Ethereum’s Three Front War | Justin Drake
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Now my personal take is that the only way to win the money game is to also win the utility game, and the only way to win the utility game is to also win the money game, that these two things are fundamentally intertwined.

Welcome to bank list, where we explore the frontier of internet money and internet finance. This is how do I get started, how do you get Better and how to front run the opportunity. At defcon, Justin drake presented what he called his most ambitious proposal to date.

What emerged from that proposal was the beam chain, which fell flat in public discourse. SE people wanted a theoria. Three people got not that we bringing just drink on the podcast to discuss this reaction, fill in some gaps, but more importantly, discuss the rise of credible competition to the three major components of the authorities roadmap.

Just in drake, after his beam chain proposal talk at defcon, gave a talk at the bank of summer that categorized all of the theory ms. Future road map upgrades, of which the being chained was only one part of, into three different categories, execution, data availability and consensus. Each one of these categories, ies directly correlates with a large ecosystem.

Yer, in the crypto space, execution competes with salona, data availability competes with latia and consensus competes with bitcoin. So we present Justin with the idea of theory fighting a three front war against two competitors with centralized teams who can ship fast and break things and the highly osi fied bitcoin and its network effects. What is a theory um strategy for winning this three front war against three legitimate competitors? What is trick? What does that have that others don't? This is what we get into today on the pog let's get right .

episode with Justin. But before we do, we want to think the sponsors that made this possible, including our recommended exchange for twenty four and picking up some critical do IT. Now before everyone else gets here that is cracking, go create account if you want.

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Radially simple ideas always tend to catch on. That's why cartelli did the hard work of putting linux on chain so that building depth can be radically simple by using python or job a script and their sweet libraries. Simple, like not rebuilding the basics from scratch.

Simple like dedicated, scalable compute for your debt. Simple like building debt however you want. Web three should be simple too. Like bread and butter, cartelli brings radically simple solutions to the area to develop, can do what they do best, build, go head and discover a flexible modulate stack on cartels I and build you are most powerful, ambitious project, visit cartelli dot I O slash simple and simplify your block chain journey and start building today bk cos nation. Once again, we have just in drake a researcher at the theory foundation, and more recently has been the pillar of the beam chain, a proposed path for making some of the upgrades found in the a thean road map or reality all in one package. Justin.

welcome back to back this. Hi guys. thanks.

Having me just until I was fiercely life, tweet your presentation at defcon as you were giving IT. The significance of your talk that you are giving went pretty viral, especially from when you tweet, treat that red announcement of an announcement tomorrow, five P. M.

On the defcon mesage. I will unveils my most ambitious initiative to date. So a lot of people did not know what to make of that tweet, which I think allowed people's imagination to just like run wild. And then, because myself, in a few others were all live, tweet your presentation in real time.

Even by the time you had finish your presentation, a lot of people's imaginations had been brought back down to reality after getting off the stage and like checking in on like twitter post talk, what was your first reaction? What was the thoughts that you had after seeing some of the the twitter discourse? What's reaction to the reaction?

sure. So interestingly, I had spent a month prior trying to convince the researchers and the death that this was not a crazy idea that I was not too ambitious to bring forward. And I think the summary of crypto twitter was that it's not ambitious enough.

So I was kind of very surprised in a little bit shocked by the strick opposition of takes. I think one of the things that you know, all of the researchers and the depth had as context was that, you know, I was only focusing on one single layer of the stack. And there was these two other layers, the execution and the data layer, which didn't talk about.

And there's a lot of ambitious stuff also happening there. And then maybe another thing that the depth and the researchers had in the back of their mind that they knew that there was kind of a short and medium term road map with the next coming folks where some big changes were coming in. And maybe that something that I didn't highlighting ough in my presentation because people fought kind of incorrectly that this was a kind of a massive one time sprint over the next few years and then there would be no incremental upgrades between now and the fork.

But actually, it's kind of the opposite. There's plenty, plenty of upgrades that will happen in between. And another like minor thing that I would highlight is that I had the slide which showed kind of a five year road map, but actually the first year was kind of already complete. IT was the pitting phase.

And so people were kind of very underwhelmed by the five year time line, which actually is a four year time line, and the four year time lines itself kind of this conservative time line to try and get all of the depth on board and not put too much pressure on them. And so I think that maybe there's an opportunity to shrink the timely a little bit. But ultimately, I do think that is a realistic one given how slow and how conservatives ity if from l one is.

Now, one of the things that you did mention is that a lot of the imagination went wild in few hours between my tweet and the actual presentation. And this was a fantastic social experiment, right? Because allowed for the community to express the world the dreams and desires.

And one of the things I was very pleased about is that a lot of the community shed this vision around putting Z K. Front center in the road map. And this is exactly what the beam chain proposal is all about, is about leveraging this fantastic technology that has matured in the last few years.

And that is opposed ed to mature, even server and be ready for production at all one. And then the other thing that I was also very pleased to see is that, for some reason, never like now is the time where the notion of native roll ups hit mainstream consciousness in a very, very big way. Now, i've been kind of shelling native roll ups for years at this point.

And, you know, IT always felt like this futuristic s kind of science fiction concept that have, you know, never really received the excitement that I deserve them. Now, finally, you know, when I allowed people's imagination to go well, the notion of native roll ups came in. Now, one of the, I guess, we talk about one of the big things I am trying to do with the beam chain is to accelerate the social layer, the coordination part of things.

And the good news for native roll ups is that does barely little coordination to do right. It's mostly just technology is extremely hot coin. And this is engineering that is already being done by the wider community with all the different Z K.

vendors. And so in some sense is just a matter of sitting back and relaxing and waiting for this technology mature. And then there's a tiny little bit of coordination to expose the power of the C K, V M into the one. But on the other hand, the bean chain is maybe eighty percent coordination and twenty percent technology. And so this is where I feel that I have a big impact to make OK.

Justin IT was really interesting for us to sort of observe these reactions to the take as well. And so like I wanted almost divide this into like sort of three separate ribs. There's the debs, which you mentioned, who, interestingly enough, you said they saw that being chained proposal.

They were like, this is impossible, this is too ambitious. And they were they surprised at IT. Then there is the authorities, natives, like I would say, gave myself that had been following the road map for years and we had a certain set of expectations.

And then there's just like the rest of cypher. okay. And I think each of these camps had kind of a different reaction to what you propose, i'll say, for the middle roup, like the group of a thim natives, of which David and I are probably part of.

I think when I saw that announcement, I was like, okay, here we go. here. IT is native zk roll ups on the theory um and so when I saw the bean proposal, I was just like, okay, this is great.

IT still feels like part one to a sequel and i'm like i'm missing like the part two I missing like the fellowship of the ring. I missing the two towers in the return of the king. okay? It's like it's only part of the movie here.

And I feel like I got some of that equal in the bank of summer talk. That you went through, which was like laying out not just the consensus layer, which is the beam chain, but also the data layer and also the execution layer. And I think, David, I want to spend some time talking about that road map because to me, for an ethereal enthusiast, that was like, almost like, okay, this is IT.

This is the full picture of what we can achieve in a four year time line. Before we get there. I want to address that group of, just not theory enthusiast who have been following the road map everybody else encrypt to because connecting this to something you said earlier, I think when they saw the beam chain and they saw five year timing, which was the had right IT wasn't the four year, was the five year headline.

And then hearing kind of your reaction where it's like the theory, device theory, culture, thought even that was too ambitious. They point to that and they say, yep, that's part of the problem. Part of the problem with the thereon culture right now is that it's not ambitious enough. IT has slowed down and they're looking at things that other alternative layer one communities are doing and they're a ship, ships, ship. That's what IT feels like they're shipping.

And so even if a theory researchers are certain cohort and a therein are proposing like big things, big downing, things like the being chain, if the alkoran vz reaction of that is like, wow, wow, wow, slow down point to that they say, yeah, just in this part of the problem with the theory right now, it's got too many bricks and it's not ambitious enough. And I want you to address that because I think that's something that you've maybe seen. And White, you're like you got three different stakeholders here and the dev kind of stakeholders like, wow, this is a lot.

Okay, just the being chain is a lot and like, are you kidding me? Four, five years, that's really fast. Do we have a problem here? Do even demise problem inside of a theory um where we're just like going to slow these days, things have kind of stuff fied and assists.

Ed, and i'll just put one of their case out there. That's what we've seen in bitcoin. Bitcoin definitely did that go try to get like arques op cat in.

This is like a ten year decade long project to get one single up code into bitcoin. So communities have a tendency to assist y over time. And are we hitting up against that? Walk here on a theory. I think that's what the wider cypher to community wants to know.

That is a fantastic question. And I think the criticism from the wider critter community comes on misunderstanding of the strategy of affirm. Affirm IT has two constituent parts.

IT has the l one, and IT has the l took. The l one is competing with bitcoin, is competing for maximum robust, maximum security, maximum quality, maximum health, is competing for the monuments in some sense. And then you have the altus that competing with Selina.

They're competing on maxi zing, utility and U X. And quantity and performance and volume. And asking the l one to compete with sana is just a misunderstanding of the separation of concerns.

Now I agree that as a community of l tools, we need to shape, shape, shape, shape ship every week, every month, every day on a continuous basis. And this is exactly what has been happening. Look at base, for example, like every week they they raise the gas limit.

Look at all of the l tu. There's a lot of effort, for example, on providing free confirmation and improving the U. X.

And actually, if you look at sana, what are the two key things that IT prides itself the most latency and fruit? And I think that l two are going to a vastly outperform solana on both of these two metrics. S late cy is gonna go down to zero, just one paint time, thanks to preconcerted tions.

You can think of this as being an abstraction of the notion of the slot duration, right? Users don't have to worry about what is the exact slot duration in a chain. They just want the U.

S. To be incident. And then you have the gas limit, which every single day is being raised and raised and raised. And I invite you to go to this website, roll up the WTF, which shows you that the total fruit, which is measured in mega gas per second, has grown to a hundred x versus the l one. So all of the l tu combined have a hundred x the fruit of the l one. And what is going to happen over the next year is that this hundred dex is going to become a thousand six.

and then ten thousand and then one hundred. Can we? And make sure we understand i've up WTF and what you're referring to is, are you referred to mega gas per second? Is the metric or T P S total .

transaction per second? So if look at the tom n is per seven right now, right? And if you look at the bracket, that sixty eight x right?

So IT depends on the time of the day.

yes.

okay. And then total transactions per second is a twenty three x yes.

But the thing is that you want to be looking at the gas per second because the some transactions that are more complicated and so fewer transactions, but those Richard transactions, for example, the middle colum, I think, is the want to focus on okay.

cool. And I interpreted you sorry. So you're going on to flow. This is sixty x right now, the middle column a gas per second, and you're saying something about that like increasing somewhat log radically?

yeah. So right now, I mean, in fluctuates every second, but right now is roughly sixty x. What I expected to be next year is six hundred x and in the year after that is six thousand x.

And the reason is that altus can just scale in an unlimited fashion. They can scale horizontal, but they can also scale like base vertically by just increasing the gas limit. And this is something that solana is incapable of doing.

There is no way that sooner is gna increase the fruit t ten next per year for the next few years like it's already completely maxed out in terms of the utilization of the hardware with the existing clients. sure. Maybe there could be new clients that provide more resources and allow for the so called compute unit limit.

So in sAlina, we don't use the term gas. They use the time computer limit. But essentially, what I think will happen is that so now I going to hit a brick wall right where it's max, a scalability, where is. On the other hand, a firm has a sustainable scale ability story thanks to the altus.

So just i'm now showing on the screen a slide from your benkler summit talk and the blankness summer talk happened three or four days after your dev con beam chain talk and IT was kind of a reaction to the reaction to the beam chain talk. And so like here's whatever is about they been chain talk.

And now let me kind of like fill in the gaps and you gave this drama yer one timeline slide, which I think filled in the parts that people are missing. If they just thought that the beam chain was the only thing that the theory was shipping, and the way that you or into the slide Sparked something in my brain, you color coded all of the upgrades as they relate to. Two, the three components that composer theory execution is in purple, swaling upgrades that go into the year over next five years or in purple data is in orange.

So all the data blows, the data availability, all those upgrades are in orange. And then consensus, which is Green. And so all of these different, like IP upgrades with theory, a kind of fit into these one of three categories.

And the connection that this made for me is each one of these kind of correlates to another very big blockchain in crypto to space. Execution is so lona data availability is celesta. And consensus is bitcoin like very hard consensus? And then also the monetary policy for eat is contained in here.

So that cause me to tweet this one tweet. The syrian roadmap is more blood than celestium, faster execution then salona and Better money than bitcoin. And of course, this really kind of illustrates, I think, the tension that a theoria has been under over the last two years.

IT is fighting a three way war against three different ecosystems that all have very strong merits to them. Like the money is a bitcoin very hard to fight. It's like alfio currencies slowly losing versus bitcoin.

Sona execution also very hard to fight, not only because they have good execution, but people know that they have good execution and then blobs more blogs in celestium actually think that's the easiest one to really fight again. But nonetheless, like celesta does have more data availability than the theory. John harmony put this differently on the aim guide.

John is more of just like the equal waited interpretation of the same idea we put out this week, which is etherium strength is also as weaker nesses, its ambitious vision means is competing with everyone a little bit. Bitcoin is Better sound of money than eth salona is a more performance execution envionmental the a theme later, one slut a is going to have bigger, faster blocks sooner. So there is this vision of like etherium being like drawn and ordered, except not ordered.

Third by bitcoin, silesia and salona. And there's attention here where I can the a theory, an body pull in and win this tug of war against three different fronts or is IT getting stretched by these three different competitors? Bitcoin is Better money than a theory.

Um so long has got Better execution and slow has got more data availability. And right now, Justin, the current market pricing, the market is saying that the theory is being stretched and IT does not have this strength to win a three way tug war. And so this is kind of asking.

We did a episode with ata couple years ago called the end game. And I think this is something that the authorities research community has really attracted, is end game researchers and game protocol designers who think in very logical ways how this whole game ends, and then building towards that, which ends up being a five year long road map. But what the sacrifices dressing which celestis doing and salona is doing, and fortunately for bitcoin doesn't have to do, is the middle game.

And middle game is very important. The metal game seems to be being at least by the validation of the market in this like present part of the theory um history. So I kind of want to like throw all of that out. You how do you react? The idea that like theoria is actually losing the middle game and middle game might be a very important thing to not lose because the middle me dictate tes how the end game begins.

Yeah, fantastic question. So I think you're right that the easiest to address is probably the D A. With select the way that I see IT is that selector in some sense is. A collaborative player with the firm because IT provides overflow D A when there is sufficient capacity on the one.

And so what I expect will happen is that the use cases of heb that requires the highest great security and the highest great composition order, we will use l 1DA。 But that's not enough for all of the world. And so we gone to need overflow in the form of I N D A, for example, also layer, which can think of as being collaborative technologies.

We are now you all right, that there is your competition in the form of big coin, which is trying to be the money. And Selina, what is, is trying to provide maximum utility. Now my personal take is that the only way to win the money game is to also win the utility game.

And the only way to win the utility game is to also win the money game. Like these, two things are fundamentally entertained. And they actually, this quote that I have here from alan k.

Who's this computer scientists who won the turing award, he wrote, people who are really serious about software should make their own hardware right? And this is an explanation in my mind as to why apple is so successful, right? Is because they are able to make use of the, of simultaneously optimizing for software and the harder and that what's makes them special.

And I think film has an amazing opportunity in front of itself. And the this is that a bitcoin is not even trying to compete with utility, and Selina is not even trying to compete for money, right? A film is the only system output that has the guts, the ambition, the vision to compete for both money and utility.

And IT turns out that there are these synergy and network effects that maybe worth flash out. So when you have large amounts of monetary premium, what do you have on the other? Have large amount of economic security, large amount of economic bandwidth, and that is fundamentally the driver of utility, right? If you want to have trillions of dollars of stable coins, decentralized, trustless stable coins that use a pristine money as collateral, the only way to get there is to a crew monetary premium.

If you want to have a blockchain, which, six years, tens of thousands of dollars, hundreds of thousands of dollars, a blockchain that is unquestioned, secure from attacks from nation states, or even you, a cabal of nation states all coming together to try to take the system, you got to a need very, very large amounts of econic security. And the only way to get that is for monetary premium. And then the other thing happens where, in order to get very large amounts of monetary premium, you need to have large amounts of utility.

And that is in the form, for example, of the burn right, like the more activity there is, the more utility provide the most active you have because you have income for your change, which can feed into the token and increase military premium. But you also have network effects in the form of liquidity and compose base. And using the token as a unit of account, right, if the only thing that you optimize for is being money, what you end up with is a dumb rock, right? To test rock like gold or bitcoin.

And if the only thing that you optimize for is utility, you end up with, you know, a casino like ana, like shallow and is only trading, you know me poins. What we're trying to do here is to build the future of finance, right? The internet value. And in order to achieve that, we need to have both the utility and the money. And this is a unique opportunity for a firm, and we should just keep on going and have the conviction to continue in that direction.

I want to see if I can articulate what I think you're saying once again, showing the graphic that john carbon to wait out, which is for the listener's IT is a three way then diagram. And you have this orange bitcoin circle overlapping with this purple celestium circle overlapping with this like san, so on a circle right like execution, date, availability, money. And then where those three circles overlap at the very center is a theory um and so this is, I think, the design structure that I think nerd snipes a lot of theory beevers is like, wow, there's this like unified blockchain architecture that does at all and is like the singularity of all logical conclusions of blockin designs.

And then of course, going back to like the alternative vision, which is like what what if three competence was like unbundle this thing? And I think what you're saying, Justin, is that, well, the theory has the benefit of tapping into the synergies that happens when you combine the money of bitcoin with the execution of salona and the role obsol igne of solstice. And so each one kind of has its unique energies.

The utility of salona, plus the money of bitcoin, is like your very censorship resistance, internet base, currency and financial rails like going bank less defy, trustless defy and that's very cool and unique. And nations state resisted that pytho punk values as what we're going for. And then you have the combination of money and layer tools like sovereign block chains, APP chains that can consume ze themselves into like whatever they see, that businesses that are chains that have the funding because of the money.

And then you can combine all of these energies, and only a thorium can really tap into these energies is the design space that a theory um is going for. And so there's each one of these overlapping parts of the diagram have their like benefits that I think IT theory um thinks that only IT can tap into. But also just playing devils advocate, stark ware has always been interested on settling on bitcoin and bitcoin layer tools like alpin labs.

The bit vm is like you actually are starting to see the money is a bitcoin intent layer tools. And so you are seeing bitcoin in solstice overlap in their model, in their design space in ways that a theory um is like less relevant to. And so I think kind of the bet is like, is IT actually possible to unbundle a theory um and see the theory um vision happen emergency in other ecosystems? And how does the era m kind like defend against that and how does the thera um like control the mode of these synergies of these overlapping van diagrams?

Yeah, fantastic question. So IT is totally possible for bitcoin that currently has a massively in terms of monitor premium to also start playing the utility game. And one of the recent innovations is called bit V M.

And I think you had an episode vm. And if B, V, M were to materialize in a successful way, then we could see roll lux on top of vacant. There are unfortunately several problems with that approach.

The first problem is that um IT is technologically very, very difficult to pull off. So yes, there's progress to do IT, but IT might take several years. Okay, fine, maybe that's not a big deal.

The other big problem is that bitcoin is fundamentally limited to four mega bites per ten minutes of D A. So even if you have those roll ups, there's very, very little opportunity to provide high grade utility just because because there isn't much fruit. And the only way to provide more of the you know maximum secure D A on bitcoin is to make a hot folk and the community is just unwilling to do these hard folks.

And then there's a kind of a third thing, which is that bit V M, in some senses, a massive huck and IT comes with a long list of caveats. One of them is that you can only do optimistic roll ups. You can do Z, K roll ups.

I mean, they use Z, K in the four proof game. But still fundamentally, it's an optimistic roll up and the assumptions are not as good as on the film where you need to have one of and possible being honest. And when you do the bridging in and out of the rule up, you can only use, you know for example, fixed amount of bitcoin.

So IT has to always be, you know, a ten bitcoin deposit, for example, these sorts of complications due to the fact that bitcoin is not programmable. Now you're write that stock ware is specifically looking to build on top of big point. If does this new up code called up cat, that would happen on bitcoin, because then a lot of the hacks would go away and you could natively do world lips and things like that.

And I guess the issue goes back to what I said initially is that is going to take a very, very long time for bitcoin to add this up code, if ever, just because the social layer is so optimised and in some sense, against the notion of adding programmable ly. But even if bitcoin does get of cat again, when the opposition, where bitcoin is fundamentally limited from A D, A standpoints, the bottom no longer becomes execution, they become D, A. And that is something that, as far as I can tell, you know, goes against the D, N, A of bitcoin.

We will remember the block size wall, right? We wanted to increase the block size to, you know, something like eight, make advice for ten minutes, or sixty nine advice for minutes. This is a big part of the history of bitcoin. I don't see them dramatically increasing the amount of D A.

At the I have some observations on the conversation, but before I get to I want to ask the question on coin because I like I could be that the end state that we've justified is just like our cypher native version of the end state. I will tell you, a lot of the newcomer's in this cycle seem pretty satisfied just to have bitcoin with you know ten transactions per second and the rest kind of custody by black rock Michael sailor, you the U. S. Bitcoin reserve like they're not into the whole bank. Less thesis that David i've been Operating under for the last four years.

The kind of failure says private cases for extremists .

as longest number goes up, right? It's just like, hey, so what if this bitcoin is kind of custody as long as you know, one hundred or one thousand kind of like whales have the ability and can afford to interact with the biton blockchain, maybe that's enough. And so that's one side of kind of the barbell. Another side of the barbell is just execution with stable coins. Like what if you just have something that's not decentralized finance and fully bank less, but a hope enter tether and USD c in kind of like a open finance type chain that it's not maxi C2Centralized is not cen sorship res istant.

but it's just like permissions at this.

exactly. And so before we get into kind of the full vision, I just want to mention that this is the bank less vision, if you will. It's kind of the crypt of native vision of the .

world is kind of hard core.

It's pretty hard core like it's very ambitious and IT might not come to past like the actual practical version of this might just be. Bitcoin digital gold petrock type thing. And sure, it's got a little bit and kind of a layer two type state, but most of its custody by like big whales essentially and institutions.

And then on the other side, the spectrum you have kind of open finance and like IT is nas deck on chain, right? But like it's kind of permissionless, but it's all there's nothing to centralized really about IT. It's all settled in meat space. And I just wanted ask you, Justin, if I know that's not what we're working, but do you sometimes wake up in the middle night that's really incentives and like worry that, that actually going to be the outcome that we're not going to be able to achieve. And when I say we're not gonna able to chief, I mean, just like this entire gypt of movement thing, whether it's a theory or something else that we just won't end up with the end state of actual censorship resistant, bank less monetary financial property right system for the world.

Okay, very interesting question. So I think you know this is totally possible for bitcoin to just do one thing and be a pet rock and be immensely successful. And you know, the proof that know is a possibility, I guess, is gold.

Gold is seventeen, three hundred dollar asset, and bitcoin is only about ten percent of that. And so if bitcoin would you become as successful as good, which I IT could totally be, then there is a ten x opportunity for background. But ultimately, you know, seventeen, twenty thousand dollars is a small time.

I'm saying this, you know, somewhat provocative, timely, but the vision that we have is so much bigger way. We're talking about decentralized finance for the whole world that would encompass bonds and stocks and feet and store value and derivatives and digital property and everything else we're talking about. You know, a vision that is potentially in the hundreds of students of dollars.

So again, in some sense, a fair is dreaming much bigger dreams than what big coin is. Now the other thing that i'll say in terms of using trusted money legos is that they are not stable when IT comes to complexity and composition order. So let me try and and explain that.

So if you're trying to do something very, very simple, then it's actually OK for you to have the decent rise call and then the service on top of IT just be totally centralized. And we see that with bitcoin. So we see the deceptive money and then we see all the apparatus around that, which is like the exchange, you know, being totally centralized.

And the reason that works out is because as a user that wants to sell or buy bitcoin, i'm only trusting a single trusted entity. And so there is no coordination across trusted entities. And I think the superpower of the more ambitious vision that we have is that we're going to be building superstructures that involve multiple money, legos and sure, like the final rapper at the very end, the wallet or the broker, the exchange or the U.

I can be centralized, and that's fine. But if you zoom in and you look at the money, legos, as soon as there's a trusted entity, which is something other than the rapper U I, then now this is where things breakdown because you start having platform risk, you start having counterparty risk. You know, one of the classic examples is the facebook A P I N points, right? If you were to build a complex application built on top of facebook, while now facebook has the ability to rug you.

And so this is not scalable in time and space. But if you want to build a money lego, which has very, very strong guarantees, meaning that other money lego is like feel comfortable interacting with IT, then you need a strong compose base, which only comes from strong trustless ssz. And sure like you can take like this ten trust this money that goes and wrap everything in something centralized.

And that's probably what the users want, right? The users want a button which says, I forgot my passport. Please keep IT back to me. But uh, again, like when you zoom in and you look at the building blocks, those need to be trustless in order for the complexity to scale.

Just a recent example of this is just, you know, bitcoin has been kind of scaling its stiffe open finance kind of use case through token ized bitcoin like rapped BTC. And I just noticed earlier this week, like coin base decided to delist wrapped BTC, right? And like I haven't dugger into the details around this, but just in sun has now some participation in big goes.

there. Some there's some question as to like what's going on with rap. BTC in the market gets kind of scared and you can audit that on chain like you have no idea this is not a scalable money lego for bitcoin.

What would be much more scalable is kind of a bitcoin toga ized on a trustless bridge inside of a true bitz um style layer two that would be actually a bank less money lego that you could trust and you could build a civilization and institution around like not something like cussy wrapped bitcoins. That's a small example of this. Now I just want to get to some my observations on the commentary so far this three way war right between other different chains like, I guess, a few thoughts I have at the Tommy head one.

And this is why everyone hates eth ismen because he is like a no, we're Better money than you bitcoin in and bitcoins, like, shut up. Like, sit down. Like you little eat. And then if there was tried to out blob space last year and trying to out execute salona.

And so if IT feels like themes being tacked all the time of the social layer by other communities, it's because IT is it's because it's kind of trying to compete against all of them and effectively compete against of them. So that's one observation. But the second is this, I think this is important.

Isn't IT the case that everyone is actually playing this game? So everyone is playing the game if you're big, when when you're playing the game for money, for execution and for da, if you're celestium. The one thing that you want more than anything is for tier to be money.

And you also want to have an execution layer built up around you if you're salona. And they may not acknowledge this or realize that yet, they actually need sold to be money. Also, there has no value a rule properties over the long term because all of the value accrual leak into the apple layer and away from kind of MV for block builders in the fullest of time.

And they actually need some blob space to scale, like they actually need a sona roller. Even though this is unacknowledged far this cycle, IT seems to be the case that all of these chains are actually playing the exact same game as a theme, whether they know what or not. In your point earlier.

everyone trying to move into the center.

Yeah exactly. And they need to I think they need to like even thinking about you know bitcoin scaling strategy. IT looks like a much less mature version of the authorities like roller road map doesn't IT.

I mean, they need to deal with blob space and they only have four megabytes of blob space. So how are they going to scare that? Are they they going to deal the M.

V. They're going to have to go down the a thean road map if they actually want to scale D A. And execution anyway. So that's another observation, and I want to throw that by you guys.

Like do you think that everyone is just effectively playing the same game here? It's just they're not acknowledging IT whether the theory is like that. We're competing for all of these things. And and so IT doesn't have as clean and narrative this cycle.

Yeah I mean, you could train zoo melts and look at the patterns across the different players and maybe you know everyone's trying to aim for the same n game whether not they realize that, as you said, because where the network effects lie and the only differences, you know, the strategy to go about IT. One of the strategies that bit point has taken is maximum notification at the social layer. And unfortunately, IT trapped itself.

You know, on paper, IT sounds like a very interesting strategy, but IT IT ultimately means that IT will be incapable of changing its security policy, which means that you know the long time security of is jeopardized and is also incapable of changing D A. And so unless there's some sort of radical change at the social layer, then I don't see how bitcoin could go for this bigger vision. I think it's interesting what you say about selection, right? Because initially they started as A P R D A and then they know recently added the more execution or was this planning to have more execution? I don't know the details around being able to verify snooks on cel here.

And once you have these two components and t are the token, and yes, you have all of the ingredients to potentially win this massive and game. But if I want to look at the main you know competitors in the race, I only see, you know right now bitcoin, a firm and salona as being you know, the reasonably likely ly candidates to win out. And as far I can tell, bitcoin is ruled out just because of its inability to change and has to change.

And I think that a firm is also in the position to win out because IT has a lot of the existing network effects. You recently, I had a look, for example, on in terms of you how much T V L there is from text on a fair verses, lina and the delta is striking the seventy five times more ever on a few versus so long. It's sixty five billion versus eight hundred and sixty two million.

And you know, going back to my previous point, ultimately, it's for the l tools to compete with Selina. And the l tools on many metrics. S are crushing.

And you take arbitron for example. Arbitron has three point five times more text than all of sAlina. If you look at circle, circle has more U.

S, D, C than all of sana. And again, what I think will happen is that the slot times are gone to be abstracted. So the pride joy of sana, which is is four hundred million second slot times, is not gonna a competitive advantage.

And we already seeing that with arbitrium. Arbitrium today has faster U. X. And solana IT has two hundred and fifty milda second block times. And this children in fifty minute second is effectively gna go down to one another second with preconditions tion.

And going back to one of my previous comments, which is the the second privy of soli is the ability to have large amounts of execution, but there's only so much you can push the execution practically at some points. You have to grow horizontally. And so that I is just obstinate that IT doesn't want to grow horizontal.

IT just pushes, pushes everything vertically. And the problem is that. You hit the laws of physics, you hit the limits of computation, and you can't scale past a certain point.

And on the other hand, a film has taken the sustainable strategy of scaling horizontally. And what is today, you know, a hundred x increase over the l one. Fruit will become a thousand x and and ten thousand x in the U. S.

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And so getting started with mental unis, wap wallet is officially the preferred wallet of bankers and is the one we use any time when we want to transact on chain with your on your brother or on go kes IT easier swap anywhere to actly from the top s exchange and have thousands of tokens across the year and over ten other chains like bed arbitral timidly and delivers a deep liquidity, fast execution in reliable quotes with zero gas wap through unis wap x and when IT comes to security, you can rest easy knowing its back by unis wap laps one of the most trusted teams their code is is open source and an independently reviewed so you know it's protected so why wait? Downloaded at the union ball today on chrome, IOS and android and don't forget to claim your unnative directly just I want to tap back into the theory an road map and unpack once again the sly that you shared at the bank of summer, which are was immensely useful to kind of like understanding and like categorizing parts of the author. Ian road map.

I know vitality has his road map, and the merge, splurge, urge, verge, ge, urge, urge something. The three swim lanes that I see and wasn't IT with much more is like these three alternative swim lanes, which is execution data consensus, competing with bitcoin, competing with salesian, competing with salona. In order to provide, just like stronger comprehension by the broader audience, I think people much more resonate with that kind of understanding of the a theory, an road map.

I wanted to start with the beam chain, which is where the whole entire conversation with, which is the consensus swim lane of the a theory, an road map, which was the presentation you gave at devon and then the presentation you gave at the bank of summer, was the other two sides of this execution and data. But maybe let's talk about the consensus swiming, the part of the author mode map that competes with bitcoin, the money. How would you describe the beam chain in a single sentence? There's many different upgrades here. Maxy b, fossil, A, P, S. But if you like packed shit IT up as a whole, which is what you're doing with being chain, how do you describe what the being chain upgrade those to a theory?

Um so the being chain upgrade is trying to take the slowest parts of the road map and accelerate them so that we can complete the full affirm road map in a timely fashion. And you can think of the being chain as being this memetic social coordination tool to ultimately accelerate the road map and try to avoid a firm olifant prematurity fatally called the being chained a memetic rapper around the road map.

And in the short term, you know, because it's just a proposal, you can think of this as being an invitation to think strategically about the affirm roadmap and to widen the discourse and the overturn window around that. In some sense, the beam change is not about changing the content, the fundamentals of what we want to. It's about changing meta data around IT, about how we would ship the road map. So for example, I want to to see more discussion around the opportunity or even the necessity to do ambitious upgrades, to embrace decay technology, to reject technical debt, to optimize our approach to affery governance. And as you said, David, as you potentially an opportunity to regain and simplify the roadmap because when you look at the tax road map, IT is extremely complicated.

It's for researchers.

exactly. IT is for researchers. And what i'm trying to do here is to digest the road map and presented IT in a slightly different way. Now above and beyond, you know, the short term discussion that i'm hoping will happen with the wider community and the researchers and the depth, ultimately, if the beam chained me is going to be successful, is gonna have real impact in terms of celery, the road maps, for example.

What i'm hoping will happen is that they will not snap, motivate and unite this wide in diverse group of deaths around a common shining point. And one of the things here that i'm extremely you excited to share is that we now have twelve different teams. Then I wanted build A B plans so that the five existing teams, and then in the last seven days since i've given my talk, has been like five new teams.

And then when I made the announcement, there were already two. So that's a total of twelve. And there is about fifty different individuals that have approached me on telegram and that have emailed the beam, that chain.

And if I am not walked, basically asking you, how can I help? I want na contribute. And so I think the first part around north nightlife and motivating the depth has been a success so far. But ultimately, what I want to do is like pour this acceleration ist fuel over the long term. I want to have all of the deaths kind of converge towards the shed mission, and I want to avoid the premature activation of the one, because one of my fears is that a thorium osi fies premature ally, not because there is a lack of good research ideas or a lack of collective desire to innovate, but because of an ability to coordinate fast enough to match the ambition of the road map, as well as the rapid growth of the ecosystem. And so again, to summarize, the bin chain is about taking these ambitious kind of long tail updates that are very, very important to maxim ized the long term health of a firm and make IT competitive as a super robust consensus layer, and to basically provide the foundations for a film to be successful over the decade and countries to come.

When I look at everything in dream in the beam chain layer and I try to summarize IT, I feel like as a user, as an upgrade, like the things that we're getting from this. And again, the theme here on the consensus layer is Better money, Better settlement, Better consensus, almost like competing against bitcoin. On that angle.

What seems like we get are these things called reconfirmation. And you said somewhere within this red map, we get ninety percent of transactions with free confirmations. So I think that does something for roll ups.

Perhaps to me, you can talk about that. We also to get stake capping and one eat validators. So this decreases the barrier to entry, actually like a run and node from an economic perspective.

And it's kind of like a final solidification of the monetary strategy and competitive against bitcoin. And then at the end of this, we also get fossil, which I think is a censorship resistant alec improvement type of forking the end of this, the beam fork. You said this a whole bunch of times like we're snark fy the in the theory consensus client.

So I think that gives us the ability to basically run a client unlike some minimum set of hardware. I mean, was this vision for a theory m to kind of like run A E validator on your watch? So I guess what I would love to do is, could you summarize this and kind of like laments terms, what do we get on the consensus layer at the end of the beam work in like four years plus time?

So to a very large extent, the consensus layer is all about improving the health of the system more than the performance. So if you look at fossil, for example, that's about censorship. resistances.

For the vast majority users today, they are not being sensitive. But still, this is something that we care very much about and is deeply rooted in our cipher punk of values. Another one is a test to propose a separation here, the idea to segregate the validators away from the centralization forces of M.

V. And actually, to a very large extent, what the consensus sly upgrades are all about is maxi zing, the viability of being a solar validator. And I have these three different means.

I have then staking, which is that as a staker. The only thing that i'm really responsible for as attestations and attestations are trivial, is just looking as to whether not the previous block arrived on time. If they arrived on time, I test for IT.

If I didn't arrive on time, I test for the parent. That as simple as I get, you don't need to be a tl sophisticated. And that's in comparison to what we have today where you have to pick a really, you have to play timing games, you have to deal with M E, V Spikes, and soon you'll have to deal with the reconfirmation.

And then the second mean that I have is what I call fish taking. So today, a film staking is for whales need to have if that's one hundred thousand dollars, and that is the number one barret entry to becoming a validator. And we can reduce that to just one if and one of the seeds that we're planting in the next fork is called max E B, which allow the validators to consolidate and ultimately allow for us to unlock the ability for just one if to be sufficient to make a deposit.

And then as you highlighted, there is this vision that ultimately, once we sacrified everything, you'll be able to validate on a smart watch, and I call that favor taking. And once you combine all three, then staking, fish taking and every staking, what i'm hoping will happen is that will have this running songs, this a golden age of solid validating, and that will undeniably help make firm be the most robust chain out there. Now the reason why I included the reconfirmation in the Green section is that there's this whole discussion around let's make lots fast.

So for example, max resty, you know, was laughing at the proposal that, you know, we will have four seconds lots in four years time. That is only a three x improvement of a huge amount of time. What are these researchers and developers doing? Like, are they sleeping on the wheel? Well, the thing is that these short slot times are extremely unhealthy from the point of view of desensitization.

We want to have the ability for a validator in australia with a high latency comment in that connection to still be able to participate. And the good news here is that we can keep the slot times relatively high, but bring the U. X.

Down to effectively just one thing time, thanks to preconditions. Tions, and like my faces, is that the slot time is not in the matter very, very soon from A U. X perspective. And so we should kind of plan for that and make use of that. And in some sense, what sana is trying to do to reduce its lot times is a trap, right, because it's unnecessarily sensualizing its consensus layer when there is like a much more pragmatic, ironically, solution available today.

You've got somewhere in the screen layer. There is a musty which ninety percent of transactions are preconcerted. And I feel like we can do an entire episode on reconfirmation.

So that's like an esthetic topic. I've just seen a lot of like debate about IT. Mean, in some people are saying pre confirmations in any of themselves are like centralization vehicles or like others are saying they don't really exist yet. And I know that at dev con, you showed the first main net reconfirmation.

But maybe just very briefly, what gives you confidence that will get to like ninety percent of transactions preconcerted? Like when does that happen and how do we go about doing that? This is not require an upgrade, is IT more of like a social coordination type of work to be done here.

But what's gna happen is that the vast major of transactions are going to move to l and all of the altus are going to have free confirmations. Like even today, arbitrium has preconditions tions. Two and three minutes, seconds.

All of the super chain roll ups, they have free confirmations on the order of two seconds. And like these are reputational reconfirmation, basically a pinky promise that the proposal is going to include your transaction in the next block. And what I think is going to happen is that the technology around reconfirmation is gone to evolve.

So for example, we have unit chain that announced that they are gonna have two hundred and fifty millions second T E pro firmaments. So they gonna use trusted hardware to provide the precondition tion. But we can do even Better than reputation and trust.

We can have crypto economics. So what i'm suggesting in the context where there is no reputation for the sencer, especially in the context of bed roll ups, is to use just good old gypt economics. So the idea is that the sequence CER would pledge collateral, some if or some other collateral, and when they make those promises that backed by that collateral, and if the promise gets renewed, then the collateral gets lash.

And sure, like there is a bunch of infrastructure that needs to be built. For example, there needs to be a registration contract where the sequences can go deposit colleran. There needs to be a third proof game.

So basically, there needs to be the ability for user that was cheated on by a sequence CER to provide cryptographic proof that they were cheated on. And there needs to be the slashing mechanism. But all of this is like totally doable and actually has been done as a proof concept on main that just a few days ago.

And I think this is the future. And there's this kind of common misconception that preconditions tions are centralizing force. It's actually the opposite. So what happens is that as a user who requires a reconfirmation, I need to go talk directly to the sencer. So it's all about cutting the middlemen between the user and the sequence CER.

Who are these middleman that i'm referring to? What is the builders and the relay in the world with free confirmations? We no longer have builders and we no longer have lays.

And the vast majority of centralized choke points comes from these entities, the builders, in the three days. Instead, we preconditions tions, at least before we have A P. S, which that happens soon. But in the short term, we gonna have the need for what we call gateways. So unfortunately for the based pre confirmations, the validators themselves are not powerful enough to provide them directly right there, soon to be on the rusby pie with a home connection, they can provide these sophisticated reconfirmation. And so instead they will delegate the sequencing ride to was the gateway, which is the equivalent of a relay for preconditions, tions.

And the important thing to stress here is that the relay is sophisticated from a developed perspective, but IT is not sophisticated for my financial perspective, right? So a lot of the centralization forces of block building comes from the fact that you have to be very financially ophite tied to be very well connected to the exchanges, connected to searches. You need to have very fancy algorithms for market making, for orbital, for this and that.

And this is the reason why there's only two of the builders that build the vast, vast majority of the blocks on the film because that's where the centralization comes in. On the other hand, the gateways, which are just release for reconfirmation only require developed as a barrier. Try and developed is something that new.

Thousands of companies around the world have the skills to provide. This is not know some sort of a black magic that is required for block building. And so in that sense, I actually believe that reconfirmation is less centralizing, that the state school where you have these two middleman, the builders and the relation between the user and the sequence OK.

So that's the consensus later, A K A, the beam chain, which is basically the presentation you gave at defcon. And this again, is kind of the technical network side of a you know, competing and spicy. Of course, we've left, done, address the whole memetic narrative kind of things, which is like, how do you like you propagate and get everyone else to sort of like me into existence.

If this money, the way maybe bitcoin has done, we'll leave that for another episode. And in fact, we've done episodes on that, of course, attempted to blow right past the da layer, which is basically IT looks like this is an orange in the diagram if folks are following, which is basically like scaling up blob space essentially and IT just feels like it's pretty straight forward. We're just getting more and more blog space as the years go ahead.

And like incrementally with multiple folks, we're just scaling that part of the road map. So I feel like we don't have to camp on there. What would be really interesting for my perspective, Justin's and the story that has been told less often is the execution layer on the layer one. And this has spent sort of a chant that has happened recently, indeed, when we started this episode, that the sort of what I was hoping for from your announcement at dev con is kind of like, what are we going to do to make the authorities layer one great again and to improve that economic zone? And I do see at the end a box that says native rops.

But maybe before we get to the end state here, can you just like summarize, what is the vision for in this layer one road map, a therms layer, one execution layer? Is this a strategy to make the theme layer one great again? Or like, what does the event look like in your mind?

So at the execution later were very much constrained by the way that the E, V M is defined. Y D V M is directly consumed by application and there is a need for forward compatibility. So the way that we change the E V M is extremely slowly and cautiously that we don't break the existing applications.

And so if we're going to make big, massive changes to the A, B, M, we need to think out of the box. And the out of the box solution basically boils down to smoke, fine. The whole E V M, in some sense, snotties.

Ation is something that is going outside of the m, as opposed to changing the internal als and the guts of the E V M. Now one of the big performance metrics of D V M is gas per second. How much execution can we push through the E V M? And the main bottle neck that we have right now is on the validator side of things.

They have to verify the these evm blocks are valid. And the way they do IT today is the nave brute force way in the sense that they have to read down, load the entire block, and then they have to rex ex te the entire block. And so now you see that the boat neck is basically the flowers validator on the network and variability to validate the block.

But what we can do with the case that we can create a massive between the performance of the builders, on the one hand, that produced the blocks and those that verify the validity of the block, that only have to verify a smock. So the primary reason why we have a gas limit is to prevent a massive block from coming in. And then IT takes, you know, many, many seconds to verify.

And that's not enough time for the validators to come and and make sure that is valid. So ultimately, the strategy here is to grow the gas limit by ten nex by hundred x just by removing this possibility for the out of service attack with these very, very big blocks. And the reason again is that the validators only have to verify a smock, which takes roughly one middle second regardless of how much computation was done.

So once we've spotify the holy V M, which is a process that happens off chain, one of the very first things that we can do is start increasing the gas limit and do so safely without compromising the centralization I told on the validate side of things. But then comes the really cool thing, which you mentioned, which is the native relives. What the native volp PS allow us to do is to scale the E V M.

Horizontal IT allows any developer who wishes to launch a new instance of the E V M to make basically a copy of D P M. And each copy will have its own gas limit. So if we able to have, you know, let's a gas limit that is a hundred times larger than today, so that would be three digger gas per block.

Well, you know, now we can have any times three gaga aspa block, where n is the number of copies of these native roads that have been programmed by developers. Now one of the important things to stress here is that these are programmable native values, not the, you know, top down sentiment control type of rolls, known as execution saw. So in the previous affirm roadmap, we had this notion.

And where there would be a fix number, for example, sixty four shots or a thousand twenty four shots, and they would be exact copies of the E. M. And my personal belief is that this goes against the effects of the firm.

Because the ef of fame is all about program ability. And so we should be able to program several things. One, the number of roll ups shouldn't be some sort of hot coded and dictated number from the top down. IT should just be an emergent property of the market.

And then the second aspect is that if someone wants to customize the role lap, for example, have their own gas token or have their own sequence or or have their own governance system around IT, then they should have the option to do so. And what that would allow is for all of the existing evm roll ups to upgrade to become native roll ups. And in that sense, what will happen is that all of the rolled ups would become one step closer to becoming a film itself.

right? A film has many things to offer IT. I can offer settlement.

IT can offer D A. IT can offer sequencing, and I can offer the visual machine. And there's terms that we use for each of those.

If you consume settlement, we say that you are N, L, two. If you consume D, A, we say that you roll up. If you consume the sequence thing, we say that you based. And if you consume the viral machine, we say that you are native. And so if you do all of these things and your are based native, roll up. Then the turn that I use is your an ultrasound roll up the max, the maximum alliance saying possible, but of course is up to you to determine, like, how are lions you want to be with a fear?

I want to put a pin on this subject because I really like this illustration. You say how line you are with the theme. The way that I would illustrate this is like, how close to the core are you of a theoria?

The current rollup model, the rollup that people know about today, optimism, world chain, base ink, these kind of like these are all kind of businesses like base is is like a CoOperation that's core that's like a less aligned version of a roll up. And then there's even like a layer two, which is just uses settled, doesn't uses da, even less like close to the core of the serum and the progression that you just illustrated like layer to roll up based up native rop. It's like ahead of concentric circles.

Anyone you illustrated is like IT consumes one more part of theory um layer one resources. And one of the big conversations going on lately is like layer tools are unaligned with the theory, they're acidic to a theoria. They take all the execution fees, they give thee a one meager amount of data availability fees, and then they keep all the execution fees for themselves.

And they are also highly inOperable with each other. That's another big problem of the a thorium current structure, as you are illustrating the versions of roll ups that are a little bit closer to the core of theoria base rolls that consume sequencing and native of ups that consume execution. These flavors of ups consume much more layer one resource costs, and they also get much more layer one composition order and composition order with rolfs of their same ilk.

And so a mental model dressing that i'd like to check with you is that there are new flavors of role PS that people are just learning about. We are just learning about base rolls and even closer with your native lops, that when they are composer with each other are consuming far more layer one resources than the roll ups that are like the optimism, the base is the arbitrary. And when the check is is like this is like kind of like fixing the economic relationship between roll ups and the a theme layer one composer, roll ups need to consume much more layer one resources.

And the mental model begin to understand is that layer one resources, if you want to be interOperable with a broader role up ecosystem, need to be consumed. And this ultimately shows up as both later one execution fees, in the case of native helps, and even further blob space fees for based rolls. So I want you to check that. Understanding that I have is, like, if you want to be composer with broader era theoria, you need to consume more layer on resources in order to do that.

Yeah, great question. I think directly your mental model is correct, but I just want to highlights couple aspects of IT. The first one is that it's not concentrate circles.

You can choose to be one, but not the other. So you can choose to be based but not native. If you can be native but not based, you could be a based validation that doesn't consume the D.

A. Or you could be a bed roll up that does consume the D. A so all of this is up for you to now in terms of advantages, there's different types of advantages that are being provided from consuming the different things.

I don't want to necessary go through all of the combinations, but one of the big ones is this notion of shed security. And another big one is around share composition order. And so if you want to have the maximum security, then what you would want is to consume the D A.

And the execution. And the reason why I highlight the execution is because often times today, especially if you want to be E V M equivalent, you need to introduce the government for two reasons. One is that if your copy of the em has a bug, that you need governance to step in to fix the bug.

And if the l one E V M changes, that you need governance in order to change your copy to mirror D L one. And unfortunately, governance is that tech vector like fundamentally. And so wouldn't IT be nice if you could have a viral machine which is completely governed three, and therefore has a chance to inherit the four security of the r one.

Now if you want compose base, then what you want is to consume D A N. sequencing. And the reason is that you, anna, have shed sequencing.

And the only way to do that is to reuse the l one sequence serc, so that you can synching tly, compose with the l one and other base roll ups. And you also want to use A M D A so that you don't reintroduce a new sencer. So this is the problem of the last year.

So last year is itself a sequence chain of blogs. And if you want to consume, and now suddenly you have this other sequence, which breaks the composition order with the one now, one other, like subtle thing if you want, like really, really a good compose, bilious, that you also want to be native. And the reason is that there's a little trick for the native rollup, which is that the proof of validity for the execution can be delayed by one slot.

So this is actually a proposal by max regnier and dan Robinson to delay the execution stay ruled by one slot. And what that would mean for the native roll ups is that the proof has a full slot to arrive. And so if you wants to do sequence composition order, all you need is sub slot latency on the prove inside of things as supposed to, like hard core, real time proving, which you know, we d be on the order of hundred million seconds, let's say. And so the opportunity to do increasing ability would be much, much simpler across this native ups.

If I I want to summarize like the execution there are, there's a lot of detail here, right? It's basically thems execution. Later strategy is roll ups in three flames.

First, the rolls that we know today just roll ups and then based rops and then native relise. And hopefully, there is a progression chain where there is like economic incentives, coordination incentives to move large rops down that stack and closer towards native roll ups. Now I want to ask a question, Justin, about native rulers, because others have proposed native of olives.

I think Martin coupling from noses gave a presentation at defcon about native erps as well, that similar in some ways, he was using the same term. But I also think different. I think maybe what he was proposing with something closer to like you know execution starting right, basically like we have a set of a theoria governance defined roll ups.

It's less pluralistic anyway. What are the differences between Martin's proposal in terms for native rolls? And like what you're talking about here, what differences and similarities ties?

really? Yeah fantastic question. So I think you're right. Like the term that is usually use this shouting and if somebody confusingly, he used the term a native roll up for something that is not a native role lap.

So these two main differences, I think the first one is around the programming ability, which I would express, which is that with the native role APP, you can have as many as you want, and you can configure them by choosing the sequence of the governance tokens and the gas talk and all of those things. But then there's another very key difference, which is around the incentives IT turns out that the nature rolph are much, much, much friendly er to the existing rolph. And the reason is that the existing roll ups can upgrade to being native rolled pse, and they can do so for free.

They don't have to pay anything like it's just a raw commodities technology that is given for free to the existing roll lepers. On the other hand, the execution shots would have if as the entrant unit of gas, and they would have their only I P one, five, five, nine, and all of that would be B A. Cruel for firm.

And unfortunately, like these two visions are not compatible. You have to choose one or the ever. Now, my personal, I guess this is, is that we've already lost the opportunity to capture congestion fees at the roller player.

This is not something that we can go back in some sense. We've made a gambit. We've told the role laps.

Hey, does this amazing source of revenue for you, which is the execution fees that should be a great incentive for you to go build the firm ecosystem. And remember what I said around the separation of concerns between l one and l two. The l one is all about providing your maximum robust and credible neutrality.

The l two is all about scaling. So they are responsible for doing all of the B, D. And getting all of the users and all of that. And this is the reason why, for example, coin base is building on the firm, right? Because coin base has all of the users and IT has an opportunity to bring them and make money in the form of execution fees.

Now one of the things that you know is still under discussion is, is opting into becoming a base rule up free as well, right? Because from an enormous standpoint, you don't have to pay any to use the r one sencer. But what some people will say is that by opting into the r one sencer, you lose the M V.

And so you indirectly paying for the right to use this sequence CER. Now the good news here is that I believe that. M, V, is going to be captured by the applications and as such, won't be a source of revenue. And so if we accept this promise, then these two pieces of infrastructure that the firm would provide, the sequencing and the execution would be provided for free, right? There would just be pure technology that would ultimately help the roll up to do that job, which is to acquire as many users as possible and provide a complimentary job to the one.

If we could replay this back and do IT all over again, is there part of you that wishes we started with, like the based role, or like even native ups? Or is this the way I had to be your player? Like if we had started with bed roll ups, I did everything be Better?

Now it's an interesting question and difficult want to answer. In some sense, we don't have a choice, right, because we don't have the technology to go directly with these execution shows, which you can think of as being ultra sound, roll lapse or based and native role. Pse, and I think had we gone down that path, we wouldn't be as a line of the program ability if for our firm.

And also, there would be less of an incentive for ecosystem players outside of a firm to integrate with the firm. Like right now, what we're seeing is many exchanges kind of coming in and building on top of the film. We in crack and we're seeing coin base. And then there's your project like world coin that are coming in and you know unit chain, for example, building its own chain like there's been commentators that have said, hey, unis, wab, they have the website. They originate a lot of the flow, meaning that the users, you know, come to the website, they in some sense, why don't they build their own l one and capture all of the revenue directly there. But the incentives are such that you wanna be building as now too, because you get a lot of the security and composition order that ultimately leads to more revenue all over the same time providing this sympathy for ship with the one because you are growing the users and providing to the l one a source of revenue, which is, on the one hand, congestion fees at the D A level and on the other hand, kind of this memetic premium of making use of a film like one of its token and growing the network effects around that.

You call this a gambit earlier just and I think that's a great take and were less like part of the gambit where it's hard for the market to tell and even sometimes hard for big little listeners to tell myself to tell whether this was like a brilliant move or if we just acted up like it's like we don't know yet til the story totally plays out.

I have long to believe that this is actually a brilliant move to like, bring in all of the roll ups, spring all of ecosystems and have them kind of build out execution layer. And like, I look at this thread map and I see like, wow, this is mega bullish, right to me. I look at this and i'm listening to the plan.

I'm hearing kind of the tradeoff in the baLance of concerns and what a thim is trying to do. And I get bullish a whole bunch of other people look at this road map and they say this is too complicated, like you can't sum IT up in a tweet, you know, if there was gonna like pulled apart. And I think the market is closer to believing that right now, which makes eat holders, you have to be in the conviction zone right now.

And I guess maybe one of my questions as we draw this episode to a close is okay. So like if were thinking long term right back to David original premise here, and we see this is the long term vision. But if we're not winning enough of the middle game here right this cycle, let's we don't win enough market penetration like traction we get like pull apart this cycle. We kind like lose this middle game if .

you lose the momentum.

if you lose enough middle games and if you lose enough momentum, are you at risk of losing kind of the instate game? And so part of my attraction of serum is like IT thinks in terms of years and decades rather than kind of like months to month cycles. But i'm worried at the same time that like month to month is the thing that actually like begins to I mean, what's a year, if not twelve months, right? IT all kind of like it's all middle game all the way down is another way of looking at that. And i'm wondering what your thoughts are on this meta problem now as like a whole bunch of eat holders are kind of like looking at Prices they're saying, ah I don't know if I fully understand this road map, nor do I know if I fully believe IT do you have any takes on this?

So I do agree with you that you know, we shouldn't become placed. And one of the things that would be very bad, in my opinion, is if so long, how would you flip a firm? And so I think in the shorten medium term, we should like think very, very pragmatically and we should put aside some of the ideology in at least for the short and medium term.

And so the two things that I would encourage the ecosystem to do, especially the altus, is to be very pragmatic and almost fake IT till you make IT and be ready to fake IT even harder than so as willing to fake IT. You know, so far, what we've done is we've launched altus without ford proofs. We've launched altus with central sequences.

And I think we can go even further and have l tools where you consume out D. A. As opposed to consuming a firm D A right. One of the potential outcomes in the next few months is that a firm D A is gna become extremely, extremely expensive, you think sense per transaction or tens of sense for transaction.

And I think this should be totally socially acceptable for some of those roll ups to at least temporarily move away from this expensive F M D A and use L D A, like icon D A or cel a, up until to the point where they have a very, very good reason to come back, which is to have first class security and first class compose base. The other thing that I would try and encourage the echo system to do is to band together, right together. We are stronger.

And the good news that we have a sense of shed mission, we are trying to make a film the the best platform possible, and they're actually incentives to ban together within the firm. One of the things that I believe in is that there are network effects at the role that level. And so if this network affects are strong and what could happen is that one dominant l two overall lap starts eating up the rest of the ecosystem.

And the silver lining here is that now there is an incentive for all of the other roll loves to come together and fight the dominant one. So you could kind of imagine the dog force, right, which has no incentive to try and be composer with the rest of the ecosystem, because they are trying to go for the 后排。 And then kind of these grass roots movements of lots of small guys all badding together.

And the way that we band together, I think, is through shed standards, shed infrastructure like sequencing, shed deposits and shed bridging, shed block packing and data compression, shed proof verification, like basically all of this sharing of infrastructure, whereby everyone who ops in is contributing to the network effects and to the unmotived ation of costs. So IT is quite expensive, you know, to verify a snake on chain, especially have to do this in a regular basis, for example, once per minute or once, a lot even. But once you shed that cost and you are motivate across any different rollup, IT becomes virtually noise. And so what I would encourage the developers and the ecosystems to do in twenty twenty five is to focus on sharing because sharing is caring and ultimately is what's going to allow us to fight competitors like a just and .

drake has been great. So everything we just talked about claiming that road map are.

we love to call that a three room three.

all the layers is, is the theme 3d so I tried .

to stay away from the term if three point now for various reasons。 The first one is that I think we already have consensus on what the road map is. What are the items of the road map? The meat, I guess, the fleshed that we will put on the bones.

The real question is like, how do we package IT? How do we prioritize IT? How do we solve the social layer coordination problem? The other reason why I would try avoid the term of three point hours because we already have terms for all of the existing layers. We have the notion of bank shopping for the data layer, we have the native role labs for the execution layer, and now we have this new term being chain for the consensus layer. And I I don't think it's necessary to add yet term. And then the everything I mention is that the time a film to point out cause a lot of confusion in the space, like people thought there was a new chain, a new token, even the regulators got confused and the critics used IT as a way to criticize the firm, I don't think it's necessary to go down this route of a firm.

Will hold off the me layer as long weekend, but no promises. They are Justin, just drg guys always. Thank you so much for joining us.

And backless today got to let you know, of course, script is risky for road map stuff is risky as well. This is again, but I guess you could blue what you put in, but we are had at west. This is the frontier.

It's not for everyone, but works. Glad you're with us in the bank. Less journey. thanks. like.