Hello, and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal and I'm Tracy all Away. So Tracy, obviously we've done a handful of like Crypto Defy episodes in the last few months, obviously area of growing interest. I would still say, however, that for all the enthusiasm, like, by and large, I like it doesn't seem like anything Crypto Defy is like seriously cutting into traditional finance in a big way, yet like it still feels like a
pretty separate universe. Yeah. Well, this is the point that you've brought up on a number of those episodes, this idea that we have defied. But so far it basically seems to be sort of self dealing in crypto and in various token There hasn't really been an extension outside of the crypto space, right. It feels like it feels very recursive, kind of like a snakey to gets tail, like some interesting proof of concepts about how market making works, or the idea of like an automated market maker, or
sort of like collateralized lending. But yes, by and large, like you know, if you're to sort of look and say what banks are doing or trading firms are doing.
At this point, the two don't seem to be intersecting all that much, or you know, I can't think of like many trading lines or business lines within finance that are like, oh, we're losing money to defy or two Crypto and something which kind of goes back to a wider point or one of the original criticisms of blockchain, which is that, you know, for all the excitement and all the hype, we didn't actually see that many real economy applications a blockchain UM and the fact that finance
hasn't been able to make some of the technology from Defy work like kind of hints at that issue, although I mean, I have to say there are regulatory hurdles to actually doing UM defy type things if you're a regulated financial institution. Tracy, have you ever played around or like, you know, with you know a while ago, now, like back in the spring, we did that Hayden Adams won on unit swapped. Have you ever like going around and like playing around with unit swap at all or see
how it really works? Yeah? I did. UM. I started like a meta mask account and was playing around a little bit, but like I gotta say, even starting a meta mask account from Hong Kong is a nightmare in and of itself. Like just getting money onto it UM took me like a full day to figure out. No,
I mean, like it seems cool, and it is. It's actually very impressive, and it's like there's some interesting breakthroughs, but like it''s obvious, like it's not up to snow like for like anything that's sort of like actual like high performance finance, like you know, trade eating people are
used to like executions, like millisecond scale executions. The cost of trading is for so many different assets virtually free and as everyone knows, you know, it's like I saw you you had a really good joke a while back about gas prices and you just swap. Like the cost of say like a trading on the Ethereum blockchain or whatever is like far above anything that would be like actual finance scale at this point, absolutely, and I mean just the knowledge that you need in order to dip
your toes in it. And again, like going back to the metal mask account creation, like that took me ages and I know, like a little bit about what's going on UM and then actually doing defy you know, picking like what tokens you're interested in, and then making the calculations for how much yield you can earn versus the gas fees like it. It kind of boggles the mind.
And it is worlds away from the kind of I guess service service, the right term customer experience that you would get on traditional financial applications, right and like if there's like a hot new n f T drop on ethereum, like gas fees, which I guess are more or less like the commissions like shoot to the moon. Like obviously, like if you're like I want a high performance trading environment like serious trading, it's obviously it's not there yet.
It's super interesting. It might get there, but it's not
there yet. Yeah, I would agree with that. So all of this is to say to get to our discussion today that I'm very excited about, and we're gonna be talking about a crypto blockchain initiative which is extremely hot right now, expure lots of interest, and it's kind of like, um, what I would say is it's going after sort of like Wall Street grade finance, grade finance, and by that I mean actually attempting to you know, the idea that maybe you can have a blockchain, but it actually is
at the speeds the Wall Street is used to, actually at the trading cost Wall Street is used to. And you know, I think it's interest seen because one of the things that people say about blockchain, like, oh, it's a bad database. A blockchain is just a slow database, and for most use cases it's not what you want. This is We're gonna be talking about a blockchain project that actually is attempting to not just be a slow and efficient database, but to actually be high performance. Yeah,
let's do it. I'm excited. All right, I'm super excited about this episode because it's super hot and people are into this stuff right now. We're gonna we have too great guests on um. We're gonna be speaking with Anatoly yako Venko. He is the CEO of Salona Labs, and he is the creator of the Salona protocol, which is this like smart contracting blockchain crypto platform that's kind of like Ethereum some similar ideas, and we're also going to
be speaking to kind of Korea. He is the director of strategic Projects at Jump Trading, a well known trading firm, and they're doing a lot of interesting crypto stuff that will be getting in too, and so it should be an interesting conversation on the sort of like marriage of technology finance and an attempt to do crypto at true Wall Street grade of finance grade. So Anna totally and kind of thank you so much for joining us. Awesome to be here, Thank you, Jeff. Yeah, I'm super excited
about this one. The timing is great. Well, you know, it's like we're recording this August eighteen. Most of the big coins are still well below their highs, but people are super into the Salona and I think people are going to be excited about hearing this one when this comes out. But um, you know, like, so Anna totally.
I want to start with you. I mean, this is this cliche that people have said for a long time blockchains are bad inefficient databases, and I think a lot of people are just sort of accepted that it's true that there's like this like trade off that you have
to make. It's like, Okay, you can like be decentralized, you can be permission lest, you can be censorship free, but the price of that is high cost of execution and slow cost of execution, and that more or less I would say, characterizes like bitcoin and ethereum at least right now, And it seems like Salana essentially attempts to say, no, we don't have to accept the inherent inefficiency. Like what is salana? What is the goal? And how do you
think about that trade off? Yeah, so the trade if you described this kind of this thing that people call it trai lama, right dessentialization, performer and security, And that's tray lama really only applies if the network tries to exceed the bandwidth available to it. So bandwidth is you know what you get out of Cox, out of out of Time Warner or whatever, out of a well they give you one gig a bit at home and a lot of places in the United States now, and that
that's that's really what they mean by bandwidth. Well, if you look at a theoreum and kind of like these these uh, you know, proof of work based networks, they weren't designed to maximize the amount of bandwidth that each system can use. They really weren't designed to soak up one gigabit. But that was really not something that they were built for. So my background, if you folks don't know,
I spent most of my career Qualcom. I was there from like flip phone days when really like there were these dinky little devices two thousand three and when I left in like twenty fifteen, my team was like optimizing augmented reality and a supercomputer basically. So I saw this like massive improvement and hardware in just to span a ten years. And I've also saw what what real bandwidth looks like five g that we were you know, it was in R and D stages while I was there,
is designed to give you one gigabit. Well to two people are driving one in China one United States, they should have a one gigabit by directional channel between them, and if you try to fit transactions over that channel, you can stuff about seven hundred thousand transactions per second like ethereum size Bitcoin size transactions. So the only thing
that's missing really is the hardware to handle it. And that's the challenge, like can we build a system, a fast database that could both process these messages all the cryptographic signature verifications and retransmittim around the world as fast as possible, so that that's really what we set out
to do. We had some you know, really clever insights, like using a verifiable delay function as a source of time before consensus, and you know, using GPUs and and a v X and a bunch of hardware optimizations for you know, how the runtime works, so the execution environment works. But a lot of these things are engineering, like you know, hardcore engineering, you know challenges, but not computer science problems.
So this idea that you've sort of solved the trilemma or the idea that a blockchain can only outperform in two of three areas, so decentralization, security, and scalability. Can you maybe go into a bit more detail about how exact uly you do that. When you say it's more of a hardware issue versus computer science, what do you
actually mean and how does the whole thing work? So you can imagine a single computer that's really fast, right, you send the transactions and gives your response back, Hey I'm done right, So that that's something everybody can imagine if there was one computer that did this work. So there's this thing called time division multiple access, which is
how two G celler networks work. And the way the work is you have your channel, your bandwidth, your your physical frequency signal, and you have a bunch of subscribers that want to transmit at the same time over it. Well, if you allow them to transmit at the same time, you get noise because radio interferes. Same a blockchain, if you have two block producers, two computers, they're really really fast to try to produce a block in the ledger at the same time, you get a fork and it's
the network is in a noisy state. So this idea that we had really early on using a verifiable delay function or proof of history. If anyone has heard anything about Salona, they heard of proof history. This is a clock that is outside of consensus and it rotates the button of when any block producer can transmit a block, and it does it in a very predictable, deterministic way and does it really really fast. So and experimentally we've we've done it in for na miloseconds every four na milliseconds.
This button moves right now the slots are four in a milliseconds, but we moved the button basically every four slots. So you can think of this different really really fast computer around the world gets to be the next block producer every like roughly one point six seconds. And because everybody knows ahead of time, this is the really fast computer that's going to start there, you know, start creating
these blocks. You don't run into a lot of the bottlenecks that you're on a ethereum proof of work networks and all these other kind of random based coordination networks and this this this is like two g celluer networks. This is stuff that like basically I had to learn as part of my interview at Qualcom. UH kind of why don't you come in talk to us a little bit about UM what you do jump trading with crypto? I mean jump trading. I think people may or may
not know. Maybe you could just describe what it is, what it's doing in crypto and sort of like what the UM I guess to, you know, dovetail with what we're talking about on a toll. He has been talking about some of like what needs to happen for crypto to get to the scale where it's worth it for
serious finance players to be involved in it. Jump is a coordinator trading film that was founded about two decades ago in the pits the CV and is one of the largest participants across traditional jucians markets, spanning most asset classes. UH and Joan's Scripto effort began as a Scumpbooks indoon project six years ago at the University of Illinois where Jump as a research lab. Uh and you know, our movement of the speed has grown pretty dramatically over the
last six years. And you know, I kind of classify what we do probably in two buckets. So one is prop treading, which is, you know, exactly what we do on the other side of the house, where we connect to a lot of markets and participating very actively across the cryptal escape. The second piece where this conversation is probably more interesting, is the strategic bucket, where we've been involved in partnering with and investing in pieces of infrastructure
across the cryptal space. And that you know kind of started with centralized infrastructure with exchanges, custodians, other pigs and shovels, and there's you know, involved into the much more exciting spaces, participating with on Jane protocols and projects such as Salana, and contributing in a much more hands on fashioned projects like the Pitt network, which which I'm trouble to get a chance to chat about a little bit of day. I guess tackling that question of you know what it's
going to take to finance. Yeah, the crypto well, well, projects like the Pitt Network are definitely want piece of it. And and I'll say that are you know, maybe a little bit later in the interview, but like like and it only was you know, was mentioning there's a lot of scalability that's yet to be had and that's needed in order to come out of this this this sandbox that we've been playing in with for the last five years. Right.
And so if you want to build a finance that can execute on an open order books and process a lot of transactions that before under bill of seconds, that you can facilitate a lot of meaningful response for you need a blockchain or you know, or something like Salana
that can process and be that execution layer to facilitate that. Uh. You know, there's there's a lot of the stuff that you guys touched on earlier in terms of using experiences, uh, and and other problems that have been talked about a bunch, but you know, I can I can tell you that through the course of part participation in this space, we've seen a dramatic improvement in the quality of access that's available and as more and more firms, you know, like us,
get involved, and and and as more projects like Salana continue to reach majority and more capital continued during the space these at all kind of it might be pretty solva little problems that are that are being tackled. M m Anatoly. I'm curious just on that note, like when you originally set out to found Salana, what was what was the goal or ambition of the product. So a lot of people have described it as an ethereum killer.
Was that the ultimate aim to create something that's faster um, that's more scalable, And exactly what applications did you have in mind for it? The slide deck, the seed level slide deck literally said blockchain at nas deck speed. That was the tagline. And we were going after like what I thought we would be going after are like these
monopolies like Nazzac, like Nisy, like CME. Because you know, for whatever reason, I started trading on like Interactive Brokers and a bunch of forex sites, and in my experience as an engineer, I was always a little behind. And when I got the data, when I got the information from these from these places, and when my orders got submitted,
they're always a little later than everyone else's. So I always felt like I was always getting screwed by somebody else that had access to this financial backbone and this core thing that blockchains are that different blocked blockchains from
databases is the city of censorship resistance. So if we have a really fast blockchain and all you need is hardware to connect to it, and you're in the same level playing field as you know, Jump Trading or all the best traders in the world, that's really something that I felt would be good. You know that that's the product that I wanted. I'm blown away by the progress over the last year having folks like jump Trading, like you know, to have their engineers start building lists and
really take this seriously in it. You know, it was a dream and kind of a silly idea maybe in a silly tagline and a slide deck, but now it really feels real, like there's I think there's a chance that financial execution trading could actually run on Salana in the next five to ten years from for the majority
of things that are traded in the world. So you mentioned censorship resistance, and of course, like you know, this is like a core value like a bitcoin and when I think about it in the bitcoin realm, you know, the core cetocis vision, you know, I think about, like, Okay, I could send a transaction from here in New York to Tracy in Hong Kong, and no third party needs to know about it, and no third party could say no, and no third party could say, oh, you're not allowed
to send that much across borders to Hong Kong because it's gonna like there. You know, it's like that cypherpunk vision that it's just between me and Tracy and no
one else is involved in the transaction. It feels like it means something a little bit different in the con in the sort of like pure finance context where you're talking about, oh, you don't like the fact that as a kind of interactive brokers, it feels like there's someone who maybe has a computer and a server room in New Jersey who's a millisecond closer to the exchange or whatever. Talk about what censorship resistance means in the context of like,
you know, trading interest rates. So there's uh, you know this these transactions, it's especially trades. It's information that's propagating around the world, and you can think of it as kind of chasing news. So some news worth the event happens in Singapore, that news wire trades, you know, fires off to a trader that's looking at that Bloomberg terminal, and they may and they look at the market and
then they make the trade. The goal for us is to have state transitions like transactions to propagate at that same speed speeder light through fibers, so by the time that trader looks at the markets, they see the exact same price CME or NISY. And because the how the information propagates, it's simultaneously to every computer that's part of
the Salanta network, and anybody can join. That's thatt. It means that me is a Joshmo and a totally that wants to play around with deep learning and make my models. I get that data as fast as you know the best traders in the world, and therefore I can make my trades, you know, based on how good I am at at the same kind of level playing field. So it's really like I make this joke. It's kind of a maybe a little morbid, but I say, Salanta is
really great. If you're building a nuclear first strike detector, you actually want to see the rockets launch and you want that signal to fire. Bitcoin is really great for after the that strike lands and you need to like rebuild society. UM, So how does that so? I mean there is a tension in with blockchain and regulated financial institutions that we kind of touched on earlier UM And of course we've seen Gary Gensler come out recently and talk about how a lot of tokens look a lot
like synthetic securities. So I'm just wondering how does the permissionless aspect of a blockchain UM stack up against the highly highly controlled and regulated world of financial transactions. So a blockchain, especially like one like Salana, it's really like a very dumb packet switch. It's really doing nothing more
interesting than a T and T does accept. It guarantees this censorship resistant piece that if I send a message, it's delivered to all the subscribers, and the fault tolerance and all these consensus algorithms guarantee that that part that there isn't any central party that can stop it. So
that that is really like very dumb work. Right. The validators that do this, they don't they're not aware of the bits that are sending I feel like where regulations should step in is at the places where somebody is saying, these bits in this computer and this packet switch represents something of value, and I'm claiming that they represents something of value to the public, right because that that's the thing that is kind of like, you know, effectuating the
bits into something that has you know, trust assumptions that people will look at it and say, Okay, is that really the unit swap token? Is that really the bitcoin token? Who am I sending my money to? That's a perfect place to regulate the actual bits how they're transmitted. That's
really like dumb packet switch work. You know, Like I think what we've seen, especially in the last you know, like during the discussions around the amendment in the INFRA bill, I feel like I feel like those folks got that
part and actually started moving towards that direction. Maybe kind of maybe you could come in and talk about it from the perspective of a trading firm that has to think about regulations or think about what is securities and has regulatory obligations, because it does feel like, as Tracy said, it seems like it's going to come up more and more. It's like what are these are these are these securities properly registered? Like how do you see the playing out
from your perspective? And maybe you could just yeah, give us jumps perspective or your perspective. Yeah. So, as you pointed out, Jump has a massive body of folks that are constantly monitoring the situation, uh, to ingest all this information as it comes in, and there's there's a lot of shades of right. Our participation in this space has very defined by a lot of the activities that we've
been able to get comfortable with. You know, one of them being contributing data to the bit network as a very neutral again like like I don't know this thing like a dumb backageteresting. We're we're contributing data that's helping bring pricing information and a high fidelity fashion do the blockchain, and that's a kind of neutral piece of infrastructure that
we leveraged to build a lot of things. You know, A very curious if you can talk a little bit more about this the PITH network, because um, you know, we had we did a DeFi episode I think probably about a month and a half ago with Tom Schmidt of Dragonfly Capital, and you talk one of the ways in which this space could move forward is essentially sort of like through kind of like synthetic assets that use outside oracles to bring in pricing, bring bring outside pricing
onto the chain. Talk to us like a little bit about what that is? What do you what is pith, what are you contributing to it? And why like why are you contributing data to this uh to this network? Yeah, So it is effectively a high speed Dinna bridge between the rest of the word and block chains and in this case specifically salt Right and so Blok chains for for all their strengths to or immediately have the ability to access data that lives outside the chain or off chain.
And that means you can't incorporate this data in into the logics of smart contracts and applications. And that's that in a bits, you from being able to build a lot of interesting stuff. And so PIT is like almost like a decentralized marketplace or aggregator that enables first party producers and owners of this data to contribute this price, to help build this piece of infrastructure, to bring this state to defy and enabled application to all overstabuild stuff.
The reason that us and you know a lot of beating firms and other and a lot of the other guys that have announced participation in the PIT network are really excited about this is you know, quanfirms have always been on the forefront of technological development, almost as a precursor of being relevant in this business right, and that's generally been more in the finance and kind of focus
software space. But with the rise of blockchains and decentralized finance, it's an opportunity for us to be at the forefront
of a completely new technological revolution. And we've you know, we've been in this space for the last six years, but a lot of the other participants, you know, have been evaluating coming in and vantage this different aspects and this has been a really great way for a lot of people to get their hands dirty or on a pair of private keys, send the transaction into the beer to pay network, and start building a better, better model for the space, because you can't really understand it before
you before you do that. So that's kind of piece WAE, and then piece two is creating forms are generated a lot of data historically and managed over this data in in varread ways and exchanges. As I generally modeled them or just spintech platforms that are looking to leverage the technology enable building other cool stuff. And so when you have something like bit that enables people to contribute this
data to effectively make a blockchain data play. As you know this, this auticle problem has become more and more predominant as like one of the white fields in the space. It's an opportunity to contribute to something in a neutral fashion and get exposure to the space and have a player. And that's why you know, everybody said and conspeak for cospeak for other people, but you know, through our conversations have been one of the reasons why a lot of
folks have been excited about it. So one of the reasons people are very excited about Salona at the moment is because the native token, the price of it has basically gone kind of crazy recently. UM, I don't have it right in front of me, but I think the spike was like bigger than Bitcoin recently. Um, just a lot of outperformance there. Yeah, So I'm curious, like um Anatoly, when you look at the price of Salona and it's going up this sharply, what is it saying to you?
Is it saying that people are seeing more value in the Salona network itself and they're willing to, you know, pay more for what is an effect like a processing storage fee or is its pure speculation um and people just sort of you know, having fun with crypto um. That's really tough, right, That's a tough question simply because I don't I think the crypto markets have matured enough
to recognize value in smart contract platforms. And that value isn't in the isn't just in the processing or the data. It's in this like ecosystem, right, the shared state. Like the reason why ethereum is so valuable is because there's so many companies that have built products that people want on top of it, and there are these products people want so much that they're willing to pay these exorbitate gas fees to use them. Right, Like that that is
the value of a theorem? Is that Like that happened? Right? So what I think, if anything, that I think the price is reflecting that the ecosystem in Salon over the last year has grown really dramatically, Like we saw that in our hackathons. Our first second On hackathon had a thousand registrations, not maximum of three thousand last one. Three in fifty teams actually launched you know something, um a
bunch of them. I don't know the exact number, but I feel like it's getting close to fifty of race funding just during the hackathons. That means that there's now an ecosystem of teams, right, startups that are quit their jobs at Google or whatever and created a product and have raised outside capital to go then you know product market fit eat glass grow users. Right. That that's really I think where, if anything, that this is reflecting. Let me ask a question, and I think it could actually
um be answered by both of you. I'd like to hear both of your perspectives on it. Because although we've talked about okay, ethereum, it's slower, um, it has high gas prices. There are the show called layer two solutions that people are building on top of ethereum. They're also building them on top of Bitcoin, which famously has the Lightning network, which has been around for a few years.
And these layer two solutions can actually can sort of solve this problem of extremely high throughput, low cost transactions. I'm curious from both of your perspectives what you see as uh the advantages of having it be on the layer one and why not just say, okay, well, if we want um, you know, security, and if we want high throughput, why not just use one of the layer
two solutions on that are being built right now. On top of the theory, I think like the magic and crypto happens in this idea of composibility where everybody is in the same kind of state, right, We're all playing the same game on the same server. It's all basically
super connected. Layer two's create these fractions, you know, and like you know, little shards of places where state lives and the Financially, it's very obvious that if you have a market that now has to be split between two different execution environments, different exchanges, that creates inefficiencies because now you have arbitrage between the prices between the two, and now you have to have capital and both exchanges right and manage that and that that's really not a great
thing when if you have an alternative where everything can be in just one jan pot. So that's a very financial kind of explanation. But I think just developers, you know, use as an engineer, charting is a huge pain in the ass to deal with a bunch of different roll ups. We have to manage state from application. It's huge pain
in the ass. All I want is like, oh my whatever, ten million users to not worry about any of the stuff, right, Like, as an engineer, it's just easier, right, you want, I want a single CPU with as much throughput as I can, right, ideally with a single core that's as fast as possible. Dealing with multiple cores is a little is still a pain in the ass, but still not as bad as
dealing with a network of computers. And I have to scale, and that those problems are really like something that takes a lot more time for depths to build products versus entra you know. Yeah, just sticking backing off of that, you know, the magic world that people throw around in the cripple space offen is composibility, right, and that that's you know Granadolie was talking about in being able to leverage pieces of state within the shame leisure to very
cool applications. And so you can take something like the prices the seater Mortar book, put them together in a build a derivatives trading platform and if you have shorted state, you know, those kinds of exciting applications are not possible, and that takes away from a lot of the fund that a lot of these have. These these platforms break.
One thing that Slanas you know, also done really well and is investing in what's called cross change bridges, which are pieces of infrastructure that enable state to move between these changes and so Ethereum has all these network effects that exist across a lot of these dimensions, and I think all of them eventually convert in convergent to building very useful an interesting state, and you're able to use these bridges to then bring the state or the Salana
and perform more interesting competitions of that state and create new state with very very interesting security properties. You know, that makes well there an Slona I didn't you know, in a lot more interesting. So I have a weird question um, but it's sort of related to the last point. But I think like there's so much excitement around crypto, and a lot of it is rooted obviously in excitement
about technology and its ability to change the world. But on the other hand, there seems to be a lot of belief that once this technology is invented, like say bitcoin, it's not going to be replaced by something else and it's going to sort of exist forever. So I'm thinking how to phrase this. So you know, if you have something like bitcoin and then people say it's use cases limited, so they go ahead and then ethereum, and then people try to improve on Ethereum and come up with alternates
like um Salana or like cardon. No, do you ever worry that like the next iteration of the blockchain is going to come along and um compete effectively with Salana? And then secondly, how do you sort of balance the tension between building a big network. So you want a sort of first mover advantage, you want lots of people to be using Salana, But on the other hand, you know you could have a new competitor come out of
nowhere with a better proposition. My belief is that Salana is kind of like at a terminal design for censorship resistant, real time get the information bits as fast as we can around the world. There's Piretto efficient trade offs where if you're building something that is trying to survive, you know, as a monetary system after World War three, maybe bitcoin is a better design. But if you're building something for real time trading trying to disrupt NAZAC. I don't see
a better path. So the network that's gonna beat us is going to be very similarly designed to us, but just executing faster. You know, people working harder. That that's what keeps us working as hard as we can. There's also I think kind of this other interesting aspect of this is that the tech itself maybe not as important as just empowering people with cryptography. That onboarding experience yet with unit swap that was really painful of metal masks.
Imagine that, you know, we get to a point where you have to three million people that have done it and kind of get the idea of cryptography at the level of that people understand what a browser does, not nothing more than that, right, But if they get it, then you have that many people actually all now able to solve custody, all interact with any arbitrary blockchain. That space is going to be filled by technologies. You know, like somebody somewhere is smart enough to go build a
network and get those people to go do something. You know that the tech is going to be less important, you know, like the actual getting those humans on board it. I wanna go back to this idea of like okay competing against the exchanges blockchain at nasdack speeds. You know, one of the big ways that a lot of these
exchanges make money is the licensing of data. That data is extremely valuable, and so I'm curious, you know, kind of from your perspective, but maybe from both of your perspective, is that an area that you see is like, Okay, this is prime for disruption. A handful of very powerful exchanges really just controlled heavil hammer lock on this data
and this could you could open this up? But also you know, I'm also curious, specifically, say from the jump trading perspective, and there's a bunch of trading firms that are involved in this, I know, like Virtue is one of them. What is the guarantee that the data you're
contributing is clean or that it's high quality data? Because it's what you know, like, how do we How would I if I were a a user of PITH or I, you know, have designed a smart contract that was contingent on PITH data, How would I have any idea that it's clean, high quality data that's being contributed to it by you or the partner. A couple of questions in
that one, you know, I'll go for the data model. Sure, I mean not have like the most exciting on SATA, but in the oaldy that I think the feeds that are coming out of exchanges are primarily consumed by two
classes of participants. One our films like jump like we're do like GDS, i'll do a lot of other participants in the pit network that are ingesting this data execute on like high frequent secuting strategies that needed isspond in very New York time to allow these events, right, And modern matching engines have determinism on the order of microcycles and or or sometimes you know a lot flow and
block change, you know by construction. And it only was just talking about like as long as you know, like theoretically as fast as is going to get because you know, you're limited by how quickly you can communicate to a global network of computers and come to consensus, especially over
the public Internet. And so you're talking about like hundreds of millar cycles, right, and a microsycutitis two hundreds of millar syconds as a second is Stuart Day, And so you're talking about some pretty dramatic differences here, and so the data feeds that are coming out of these exchanges. The the thing that's probably not distracted by a blockchain based data feed is is the level of subscription that that a home and jump needs. There it consume interact
with hyper constituting strategies. Now there is a second us
of data consumers. There are more human time or modial time, right and these are the guy the analysts that are picking up the phone on the underdesk in providing commentary on the UK of its back office systems across the world, like all the classes of participants that don't need data every couple of hundred nanoseconds but don't really want a fifteen minutes to the right and that data model now now definitely you know, starts to starts to get distracted
with with something like with something like it, what else canry out of that by saying is that what's far more exciting with a blockshain based data play like PIT is the en chain applications that as you know, you were talking about some of the guests that you had that we're talking about some of the applications that could be learned using this data. Uh and yeah, I almost think of the disruption of that second class of a data model as basically a side of act of what's
being there. And then you know it's it's primary motive. And then what about the data quality part? How do we know it? They call that what Jump is contributing to is how do we know it's good data? Right? So, the way the system works is as a network of independent data providers that are effectively that are all publishing their prices as transactions into the Slana blanchain and just
to get into the reeds a little bit here. Along with their prices, these data providers are also publishing uncertainties or confidence in the both associated with these prices. And you know what that and that's kind of a non ipuitive concept when it comes to the prices. But depending on the market structure, any given trade that you're seeing, or any given snapshot of the liquidities that you see on any given venue, inherently it's just an observation that
has someone certainty on a waving price. It's like a
measurement that you make in the lab. And these data providers are publishing this uncertainty and this price to the blockchain and over there, like Salana, there's an on chain program on Salana that's ingesting these inputs and doing some slightly intelligent aggregation to handle out lives, throw away that data and and and create like a final pith price and and an uncertainty that is that is like a that's on the price as a whole, right, and so
developed buggers that are using these prices are basically seeing the aggregate of a lot of this of this data that's being ingested and ugially have this like extra field of uncertainty that has a degree of freedom and the applications that they're building with and having this big diversity of quotas is critically important. Right, There's a lot of reduced syncrasies that that come into player. Right. Exchanges are like creating forms could have technology problems. You could have
flash crashes on any independent venue. You could have people who deputing game systems. You could have big fat finger prints that cause and you need you are you ideally want this auticle system to be highly robust to those
kinds of events. The second thing that that the other thing that it does is when you have a net work of these first party data providers, it's a consolidation of indridenced across the entire landscape, right, and so depending on market structure of any given asset class, like the U S sequities, you have drag NMS that ensures that the so led to US equity values trade off the line.
That's not the case for crypto effects treasuries, lots of other international equity markets, and that leads to fracture pools of liquidity that are often separated by geopolitical boundaries, right. And so pricing information that's being submitted by new new participants as they're coming onto the PIT network adds to a representation of like a global price for a lot
of these sources. And so not only doesn't give you a good representation of the price, but also the distribution of those prices, which is potentially very interesting dat And you know, as we see like k g I and m g O and and FDx and like all the participants across Hong Kong, Singapore, Japan, London, a lot of US venues coming onto the network. It's it's significantly shouldend.
It's so that's kind of like you know a big piece of what makes the data very US very high quality and you know, much better source suppressing for for application to all of us to use. So I'm curious just going back to the beginning of this conversation where we were talking about how Salona actually works. So if most of this is about expanding the network, upgrading hardware versus actual improvements on the computer science that underlines it, like what is the next big thing for Salona? What
are you working on right now? And like where do you see it going? So um, the innovation and the computer science part we just got lucky with. That's usually how it happens, if it works, uh, and that's been that's been you know, a blessing for us because we've been really focused stun the hard work of like realistically takes ten years to build a new operating system, a
new database. The stuff doesn't happen overnight. And that's because you're trying to take this abstract idea and form it into real world CPUs, GPUs, you know network cards that have you know, their own behaviors, and to do that in an efficient way, it just takes a lot of
kind of you know, blood, sweat and tears. So a lot of the development that engineers do at kind of the core protocol level is optimizations that you would see folks doing if they're working in a Linux kernel or you know database like you know, my my sequel or something like that, you know, looking at memory, looking at throughput block contention and trying to see where do we have bottlenecks that if a validator that isn't you know,
working on software. If they add more hardware, they add more as systees and more network cards, they should see that improvement, you know, from from that right from that investment that that's really kind of like our our goal here is to make this thing elastic with a hardware that's given to it. I want to like, you know, zooma. One of the things in the whole crypto space is each generation accuses the next generation of being insufficiently decentralized
by some metric. Right, so big cooiners look at Ethereum and they say, oh, Ethereum has a vitalic, and we is like, okay, no one knows who Setoshi was, he has no influence anymore, though people try to still like understand his writings. But then Ethereum they say, oh, you have vitalic. He's the leader of it and there's consensus and that foundation and also an individual can't run a full note like we can on a Raspberry Pie, so
it's insufficiently decentralized. And then the ethereums look at Salana and it's like, well, you have and it told you who's a CEO. We don't even have a CEO, but there's a CEO, and you need a big data center. And even maybe it's a little bit more tough to run a note on a theorium, at least theory, it could still be done. You need you can't. Really, someone can't run a full UH Salona node on their home computer.
You're insufficiently decentralized. And so I'm curious, like, how concerned should one be or what, let's put it this way, why shouldn't one be concerned about the lack of decentralization on Salona That here's a company. You're the CEO of Salona Labs. I get that's different than the protocol, but obviously you have a lot of influence and there's no way I could run a full note UH at home.
So why shouldn't I be worried about Salona decentralization? You could run a full note at your local day son, right, Like okay, So so I've always felt that it's not about like lowering the berry to entry. It's about making the thing on the other side so valuable that you're willing to kind of, you know, crawl through broken glass to get there. So in this case, right being having access financial data, access to the network where you can trade and participate in the next generation of finance at
the same speed as jump trading. Like for me as an engineer when I was working at Qualcom, I would have drove to like, you know, Hurricane Electric and set up my note like that day, like as soon as I would learned about it. Right, Like, that's not a big deal for for somebody that wants to do it.
So what I in terms of decentralization that question specifically, The way we look at it is we try to address all the quantifiable variables that we can uh and the specific one that we care about is this mac maximizing the minimum set of independent parties that can get to thirty of the stakeweight in the network. And that's a very specific thing. Bology talked about it, calling it the Nakamotico efficient. You kind of look at the network and you try to find what is the smallest set
of parties of participants. However, you slice this network that if they all collude it at the same time, that could shut it down. So they can never steal funds because the layer one doesn't take custody of your funds, your cryptographic keys that you own, those things actually help
hold custody. But if you're talking about trading, right, or even payments, like a big big payments company right starts using Salana for payments, what they care about is that the service never gets interrupted, right, it stays fair and transparent and censorship resistance. It's far more important trading. But also in any financial use case, interruptions cost money. Right, So maximizing that minimum set is a quantifiable measurement of decentralization.
You can start slicing it by data centers, by geographic locations, worldwide distribution routers, b GP routing routes, right like everywhere you look at it. How do we make sure that that problem is as hard for an attacker to pull off as possible? And in that sense, it's going back to this like nuclear strike analogy Byzantine fault tolerant nuclear
strike detector. How do we make sure that it's as hard as possible for an attacker to disrupt service, so that that form of decentralization, I think is is like measurable, and if we succeed there, then we can deliver value to in our humans. That that's the real form of decentralization. How many humans actually care about this thing being alive? I just have one more question for you, uh and totally um. You know one thing that we haven't mentioned.
Sam Bankman Freed is a was an early investor, right and we've had him on the podcast twice in one it's like the year of SBF. Like f t X is exchange has done incredibly well. You know, Alameda has trading hedge fund. I think they've done phenomenally well. Can you talk a little bit about his role and his contribution to Salona and how helpful that has been This sort of like the dovetailing with f t X, I think everything that gets you know, every new launch on
Salana seems to get traded there very quickly. The is a a token called Mango, they're just launched, it's already trading there. How talk about the sort of the synergies and the significance of that. Yeah, So um, FTX was in. Our connection with Sam really started about a year ago, not not like super early in the life of Salona simply because we know, you know, we got connected to them even before that, but they were looking for something
that worked. They don't really care about our theoretical claims, like when is the Singing to be live? Was like the first question out of out of Sam's mob Um. And after we launch, we had this little game called break You you know you've connected the network, it sets up and you pay a little bit of fees, like a few sounds, and then you can smash to your keyboard and you see transactions fighter off and get confirmed
on your screen. It's incredibly dumb, but it really like show to their engineers that like, Okay, this thing is really live. These are real smart contracts. You can go and build whatever you want on it, and it's fast
and cheap. And that's why kicked off there and kind of internal team to go incubate Serum built a central limit order book, which is something that they really wanted to do for years, Like really as soon as they started trading on crypto and building ft X, there was this like how do we do this in a decentralized way, Well, we don't want to do something cheesy like an Ethereum layer two that like doesn't really like do do like
a full censorship resistant chain. So that was really symbiotic really from day one, from that moment because the engineers saw how cool what we built and that it actually worked. And at that time people remember like about you know, a year and a half ago, f t X was not like the juggernaut at this today. Right like the it was a much smaller exchange. There were an up and coming exchange. Everyone loves SAM, but it was much much smaller and I you know, we started both kind
of taking off. Right around when Serium launched UM, a lot of developers started looking into Salana. The tools were really rough at that moment, you know, that time and the work that the Siriam team put in and just building things and showing okay, this is how things work, this is this is how the libraries work, and how you get started. That had tremendous effect on onboarding new developers.
Just simply having another another experts start generating you know, code, These are examples, this is how you interact with Sirium and of course you know through that participation, UM you know, Jump and Pith and all those guys. Really I think their eyes open to that. I think there is it's possible to build on next generation of finance and a
essentialized way. So you know, as much as you see Sam on Twitter, the folks at that fifth and Jump have been doing as much of the work behind the scenes, just not as loudly. Uh well, an a totally and kind of. It was a fantastic discussion. Really appreciate both of you joining us and thanks for coming on odd lot. Yeah, thanks, thank you, thank you so much. Cheers. I thought that
that was really interesting. You know what, actually, I think what really struck me is I mean there was a lot there's a lot there on Untillys Point, you know. He he said, well, it's like anyone can go set up a Salona note at their local data center. And at first when he said that, I was like, well, that's some sort of like weird joke because I'm never going to do that, But actually, I guess the idea it does kind of make sense. It's clearly like not a network that people can look run like as a
hobby or like on their laptop. But as his point, it's like, well if anyone can do it equally, and we know that this is a problem in finance current which is this sort of like perceived inequality of who has the faster hardware or who has an antenna tower somewhere in New Jersey closer to the NYC Data Center or whatever. If anyone could do equally, it may not be available to everyone, but that does seem like an interesting potential solution or interesting potential reimagining of how finance
could be made more fair. Well, on a related note, I thought his point about, you know, it's not really about the technological innovation but more about getting people acquainted with cryptography and getting people to understand that interesting too. Yeah, that was very interesting, although I gotta say, like without some sort of improvement in the interface, um, I just I find it hard to imagine that like millions of people are going to be doing deep but um but
you know that could come in time. But and of course, on the other hand, if you have the networks like Jump, in Vertue and a bunch of others, then you know they're interacting with the protocol at the sort of like the API level, as opposed to like the you know, the unicorns on the Unicorn Graphics on unit swap. Um. You know what it's interesting is like, you know, thinking
of hearing from hearing about this from jump perspective. I thought it was super interesting too, because it's like there's like, you know, there's serious muscle in this space. Though, like anyone who thinks this going away or a fad or whatever, I think at this point is like missing missing a pretty big story. Yeah. I mean, it seems like so many um well, so much money and so many people are tied up in the industry now that it would be very, very difficult for it to go away. I
agree with that. Yeah, No, I think that, you know, and again I I think like this idea, like for years, this idea I always sort of just took it for granted, like the idea of blockchains have to be bad, blockchains have to be expensive, they have to be slow, And it's interesting that in that I'm gonna tell you just like, no, they don't. There's a different way to do it. Yeah, I'm just thinking, you know that notion that like it's not so much about innovation in the computer science anymore,
but on the network and hardware side. I mean I'm kind of well, look, I'm not an engineer, so what do I know, But like I know that technology changes sort of all the time, and so I do wonder if something could come. I mean this, this to me is like a tension in the crypto space because you're trying to build a network and you want the network
to be as ubiquitous as possible. But at the same time, people are trying to build better networks all the time and then make those bigger, and it just seems like it's I don't know, it just seems like you're sort of getting constant change at the moment, and I don't
know when we're going to settle or coalesce around one thing. No, I think this that was a great question, and I do think that, like it is a question for some of these like so called like layer one, like smart country acting contract platforms, like the barriers to entry in them, because like you know, and I'm sure like if we talk to an Ethereum person, they would say, like, oh, Ethereum has like ten x as much you know, fift x as much money involved, and you know, a thousand
more um you know, a thousand x war developers, etcetera. But it's not obvious to me, like the degree of mode. I guess motives, motives the word I'm looking for, Like, how do we know that a sustainable mode exists in this space? And it's not obvious to me that like we know where that is or that that's been established by anyone yet. Yeah, totally I would agree with that. Um, okay, shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts Podcast. I'm
Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Wisn'tal. You can follow me on Twitter at the Stalwork and follow our guests on Twitter and a totally yaka Vanka. He is the CEO of Salana Labs. He is at a E. Jakovenko and follow kind of Korea. He's a head of New Initiatives and Crypto at Jump Trading. He is at Korea kind of and be sure to follow our producer Laura Carlson. She's
at Laura M. Carlson. Followed the Bloomberg Head of podcast Francesca Levi at Francesca Today and check out all of our podcast at Bloomberg under the handle at podcasts. Thanks for listening.