Unichain is Live! What This Means For The Future of DeFi | Hayden Adams
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Scalable singular chains like Solana are very successful. It has been that like, you know, there's two approaches to scaling. There's going vertical, there's going horizontal. They both have validity, but ultimately you need horizontal scaling to reach like true mass scale. And so that will require many chains running in parallel. And we need to figure out how to make that user experience completely seamless. The internet runs at massive scale. It doesn't do it by running everything on one massive server. It does it by running many, many servers that can just seamlessly connect to each other. And we have to do that for blockchains.

And so we have to figure out how to make different blockchains feel like one experience. With Unichain, a lot of our focus is on what we call interop, which is how to make multiple blockchains feel like one cohesive experience. Welcome to Bankless, where we explore the frontier of Internet money and Internet finance. This is how to get started, how to get better and how to front run the opportunity. This is David Hoffman here to talk to you about the launch of Unichain.

Unichain, the Uniswap Labs built Layer 2 is live today. On the show, we go through the release of Unichain with Hayden Adams, the creator of Uniswap and CEO of Uniswap Labs, to talk through some of the bells and whistles that the Uniswap Layer 2 is bringing to the table. Some people out there, I'm sure, are saying something along the lines of, not another Layer 2, but...

Well, Unichain is bringing some novel tech to the table that no other layer 2 has. They have built some new kind of sequencing process that helps decentralize the sequencer in collaboration with Flashbots.

They've been pioneering full stack native interoperability with the Optimism Collective. And they've also built the Unichain validation network that allows Uni token holders to stake their Uni and check the validity of the output of the Unichain sequencer and also earn the fees accrued by the Unichain block space. I think that's pretty cool.

And of course, these are the subjects that I get into with Hayden. But first, before we get into it, a message from our friends and sponsors over at Morpho. Morpho is a borrowing and lending application on Ethereum, also on base. And it is also the first and only DeFi protocol that has been integrated into Coinbase.com.

which is a pretty crazy concept. But if you're a longtime Bankless listener, you know that the concept is known as the DeFi mullet. Fintech in the front, DeFi in the back. Coinbase is using Morpho to offer its users Bitcoin-backed loans, which actually is how I'm also personally using Morpho as well. It feels good to have an app that I am an ongoing customer of to support the podcast. So I appreciate you, Morpho. There is a link in the show notes if you just got peaked by Morpho, so check him out.

In addition to everything Unichain related, I also talk with Hayden plenty about Uniswap v4, which just got released last week. Uniswap v4 has this new singleton contract design, which means that the entire state of Univ4 is contained inside of a single contract. This lowers interpool trading gas costs and new pool deployments down by 99.99%. That's four nines. As well as enables this idea called Uniswap hooks.

and Hayden and I spend a bunch of time talking about the possibilities that Uniswap v4 hooks unlocks for the world. So let's get into it, but first a message from our friends and sponsors, Uniswap. Let's go hear from them right now. Introducing Unichain. Built for DeFi and powered by Uniswap, Unichain is the fast decentralized layer 2 designed to tackle blockchain speed and cost challenges. With this mainnet now live, you can enjoy transactions at up to 95% cheaper.

than the ETH Layer 1, all while benefiting from an impressive one second block time that will be getting even faster very soon. Unichain is the first Layer 2 to launch as a Stage 1 rollup on Day 1. That means it comes with a fully functional permissionless proof system from the start, increasing transparency and further decentralizing the chain.

More than 80 apps are joining the Unichain community, including Coinbase, Circle, Lido, Morpho, and Uniswap. You'll be able to bridge, swap, borrow, lend, and launch new assets and more from day one. Built by Uniswap Labs, the team behind the protocol that's processed over $2.75 trillion in all-time volume with zero hacks, Unichain truly enhances DeFi experiences with faster, cheaper, and seamless transactions, even across chains. And soon, the Unichain Validation Network will allow anyone to run a node and earn by securing the network.

Visit Uniswap.org and swap on Unichain today. Ondo Finance is leading the way in the tokenization of real world assets with a mission to accelerate the transition to an open economy by building the platforms, assets, and infrastructure that bring financial markets on chain. With Ondo, institutions get seamless access to tokenized finance while on-chain users gain access to institutional grade real world assets like never before. By bridging traditional finance and the blockchain economy, Ondo is unlocking liquidity, efficiency, and global access

reshaping markets for the digital age. As the leader in institutional adoption, Ondo finances the gateway to the trillion dollar tokenization revolution. Institutional great finance, on-chain, for everyone.

Celo is transitioning from a mobile-first, EVM-compatible Layer 1 blockchain to a high-performance Ethereum Layer 2 built on OPStack with EigenDA and OneBlock finality. All happening soon with a hard fork. With over 600 million total transactions, 12 million weekly transactions, and 750,000 daily active users, Celo's meteoric rise would place it among one of the top Layer 2s

built for the real world and optimized for fast, low-cost global payments. As the home of the stablecoins, Celo hosts 13 native stablecoins across seven different currencies, including native USDT on Opera MiniPay, and with over 4 million users in Africa alone. In November, stablecoin volumes hit $6.8 billion,

made for seamless on-chain FX trading. Plus, users can pay gas with ERC-20 tokens like USDT and USDC and send crypto to phone numbers in seconds. But why should you care about Celo's transition to a Layer 2? Layer 2's Unify Ethereum. L1's Fragmented. By becoming a Layer 2, Celo leads the way for other EVM-compatible Layer 1s to follow. Follow Celo on X and witness the great Celo happening, where Celo cuts its inflation in half as it enters its Layer 2 era and continuing its environmental leadership.

Bankless Nation, I'm here with the creator of Uniswap, the founder of Uniswap Labs and the man responsible for burning almost a quarter million of ETH, Hayden Adams. Welcome back to Bankless. Great to be here. Thanks for having me. So Hayden, Unichain is launching their OP stack layer two, and I think it's one of the more uniquely constructed layer twos that I think everyone needs to understand and digest, including myself. So there is a new sequencing mechanism built with Flashbots. There is some of the fastest block times on the OP stack.

and from what you tell me, they are quickly going to become faster. There's also this brand new thing called the Unichain Validation Network to stake our UNI tokens. Hayden, first, congrats on the release. There's a lot to unpack. How should we start this conversation? Maybe just at the highest of levels, how would you summarize the significance of the release of Unichain upon the Layer 2 landscape and just broader Ethereum?

Awesome. And that's a great summary. What I would say is that, you know, we at Uniswap Labs, we built, you know, the Uniswap protocol, which is one of the, you know, it's the most used protocol in Ethereum, you know, full stop. And then we also built the Uniswap web app and Uniswap wallet, which are some of the top

up user-facing products built on top of decentralized protocols and blockchains. I think that has given us a very unique perspective and lens and approach. Going into building Unichain, the thought was how can we advance and accelerate?

the Ethereum space and the blockchain space to build better applications, full stack. When we think about building products, we're now thinking not just at the front-end level, but also at the back-end level, also at the smart contract level, also at the chain level. I think sometimes a problem that our space has is people will build at a very narrow layer of the stack and they offload their problems to a different part. For us, because we're building at every layer of the stack,

It allows us, it gives us a very unique insight. And so when we, you know, started building Unichain, we were thinking, what does DeFi need to be, you know, to be better, to onboard more users, to create better user experiences, to create more efficient markets, et cetera. And so, you know, Unichain, with Unichain, we're leaning very,

hard into faster block times. People want transactions to happen very quickly and 12 seconds on L1 isn't cutting it. Honestly, even two seconds at the L2 level isn't really cutting it. You need really fast blocks. For Unichain at launch will be the fastest OP stack chain with one second block times. But then later in the year, in the coming months, we're going to be working towards 250 millisecond sub-blocks. Another problem,

for DeFi is MeV and the amount of value that gets lost by users to MeV. And, you know, just for example, Uniswap users end up missing out on about a billion dollars per year based on MeV. And, you know, we think that that's how you ended up burning so much ETH. Yes. And, you know, as much as we like burning ETH, we actually also like returning value to our users even more. Sorry. Sorry, people. No, I have also been a person, but still,

We really do build with users, end users in mind. And I think that ultimately what's better for end users will be what's better for Ethereum, for what it's worth. And so, you know, some of this sequencing stuff that you talked about at the builder layer that we're partnering with Flashbots on really will allow us to rebate

Mev or allowed us to, you know, allow not just us, but other DeFi developers and even like, you know, et cetera, to have Mev be returned to users. And that both works for Uniswap liquidity providers, it works for swappers, et cetera. And then, you know, I think that the final thing I want to get at here is really Interop. And the, you know, when I look at our products today, the

user experience of L2s has become very fragmented. And part of what even has made very scalable, single singular chains like Solana very successful has been that

You have one chain that can process a lot of transactions. And I think that, you know, in my mind, there's, you know, there's two approaches to scaling. There's going vertical, there's going horizontal. They both have validity, but ultimately you need horizontal scaling to reach like true mass scale. And so that will require many chains running in parallel. And we need to figure out how to make that user experience completely seamless. When I look at what's like truly possible there, you just can look at the internet, right? The internet

runs at massive scale it doesn't do it by running everything on one massive server it does it by running many many servers that can just seamlessly connect to each other and we have to do that for blockchains and so we have to figure out how to make

different blockchains feel like one experience. And so with Unichain, a lot of our focus is on what we call interop, which is how to make multiple blockchains feel like one cohesive experience. And there's multiple approaches that we're taking and we have to layer them all the same way that the internet has multiple ways to feel seamless. And one of them is native interop through Optimism Superchain, which might be the fastest, cheapest version of interop, the most seamless, the one that makes you feel like

liquidity is essentially fungible between the two chains. And then on top of that, we also have what we call intent-based interop, which is essentially using markets and trading to kind of quickly convert assets across chains using various bridging systems and liquidity systems. And so we're working on both of those for Unichain. And the end result that we hope to build is a really, you know, amazing, really just like an amazing platform on which you can build amazing products. Mm-hmm.

Okay, so in this release, in this tech release, I think there's something here for everyone. So if you are a person who is concerned about the centralization of Layer 2s because of centralized sequencers, well, that is the part of the conversation that's going to interest this person is this Flashbots block building mechanism that we're going to talk about, which is going to be like the execution of the Layer 2. And the Unichain validation network.

And the Unichain validation network. We have two things we're doing here. Okay. If you are an Ethereum person who is worried about layer two fragmentation, there is a conversation here when it comes to native interop, which is some of the rigor that you guys at Uniswap Labs have been putting into creating this like full stack native interop mechanism that's coming to the Superchain. So we're going to talk about that. And maybe if you're just like a Uni token holder.

And maybe there's something here for you because now with the Unichain validation network, we're going to be able to stake our Uni. And so I think this is kind of downstream of what you were talking about with your position at Uniswap, Uniswap Labs, where because you guys are building end-to-end on the stack from an application on the layer one, you guys have a wallet, you guys are a full stack company, and it gives you a unique perspective to innovate at different parts of the stack and kind of create a full stack solution. So I'm pretty excited for this episode. Before we dive into each one of those areas individually,

in detail and specific, I also want to touch on Uniswap v4 because Uni v4 just got released not too long ago, last week. And many, many people are talking about that. And so I think some listeners are probably coming into this episode saying, oh, Hayden on Bankless. Clearly they're talking about Uniswap v4. We're actually going to be talking about Unichain, but I do want to talk about Unichain, Uniswap v4. How do these two releases relate to each other? Is this a coincidence that they're happening within like a week of each other? These two different announcements, how do these things fit together? It's like,

Both a coincidence and not. I think we've been grinding on both for a pretty long time. I would say these are the two biggest projects we've done, and we did ship them both within a two-week period of time, which is kind of insane. That was partially a coincidence, but actually in some ways the timing is really nice because it's a good moment for new ecosystems to form.

By the way, we forgot there's something for everyone, like swappers and liquidity providers will also greatly benefit from both of these releases. And that's part of where I can even talk about this convergence. So Uniswap v4 launched. Uniswap v4 is the latest and greatest edition of the Uniswap protocol. There were really two areas of focus. One was around cost, gas efficiency, et cetera. And the other was around what

what we call hooks. So cost really simple. You know, we have a bunch of improvements to the efficiency of using the protocol. And so that means deploying pools are like 99.9% cheaper. And we're doing that with our new single contract architecture. And that actually does make a big difference, right? There's thousands of pools being created. And sometimes people think, well, pool creation, that can be expensive. On Mainnet today, it's gone from $55 down to $4, something like that.

Uniswap v4 has brought pool creation from $55 down to $4. Something like that. At reasonably high gas prices that I tested yesterday. But on L2s, obviously, it gets even lower, and it may be a matter of cents or less than cents, like fractions of cents. And so pool creation, much cheaper, which is really nice. We also have just...

In the early days, we used wrapped ETH under the hood, but that adds an additional cost. And so we have native ETH support. It all boils down to like, swapping is maybe 15% less gas cost for when you're swapping against ETH. We also have, because all the tokens live in a single contract, when you do like these more complex split routes and multi-hop routes, there's a compounding benefit to the more of those pools that are in v4. Because

Essentially, before you used to need to transfer tokens between pools and these multi-frag, and each of those transfers incurred a cost. For before you put in the input token, you could have a complex series of routes and hops that are just all internal accounting rather than real token transfers, and then you spit out a token on the other end. That ends up being just a much more efficient way to do multi-hop routing.

And then, yeah, so gas, just across the board, gas is cheaper, and I think that it will compound the more liquidity moves into v4. And we're even seeing very early on that Uniswap v4 is getting the majority of small swaps through our UI. The liquidity is a tiny fragment, right? Because it just launched, and so liquidity hasn't had full time to build up. But even at much lower liquidity for small trades, the gas savings outweigh the increased amount of liquidity. And so...

V4 is already performing very well there. So that's like the one half of V4. The other half of V4 is what we call hooks. And hooks are really, you know, turning the Uniswap protocol into a developer platform. And the Uniswap protocol was always a developer platform. People could always build things on top of it.

but there were very strict limits on how you could modify your pools. You couldn't really modify your pools. There was a single implementation of concentrated liquidity, etc. Then a single implementation of how fees can be done. Then any modifications had to be done externally or through the token contract itself. With USWAP v4, we allow people to somewhat arbitrarily modify the logic of pools, but in a way that creates very consistent,

a very consistent experience and gets to benefit from this low efficient routing

against everything else within Uniswap. And so from that, we've already seen like a, like even day one, like I didn't even know about this project, but like the most, like the highest trading volume or the most assets for Uniswap before on day one actually came through a third-party hook project that launched at the same time as us called Slaunch, which, you know, people were trading. People, it's essentially, you know, the equivalent, it's like a standard

system that uses hooks to more fairly distribute, you know, like to more fairly issue new tokens. Kind of similar to like... It's a token launchpad. Yeah, it's like a token launch platform, but that like natively integrates with Uniswap v4 hooks. And we saw like a lot of activity there. I didn't even know about it. I was someone with activity.

Yeah. That's a teaser of what is possible with Uniswap v4, but it goes well beyond that. Yes, it's good for token launching, but it's also good for all special designs for different and new asset classes. It's good for honestly just improving and optimizing Uniswap fees. Maybe since you asked about the convergence of v4 and Unichain, I can give a really good example here. The builder that we're working on with Flash Blocks,

will enable is essentially it will create very fair priority ordered blocks. And we can use that. And by we, I mean really anyone with me building on Uniswap protocol or on Unichain.

But, you know, one way to use that would be like you could have the hook in a Uniswap pool that actually sets LP fees as a function of the priority fee for that swap. And what that would do is actually allow LP fees to be aware of how much MEV they're creating, because the more MEV a transaction is generating, the higher priority fees someone will bid for that, you know, the higher priority fee someone will pay to, you know,

the trading end step and so lps can actually now be aware of what is being bid and they can actually up the lp fee uh proportionally and ultimately capture more of the value that they're creating as liquidity providers and leak less value uh to mev and so this is like an example of like a really beautiful convergence between unichain and uniswap v4 but like that's just like one idea right and like the kind of the world's you're always there there and so i think that i'm just really excited that they're like both you know one one other thing here is just that like

when it comes to like interoping and when it comes to like the kind of explosion of L2s and chains, I think that like a lot of developers might not want to be maintaining their info across like 50 different L2s. And so, you know, I think that Unichain could become in part because it's like designed to, you know,

So with DeFi in mind, it can become a really good hub for people that want to deploy hooks and experiment without trying to manage across a million different chains at the same time. And so I expect a really exciting, vibrant developer community to form, building on top of both Uniswap v4 and Unichain. And I expect these compounding benefits of the two.

I think that maybe gets us into the interrupt conversation. I understand the desire for like many people to just not want to manage multiple deployments of their applications. And so like at the very least use Unichain as like a shelling point of where to deploy your hook and manage your hook.

Like if you're just going to do it in just one spot, just do it, you know, at the epicenter, which is going to be Unichain. And honestly, that's probably if liquidity does end up going to Unichain, then like that's where you want to be anyways. I've heard Uniswap V4 hooks being called smart contracts for liquidity, which I think is a good meme. And so, but I think the truth of that is like the truth of will Unichain be the epicenter of Uniswap?

hooks and the developer experience, and honestly, the liquidity center of the Layer 2 landscape is gonna depend on that native interop conversation. So maybe we can start with that native interop conversation because if things can be deployed on Unichain and also be natively interoperable with other Layer 2s,

That is a really strong argument for Unichain representing kind of the epicenter of liquidity in Layer 2, in the Layer 2 landscape. So maybe you can talk about what this native interop looks like with the Unichain, how it works, what it'll feel like for users. Just open up that conversation for us. Yeah, and maybe I want to contextualize. For what it's worth, by the way, Uniswap v4 at day one was deployed to pretty much all the L2s.

And so we're not like, this doesn't represent Uniswap moving away from supporting other chains and only supporting its own. This is like us trying to spearhead pushing forward innovation in the space.

and creating what we think is a very unique uh platform uh within it so uniswap still you know day one on you know on base on arbitrum on polygon etc and i believe that there will be very vibrant ecosystems there and you have things like you know well if you want to write a you know a smart contract in rust on a hook and rust then you might want to be using arbitrum right and so just want to like contextualize that a little bit but then when i when i talk about

you know, interop. I think one thing I want to bring into the conversation, I have this sort of metaphor I've been using recently, which is I think an interesting conversation to have is what applications should co-locate within the same blockchain as like the leading liquidity protocol. Because I think that's not a thing people think about and maybe sounds kind of complex, but what I'm essentially saying here

is we are in this and we're in this kind of system right now where we have a bunch of general purpose L2 ecosystems that are competing against each other. And the majority of activity in blockchains today is trading. And because of that, everyone wants to be the best place. Every every general purpose chain wants to have the most liquidity to be like a trading hub.

But I think something that like a point that is getting lost here that I really want to emphasize is that, you know, co-locating your application when it comes to like engineering and like blockchain architecture, like co-locating your application with a blockchain is like living, or like with an AMM is like kind of like living with a hoarder sometimes. And what I mean by that is that like,

What does a payments network want? A payments network actually wants the lowest fees possible and very reliable, very low fees. What does a big game running on a blockchain want? They want low fees and very reliable fees. What does an AMM do? An AMM actually basically incentivizes an insane amount of trading because if there's ever an arbitrage available on the AMM, someone will make a trade up to that value. AMM is almost like a floor on the gas cost.

of a like of you know interacting and so like uh of using that block space and so you know i think that like you might you know maybe maybe you want to like

you know, live next to the hoarder instead of with the hoarder, right? And what I, but like to do that, you need to be able to like, maybe they have a lot of stuff and you actually want some of their stuff or you want to be able to engage in commerce with said hoarder. Like, you know, so I think that like really what we need to move towards is a model where liquidity kind of sits like in its own sovereign box space and then people, and then like,

applications that need very low fees actually sit right next to them and interrupt against them. And so like, you know, you have a payments network, but when it needs to convert between assets, you know, those assets get popped into your new chain, they get swapped and they get popped out because that is how you have low reliable fees. Because, you know, anytime there's like a huge amount of market volatility demand for trading within, you know, within an AMM is going to increase and that will spike gas fees. And that's actually what happens to Ethereum. Every time Ethereum has like a gas fee spike,

it's usually like the launch of a new token that people want to buy or like a big market movement that like creates a big market movement that creates you know a lot of demand for trading and you know and that actually affects like small applications that shouldn't really be affected by those things and so i think that like some things certainly should co-locate with liquidity and i think that's like gonna be a very interesting thing to figure out like do perps belong co-locating with liquidity does lending you know these are different interesting conversations to be had

But I think that like, and then the last thing I'll say is that like, even like the logic for how the chain like orders transactions might be very different for a payments network versus a trading platform. Right. And, and, and so like, you know, when we're, we're thinking about Unichain and like the builder that we're building and the sequencing logic and all of that, we're thinking like, what is optimal for, for DeFi and, and, and as, as well as trading. And that might not be the same for like a game for like other use cases. And so like this priority ordering is actually allows us to create really fair, uh,

you know, really user, you know, really fair transaction ordering that is really good for users. And so for who are swapping, that might not be the perfect logic for another use case. And so I think that's like kind of the like positioning of it.

within the world. There's some context. In terms of what it actually feels and looks like, day one, it's going to look like another chain because these pieces are being rolled out step by step. We don't have full interop day one. We're launching the chain and now we're working on interop. Day one, it will look like any other chain with the caveat that it will be one second block times, which is faster than all the other OP stack chains to the A. Maybe we have some

And that's kind of like, you know, we also will have, you know, it has native USDC. We have a lot of partners we've been working with who, and, you know, us and the Uniswap Foundation have been working with who will be also launching cool things on Unichain day one or building, bringing their products, stuff like Circle, bringing native USDC. So they'll certainly be like an initial ecosystem, but I think that I expect very early on a lot of new projects to start deploying and doing cool things with it.

I think each tech stack, layer two tech stack, like the OP stack, Arbitrum Orbits, ZK Sync, ZK Sync chains, ZK chains, they're all trying to work on internal interoperability, native interoperability inside of their tech stack. And I think the market, myself, users are all kind of those waiting to be able to experience that.

And to my understanding, this native interop part of the Unichain is being worked, built on, worked in collaboration with the Optimism Collective. Can you shed a little bit more light on that and say we do get to a day where this native interop is

live and can be experienced by users. How does this kind of work under the hood and what does this mean for the Optimism super chain and how is this really built collectively? Yeah, that's a great question. I will also add that there's interop within ecosystems that are somewhat competing with each other, but then there's interop between them. And I think both of those are important. And I think that like

But to just start with like native interop and, you know, like the, you know, Optimism calls it a super chain, Arbitrum calls them chain clusters. But the idea here is, you know, I think with like native interop, the goal is really to almost have like assets feel fungible between the two chains. Like in our UI, you know, I think we failed if we can't show the token balances. There's like day one and there's like day like 90 and then there's day like one. Like this will be a process to get there, right? We have to like

iterate through the UX flows. We have to iterate through the, like, you know, the sequencing design, et cetera, right? But to me, we would have failed if we show you two different versions of ETH in our UI. And so to me, like, it means that, like, you don't have different representations of assets within user experiences. So you have, like, and to me, it means that, like,

Even if you're buying a token, like if you're on Unichain and you buy a token on OP Mainnet or something, or Base, when they join Interop, which I assume they are. I'm just saying I can't speak on behalf of another team. But it shouldn't take that much longer. I should be able to buy a token on OP Mainnet from Unichain within a second.

The question will be remained if we can do it at the 250 millisecond flashbox level. But really, you should be able to buy a token on another chain. You should be able to view the balances as combined. It should take less than a second and it shouldn't cost much more than converting assets within a single chain. So it's really just fast, cheap, good user experience.

Once you have a super chain, you should be able to start abstracting the chains and you shouldn't feel like there are multiple chains. It should feel like one chain. But it's now running at a much greater scale than any individual chain. And yeah. Okay, but what is the...

How would you actually illustrate the technical solution here? So when Unichain goes live, as part of the Optimism Collective, there's going to be... We're working towards native interop. It is a process. But how do you actually illustrate the technological advances here to getting to this native interop? So there's like...

There's technical backend advances and that gets at each thing. If you're running a sequence for one chain, you probably want to also be running a sequence there for the other chain. Or you want to be running a node for the other chain so that you know that you're also up to date on the state of the other chain. You want some level of communication there. I think the other thing that you really want is basically to really have it feel fungible, you want a shared security model between the two because

and you can layer additional security models but you want like the base level security model to be like shared so that you you know because if the security model isn't shared then it's hard to treat two assets as fungible because they have fundamentally with a different security model they should have a different market price to some to some degree right and it's not and so you know it's about like sharing a security model with like shared bridge logic and it's about sharing you know standard protocols for for how sequencing works and for how you know proving works etc and then it's about

sequencers that validate other chains. It all comes together. I think you guys could do entire. I'm sure that when Interop launches, we can do a whole one. Maybe we bring Carl Black on, etc. We go really deep on the technicals there. But then that's the level there. Then there's the UI level, which is how do we present these things to users? I actually think that's even more important. I think that we could do a version of this UX today where chains are abstracted.

but it would just feel bad. And the difference is that it would feel like we could have no chain selector and we could show a combined balance of all your ETH balances. But then when you convert, behind the hoods, we would have to do like a whole series of very slow interactions that would take a very long time. And so like swapping ETH might randomly take 20 minutes instead of 12 seconds because to like

properly bridge from one chain to the other to make the swap, it's too slow. Whereas within the super chain, we will know every different chain can be bridged in and out of from every other chain very quickly so we can create a cohesive, fast user experience. And it will be cheap too. So I think that you can build these UXs today. And I think to some degree what we're doing now in preparation for this is starting to...

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with Cook. Participate today at meath.mantle.xyz. Okay, the way I understand chain abstraction is like you approach it from two angles. One is like the top-down user interface level, and it just rounds out the tech under the hood, like all tech does, right? This is just like what the personal computer did and what Apple did when it made just a usable computer interface. It abstracted away a bunch of the choices and complexity, and that's coming from the

user interface level. But then also we need to have like tech advances. We need to have fast block times. We actually need the assets to transfer over blockchains very quickly so that the UX can easily show and make choices that help things abstract. So like you have the top down and meets the bottom up. These two, two things touch at like a, like, you know, they meet together and that's where we get chain abstraction. It,

And then, but whose responsibility is it to actually like deliver the bottom up tech advances? Is this what you guys are building at Unichain? Is this in the Optimism Collectives? Because I'm just trying to get a sense of we have in this in the Unichain announcement, like some like,

excitement about native interop. I'm just kind of trying to figure out where this in native interop is coming. It sounds like it's not one technological advancement. It's coming from a variety of different places. And so there's not actually one clear, like deliverable here. Like I'm trying to get a sense of that. Well, I mean,

There is a lot of heavy lifting being done by the OP collective. Part of what we were excited about joining the Super Chain is that we can work with them and collaborate. So I think that it is a collaboration kind of on both sides. The bottoms-up part is a collaboration and the top-down is a collaboration. I'd say that maybe we're doing a little bit more of the heavy lifting on the UI side, but we're going to have to be working with them closely. And then they're doing more of the heavy lifting on the development of interop technology.

out technology, but we're like, we have to still like make the sequences, you know, like we still have to run it and we have to work with them on it and make sure that it, and like,

there's also like when it comes to like the thinking of how it like feels across the stack and the interfaces between them there's like also an area that i think we can like have some very unique input into and so it's a collaboration as as the best things in crypto are in my in my opinion is there any sort of like timeline on like expected arrival of a seamless cross chain inside of the super chain experience i mean look i would say that like

I don't know what I can say. I don't think that we're going to be waiting that long here to have pieces of it start to roll out. I think that like, you know, I don't know, like, again, like there's like, to me, like also even my own definition of seamless is like a really high bar. And so like, but I think that like, the cool thing is there's a lot of wins along the way. Like it's going to get better and better and better throughout the year is how I would put it. And so like, I think that like, you know,

Every couple of months we should have very, we should have like meaningful improvements to, to, you know, the experience of, of using L2s in my opinion. So there's never going to be one single announcement of like, congratulations, layer two interop is here. It's just going to be, we chip away at some of the frustrations, some of the UX. People will start to be like, oh wow, using the Uniswap web app feels better than it used to feel. You know, like it's just going to be like, it's, there will certainly be a day where we're like the first version of, of interop being L2s is like that, that will be here.

There will be big announcements, but like, like it will, you know, part of it will just be chipping away at it. And definitely like a goal for me is by the end of the year, like it should be like completely seamless. And, you know, there will be a lot of,

steps to getting it more seamless along the way. I think some of them will be realized in the near term. Some of them have already been realized. We've already been preparing for this. We already worked to make L2s first-class citizens and have all our dropdowns be multi-network. In the past, we used to silo our interface between networks to switch between the network at the top of the page. We've already been preparing for this. We've already been abstracting away different parts

We already integrated bridging as a step towards there. I do want to shout out, beyond native interop, there's intense-based interop, which I think is a very important part of the story. It's part of how we'll be able to interop against other ecosystems beyond the superchain. That's how arbitrum and optimism clusters will be abstracted. There might even also be a way to go from one-second interop to 250-millisecond interop within the superchain. I don't know.

I have intuitions there, but that we haven't explored in full depth yet. But I'd say that like, you know, the way I think about that one is just you can use, you know,

People can use arbitrary bridging mechanisms and arbitrary liquidity providers to convert between chains. You just need a bridge or a liquidity provider to be willing to sell you one asset on one chain for the asset you have in the other chain. And you can use these markets as an abstraction layer for all possible bridging systems, including native interop. And that will be part of the story. And getting better at that. And that gets it, like you asked a bit. I think that we should have a convert. I don't think that we need... I worry a little bit about too many. I think that...

the same way that like computing has kind of converged towards like we have maybe like Linux and we have Mac and we have Windows but we don't have like 80 of them because it's too complex technology like having like applications have to support like when people build applications they'll often make it work on Mac and Windows but they're not going to make it and Linux even but they're not going to make it like work on like 80 different things and so I think that like there will be eventually a convergence of tech stacks and so we probably only need to have like cross so like when people worry about like oh how will Interop ever work or it needs like I think that like

You know, who knows? Maybe it's arbitrage and optimism. Maybe it's like, who knows? Maybe it's a ZK chain. Like, you know, maybe, maybe they're like, I don't know how it converges exactly here. Right. But I'd say that like, you know, having all of these tools in our belt such that we can create cohesive, like, I think at the end of the day, like, you know, two years from now, when I think about what our product looks and feels like, I think if you can't, like an asset shouldn't really appear in our UI if it

if it can't be converted for every other asset in the UI at a low cost relatively quickly. Otherwise, we're just creating bad use experiences for people. I think that these interop systems will be what gets us there.

Cool. Let's turn from interrupt to execution, which will invoke a flash bots. So maybe you can illustrate a little bit about what is different with Unichain block execution and block building. How flash bots got involved here. My understanding is that there's this flash bots puts this T E in front of the Unichain sequencer to enforce some additional rules, which

which kind of checks the power of the sequencer, makes the centralization of a sequencer just less important and does some other cool mechanisms. Can you open up this conversation for us?

Yeah, and so we have two approaches here. And they actually both in some ways solve multiple problems at once. But I'd say that we have the builder that we're working on in partnership with Flashbots. And then we have the Union Shaded Validation Network. And I think it's good to talk about them both. And they both in different ways provide checks and balances and additional decentralization on top of the sequencer. And then the Flashbots

Bot's builder also provides additional capabilities when it comes to the fairness of transaction ordering, when it comes to ways of returning MEV to users and stuff like that. To start with the FlashBots system, we're essentially, you know, it's not too dissimilar to people who've heard of like proposer builder separation in Ethereum.

But really what it is, is that before transactions are fed into the sequencer, they're fed into this other system first. It is what we call a block builder. This block builder is running inside what are called TEEs or Trusted Execution Environments.

Essentially what it is, is it's like at the hardware, like it's people, there's chips and at the hardware level they have like certain rules for how they operate and it allows you to create, it's kind of like a blockchain for a server. Like in the same way like blockchains kind of you have sort of guarantees for what will execute with like certain trust assumptions, et cetera. And I think TEEs allow you to create like applications that have, you know, specific rules imposed on them. They're like, they'll allow you to create essentially servers that have certain rules imposed on them.

When people talk about sequencers, there's a few different things that they talk about. One is the sequencer could take the MEV if they wanted. And today, most sequences don't take too much MEV, or they do some, but you're sort of relying on goodwill for them not to be doing the most malicious forms of extracting MEV, which would be sandwich attacks, etc.,

But what we want to do with this builder is we want to say, well, by running some of the builder logic inside a TE, we can actually have stronger guarantees around how transactions are being ordered such that the sequencer is not able to arbitrarily extract the MEV. What that actually also does is it allows you to, essentially what we're doing is we're going to be ordering transactions according to priority fee.

And that, uh, and, and, you know, so everything that's fed into the TE within a period of time will get, you know, ordered fairly according to this, like very transparent rules, right? The transparent rule is the higher, the, the, the higher the priority fee paid, the higher up in the block it will be. And that brings us back to this like 2016, 2017 era of Ethereum layer one, where no one had really discovered MEV because there wasn't really, wasn't too much MEV on the Ethereum layer one back then in the first place.

And so like it was very simple of like a how to get your transaction included. You just paid a higher priority fee than all of your peers. And if you did, then you got included. And if you didn't, then you didn't get included. And there was no other games to be played. There was no MEV extraction. There was no transaction reordering. It kind of feels like using the power of a TEE and pushing everything through that TEE, all the transactions were kind of returning to just a very simple, reductive, kind of like

naive way of ordering transactions, which is good. Which is good. Just if you want to go first, you pay more. And if you don't want to go first, you pay less. Yeah. And I think that like, but there were, back in the day, there were issues with that on Ethereum because we didn't have like very, like people barely knew what MEV was and there weren't very many rules imposed on how transactions. So part of it is about like using the TEs to impose like rules that create, you know, better outcomes, but also exposing those to smart contracts running on the chain, which

allow you to do all sorts of very cool things. One thing that could happen is you can have transactions that are not... If you have a side channel deal between the builder and the swapper or the arbitrage, you might be able to have

like pay your priority fee outside of the system right and so part of the purpose of having a priority fee is to make sure that like you know you can use tes to have like certain like rules around privacy and stuff so that in order to participate in the system you have to kind of pay the fee right and so

within the system. And so that allows you to do things at the smart contract level that is aware of that system. And what I mean by that is like, you can construct a liquidity provider using hooks. LPs could set their own fees proportional to the priority fee, which is visible on chain for that transaction, which means that liquidity providers can now be aware of the MEV

of the swaps through the chain. Now there's different levels of like enforcement of the TE builder. Like when we initially roll it out, it's kind of like a layer on top of the sequencer. It's possible over time, like as it proves out its robustness and as we iterate on it and as we roll it out, like it could be like, you could eventually, for example, enforce it in the fault proof. You could say this block is not valid unless the builder has signed off on it. And then the builder will only, you know, in the TE, the TE will verify that like,

we'll only sign off if it's run this logic. You can have these additional layers of enforcement on top of it, and part of that isn't just about proving out the initial version. Two other things on the TE Builder that are going to be possible is going from

one second box down to 250 millisecond blocks. That is again possible because some of the thing that takes time to build blocks, for example, is things like mergulizing the state. The TE builder can commit to the state for a period of time while mergulizing in parallel. What we have is these 250 millisecond increments that can be generated faster than you can generate a full block.

And each of them feels like a block from the perspective of swappers, from the perspective of MEV and BlockBuild. It feels like 250 milliseconds, but then those get combined into one-second blocks that get posted by the sequencer. And so you have this sort of like...

So that's another thing that's made possible by the TEs. The last thing I'll say is that we're planning on adding basically revert protection, which means that if your transaction fails, you don't have to pay gas fees, which is another nice thing that we're going to have. But it does cost resources to revert a transaction. So is that just... But it doesn't require... Yeah, so at the builder level, I think that the builder will have to...

And I think that there's going to be like, we're going to see how well it works. I'm excited for it. I think we can do it. But yeah, I think that like, it's the cool thing is that the builder is running like off chain, right? It's not. And so you can, you know, like you just have to do like, you know, sophisticated techniques for, you know, handling that. But again, I think that like, you know,

That's another thing that we can start to, you know, that we're going to be experimenting with at the builder level is revert protection and having, you know, people not pay fees for failed transactions. Check my understanding on this. There is no public mempool for the Unichain. And so when people, when we talk about MEV on the Unichain, the only...

knowledge that like an MEV bot or you know and wannabe MEV extractor would be able to have about the state of MEV is from the public state of Unichain which is like free open you know totally publicly accessible information and the only way to extract that MEV is to not not be able to be be

playing in the mempool because there is no mempool but instead just like reviewing the state of the chain and trying to get an arbitrage transaction in by paying a higher gas fee and so there's no like co-location shenanigans there's no trying to read like get transaction order flow ahead of others it seems to be like this mechanism from flashbots with this te really just reduces the number of games that can be played

in private spheres and allows just like one larger, bigger game to happen that's downstream of the public state of the Unichain. Does that check out? Yeah, I mean, I think that there's still kind of like the equivalent of a mempool in some ways that like the builder is reading from, but then the sequencer is only reading from the builder. So like, I think it was like the sequencer isn't reading from a public mempool. There's like a, there's like a, you know, there's a place that transactions are posted that the builder reads from and then constructs blocks. And then, then the sequencer pretty much just reads from the builder and

I say that when it comes to these types of games, eliminating them completely in all contexts is really challenging. Sure, can you still communicate faster with the builder if your server is closer? Maybe. And maybe the only solution to that is you have to have geographically distributed multiple pieces of the builder that somehow are reconciled with each other.

Sure, you can eventually... It's not like eliminating all games is impossible, but the goal here is to massively reduce the impact of this on users. And I think that I'm very confident we can do, is massively reduce the amount of value that is extracted from end users by sophisticated searchers and arbitrageurs and professional marketers.

And, you know, all these parties still play a role in this world, but, like, let's try to return as much value to users that create it as possible. And so I'm not going to come up here and claim that we've eliminated, you know, all forms of games that can be played, because that's...

like maybe impossible and maybe, and it also actually might not be optimal, which is kind of an interesting thing. Like games, like they're like, it's like incentives to participate in systems can, can provide net value. And there's some value, like there's value that people like arbitrage has provide to the world. And so like, I think it's okay for them to make some money, but it's really about like today, I think you swap users are like not getting as good of a deal as they could be. And so we're trying to like, you know, improve on that significant.

Is there a timeline from when Unichain one block times go down to 250 millisecond sub blocks?

I don't know if I can give you a date right now, but I think it's very actively in development. We have an internal testnet of this right now, and then the next step would be an external testnet and then a public launch of it. I think it's all about just making sure that when we launch these things, we want them to be like, we want to minimize, we don't want to see downtime. We want things to run it. We want them to be able to be well-tested and run at scale. I don't have an exact date for you at this moment, but

Q2, Q3. Yeah, sure. Somewhere in that area. I'm just saying. So before Q4.

I'm not committing to any date, but I say that I'm very optimistic about a lot of these pieces shipping throughout the year, not at the end of the year. Across things like Interop, across Flashblocks, across the Exchange Validation Network. We're not working as if we have years to figure this stuff out.

Let's put it that way. Okay, let's turn to the last piece of the puzzle, the Uniswap validation network. What is this? Because this is something that I don't think there is a parallel of for other Layer 2s, to my knowledge. So what is this? What is the Uniswap validation network? What does it do? Yeah, I think the Unichain validation network is kind of like another layer of validation and check and balance on the sequencer.

A lot of people talk about, "We should decentralize the sequencer," but it's the most hand-waved thing of all time and no one has a plan for how to do it. I'd say that our way of doing it is just adding additional checks and balances iteratively and incrementally, and if they prove to be really good, building on top of them until we have a point where we don't have a sequencer that has much power at all. There's already checks and balances built into the OB stack. We already have forced inclusion, we already have

the stage one fault proofs, right? We have things that are beginning to be checks and balances. We have the fact that anyone can run a node and validate and detect bad behavior. But with the Unichain validation network is essentially is just like, you know, you can, you know, you stake uni, you run nodes,

You run Unichain nodes. So part of it is just like an intent. You know, it's a good, you know, you earn a portion of fees from Unichain as part of that. So part of it is just like incentivizing more people to like be validating the network, which is on its own a good thing. You know, people are signing off on, you know, people will be able to like sign off on the validity of blocks. And when it comes to like, when

When it comes to, you know, settlement, there's no like, there's actually multiple layers of settlement on every system, right? Even on Ethereum L1, you post it, there's like the settlement of when like, maybe like you're using like a builder and they say they're going to include it. Then there's like a settlement if it actually gets included. Then there's a settlement of like, you've like had like,

20 minutes of Ethereum blocks built on top of it. And so you're like less likely to reorg, right? Settlement is just like a series of weight of realness. And so this is like an additional weight of like additional layer. Like if you, if you think about like the chain of, of, of additional weights of settlement, you have like the fastest is like it's been confirmed by the flash blocks builder. Then that's 250 milliseconds. Then you have, it's been, you know, included in the one second block from the sequencer that's read out of these builder. Then you have

Shortly after that, it's been signed off on by the unit. It's been validated by the Unichain Validation Network. That's the next layer. And I think that there's all sorts of different implementations. I think that we'll have more details on that coming out. So don't need to go that deep on it right now, I'd say. It's not worth going that deep. But like,

Essentially, there will be nodes validated in the network and people that don't want to just depend on a sequence, maybe they have a higher certainty that it's now been included because the validation network has confirmed because their nodes have run the transactions as well. I'd say that maybe that'll be used by bridges, maybe it'll be used by centralized exchanges.

And then you have the final layer of settlement, which is it's posted to Ethereum. After which you have all the other forms of Ethereum settlement I mentioned, which are like more Ethereum blocks have been built on top of it, more stake. And so there's just like another layer that can be used for faster bridging, for centralized exchange. It also like adds like an incentive to be a check and balance on the sequencer. And that like, you know, these people, these nodes would detect bad behavior very quickly from the sequencer.

which even that by a pfh was very limited and then i'd say that even beyond that like one thing that's very cool is that like as we have this validation network that improves and evolves as we have this builder that improves and evolves it's possible that we're like squeezing the sequencer and maybe you eventually collapse it and you just have like a decentralized sequencer by virtue of like a really good builder and a really good te builder and a really good validation network i don't know if that's optimal or not it's possible that there's still a role for the sequencer that is very constrained

But the point is that we're like, you know, we're just trying to push forward and advance on the decentralization of L2s in this project. And this is sort of our approach to it, which we think is pretty unique. We're kind of just like, I don't know, I think that like people have talked about a lot of things, which is trying to like do them and grind through them and see what works. And

and kind of put in our best foot forward. So, yeah. Okay, so there is a uni token staking and fee mechanism. So fees are being collected by the Uniswap validation network. And then they're also being redistributed to a variety of stakeholders. And that's important to like, you know, have more people...

validating the network, which will add increased economic security. MARK MANDEL: Right. Where do the fees for the Uniswap validation network come from? How does that quote unquote revenue generate? MARK MIRCHANDANI: Well, it's just like priority-- it's things like-- just like base fees and priority fees from the-- MARK MANDEL: Oh, so it's just the layer two chain fees. MARK MIRCHANDANI: Just like the layer two chain fees.

There's going to be some split across like Sequencer, Validation Network, etc. But that will all be like, I think some of it's already public, but that will all be documented, etc. Okay, so like the Uniswap Validation Network receives the chain fees of Unichain and it sends it out to some portion goes to the Sequencer, some portion I believe goes to the Optimism Collective because you guys are part of the Super Chain, this is how that works. And then some portion goes to the Uni Token Stakers. Right.

Yeah, I mean, it's split out at the, like, yes, there's, like, a split out. Cool. Okay. Neat. So this is kind of, like, a way for, you know, the Unitoken holder community to, like, get involved with, like, the management and operation of the chain. It's a way for them to provide additional, you know, security to Unichain and additional transparent and additional kind of validation of Unichain.

Cool. Okay. All right. So that's the Uniswap Validation Network. We've talked about native interop. We've talked about the FlashBots block building. What is left to talk about with the Unichain? It's launching today. So that's that very important detail. What should people, now that they have this information, what should they go do? What links should we send them to? What are kind of the next steps for the rollout of the Unichain?

Yeah. So look, this is day one. I expect like, I don't like, I think that, you know, there's going to be all sorts of things. I, you know, I'm very excited to see what people do with it in some ways. Like it is, you know, it is a decentralized blockchain. People can deploy, you know, permissionless smart contracts to it. So like,

you know, will someone do unicorn with hat? I don't know. Like people, you know, there's going to be all sorts of random things happening, I'd say, or exciting things. But we also are going to have like all sorts of, you know, tier, you know, tier one projects begin building on top of it. You know, things like, again, like native USDC. Like what kind of run projects? Can you tell us? There's actually a whole, I, off the top, off of the top of my, my head, I'm actually, I have to, there are, there's an entire site section of our website that has like, that we'll be updating and, and

will be is live right now that people can look at. I don't know if I've been named names off the top of my head. What's the, what's the UniChain website? Uh, just uni chain.org and that it will be at, you know, as of the launch, oh, this is a slightly prerecorded. Oops. But as of launch, it will be updated with an entire section that talks that shows some of the, you know, the initial projects that are already launched on it or launching on it. Very cool.

Yeah, I'd say, you know, day one, people can bridge into Unichain. They can try trading on it. They can access all the, any, anything built on top of it.

they can start designing Neverware or they can start thinking about, again, this won't be day one. I would say that day one is just the beginning. We're in the early stages. I think part of it is just beginning building, preparing for a world where we have Flash Blocks, where we have the Unchained Validation Network, where we have Interop, which is definitely all coming this year. Again, we'll be rolled out one by one.

Right. And so, you know, I think that part of it will be like thinking about those things. Thinking about Uniswap v4, thinking about Uniswap v4 hooks, you know, day one, Uniswap v2, v3, v4 will all be deployed to Unichain as well. It will be working in our products at Uniswap Labs. So you'll be able to, you know, create liquidity pools on top of Uniswap v4 using hooks, et cetera. That will all be there day one.

But then you can start thinking about what this chain is going to be and how to make use of its unique benefits, which I think is maybe the most exciting thing. I think that ecosystem will just be evolving over the coming months to year.

Something that I have picked up on as a pattern is things that start off as apps that then develop into the grow, evolve into developer platforms. So, you know, Uniswap V1, V2 and V3, I would all call those applications. Those are all applications. Uniswap V4 with the introduction of hooks is turning Uniswap into a developer ecosystem. Kind of like not really with an app store because there's no app store here, but like hooks are apps for Uniswap.

And now hooks can be developed by there are teams that are building, taking in funding and growing a team to produce a product. That product is a Uniswap hook. And so now there's a developer ecosystem on Uniswap before, and that same idea extends into the existence of Unichain as a platform, as a whole. Maybe Hayden, we can just zoom all the way back out and just talk about the trend of Uniswap turning into a developer ecosystem.

Yeah. And by the way, I will say that Uniswap in some ways has always been like, I think of it almost like going from like Bitcoin to Ethereum or something like Bitcoin is also developer. You can build applications on top of Bitcoin, you have Bitcoin script, et cetera, but Ethereum is just much more expressive. And so you could certainly build applications on top of v3 and v2, but they just weren't very expressive because you couldn't modify the pool logic. You had to like kind of interact with the pool logic. It was just like much more constrained. And so I think that like

for me it was kind of like in some ways was maybe an obvious evolution but at times it didn't always feel obvious like there's a lot of dis i think like a really interesting kind of complex challenge is like the trade-off space between liquidity fragmentation and hook and pool innovation where like there's almost like a zero like a like the more you you know liquidity is fragment like the more like the problem is that if you have like only one

Only one AMM, right? All the liquidity is in one place. You actually have very unfragmented liquidity, which allows for very efficient. You don't have to think about this really insane sprawl of insanely complex routing and liquidity isn't fragmented across a million things that ultimately incurs costs to access.

But you also don't have the level of innovation and that you only have one design and it doesn't give you the expressiveness in the innovation. I think early on with v2, v3, we took these stance of very opinionated designs. What is the best thing you can do in a single design? v1 as well. I think that they took us very far. I think that the concern about things like earlier on would have been like, okay, but now there's this insane fragmentation. How do we handle it within our routing? How do we handle it within our UI? How do we handle it in

How does that not lead to just crazy liquidity fragmentation that no one can grapple with?

But I think that what we saw ended up happening is that people just took that innovations that they wanted to do and took it outside the InfoMap ecosystem and were even less standardized. It's like people that were innovating were just doing competing AMMs essentially. That wasn't really a good status quo because that actually means that the interfaces were less standardized. There's even worse fragmentation and gas costs.

people are in some ways like sometimes people would like build a new custom wonky amm and then like it gets hacked and then people like my amm got hacked and like that's unfortunate right and so we wanted to figure out how can we lend our like security mindset our like code quality our like and and reduce fragmentation while still allowing open innovation and so that's where we land on like you know something for his design which allows you to create very customizable pools but the liquidity all sits within a single contract uh we have like a lot of

a lot of security mindset that went into making that a secure thing or what we feel to be very secure and what has been very well audited at this point at least. Then we've also using hooks, we've allowed a lot of the core logic, AMM logic to be shared, a lot of the interfaces to be shared.

but allow specific points to inject customized logic such that even when you're thinking about the security of a pool built on top of it, you can think about what hooks are being used. It constrains the area of which you need to audit and think about risks from. Like as an example, if the only hook that's being used is like the custom fee hook, then like you know that the worst thing that can happen is like the fee can be modified, right? Like if your only thing you're using is a swap hook, you know that it can't modify the liquidity provision portion of it. Like there's like...

different constraints you could put on how you're modifying that allows you to build. What that allows us to do is much more quickly, you have this aggregation problem. It's very hard to aggregate every liquidity protocol. If you do everything, you might end up aggregating something unsafe and then your users might lose money. With hooks, we can massively constrain this mindset. As an example,

This, that project's launch I mentioned, like they launched their custom hook. They do some, some kind of semi wonky things that are not wonky. And then like semi like custom niche, right? Like different from what we do in like the standard pools. But you know, we've done some initial looks at it and we think it's like not too hard for us to route through it because they're like, they, you can still just call it the swap function in the pool manager and it still works.

we just have to think about the slippage tolerance we said, because it's slightly effective. That's some custom logic that in the past would have had to be an entirely competing AMM. They don't have to build an entirely competing AMM. We don't have to think like,

an entire competing AMM. We're instead, you know, able to just, you know, so it like constrains. It's like a trade agreement. You guys have like a constrained conduit of trade between the Uniswap and the AMM and Flaunch, the hook. And because you guys have constrained things to these like more narrow pathways, like you can just trust each other better. I think that like

you know, trade agreement has various implications to it. All metaphors break down pretty quickly. I hear your metaphor, but yeah, the main thing is that like it allows, you know, there's like a positive sum thing here, which is like Flaunch actually benefits from co-locating their liquidity with all the other USOFI4 liquidity, which means that you can like do very cheap, efficient routing between them. They also don't have to like

like they can like do less work in terms of like building an amm they can kind of like you know and and they get like a very cool platform they even maybe get some in and then we get the benefit of like we don't like there's no single best i think that i've i'm fully pilled on the fact that i used to think you maybe there was just like an optimal implementation of amms and that we could achieve it and v3 was like a really good shot at that i'd say i think that like i've

concluded that there is no optimal implementation and that the only solution is customizability. And I think that there may be like, I don't know like how many hooks will be like super popular or not. I think we've already seen like a good amount of them being developed. I think that like, you know, hooks that minimize MEV extracted on top of Unichain, you know, priority ordering is like a really meaningful hook on its own, right? That could like massively boost LP profits because they're not losing as much money. And so like, yeah, I think that like it's,

I think that there's a lot of very meaningful hooks.

Yeah, I'm excited. So Hayden, I want you to do this hypothetical with me. You, Hayden Adams, CEO of Uniswap Labs, fires yourself and or just challenges yourself to go build a hook. Like your next task, you're fired from Uniswap, you're fired from the CEO of Uniswap, now you have to go build a hook on Uniswap v4. What hook would you build? Or what hooks would you like developers to build is like maybe an easier way to answer that question. Okay, there's a lot of, I think that like

there's a bunch of categories that I'll shout out and they're all kind of interesting to me. Like definitely like the token issuance ones are really interesting ways to like bootstrap liquidity essentially. And we already are seeing some of those. I think that like

One of my favorite ones is the dubit. It's just like Uniswap v2 on top of Uniswap v4. It's kind of funny, but Uniswap v2 is still the highest TDL version of Uniswap. And there's a lot of really good benefits of v2. It's ultra dead simple. You don't have to have any brainpower in some ways to use it. And then beyond that, there's fee compounding that's still hard to do in v3. So even full range v3 doesn't have the fungibility or fee compounding of v2.

But I think that what you could actually do on top of v4 is you could literally create a hook that has the exact same interface as v2,

The exact same logic has all the same auto-compounding fees, fungible liquidity, and has lower gas costs than v2. Oh, interesting. And so v2 on v4 can actually be identical to v2, but better. You can do better v2. And I know that's kind of a funny way to say, but I think a better v2, or even a better v2 with liquidity bootstrapping is pretty sick. I think that beyond that, you could do...

I think definitely there's like priority ordered ordering stuff. That's pretty interesting. I don't know. I think somebody builds a better, a V2 hook on Uniswap V4 that it would actually migrate some of the old liquidity from actual Uniswap V2 into the hook version of Uniswap V2. Or do you think that, why do you think the Uniswap V2 liquidity is so sticky? It's so sticky because one, there's like a, there's a lot of info that's been built that was built around V2 for like deploying an incentive. Like the fungibility and fee compounding of V2 is just like a pretty,

good thing for for for you know projects that only want full range liquidity which it seems like a lot of like long tail tokens that's like a very dead simple way for them to do it

So I think that like, you know, and then there's like infra built around that. There's like token launchers that use, that launch v2 pools and there's like, you know, whatever, there's like liquidity locking mechanisms that like, you know, whatever, there's all these different mechanisms and things people have built on v2 and like people are continuing to use those products even as v3 has existed. But I think that v4, you could truly do a much better version of v2, which to me is pretty exciting.

Other hooks, by the way, I would do like, so yeah, there's all sorts of priority ordering stuff. I think it's interesting. All sorts of fee designs that are pretty interesting. There's companies like Sorella, et cetera, that are doing some stuff like that.

So, Sarella, I think, is making the hook that is on the main quest line of Uniswap itself. Because one of the big things that plagues Uniswap is LVR, Impermanent Loss, just MEV extraction from Uniswap LPs. So, I think if there was any hook that would ever be created by Uniswap, the team, it would be the one that Sarella is building that just so happens to be built by a third-party team. I mean, I have a lot of hooks I want to build, but that's definitely an interesting one for sure.

I think like everyone in these days, I'm a little AI obsessed. I think that there's probably convergence of TEEs plus AI plus hooks that are kind of fun. I don't know the exact thing there, but my curiosity there is interesting. I'm curious what people will do there. I'm nerd sniped a bit there. Let's see. I'm probably forgetting ones. I think that there's pretty good... You can definitely do things like perps as a hook. You can definitely do things like...

You can definitely do things like, or, like, you can definitely do things like lending as a, like, you can do, like, a lot of, like, DeFi primitives and protocols within hooks. I think they're interesting. Or even, like, natively, like, do your liquidation. What about Morpho as a hook? Yeah, like, potentially. Or, like, portions of those systems. Like, maybe the liquidations are done through the form of a custom hook pool. Like, I think there's, like, a lot of really, I think there's also, like, efficiency and, like, some of the, like, using LP, like, using liquidity as a collateral as part of the system as a hook, which is pretty interesting. And I think that, like,

You could do it in ways that like, you know, things automatically like, like, yeah, you can just kind of like combine these, these defy primitives, like kind of money, Lego stuff that people used to talk about more. I think there's a lot of there as well. How is it Uniswap either Uniswap labs or Uniswap foundation? What, what, what is the effort here to like foster this ecosystem? Are there like hook hackathons? Like what's going on here? Are you guys doing something in Denver?

So that's a great question. I will delineate the roles here because like Uniswap Labs, we've been like, we've been like building this core protocol and we've been launching it. And I think that like, we're thinking about within our products, how do we support hooks? How do we make sure we can route through as many hooks as possible in our front end, right? Stuff like that. And I think sometimes we'll be like a technical resource, just like, you know, through our own technical expertise to people that are building hooks. And we also, I guess, have Uniswap Labs Ventures, which we can invest in projects, including hook projects, but also all of crypto.

But then that actually went dark for a while. We have reactivated it. So Uniswap is a thing now if people want to reach out. Yes. But then Uniswap Foundation is really leading the charge here in terms of directly working with, you know, this ecosystem of hook builders. So there's, you know, like a hook registry. There's all these things that they've been doing to try to like help. They have like, you know, giving grants to builders, providing distribution, you know, giving like, you know,

I believe there's stuff around even helping hook builders get audits and funding audits, having standard GitHub repos with all the pools that have been audited. The foundation is doing a lot of really cool stuff.

I actually wish I knew it all off the top of my head in some ways. People always think that we're one entity, but the actual separation means I literally don't actually know the latest on what they're doing. We catch up sometimes, but this is a big part of their mission right now is supporting hook builders. And so that's really been their domain. Could even make sense for you guys to have the Foundation team on for a whole episode. Yeah, a hook episode. A hook episode with the Foundation team would be great.

Awesome. It's been great to have you on and help. Thank you for walking me through all of this. It's pretty exciting. I'm very excited to see what the native interop can do when that rubber meets the pavement. And now I'm going to go play around on some hooks. So thank you for joining me on the show today. Yeah, use Unichain, launch some hooks, do stuff. We're building away.

Cheers. Thanks for having me. You guys know the deal. Crypto is risky. Hooks, they're brand new, so they're also risky. You can lose what you put in. But nonetheless, we are headed west. This is the frontier. It's not for everyone, but we are glad you are with us on the Bankless journey. Thanks a lot.