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cover of episode Ep.66E Robert Drost: How we reimagine blockchain security in Eigenlayer

Ep.66E Robert Drost: How we reimagine blockchain security in Eigenlayer

2025/1/24
logo of podcast Cryptoria | Web3&加密说

Cryptoria | Web3&加密说

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@Robert Drost : 我是Eigen Foundation的CEO,拥有Web2和加密货币领域的丰富经验。EigenLayer旨在通过其创新的restaking机制,使区块链安全可重用,如同共享单车系统一样,但更可靠。我们已经吸引了数千名运营商,成为区块链世界的安全共享中心。我相信良性竞争能够推动创新,我们正在积极应对中心化风险,并致力于创建一个对所有人开放和可持续的区块链生态系统。我们的目标是降低新项目的成本,并最终构建一个更人性化、更去中心化的互联网。 我们相信EigenLayer的restaking机制能够解决当前区块链安全面临的挑战。通过将抵押资产通用化,EigenLayer允许同一抵押资产同时用于多个协议,从而提高资产利用率并降低安全成本。这对于新兴协议来说尤其重要,因为它们可以利用EigenLayer的共享安全池来获得与大型协议相当的安全级别,而无需付出高昂的成本。 EigenLayer还提供两种安全模型:共享安全和专用安全。共享安全模型类似于Ethereum L1的共享安全机制,所有协议共享同一安全池;专用安全模型则允许协议预留一部分安全保障,仅对其自身生效。这两种模型可以根据不同协议的需求进行选择,以平衡成本和风险。 我们正在积极应对中心化风险,例如通过简化运营商的加入流程,并激励更多小型运营商参与,来促进网络去中心化。我们也正在开发更先进的加密经济学协议,以进一步增强网络安全性。 EigenLayer的长期目标是成为人类协调的超级高速公路,通过提供弹性的共享安全,为各种应用提供安全保障,甚至包括现实世界中的交易和承诺。 @Vivienne : 作为主持人,我对EigenLayer的restaking机制和AVS(主动验证服务)非常感兴趣,并就其技术细节和应用场景向Robert Drost提出了许多问题。 我关注EigenLayer如何解决区块链安全共享的问题,以及如何降低新项目的成本。同时,我也关注EigenLayer如何应对中心化风险,以及如何平衡去中心化和用户体验。 通过与Robert Drost的对话,我对EigenLayer的未来发展充满信心,相信EigenLayer能够推动区块链技术的发展,并为构建更人性化的互联网做出贡献。 @Zhiyang : 作为主持人,我关注EigenLayer的市场竞争以及其在未来发展中的机遇和挑战。 我与Robert Drost讨论了EigenLayer如何看待竞争,以及如何利用竞争来推动自身发展。我们还探讨了EigenLayer在未来三到五年内的重要发展里程碑,以及EigenLayer如何帮助协议降低成本,并最终实现可持续发展。 通过与Robert Drost的对话,我更加深入地了解了EigenLayer的技术优势和商业模式,并对EigenLayer的未来发展充满期待。

Deep Dive

EigenLayer:构建区块链安全共享的未来

作为Eigen Foundation的CEO,我与两位主持人深入探讨了EigenLayer如何革新区块链安全模式。我们并非仅仅停留在概念层面,而是深入剖析了其技术细节、市场竞争以及未来发展蓝图。

EigenLayer的核心:restaking机制

EigenLayer的核心创新在于其restaking机制。这并非简单的“共享单车”式比喻,而是更精妙的设计:它将区块链安全通用化,如同一个安全资源池,允许同一抵押资产同时服务于多个协议。这就好比将原本分散的、针对特定区块链的抵押机制,整合成了一个可共享、可复用的资源。

这种机制对新兴协议尤其具有吸引力。它们无需投入巨资建立自身的安全体系,即可借助EigenLayer共享的安全池,获得与大型协议同等的安全保障,显著降低启动成本。

两种安全模型:灵活应对不同需求

EigenLayer提供两种安全模型,以满足不同协议的需求:

  • 共享安全 (Shared Security): 类似于以太坊L1的共享安全机制,所有协议共享同一个安全池。这种模式成本最低,但风险也相对集中。
  • 专用安全 (Dedicated Security): 协议可以预留一部分安全保障,仅对其自身生效。这种模式安全性更高,但成本也相应增加。

这种灵活的模式设计,允许协议根据自身风险承受能力和成本预算,选择最合适的安全策略。

应对中心化风险:多管齐下

中心化风险是所有区块链项目都必须面对的挑战。我们采取多项措施积极应对:

  • 简化运营商准入门槛: 降低运营商参与的门槛,鼓励更多小型运营商加入,从而分散网络控制权。
  • 激励小型运营商: 通过激励机制,吸引更多小型运营商参与,避免网络控制权过度集中于少数大型运营商手中。
  • 先进的加密经济学协议: 持续开发更先进的加密经济学协议,以进一步增强网络安全性,并抑制恶意行为。

降低新项目成本:赋能区块链发展

对于许多新兴区块链项目而言,高昂的安全成本是其发展的一大障碍。EigenLayer通过其restaking机制,有效降低了这一门槛。我们不仅提供共享安全池,还在积极探索更有效的成本控制策略,例如通过第二阶段激励计划,为主动验证服务 (AVS) 提供更多奖励,从而吸引更多参与者,最终实现成本的持续下降。

未来展望:构建人类协调的超级高速公路

EigenLayer的长期目标远不止于此。我们希望它能够成为“人类协调的超级高速公路”,通过提供弹性的共享安全,为各种应用提供安全保障,甚至扩展到现实世界的交易和承诺。这将彻底改变我们与技术的交互方式,构建一个更人性化、更去中心化的互联网。

良性竞争:推动创新

我们并不畏惧竞争。相反,我们认为良性竞争能够推动创新,促使我们不断提升自身技术和服务水平,最终造福整个区块链生态系统。 一个缺乏竞争的独角兽,最终可能沦为独眼巨人。

总结

EigenLayer 通过其创新的restaking机制和灵活的安全模型,正在重塑区块链安全模式。我们致力于降低新项目的成本,并最终构建一个更安全、更开放、更可持续的区块链生态系统,为一个更美好的数字未来贡献力量。

Shownotes Transcript

Translations:
中文

Hello everyone, welcome back to the Cryptoria. This is our new episode. This is a new our how to defy episodes. And I believe you guys have learned a lot from our previous episodes about risk taking. So this is our masterclass. So masterclass, I believe you guys definitely gonna

guest who we invite today. So we invite Robert here. Robert is the CEO of Ag and Layer Foundation. So welcome, Robert. Would you mind introduce yourself to our audience? Yeah, absolutely. I'd be happy to do that. So hi and welcome everyone. And thanks for either...

Robert Drost:

And we're ending the year with almost two dozen people in the foundation doing a lot of work on building new governance in general for us, as well as for any other protocols. We're building a whole new governance system. I'm happy to talk about that. And then we're also have built out really strong presence around grants, business development, protocol ecosystem, because eigen layer is very fundamentally, you know, it's an infrastructure layer.

And its value is only coming out of what people build on it. So it's, you know, very clear from us and recognized by, you know, Sri Ram, myself, a lot of people in the founding team that, you know, our success is really just reflected in the success of people who, you know, take a big, big risk. I mean, it's an opportunity cost to decide to build your protocol somewhere. So we really appreciate people who do that.

Amazing. Amazing. I didn't do the intro myself. So let me actually just say before I can hear one year, I was, I came into crypto and I worked at consensus, uh, Joe Lubin's company that kind of like, you know, founded the entire application layer around the theorem. So you can see a theme here. I came into crypto. Um, I have an infrastructure background. I worked in a number of the web two companies, um, back in Silicon Valley. I'm originally was based out of Silicon Valley, although now I live in grand Cayman. Um, and,

And, you know, I also started companies of my own in Silicon Valley. So I just had a lot of this like founder and operational experience in software and hardware, data centers, high performance computing experience.

And I came into crypto recognizing the computing and the performance was like down here on the floor in 2017. The value is like up, you know, it was already up, right? It was already in the, you know, trillion dollar type range. But what could be done with it, the world computer at the time was really quite limited. It just had this like great property value.

But I came in, I was very interested. My background is more on the data science, machine learning side, so AI side. That's where I had moved to in my career.

And coming to crypto, I came into space because I felt like probably one of the biggest values of crypto, and this was back in 2017, was going to be that it could fix the problems of technology, especially around the coming revolution of AI. So giving people sovereign identity, giving them privacy, giving them sovereignty over their identity and their data, allowing them to monetize all of that rather than become the product.

But I worked for six years helping Ethereum scale. I'm a big Ethereum fan. I think there are a lot of other great chains people should pick. But for me, infrastructure and like the actual financial sediment rails for Web3 and the best place to build protocols that are building the Web3 of the internet are going to be around Ethereum. And so that's why I have a huge affinity for ConsenSys already doing that.

and then EigenLayer as well. We like Ethereum so much and we just did one episode with Michael Neuner and he introduced our... Did you meet me in the DevCon?

Yeah, yeah, of course, of course. I know him. Yeah, yeah. His permissionless money is so incredible. And it's just like the very big ideologies and for whole human beings to achieve. Mm-hmm. Yep, yep, yep. No, we have, you know, we started out EigenLayer very much around this Ethereum ETH narrative.

And that's really a reflection of the fact that one of the incredibly strong network effects of Ethereum is the fact that it has this very pliable value in the security layer that allows you to stack up DeFi space. Obviously, there are other places that have very strong security. Over time, we're going to see more and more of those. But Ethereum has really started off with this idea that you need to secure...

You know, have the money itself be a security layer for these transactions and for settlement. And yeah, Mike Nooter, those guys, I don't know if you caught that, but we actually finally publicly announced it had been in the works for about a year. But last week or the week before, it's pretty, pretty in the recent past, we announced our 1% pledge to the Protocol Guild.

which is kind of capping off, you know, a lot of things we've done that have been very synergistic with Ethereum over the last year and a half. And the way we communicate about Eigen layer is really about like extending a lot of the great work of Ethereum and all of the protocols into from there into an even easier to bootstrap, easier to innovate space that still flows value back into the Ethereum ecosystem at large as well. Yeah.

But yeah, so we announced 1%. It was a net value of it was over $80 million. So that will hopefully, all of us saw DevCon, there's a need for a Beam Chain. We would like to have that in two or three years, not five. We would like to have base rollups ASAP. We would like to have more movement towards full bank sharding. But at least the blob space should be increased by 2x, 4x, 8x.

All of that takes work and it takes real people. And for people like myself and Sriram and a lot of people in the team, realistically, we really value people who spend time on things. And the Protocol Guild has about 200 members across almost 30 different projects. And these people actually are the people who move Ethereum as a public good forward in the roadmap. They build, test, and support, maintain, and release all of the software that is Ethereum.

So this is something the Protocol Guild allows those members to sort of reward themselves. And so in Ethereum, ideally, every protocol would give 1% of its token value towards the developers that build the base. Wow.

I think that would be pretty attractive because, you know, in the Chinese community, there weren't much news or information about that. So definitely we will get your message delivered. Yeah, we kind of view it, yeah. Yeah, we definitely view it like, you know, when you have, you know, foundations or other groups, you know, the money is your mouthpiece, right? Yeah.

Financial incentives, of course.

There's that thing in game theory, which has shown me the incentives and show me the outcome. And, you know, like you definitely want people to be doing things because it's their passion and what they want to do. But you also want people to be able to buy a house. You want them to be able to put their kids in a good school. You want them to be able to take care of their parents, you know, because if you don't do that, then they're going to have to go work at, you know, in the US, it would be like Google, Facebook, one of these companies, and they're just going to be another cog in

in the current web to tech world that we have where the internet is, it's not been the most positive for society. Um, number of people talk about it. I think Mark Andreessen last week gave a pretty compelling talk where he went through just how broken the internet is right now and why, you know, web three and crypto is going to fix it. So I, I'm not the only, you know, there's a lot of other great people talking about it, but I strongly believe that as well.

Amazing. Thank you for your opening, Robert. So, you know, the first impression of, not just for me, but most of our audience from ArgonLayer is restating, right? So this term,

at the first place is pretty technical to me. Even I need to figure out what staking first before I enter the define. So now we've got restaking. So Robert, could you please use really simple terms, non-technical or analogy to tell audience what restaking means?

Yeah, I think the best way to do that, and I know there may be people at different parts in their crypto journey. So I'm going to kind of move through a couple different stages. And I do know a lot of people kind of know some of these. But let me just first talk about the principle of staking, because restaking is exactly like staking. It's just a layered version of staking. So when you stake on something like Ethereum and

Then what you're doing is you're taking capital that you have and you're basically trading off and you're saying, hey, I'm going to operate an Ethereum node and I'm going to help to build good blocks. And I'm not going to behave badly. I'm not going to attack the network and try to put something in that would allow me to revert the network and double spend money.

I mean, the whole point of blockchain, if you look at Bitcoin and the original idea, is that to have money, you can't have a digital signature and then use it and print as much money as you want. It has to be consumed when you transfer that money to someone else. And you can't get it back by some kind of a hack that would make the chain give it back to you. So as a staker on Ethereum and the operator,

If you're running the operator yourself, it's all one system. But otherwise, if you're a staker and there's someone else operating, you have trust in that operator. And if the operator loses your money by behaving badly, you're not going to trust them again. And so most of the operators that you see in Ethereum, a decent percentage, like 10% of them are actually solo kind of home stakers, you would call them. They're like a decentralized backbone. And the majority of the rest is various liquid staking pool operators, as

as well as private arrangements. So if you're a really big investor, you're going to be staking a billion dollars. You may not want to run the infrastructure yourself, but you may just sign a deal with, in the real world, another company, and then you split the profits and whatever.

So that's the principle of the idea of staking is that you take something that has value and you basically use that as a trustless commitment that you're going to do the right thing. Protocols need you to do the right thing and they need to penalize or disincentivize you from doing the wrong thing.

So EigenLayer takes this idea in, you know, every chain has this idea in crypto. Even Bitcoin, which is proof of work, has this idea because you may not be staking Bitcoin, but you are kind of staking the investment you made in ASIC mining. And then also the energy that you spent ASIC mining. And if you attack the network, you're going to lose that. So that's why people in Bitcoin, even though they don't have proof of stake, are effectively doing something that's pretty comparable.

So all of the chains have this, but all of them have it in a way that's bound. It's not special. It's not general purpose. It's very specific to what that chain needs and it's providing security on that chain.

So the insight of EigenLayer was that there's no reason that we have to actually say this mechanism has to be, you know, let's say you have, you know, Zimba chain, right? That you have Zimba tokens, you stake Zimba tokens, you run Zimba chain, and then you get the rewards. In reality, security and like the value in a token is reusable. It can be used in multiple places. So restaking recognizes that you can couple together the stake and

You can couple together good operators that have reputation, and then you can make those available to a lot of protocols. We call them actively verified services. You can also call them autonomously validated services. They both spell ABS. And these operators are kind of like the Ethereum validators. They're running your network, whatever it is. And your network in this case might be something entirely different, right? It might be like

a storage network like Filecoin, or it might be a network that's guaranteeing geolocation. So it's doing like network pings and it's doing time protocols. You can do like anything that happens in Web2 that the public clouds are providing now. Plus, if you open up your imagination, there's probably a hundred times more things you can do decentralized because the speed of innovation and open source and decentralization is just, it will win every time in the long run over centralized people.

So we kind of took stake and we made it general or universal. And we put into a protocol where we created a marketplace that stake operators and protocols that want operators, good operators and adequate stake together can all find each other. And they can very easily structure in an open market, you know, with open pricing dynamics and.

What is the value? What is the cost? And we just make that a, you know, Eigen layer is this very thin infrastructure level, but what it creates is very valuable because if you're a protocol, you might be like, you know, Hey, I'd like to do another Oracle, you know? And you're like, Hey, I see this Oracle that's out there has, you know, $20 billion of stake in its network. How could I possibly compete with that? I hope my token gets to 200 million, but on Eigen layer, you can actually rent $5 billion worth of stake. Okay.

And at a reasonable cost, it's just a cost of providing security for your chain. And so people who are using your network now actually see the security backing it is like a heavyweight, even though you're starting up. So we call that the bootstrapping effect, which makes it really valuable. You can kind of bootstrap your way up in the same way that people don't buy data centers anymore. They just go to a cloud and elastically get the compute and the servers and the storage they need.

So EigenLayer is a place that you elastically go and get the security that you need and you just pay for it, you know, on a time basis, just like you buy a

services on public clouds like Amazon on hourly or daily or weekly rates. We're not at the level of hourly yet, but there's short-term contracts, let's call them. So in order to do this, this means that the same stake is used again and again. It's a little different than sometimes you use it in some other place. We are actually, like the AVF, the protocols that are using Eigenlayer, the AVSs,

They, their nodes actually kind of define what's a good behavior of an operator. And then they also similar to Ethereum would find cases where an operator is doing something bad. And so you either get rewarded or you get slashed. And so the stake that you put up, um,

You can have slashing in Compound or Aave, but it's really liquidation slashing because of margins. In ours, it's more active. You are performing compute storage services. You're actually working on the network. And if you do it well, then you get the reward.

to the operator who then shares it with the staker. Or if you do it badly, then it gets slashed and then that operator loses reputation. So they lose something that for them is more important than money. And obviously the stakers lose their rewards as well. So it's kind of an active dynamic marketplace that you get there. And one of the big values is

From the point of view of the staker, you're getting more yield than you would have on Ethereum alone. You're still getting the Ethereum yield, but now you're able to get rewards that are on top of that. And, you know, on the protocols that are building on Eigen layer, we have around 30 that are active and actually out there, we have hundreds that are in the pipeline. And so it's this massive space because it's just a very easy way to kind of launch a protocol and,

In theory, if you look at the cloud, there's this idea of middleware services, the protocols, the ABSs that are building on Eigen layer, a lot of them are building a part of what you would need to eventually build like a full stack application. So applications, many of them, if you look in web two, they use 10, 20, you know, more than 20 different applications.

large services that are actually Amazon software, other software vendors. And our theory is that final end applications that are going out to consumers, they won't just be going to like one blockchain and then building everything else on top. They will actually be consuming software as a service that is secured by something like EigenLayer that then is settled and provides all of this decentralized security back eventually to layer one Ethereum as a financial settlement layer.

So, you know, we're building something big, but everybody in this ecosystem has an opportunity to get something valuable out of it. You know, stakers and operators get additional rewards. AVSs get access to stake because the Ethereum is already staked. You know, if you have 100 AVSs that are paying, you know,

the stakers and operators an incremental 5%. On a per AVS basis, that would actually translate down to five basis points. So the cost can actually be quite low as it gets up to scale. Obviously, it's not there yet. But in terms of the vision, you can see that the bigger that this gets, the better that it gets for everybody. You have more rewards for stakers, operators, and you have lower costs for the

the protocols or EDSs that are utilizing Eigen layer. Okay. I apologize for something that was a short and then I went into a lot more detail, but hopefully it was still, I was trying to still just kind of talk about

principles as plain facts as I could. Well, kind of the protocols need those kind of the security things because we know we have a lot of the Layer 2s. So the Layer 2s is supposed, the Layer 2 has their own securities, right? So a lot of the apps that are building upon on the Layer 2s.

So this should be shared the securities about those base layer tools. Who needs the agonist rather than just I go to the, just like the base or go to the salon or like others. Yeah. Yeah. Right now, like if you look at blockchains, they've only captured or they've only fulfilled like a fraction of percent of the value of the value that you can get out of decentralized technologies.

So if you look at something like the Web2 world, the Web2 world has surpassed trillions in revenue at this point. Every year, this isn't people staking. This isn't TVL. This is people actually paying for things. And so blockchains, you know, blockchains are like a very valuable service that you provide. They're kind of the underpinning that you need in order to have decentralized trust.

But blockchains are, you know, it's very hard for them to actually serve, you know, the purposes of everything that you need for software. Like, how would you actually build a Cloudflare or like an Amazon CloudFront technology that is serving, you know, petabytes per second of bandwidth around the world directly on a rollup?

It would be very hard to do that. You would actually need in this to have millions of different nodes that have, you know, an incredible amount of solid state drives and others with a huge amount of bandwidth doing it.

Do we need to be able to do this in a decentralized fashion? Of course, because if you're going to have it be permissionless and censorless, uncensorable, then you can't have people who are able to go in, a government goes in and just puts a cease order, do not send this person data through or search for this and then stop it. You can't have this

sort of containing there. So we want everything that's going on in technology to have decentralized trust to it. So blockchains are kind of an anchoring point, but everything else needs to be built on top of it. I mean, I can mention a few other like, you know, platforms and others. I mean, obviously one is like raw storage, but storage raw is just like disks. People actually need databases and there are so many different flavors of databases optimized for different types of read and write patterns.

All of them need to be able to be, you know, on decentralized storage and have all of their operation be sensorless and be permissionless and be, you know, full decentralized trust.

And if you look through, like if you look at something like Google Cloud or Amazon Cloud, what you'll see is that there's an incredible amount of those. So I might be getting ahead of myself a little bit. And like maybe for a lot of people who are only in the blockchain world, let me step back. And then you talk like the here and now, of course, is that there's an incredible amount of scaling happening in the L2 space. So people are exploring all sorts of different ways that you can build chains.

And so people are building very compelling roll-ups on top of Eigen layer. There's people building essentially like

a redo of the whole Cosmos ecosystem completely compatible, except that it has the right kind of central coordination in it. It's a couple of people who are like, you know, kind of big people in the Cosmos world. They're building this protocol called Layer. And so, you know, somebody would build something like this, which is essentially like a Layer 1 network on top of Eigenlayer.

Then, you know, we have other providers, you know, AltLayer has been a close partner for a long time. They built a lot of great things. MegaEth, I think you would have seen us around DevCon and Zuzulu. We did like a joint event with them. They're building something very special is they're taking like the limit of performance that you can get on a roll up with decentralized trust. And they're doing it by, Vitalik has talked about this a number of times, which is you

Using L1 is the absolute decentralized trust security for your rollup, but then taking your rollup and figuring out how to, without giving up that decentralized trust, run the rollup at absolutely breakneck speeds in a very centralized fashion, like way more centralized than Solana. Solana can't be fully decentralized in how it sequences because it still has to be decentralized to be competitive to the thesis market.

of Ethereum. And there's a lot of debate about if it really is, if it really isn't, I don't want to go into that, but something like mega ETH goes ahead and they just say, if we're really centralized, we can get down to one millisecond block times and we can go into a hundred megabytes per second of, um, data bandwidth on our chain. And so it completely changes it because now you can actually have a hundred, a hundred, um, frame rate per, you know, uh, per second, uh,

updates, settling to a blockchain. Completely different if you're looking in like high frequency gaming applications and others. So people are looking at like really kind of wild different spaces that you can do in the design space. And really happy Mantle has also been doing great stuff on the roll-up side as well. So just a lot of very strong people who are building. So the base blockchain level, of course, on a scaling and like functionality basis is integrating more things. And we're seeing that.

But I probably, and the reason is just coming from the infrastructure world, I always kind of go to like the vision I came into blockchain for, which is how do we fix technology? How do we fix the internet? How do we fix the web? And my hope from the very beginning, and I'm sure we're going to get there, it might still be another five years, maybe 10 years, but we will successively over time build technology in a form that works much more for humans rather than corporations and stockholders.

And, you know, the fact that we can at EigenLayer be a part of that journey is really exciting to me. But, you know, the majority of that journey is going to actually be built by all of the protocols that build on top of EigenLayer. So I always tell investors and others, there's like, you know, you might have missed EigenLayer, you might have missed a few protocol, but there are going to be thousands more. Just think of the entire Web2 investment space that's been going on for 30 years.

And now imagine all of that's going to be rebuilt in the blockchain space. Amazing.

Amazing. Yeah. So, oh, go ahead, Yujun. Yeah, I just want to say it's just more like in the Web2 era, it's more like that every protocol or every tech companies, they are building by the corporations. So they normally have huge capitals, a lot of the huge teams, and they can build one thing and they build something for people or they build something that sells to the consumers.

And in Web3, I think most of Web3, what Web3 charmings me is more like every protocol is built by the individuals and they are using for the individuals. And I think that is the main difference between Web2 and Web3. And I think that is mainly the difference that attracts a lot of people to the cryptos.

Yep. Yeah, yeah, absolutely. And, you know, I like that you make that point because the reality is like that's what we're building.

When I talk to my Web2 friends, because when I go back to Silicon Valley, I run into all of them. I try to red pill them. I try to get them into crypto. Some come. Others are going to take a while to kind of get it. They're all very excited, though, when we're in bull markets. And in general, new people are not excited in bear markets. I mean, go figure. Why would that be? But I always tell them in the bear market, join now. Create a protocol now. Don't get excited at the top. Get excited. Buy low, sell high.

Yeah, unfortunately, unfortunately, every time. But, you know, but then they kind of ask and they're like, yeah, but, you know, now you build these protocols and like, well, why don't why won't they do what Facebook kind of does, which is, you know, turn the customer into a product. And I go back to, you know, blockchains have this incredible potential.

feature to them, which is that they can fork. The community can decide that, hey, this is not going well. I don't like how the people creating this protocol are running it. I don't like how the DAO is running this protocol. And they can go ahead and they can just say, hey, look, we're going to actually take all the state. All of it is visible, right? That's why data availability and data posting is so important. And we can basically say like, hey, we're going to fork. It gets harder over time. And so there's some ideas that

some very interesting things eigen layers can do to kind of help move that along. But the more powerful that we have that the users control the ability to fork, just imagine if everybody could go to Facebook right now, Facebook changes its privacy policy. Everyone's like, this is terrible. I hate this new privacy policy. Well, what do you do on Facebook right now?

You don't click accept and then Facebook kicks your account out. Like that's the only thing you can do. And so you get this huge harm. And it's the reason why everybody, we don't even read a hundred page privacy policy changes. We just sort of roll our eyes and click on them and say, I wish there was something better, but crypto is something better. Like this idea about forking and the decentralized trust means that imagine if we could go to a, you know, a Facebook and be like, Hey, we don't like what you're doing to network and privacy policy. Um,

So we're going to go ahead and just fork the entire company. And the new company is going to have, you know, a policy that we like better. We happen to also not like your moderation. It's like, you know, making people feel extreme. The ads that are showing are negative and everything else. And you can just fork it. In the blockchain world, it's an ideal. It's actually very hard to achieve that because there's a lot of spots where you can get into stickiness. But in general, the blockchain and its underpinning has this idea about

you know, public software, public data, public identities. But while all of these things are public, they're still owned. All of the data can be owned as NFTs. All of the identity can be owned by users. All of the value is owned by users. So this reshaping, you know, and keeping like the model of the real world inside of the technology is to me the most innovative thing. And it's sort of, you know, in my career in technology, I always kind of early on, it's just like,

The technology goes into the capital markets. It goes into regular companies, VCs, banks come out, you know, it goes into a, you know, forever growth. And we get to where we are now where companies are looking at how to be 10 trillion dollar companies. And we have billionaires that are, you know, approaching half a trillion dollars of money. Um,

And it's all very kind of centralized and collecting. And blockchain just changes that because, you know, the value kind of stays inside. And therefore, the people who are in control, the users get to figure out how that value gets shared better. I have some questions about AVS. You've already mentioned a lot of things about AVS. But I think AVS is the most attractive thing currently.

Well, what am I saying? I think the second term after restaking the people need to understand what is AVS. Yeah. Yeah. Yeah. Okay. So I'll keep these brief because I think I went off on a bunch of philosophy before. So in, in, again, going back to the layer one, hopefully, you know, everybody has, you know, taken the time to kind of understand like what Ethereum consensus is built on and it's built on people proposing a block and,

One person proposes a given block, and then I can just draw dots for the tens of thousands of validators that are out there that look at how they ran the EVM, look at what the block was that was proposed. And then they say, this works. I certify that this is correct. And it's the validators who actually build the chain, because if they don't approve what was proposed, then it doesn't go into the chain. And that's why they're called validators.

And that word validate appears in ABS, actively validated service. So in Ethereum, the only validation you can do is to build the Ethereum blockchain. In EigenLayer, the validated service means you're a validator who's doing whatever the service gives you as node software. So they can design whatever protocol they want. They can write the software any way that they want. And the operator's agreement is that I'm going to validate using your node software.

And then the word actively in the very front is kind of a recognition of like a validating service needs to actually have a real time aspect to it. And so the A was added. So I'm going to stick with that one, not the autonomously verified. So we're going to say actively validated service. And I've answered the question now. Cool. So I know that EconDiary have their own AVS. It's called EconDA, right? And it started running on the Q2 this year.

So what's the difference between Eigen DAs and for like the current competitors like the Cilicia and Avia? What's the difference between them? Yeah, I mean, so the core value of Eigen Layer is around this decentralized security and creating this marketplace around people being able to sell, use and buy security.

But there's a recognition that security has no value unless you're able at, you know, you know, over time approaching infinite data rates, able to actually post all of the data. And if you have like hodgepodge data all over the place or like, you know, look at something like Ethereum, the first data build, the lady outside service was, you know, a company built on Cosmos, Celestia, right?

And Celestia is actually built on a different L1 domain, but it's providing data availability for many roll-ups on Ethereum. I mean, that's nuts, right? Why would you be mixing two different L1 security domains on the same thing? So for EigenLayer, it was recognized that this is like a foundational service that needs to be on EigenLayer. And it's also recognition like this service shouldn't be something that's invested in by VCs.

and therefore has a separate, its own token incentive model and its own need to extract and build more value and capture more inside of it.

So the idea of eigen layer was that we really need something that's more like an incentivized public good, which is how Ethereum was built. And we need that to be something that we can drive the cost down, you know, just obsessively to as low as possible. And we need to be able to scale it out. It's currently at like 15 megabytes per second. We,

We ran an experiment. Every blockchain that is being run basically fit within seven and a half megabytes per second. So our chain already was surpassing the total aggregate bandwidth of, and this includes Solana and Ethereum and a whole bunch of the rollups and everything else. And it was still only using half the capacity, but our roadmap is only limited by demand at this point. If we have anybody that needs more demand, we will just

go up, you know, two X or 10 X or a hundred X in that bandwidth. The roadmap is very clear for us to do that. Um, so the DA, that is like the main reason, um, we have no expectation to be building a lot of AVSs. It was just, and maybe there'll be another one that comes up like this, but like if there's something that should be a core service and if it should be a core service that is being driven to an extremely commoditized low price, um,

then it's valuable for us to make sure that that happens, not to rely on outside VC investment theses. So basically beyond the IDENDA, what unique advantage does those AVS chains have with your economic security? Yeah, so I mean, they can basically get a very high level of security early on.

And, you know, from their perspective, like if you wanted, let's say you have a chain and your token is worth three billion. Let's say you decide that you need to have two billion dollars of security. And so you do that with your own token. Well, your token has higher risk than Ethereum, which pays out about three percent yield.

So you may then have to be releasing 7% or 8% of your token, maybe even 10% of your token. So on the order of like $200 million worth of inflation per year to get that $2 billion of security. So there's a huge economic advantage if you can utilize other tokens that people are restaking to get that level of security for magnitudes order lower cost.

So that's an advantage there. We're not opinionated on tokens, so we do also have AVSs or protocols

that are building on EigenLayer that are going to go ahead and put their own ERC-20 through the system and then actually have their token staked through the system. And they'll actually make their tokens restaked and available to use on other protocols. So it also provides additional sources of revenue for tokens that are with the protocols that are building on our system. So, oh, yeah, go ahead. Yeah.

And then I, if you finish, then I have the questions about the steel in AVS part. Is that the security is going to be isolated? So if let's say I'm running one AVS, Jian runs another AVS, is that possible that both of us we can claim that, oh, that is the same assets, the state.

it belongs to us, belongs to our AWS. Is that any technology things we can isolate in those securities? Yeah, we already have. There's going to be more different features on how we actually allow you to reconfigure your security. But right now we have two types of security. So one is the default and the lowest cost shared security. And

And so that security now is going to go ahead and potentially overlap in many different configurations with shared security that other people are, you know, are paying for. And so, you know, and so it has that issue. I'll come back and I'll talk about that in a second, because I think people interpret that sometimes in a way and they actually don't realize how Ethereum's layer one shared security works.

But the second type of security that you have is called applicable security. And applicable security means that you're actually reserving a portion of security that will only get penalized for you. And if it gets penalized for you, then the value of that, which in theory would be built, we also have an applicable security, the idea that there can be some repayment effect

for damage that's being suffered by financial losses or other things. And so a portion of the applicable security can actually go back and cover losses. So it can act as, you could call it kind of an insurance, although it's not really exactly like an insurance market. It's sort of like

you're basically able to direct some portion of the slashing from burning to something else more useful than burning. Let me see. Does that make sense with applicable security? And then I'll go back to the other one. Okay. So on the shared security, I actually want you to do a little thought experiment. If I'm running compound and then I'm also running, you know, other protocols like Uniswap,

and constructing all of these DeFi Legos. Do each of those have a specific portion of ETH that would get slashed for them only if something only happened to them?

And the answer is no, because Ethereum's L1 security, people didn't really recognize this, but, you know, Sriram kind of spelled this out along with his grad students that kind of created Eigenlayer that, in fact, all the value of composable dApps on Ethereum is that they all share one level of security. So they share the $30 billion or so, or now $100 billion of ETH that is staked.

And if something goes wrong and the slashings happen, you know, then that's happening on that shared stake. So shared security has this nature that you have to kind of, you know, look at how you're composing and what you're doing in the transactions. But this idea that you actually get value out of shared security, you might look and be like, okay, well,

You know, what happens if all of these things are happening at once? You know, is there enough coverage? That's a separate question. If somebody is able to go through all of the value locked on Ethereum, and if they're able to figure out a way to hack all of it at once and make it worth more than the 30 or $40 billion of net security that's available on Ethereum, then they can actually profit from hacking Ethereum. They could pay off enough operators and they could revert the chain to something else. And then they could double spend the money that they, that they stole.

So shared security, you have to look at the total amount of what's hacking across this protocol and that protocol and that protocol. Ethereum really hasn't gotten to that level of sophistication around security. People point it out sometimes, but then they just sort of think, okay, well, Ethereum is actually really good and there's actually less security everywhere else. So let's focus in those other areas.

But in Eigen layer, the shared security model, there's kind of inspiration there that when you do, you know, you go from specific security lock to one chain to now having general security and like Eigen is like a security work token, plus any ERC-20s that are all being combined together.

as a general security pool that is used inside of the Eigen layer space, that's a shared security pool that also has this characteristic of, you know, basically being able to use in many places as a group like Dapp's shared security on Ethereum. Oh, that is so clever. Yeah. That is so clever. Okay. Okay. When you talk about the part we haven't covered from our previous episode, talking about restaking, well, that gives us some really insightful thoughts.

Amazing.

of like how and why crypto worked. Like I thought I understood it. And then it was like a Zen journey that I realized there was another master beyond that master. And, you know, I can layer like, and I got to that point. It took me about a year and a half and, you know, it was great. I mean, I was working the whole time and doing stuff productive. It was just on weekends. I would kind of read and go deeper and deeper.

on it. And then, you know, eigen layer is something that is kind of mind melding. It is actually sometimes bad and a podcast or other things that we talk too much about it, because honestly, I don't know how much everybody wants to get into this deep level.

But, you know, Eigenlayer kind of looked at that bedrock of, you know, where crypto was currently with its security all wrapped up inside of like one blockchain. And then it said, you know, there actually may be a level of bedrock below that for like opening up the next, you know, the next height of that Zen mountain journey. And, you know, and so in order to get there, it's not something like I described something and no one should feel like, hey,

That is weird. I can't fully get that in my mind. You are then experiencing what everyone else experiences when they find out a very radical new idea. And part of the thing I'm really excited about EigenLayer is I actually have privy to a lot of amazing things that we are thinking about and doing. And there are many, many things you can do once you have this unlock of shared security and once you have this unlock of different ways you can use it and more generalized operators and the stuff I was talking about the cloud.

a whole new region of crypto protocols and crypto mechanisms open up.

So, you know, there's not only the eigen layer today, but it's kind of like, if you want to think about it, the ZK space five year backs was like just so rapidly moving because people were inventing, inventing, inventing all of these new things on it. And, you know, I would say a large portion of the foundations you're going to be hearing coming out of eigen layer, but then they're extremely creative things that even surprise us that people are like, I'm going to do this and this with an AVS. Most of these are still under wraps.

But what they're thinking about is also a surprisingly innovation. You're just like, wow, that person's really smart to think about it. So if we're doing things right, what you should see is if we do a follow-up podcast in a quarter or six months or whatever, that you're seeing this advance on both the advance of the knowledge in the space and then also advancement on the innovation that has been brought to product in the space.

around Eigen layer. And, you know, Eigen layer is not fundamentally a chain. I mean, it's one of the most radical things, right? It's sort of an L1, L2 in terms of what it's providing, because it's providing a generalized version of like L1 security.

But we found a way that we don't have to build and lock people into one new universal chain. We have enough universal chains already. We're looking to like leverage what's there already and then unlock it for a lot more use cases. And, you know, hopefully that's the kind of, you know, new fire that we've been able to spark.

Right. So, you know, it's all like full of opportunities and definitely like give us a lot of hope in the future. Now, I think we need to talk about something maybe not that happy. So, you know, restating model phases like potential risks, such as value data collusions and high concentrations. So what will be the specific measures you guys will take?

take to prevent those risks? And how do those measures protect the network security while also maintaining the user experience? Yeah, I mean, I wish there was a magic wand or a silver bullet that we could shoot at this. I sometimes talk with people when they're like, hey, what's the solution for this? And I'm

just like it's a pervasive problem across crypto. You build something that's very open, very innovative, uh, has the potential to be massively decentralized. You know, you look at something like my canonical story on this. I had friends of mine who, you know, work, uh, know them really well. They worked at the Ethereum foundation or around the theory. Um, and when, um,

We had the first LSTs emerge, even while the beacon chain was not withdrawing. So it was completely locked ETH. And you remember that that actually caused de-pegging of some of the LST tokens during the crash of 22. The crashes of 22, I should call it. It's a painful year. So...

So they built this thing and they deliberately said, we're not going to allow delegated staking because it's going to cause centralization and everything. We're going to require people to, you stake, you operate, that's it, right?

Then because it's crypto and because people are innovative, somebody looked at that and they said, "Well, I can build a contract on top of that." Then what are you going to do? Then we ended up with some of the strongest centralization there. It's always kind of arguable because you can look in an LST and then look at the number of operators they have. Do you count them as separate? Do you count them as one? Decentralized and decentralized, they are opposite ends of a continuous spectrum.

And there are many, many points in between. And Vitalik in Ethereum has actually written about this, that even assuming that purely centralized or purely decentralized are the best outcomes is a very narrow way to think about it. That would be convex thinking, thinking that every design point between the two is worse, it's lower than the two ends. And most engineering and most life decisions, we all kind of know this about trade-offs,

is that it's actually concave, like the optimality goes up between these two solutions. And so you always have this kind of trade-off or tension.

So, you know, what you're seeing on something like Ethereum is, you know, over the past five years and over the next five years, there is a continual search for additional crypto economic protocols, things that have better incentive mechanisms that, you know, incentivize decentralization, as well as, you know, cryptography that basically makes collusion impossible or so difficult that it's not worth doing, you know, and things like this that are being created over time.

So, you know, we're just starting out at Eigen layer and, um, you know, the initial look is that we actually do have a good spread of operators, um, you know, working thousands of operators. Um, there are some obviously that are larger, there are some they're smaller, but it's, it's less than what, you know, you would imagine when you look like you're not looking at a network where 70% of it is like, you know, running through one spot. I mean, Ethereum got to that point.

that point pretty early on with liquid state tokens, where I think it was, uh, I believe it was well over 50% of the staking was, was passing through that network, which was really, really quite, quite high. Um, and so then the question is like, how do you incentivize? Some of them are, you know, simple measures like making it very easy for new operators, um, to be running the network. Um, you know, which just means like how,

how much do you provide standardized software? So we're working on like building and making the onboarding of people easier so that somebody doesn't have to invest as much money. Cause if you have to invest a lot of time and money to do a function like operating on eigen layer, then you're going to end up being, um, favoring people who have a lot of resources that are going to end up, you know, owning a lot more share. There's also some incentivization you can do for people that are, um,

Smaller operators are starting out. It requires some level of reputation and some level of trust because you have to guard against symbols when you talk about doing these. But you can actually provide incentives for a wider growth of the smaller part of the market, which hopefully moves into more from small to medium operators. And having a healthy group of medium operators is a very good point to be.

I always kind of like think about it economically in this model that, you know, everywhere in economics, if you have a monopoly, if you have one buyer or an oligopoly, you have one seller or, you know, monopsony or, you know, you know, or a small number of sellers, then you end up with economics that don't even work. I mean, don't even forget about like, you know, the control part, but just the economics of the pricing becomes very skewed because one side of the market can't really communicate

competitively price sellers against each other or buyers against each other because they're only selling or buying from one person. And small numbers, I mean, we all know the oligarchs, you know, oligarchs are referred to in Russia. I even hear them, you know, talking about oligarchs in US and other countries at this point. And, you know, when you have a small number of people, they control too much of the assets. They have too much control over government and everything else.

So, you know, we're kind of striving for that. So there's some practical things you can do over time. We keep seeing people inventing more and more protocol mechanisms. But I would say, you know, our, you know, our kind of heart and spirit is to be another member of the army that's fighting that fight. You know, I think a ton of people are doing that. And, you know, just, you know, I've been

Definitely in the Ethereum space, very aggressively, you know, they try to trade off that concave space and they try to have, you know, originally it was just, you know, you have maximal decentralization, but it's a little bit more of like sufficient to as close as maximal as they can get to while still being practical.

And I think on EigenLayer, we're going to be shooting for that goal as well. In our communities and our audiences, there are a lot of builders. And some of them are trying to build upon the EigenLayer. But they have one common question, which is about the cost. For all the startups, the cost is always the major problem.

And they just find out that currently the Aeconers or the ABS, they supply far more economic security to the ABS than the protocol they already need, or they may attract it by themselves on their own model token.

So do you have any suggestions? How can those protocols who want to build upon the agonist and can help them to say, oh, you guys can reduce your cost to the sustainable level?

Yeah. Yeah. I mean, I think so, you know, first of all, you know, we're not like, you know, in terms of AVS is practically spending a lot of money, rewards, everything else like these systems are just kind of spinning up now. The dominant kind of reward that's coming into the eigen layer space right now is being provided by us. It's, you know, it's an inflationary award. It's 4%.

It then goes into a reward mechanism where stakers and operators that are running nodes are getting it from us, not AVSs. So there's always kind of a startup thing. If we started off and we just said, hey, you know, good luck, people, you go figure it out, then we'd be doing a disservice to everyone who's building on EigenLayer and to us as well. So very normally, like if you think about, you know, any ecosystem, you kind of start off from a place where all of the economics are

are, you know, they haven't come to scale yet. And so you don't have all of the cost efficiencies. Because if you think about it, like that number I said before of like 100 protocols sharing 5% is five basis points. Everyone would be really happy with that number. Maybe they'd want it to be one basis point. We'll try to get there. But, you know, if you only have two people right now and they're sharing 5%, it's really bad, right? So that's why our inflationary incentives are providing this 4% base level. And, you know,

Beyond that, if you look at what an ABS needs to do, right now it doesn't actually need to provide anything on top of that. There's already operators who are running a ton of ABSs with no specific ABS rewards. We've already announced in a version two of our incentive system is coming out. The second incentive system, we're going to be providing a huge boost on ABS rewards.

So an AVS will actually pay out some rewards, typically in its own token, although it can use whatever token it wants. We just figure it out the monetary value of it. And then we put a set amount of our 4% inflationary reward. We divide it into 365 days. And for every day, we take roughly 1 360 fifth, let's call it 1 400th of 4%. So we take one basis point of our protocol.

And we feed that money out or we feed those tokens, I should say, out as rewards to people who are operating and who are staking on AVSs. But the way the boost works is that the AVSs that do their reward into it, they get a pro rata share of the rewards we're putting in based on how much their reward is compared to what all of the other AVSs together summed or combining.

And so it's a very fair system and we're not actually setting the price even, but we're putting in a huge amount of the value that's needed for operators and stakers to be interested in running ABSs on our dime, not on the ABSs. So, you know, I would say in the short and the medium time, there's this huge amount of like protocol coverage on these things. As we get bigger and there are, you know, we transitioned from dozens of ABSs to hundreds of ABSs.

At that point, if you look at like what has to incentivize people to bring in stake and what has to incentivize operators, you get to economics that are vastly better than anything you would get anywhere else in the crypto world. So we have kind of the short, the medium is like more on this inflationary side and then going from medium to long term. At that point, we've spun up the flywheel and the system will work economically great on its own.

Okay, so, you know, Agonel actually opens a new chapter in the industry, right? So there are a lot of new protocols emerges after that. So what's your view on this, you know, really competitive landscape? And is this kind of like competition really beneficial or you think it's harmful to the industry development and how Agonel will see the opportunity here?

Yeah, I mean, some people are down on competition, right? They sort of look at it and they're like, well, you could be putting all those resources towards one effort. Now you're splitting it among three or four places. You know, I know the venture community really doesn't.

kind of dislikes the idea that competition where multiple people are sharing the pie is negative. I mean, if you look at power law investing, the phrase that I've just, it's just ingrained in me. And I've always been like, this is why we end up in technology where we are with a couple of tech behemoths that are running specific parts of the market is this winner takes all mentality. It comes from, I think Peter Thiel made it very famous with the power law. The power law actually comes back from an early generation

hundreds ago years, a mathematician named Bernoulli who kind of noted that like, you know, basically as you take riskier and riskier bets, if your, you know, chance of winning drops by like on a statistic chance by four X, but if when you win, you make 16 X more money, then you should take that bet. And power law is a spot where the, the reward on the increasingly scarce winning is,

is rising faster than the chance of winning is dropping because it basically gives you a higher expected return no matter how much riskier the bet is. So that's why investors, when they do portfolios, they're like, you know, I just have to have one, you know, Facebook. I only have to have one Tesla. I only have to have one this and I will pay off my entire billion dollar fund with like a $10 billion outcome based on this one investment.

So I kind of dislike when people bring that kind of model and they look at competition in two negative ways. They're like, one, you're splitting resources. The second, from an investor point of view, you're splitting the outcome. So I reject both of those. In my opinion, the competition is extremely effective because if you take one team that's building one thing, which is a clear winner, and it doesn't have competition, then

Human nature is what human nature is. This is a whole incentive, show me the outcome. If you don't have the incentive to beat the competition, the outcome is you won't work as hard. You won't be as innovative. You won't try as hard to make hard choices about resources, hiring, what to prioritize, everything else. So it's competition that drives us to run faster, to build better cars, to build better energy systems, to build better blockchain and decentralized technologies.

So, you know, early on for EigenLayer, you know, I would say, you know, through the middle to end of 2023, we were looking at a situation where a lot of people, some of whom have actually built up competitors in our space, they staunchly believed restaking the idea of it.

decentralized security as an elastic open marketplace, general marketplace, didn't make sense to them. I mean, it's kind of, it's amazing. And then the number, the TVL that was staked in our protocol, you know, passed a billion, it passed 4 billion, it passed 10 billion. And then all of a sudden the people were like, oh, now I see it makes sense. And I'm like, okay, you couldn't see it from reading 20 papers that Sriram and other people read and literally went to, you know, a lot of these people who then became competitors and

and explained it to them and for like a year and a half. So, you know, we can talk about their motivations, but you know, that's, that's, uh, that's capitalism and competition. We have, you know, people that are building things and, you know, you learn from the competition. I always would say this in the Ethereum space, you know, like you need to learn from Cosmos. You need to learn from Solana, you know, it's actually good to do that. Like, don't put your head in the sand and,

and just say that those people are bad. Like they, they are actually building something different. They're trying something different. Maybe they're succeeding. Maybe they're failing. You can learn from both of those.

So, I have a very proactive sense in this, which is, you know, competition, if it's good, it's something that you use to drive your own excellence. You deliver a better thing to your partners. You deliver better things to your customers. In our case, our customers are AVSs, the stakers, the operators. And ultimately, our end customer are the people that are using these protocols, these AVSs, because some of these AVSs will go out to the retail level.

So, so that's that. On the investor side, okay, so I'm very bullish on competition. I said this earlier with Monopoly and Oligopoly. The reason these networks work, you know, these one-sided marketplaces with one person on the other side are so awful. Like you look at like cars that had been built during the communism time in Russia and they were just so awfully bad. But,

But the reason they could exist and be so bad is they had no competition, right? So you can see where it gets to, whereas look at the amazing innovations that we've seen through free market kind of global economics that we've enjoyed for the past 40 years, 1980 to 2020 was I think the heyday of globalization and free market. That's not me saying a lot of pretty smart economists kind of point this out if you read that stuff.

So then the other side on the power law and the investing, I think that power law investing and all of that is a way to kind of concentrate wealth so that, you know, there's sort of the outcome and all of the benefits of it kind of go to the capital class. And they go to people who already had money who get more money. And in my opinion, the point of blockchain is that we, of course, want people to get rich.

But we don't need some people to have trillions of dollars. Like, you know, Joe Lubin, you know, coming into crypto, I was like, wow, this guy's a

pretty successful multi-billionaire multi-tens of billionaire kind of person and he would always jokingly ask the question which i realized after why love was a serious kind of question of like he would say do we really need so many billionaires in the world because like economically you think about it it's like what you know what more money do you need at a certain point um but you know we need fairly and we need for like hard work and effort to be sharing it like you know this shouldn't be something people just sit around and expect that someone's going to pay them out huge amounts of money

So I think the crypto space where you have competition and you actually have a viable palette of people that are offering eventually slightly different things. I mean, if you look at the different blockchains we have now, you know, and I'll just say probably the top three people would consider are Bitcoin, Ethereum, and Solana has been doing well through a couple of cycles.

So I will put it in the category right now, but it's had issues in the past of being very closely affiliated with FTX and other things. So I just say centralization tends to not do well when you're going from bull to bear markets, but they all innovate in really different ways. Bitcoin innovates by not innovating. It's just like, I'm digital gold. I'm never going to change my protocol.

and you get what you get. And that's really valuable. If you want something that is a much more efficient version of gold, you got it there. And then Ethereum is like programmable money. If you want money that can actually interact with the world, then Ethereum is your place. Because Bitcoin, you get four transactions, four transfers per second. That would be equivalent to like 200 transfers per second on Ethereum. I mean, we say Ethereum is...

you know, 15 transactions per second. The only reason is that is because like one transaction can be a huge smart contract execution. But in terms of transfer, it's, you know, two orders of magnitude faster than Bitcoin. And so that allows it to be programmable. And it, you know, has created the scaling roadmap that,

That unlike this other design space of Solana was all built around, you know, one centralized yet still decentralized sequencer. Remember my example with MegaEth, if you separate out the pure decentralized and the pure centralized, you can actually meld them together mathematically in a really good way. If you put them all into your consensus layer, you end up with 250 millisecond block times versus one millisecond and you end up with lower bandwidth and

You still end up with only centralization at a certain level because there's a small number of permission validators in that network versus Ethereum. But, you know, still there's a huge amount of stuff. If you look at network extensions, if you look at the high frequency trading ecosystem that was built around the market, around Solana, all of that, there's a tremendous amount for us to learn. And, yeah.

You know, I mean, smart people kind of do that. And so an eigen layer side, the competition, I look to utilize it, you know, all of the eigen layer, all of the people that are working at the foundation and labs, we look to it as something that, you know, brings out the best for the restaking space.

And it definitely brings out the best for us. Like, I feel like once we started having, you know, some competitors appearing in 2024, once people saw the light, the billions of dollar light, then, you know, then it actually really helped out a lot because you can, you can make harder decisions internally of like, well, we'd like to do those four things, but which is the one that we need to do right now? And resource management, like it's in a sense,

It's much more important what you choose not to do immediately. What you choose to put later in your roadmap, that is the critical harder decision than what you want to do now. You know what you want to do now. It's just problem is you want to do 10 things right now and you can only do one.

So, you know, removing those is like, you know, something you get a lot if you really pay attention to competition and what your customers are telling you by like, what did they like that the competition is doing? I think in the cryptos, cryptos always have the hacker culture. So we just, we just talked with Sergey, the co-founder of OneNiches, and he is the beneficiary from the hacker cultures. And the one inches came from the one hecto, right? Yeah.

Yeah, keep trying, keep trying, keep trying. So everybody are competing during the hackathons and everybody competing for the rewards. And they always have the good ideas generated from all the competitions. Yeah, absolutely. So you just mentioned about making decisions. It's about our...

the final question, the last question. So for the next three to five years, and I believe EgonLear will keep learning and keep evolving and keep finding the deep layers of the blockchain, the whole technologies. So in the next three or three to five years, what do you consider to be the EgonLear's most important development milestones?

Yeah, I mean, I think EigenLayer, if we're very successful, then we do two things. I used to actually call them two phases, but now I'm seeing that the two phases are happening like happens in blockchain, 10 times faster than in the regular startup world. So they're happening overlapping with each other. One is improving the efficiency and the innovation rate within blockchain protocols themselves.

So, you know, we're seeing evidence of that. Like there used to be like in some sense, I would say some of the reason that you ended up having all of these different L1s being created was that they didn't have a way to sort of get what they wanted while building on top of somebody else's L1.

And in Eigen layer, we sort of normalize and, you know, we use Ethereum security, but we don't put the Ethereum chain as like the anchoring chain from like a, you know, transaction settlement point in the way that Ethereum anchors L1s that are rollups to it.

And so that actually allows people to build something that looks more like, you know, a layer one slash layer two network on top of us. So we kind of free up the ability that people are able to have a huge amount of token value in their protocol without having to completely leave the economic security domain of the, you know, what I would say I really label Ethereum is like the programmable money security domain and chain.

So we do that on the blockchain side. There's a tremendous amount of people that just have a hard time kind of getting to critical mass. You have to raise a lot of money. You have to spend a huge amount of money on the marketing and all of these other things. And you can kind of focus on building much more. Exactly the same, like before the public clouds, you have to actually spend millions of dollars building out your computing hardware, your data centers.

And that was just too expensive. And that's why everyone loved when they could just like rent this as they go. So unlocking security in this way is that kind of an unlock, in my opinion. So that's on the blockchain side.

That makes blockchain a much, much better infrastructure. And I think it elevates it where blockchain now is able to handle the capacity needed to move over the entire tech stack that we all use every day and move that entire stack over, not to become blockchains.

but to be using this blockchain cloud of services as the kind of, you know, secure version of databases, as the secure version of computation services. And, you know, when we do that, then that second part, the first part is super valuable. Of course, everything in the blockchain space is valuable. But that second part and, you know, really moving over the tech stack that, you know, the global economy is built on,

over to settle and be secured by blockchain. That's something, like I said earlier, you know, the consumer market, you know, consumer market total revenues in consumer markets is like 2 trillion. In enterprise or business markets, there's like another 2 trillion of revenue that's spent

in the tech stack worldwide. It may be higher now. I honestly haven't looked at the number for like five years, but, you know, but it's a huge kind of unlock. And, you know, while, so I don't want to discount DeFi, okay? I may not be a person who's super financially motivated personally, and I also never really worked. I didn't come from the fintech world. I came and I've learned a lot about it. And so I put absolutely, you can't actually build a new technology world

built on technical security without having money in the technology. So not just having like outside money, like gold, like it's great to have gold. It's not tied to some nation's currency. The problem is you can't do computations passing around little gold coins, you know? So, but you can do it. You can tie together these gold coins effectively through the crypto tokens and make it at the base layer. And that's important because eventually you,

If you go to New York and you look at how much foreign currency is being settled through New York on a given day, do you guys have any idea? Have you heard this number before? No. It's in the range of $7 to $10 trillion of currency passed through New York companies daily being cross-settled. This is what the global economy needs, trillion. Yeah.

And this is why it tells you why there's so much money there. Because like you could have a fraction of a basis point. And, you know, one basis point, I mean, one basis point on 77 trillion, it's like around a billion or so. But still, it adds up to a lot. Yeah.

Because that's only one source. It's still video. Yeah, yeah. It's still, it's a lot for one day. And it's only a portion of the revenue because the financial markets make a lot of money on, that's money in movement. There's also money that you make on money in storage. And so a lot of the financial world is like about that side as well. The lending market, the transaction market, you know, all of those types of things.

So that second part to me is really the exciting part because that's when we get to like, we built the internet in the late 90s. It then became Web 2 and with cell phones became like part of everybody's lifetime experience. We all live with a...

you know, our being in the real world. And we also have this digital version of ourselves, this digital shadow that lives entirely in technology. And so this unlocks it that the digital shadow can now be rebuilt with rules that are not corporate and like, you know, kind of investor and stock market focus, but are instead focused on people who are trying to build things that are healthy for humanity and healthy for the way that we coordinate. Shriram always has a statement, which maybe you're getting an inkling of from talking with me that

Eigen layer, you know, over time becomes the coordination superhighway for humanity. And that's kind of what it means that, you know, you rebuild a technical stack and

And if you look at elastic shared security in theory, like in phase three down the line, you could be taking security commitments and writing them into like off technology commitments that you're making. You could be de-risking real world transactions, kind of like real world assets. You could have real world commitments that are being brought on chain where crypto assets are basically getting value for providing the security for things that you're doing that are not even in technical sense.

So, you know, there's a lot there because like, you know, we obviously have to have buildings, we have to have, you know, police forces and, you know, all of this other things. We need courts and, you know, judicial systems and, you know, all of that criminal and civil. So, you know, it gets kind of wild if you start looking out, you know, 10 years later.

But let's just focus on phases one and two. Phases one and two are being very heavily built now. And the phase two one, I just want to say one other comment is that I just got kind of tired at a certain point when I got into crypto. Every VC talking about their favorite startup would be like, this startup in blockchain is the AWS blockchain.

of, you know, crypto. And I was always like, okay, like, do you understand like what ABS is? You know, what AWS really is? I talk about it. If you look at, there's a talk that I give, which is like, you know, moving the public cloud to crypto, right? And what I actually talk about is like, you know, all of AWS is extremely decentralized now. The only thing that's centralized in AWS is the control, the control of the money, the control of who gets to, you know, bring hardware into the network.

Who gets to bring software into the network? Who receives the payments? Who decides to take their cut? The pricing, all of that is centrally controlled by them. So, you know, I kind of view when you look at that aspect and, you know, why does AWS get to do that? It's because, sure, they bring a lot of resources, but so do many other cloud providers. But they have this trust and it's like integration. But I'll focus on the trust part especially.

that once people stick with them, they're like, okay, this is a corporation, it's huge, this works, let's just stay there. It's a safe place. So if we can actually bring that level to developers around the world who are bringing technology,

that decentralized trust through blockchain and crypto is not just the same as, but it's actually better than any real world company. You notice all the time, real world companies fail. They come and go, right? The vast majority of corporations in the world are like three or four months of cash away from going bankrupt. They just have to keep making revenue.

The trust is based on the reputation, not based on what you guys are doing, what the security is. It's a weird thing to say that if someone wanted to call EigenLayer the AWS, you could look at the trust

and the kind of like, you know, the monetary, you know, aggregation of AWS 3, of AWS. And you can say like, oh, well, you know, EigenLayer is that. But I don't think anybody thinks that is AWS. Like AWS will be all the protocols that are building, you know, in the crypto space and many of them on EigenLayer. And EigenLayer is just facilitating taking the locked up security on every single chain in crypto and then pooling it and making it something that now is a Web3 network effect can actually defeat Web2.

So, you know, that to me is like the critical unlock of AWS. And then you may ask, like, why didn't investors see that? Well, because that's very complex. And like, that's, you know, harder to see than a winner takes all of like, you know, you look at a network like DFINITY that came out and they were just like, we're going to be the AWS. Okay. And they're going to control the hardware. And

and they're going to control the software and the API layer. So I just saw somebody talking about bringing the AWS to crypto and maybe not the way we want it. You know, it's more like one-line pitch so that you don't need to explain a lot of stuff. So everything's concentrated. So it makes the people understand more easily. That's, I think, their purpose. Yeah.

Yeah, yeah, exactly. Exactly. No, you're 100% right. Amazing. Yeah. Oh, yeah, go ahead. Yeah. So what's mainly the challenge currently, you know, in the sharing security, the landscape? I mean, so we're starting off like a multi-sided marketplace. And so we're starting it off like initially we had to kind of start off that there was enough stake in the system that it made sense. And so the first flywheel that we were really focusing on was on staking.

Um, we thought we were going to have to really focus heavily on like the operator side of the network that ended up just taking off really well on its own. Like we were getting hundreds and then even more operators just from us, like spinning up that first flywheel.

on the actively validated services, the protocols that take a huge risk when they choose an ecosystem to build on. That one is one that both has been doing really well in the sense that it's like spinning up and a lot of things are coming to it. But it's also one where I think that's where a lot of our focus is now on. How do we actually help the people who are building the services and the protocols on EigenLayer become very successful?

How do we help that people who are building using the security model versus like building on a monolithic security domain somewhere else in crypto? How do we make sure that that is actually the best model for them? And we want to do that in a repeatable basis for many of the top protocols that are coming out.

And, you know, we want them to be able to kind of trust and use each other security because fundamentally when they're using security from another protocol building an eigen layer, they're sharing and getting cost effectiveness, you know, inside of their network as well. So that probably if I was saying like where the focus is for us these days. And then if you think about protocols that are building on us, what does this mean? So a lot of them, they care a lot about total value locked. It helps with like their liquidity, their slippage.

You know, it helps with interest in them. They want to have, you know, they don't have to worry about a lot of operators. They don't have to worry about a lot of stake. That's all available in our network. But then they also have to have a lot of users. And so, you know, there's a big focus for us of like, how do we make these protocols that are coming in have like a shared user effect that's larger than you're getting in other places of crypto? How do we help them have a shared liquidity effect that's larger than other places? These are not easy problems. I don't want to tell anybody like,

hey, this is all just like up and to the right, no problem. Like we are working hard on it. We have a large team. We're not only engineering, we have a large business development team. We have a lot of people out there, you know, working on community ecosystem growth and everything else. And we'll still be growing that massively into the next year as well. So, but that's our focus. I would put like, if I was doing the one line thing, I would say like, you know, we're very focused on the net value that comes into EigenLayer comes in from these protocols, these AVSs.

And so our focus is on making them successful. That's really, it's sort of like long-term, the success of Eigen layer is measured by the success of AVSs. There's nothing else like the long-term value that we get in Eigen layer is only set by them. Thank you so much, Robert, for your time today. And I'm really looking forward to, you know, invite you back in, you know,

quarterly or six months later to see any updates on EigenLayers, especially, actually, I want to ask you a question, but I prefer not to, because yesterday I saw Serene post a photo outside Hyperbolic office and said, you know, we are cooking something amazing. So I'm pretty sure it's like some secrets. And I don't think you want to share this early, but so let's keep it.

you know, perhaps three months or six months later, you can come back and tell our audience what will be that secret. And is that something will excite all of us, you know, especially. Yeah. Yeah. Yeah. No, I mean, I, I always, I always had a little more information about Eigen layer from the start. Cause I was working as a research partner with a VC firm, not poly chain, but one of the sort of co-leads of the pre-seed round for Eigen layer. So yeah,

But part of the things that made it so attractive for me to get an eigen layer is that I didn't want to be on the outside seeing a picture of Sriram with any other protocol. I happen to be in the privileged place where I get to know these things and I get to have an impact on them. So it's really great to do. When I talk with people about, do you want to work as a VC, an investor, others? I'm like, if you'd like to be in the action...

Go find something you're passionate about. Go find a group of people who are also passionate about it. Start a company or join a group of them that have started a company and you're going to be happy. So I didn't know that you collect the...

I didn't personally. There was a VC, but yeah, no, I was very, I was, you know, so I was working at this, at this place. But so like from the very beginning, I've just followed the track of Eigen layer. And for me and Sri Ram, we actually met back in the previous bull cycle of like 2016, 17, 18, that one, because he first came into the space then, and he was doing trifecta and prism and some other startups and other stuff. And

When you see someone who's really smart, very charismatic, very optimistic, they're like a lightning rod. You're kind of attracted. So I've enjoyed knowing him for quite a while now. Okay. Okay. Thank you, Robert. You just answered me a lot of the questions and you make all those papers I've read make sense.

Yeah, no, really happy to do that. We didn't even talk about governance and other things. So, you know, some follow-ups, depends what your audience likes to talk about, but...

Hopefully this was interesting to some people, and also really great to meet both of you. So thanks for inviting me on the show. Hopefully I'll see you in person again in June next year. So we're heading to the permission list. I'm not quite sure whether you'll be there. And also we head to Hong Kong in February this year for the consensus. We'll see each other again.

Yeah, between me and Sri Ram and other leaders at the company, there's a lot more of us hitting Asia, you know, Hong Kong, Singapore, you know, Japan, Korea, you know, other places throughout next year. And then, yeah, people are coming over here. I don't know how many people are going to trek down to Argentina for DevCon, but I'll be there too. Oh, really? Oh, you already know that? That's Skyler, and he keeps it a secret.

Okay, okay. I'm hoping I'm not like putting a secret. The thing is, even if I'm saying it, maybe I'm wrong. But you know, that is what I'm understanding. I'm like, where it's going. Yeah, we definitely go. I've never been to South America. Yeah, yeah. There's a couple of really amazing dev teams that are down in Argentina. Lambda Clath and Wonderland are two that I know of. Just really passionate, great crypto builders.

So I think it's going to be an amazing DevCon. I love that DevCons go to different regions of the world and they're just like, we're just not going to do a DevCon in New York City. Like we don't need to feature in New York City. So this last one in Thailand was amazing. I love that choice too. Indeed. Okay. Thank you so much. Thank you both. Hope you have a good evening.

and then enjoy all right thank you yeah see you soon yeah and merry christmas oh yeah merry christmas happy holidays to everyone absolutely bye-bye

We're sunsetting PodQuest on 2025-07-28. Thank you for your support!

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