#224 Jeff Garzik: Metronome – Of Bitcoin Satellites and Built-to-Last Chain-Hopping Tokens

Transcript

[Music] all right welcome to episode of the show which talks about the technologies projects and starts driving decentralization in the global blockchain revolution my name is Sebastian Cujo and my name is Robin crane we're here today with Jeff Karthik of course many in the blockchain industry will have heard of Jeff he's been around this industry for a very very long time he was a Bitcoin one of the first Bitcoin core developers one of the militant French ones he's also had a lot of other projects that he's been

working on so I'm super excited to have have you on Jeff thanks a lot and hello world so we talked briefly before the show right so of course we want to hear a bit about how you regionally got him off from Bitcoin which I think was like two thousand nine or ten or like a very long time ago oh it was back in 99 I think I have about 20 years of blockchain experience now no just kidding I've seen so job ads claiming you know they want candidates with 10-15 years of blockchain experience and I really wonder you know what kind of people they're hiring because those don't just don't exist my Satoshi may have ten years right yeah everyone to a

candidate but yeah the great slash dotting of July 2010 when myself Jed McCaleb of mal Cox Fame and many other people found Bitcoin from just one single article on this news for nerds website cool and but before Bitcoin right you had a long history in in working on Linux as well can you tell us about that yeah yeah I've sort of been a nerd all my life I've been programming since the age of eight working on trash 80 computers that fans will know what I'm talking about and everyone else will have no clue what I'm talking about

programming basic and Pascal and that led me to working on the first CNN web site here in Atlanta they put out the call and that led me to Linux and leanest Torvalds working on open source software it was this at the time amazing environment where you can if you want to make a software change in you're a software developer you make that change you create this file called a patch which describes your change and then you you email it to the software maintained or the leader the inventor of Linux in my case leanest Torvalds and it's kind

of like throwing spaghetti at a wall he gets hundreds of emails a day and you wonder if he's gonna even listen to a nobody who is that some college in Atlanta and he did he received my patch he applied it to the the Linux kernel which is the the core of every Android operating system and Linux running in every datacenter and that was sort of the start of a 20-year journey and open source was that first introduction to to merit based programming and meritocracies that you know if my patch was you know complete crap then people tell you your patch is complete crap and

here's how to improve your change but it was accepted and that I you know gave a young developer that sort of boost you know the little ego boost or whatever that you need to get up in the morning and keep going every day and pursue your pursue your dreams and this internet open source stuff working in public airing your your dirty laundry in public every day on open source mailing lists as you discuss changes that was a really appealing environment and Linux in the early days in the early 90s mirrors blockchain almost to the tee in many ways today

it's it's roxas there's a lot of flame wars and factional back-and-forth and all sorts of silliness but at the end of the day it's it's serious engineering people are passionate because they care about what they're doing they care about making changes in the world world so that was Linux and I think that's a Bitcoin and blockchain today so having been in open source software for so long you mentioned you know sending those patches through email of course there's been quite a bit of evolution since then I mean we've we've gone from that so a very simple system to then like SVN and

and now git and these new types of community open-source platforms you know in your view what has been the most fundamental change in open-source and similarly like what has remained the same like how has open-source friendly changed in 20 years and how is it also very similar well I was fortunate enough to be there at the birth of get there was a that was originally written by leanness over a couple weeks and due to some copyright and licensing issues we were having trouble with the email

leanness patches and he applies the manually system he he and I and everyone else we disliked SVN we disliked CVS those didn't really seem like solutions there was one solution that nobody has really ever heard of bitkeeper it's still around and that was one of the inspirations the first of these repos that allows you to clone the entire repo the entire history whereas SVN CVS they were very server based they're a very client-server and where this was decentralized and that was a

huge huge point and it trickles back to Bitcoin and blockchain today is that you can work remote you your repo might be the leader maybe if you get hit by a bus as the proverbial saying goes your friend becomes the leader simply because he has the latest repository that was the way early get worked as well and we moved away from that beekeeper system because it was closed there were a lot of non open source non open license components so we went full get and how has it changed in 20 years sadly it's become more centralized

is that git was originally intended to be you post your repos on your websites I'll post my repos on my websites we each pull from each others if one repo dies everyone else has a clone very decentralized very natural github which I use every day I love it but at the same time I think the open source world would melt down if github and Travis go offline for 24 hours so it's been more centralized than I hope that we find a way to make it less centralized

what do you think of these new systems that are now coming into this space I forgot the names exactly but you know these these are the blockchain based decentralized get platforms well that was always the natural extension forget get stores objects you know it hashes an object and its really a hash based object storage system almost a file system and that's that's no surprise coming from leanness and unix and everything is a file type computing philosophy and we see today with say ipfs ipfs would be a and I'm pretty sure

there's a gate connector for it is a natural extension forget because it's ultimately an object addressable system you say give me this hash and here's this get commit and we're doing the same things in blockchain with blocks and transactions we're doing the same thing with ipfs just that you know content addressable object addressable filesystem it's it's really the just an extension and so I inspect out 15 years ago a get with BitTorrent and ipfs honestly you know unintentionally took my design and improved in a hundred fold

and so it's it's a very natural extension I think for today yeah I'm sure we're gonna see some a lot of interesting developments in here in Berlin there's a team called us going that's kind of working on somebody I thought too but so to move to Bitcoin now so you learned about it in 2010 and then how did you get involved and what was your role in you know in that early stage of the project sure well it mirrored my linux experience almost exactly I made a change created a patch emailed the leader of the software project and they accepted the patch it

was it was really that simple you know other patches were you know you get feedback you get a patch rejected hopefully the the leader doesn't say your patch is complete crap and that's sort of the open source merit-based development method it was Satoshi and Gavin in those days were primarily leading development Satoshi sort of transitioned the lead merge role or the project maintainer role - Gavin while still providing you know the leadership and changes for say six months to a year then Satoshi sort of faded out of the

picture he just emailed and said I'm gonna be busy for a while and I went communicated less and less frequently and eventually stopped communicating at all and that that pretty much mirrored his forum posts as well is on Bitcoin talk he posted a lot and then less and less and eventually just sort of faded away and I think that that that more than anything else stopped stopping the leaving of a trail of data fingerprints is the best thing you can do to protect your anonymity and being anonymous it forced all of the

other engineers myself included to really just look at the code and say does this make sense from a code perspective you know I don't know who this random anonymous guy is and so I'm not putting any credit in the authority of a person X person Y person named Satoshi I'm putting all of the credit in my evaluation of the codes so again very open very merit-based and being a being pseudo anonymous really made that really crystallized that I think for the rest of the engineers until you did you keep continuing to you know make little improvements submit

them was there particular parts of the code base that you mostly worked on or was kind of I was sort of a jack-of-all-trades you know the early pain point was the initial block download it's still sort of a pain point today is that downloading and validating the blockchain before the node is up and running so I made many improvements to improve that user experience based on all my experience with storage and Linux I did a lot of early mining work I wrote the one of the first mining pools I wrote the first CPU miner Satoshi actually asked me to do that since there

are so many requests to you know put in this option of the optimization that optimization into the in client minor he asked me to create an external CPU minor and the ASIC miners you know the bit mains and that whatnot the mining software buried deep inside still carries some of the remnants of my early CPU mining work from many many ear eons ago it seems so mining there was a lot of API work inside the node I turned it into what I call a router I stripped out

the wallet I made a no wallet mode inside a Bitcoin core that sort of hyper secure and hyper optimized just being a full node that work is still there today there are there are a lot of other bits and bobs in there as well but it's sort of a look for a pain point and fix it that's that's really what I consider my role and so you'll see me all over the place if it weren't for a quirk in github commit statists I would still show up as one of the top 20 Bitcoin core contributors

cool yeah and then so you worked on bitpay as well right I think you were one of the first kind of like you know Bitcoin focused developers to get paid by a start-up you know to exclusively work on my pay right yeah Bitcoin yeah I left Red Hat in 2013 I took what at the time I thought was a big risk going into this new Bitcoin block chain space and jumped over to bitpay bitpay has really turned out to be just an amazing not only business but community there are at least five or six businesses that were spawned by bitpay alumni after working

there it's a really amazing tech focused shop the CEO Stephen pair has a real sharp head on his shoulders and so I'm not surprised to see not just myself but a lot of the Argentinians like Zeppelin solutions a big smart contract auditing shop several others they're all alumni at bitpay so he then went on to found the co-found block tells us tell us how you how that came to be in how you met Matt rose a confounded block sure well rewinding the story a bit a couple years to 2014 after bitpay I went to one

of my passions which is space and I developed what was then the first open source satellite the United States has a lot of really annoying rules about exporting satellite technology outside the borders of the United States it's really sort of left over from the Cold War type rules and people may remember back in 96 when President Clinton freed cryptography before that if you took source code crypto source code from the US and crossed the border with us Corsica crypto source code you are

exporting munitions weapons-grade munitions you know that's how dangerous they can trick considered cryptography and Clinton in 96 issued an executive order changing that and then we had the internet boom and you know freeing cryptography frees people which frees markets which frees commerce we saw that in 96 I'm just saying people crossing the border with like floppies that's right crypto like no there's a famous story of the phils immerman the author of PGP he printed the entire source code on an OCR friendly book he got on a plane and

flew outside the United States with this book and then scanned it in and that's how PGP was legally successfully exported from the United States it was using the First Amendment and printing it as a book and fill on the plane he was scared he didn't know if he was going to get arrested for exporting weapons-grade munitions or not so all sorts of arcane rules and they you know sort of getting back on track those were the same in space is even if you build the world's most commodity satellite you downloaded instructions off the internet

you 3d printed them you bought an off-the-shelf computer that's still exporting a restricted material according to the US Department of State US Department of Commerce and so I worked through all the paperwork and mess to get approvals to post my satellite design on the Internet and that was done vagin Space Systems in 2014 the first open-source satellite it's still there today DSS CEO on your web browser and you can go see the bit set and down at the bottom there's a 97 page preliminary design review that's

essentially the bits at technical specification and that's what we had to get State Department approval to open source but you asked about block that that's sort of how I met Matt my co-founder at block is Matt was a very successful entrepreneur and he came out of the private equity space he built in ran six enterprise software companies was very successful he found the blockchain space in 2013 started investing in the various bridges roads and tunnels the blockchain while it's payment processors miners you know

many of the companies that we're familiar with and through that he met just about everybody in the blockchain space myself included and I got him involved in dunvegan DSS and there all sorts of you know puns and jokes to be made you know never got to space the launch never launched you know the the space venture never got what it needed which was a very large ticket of 14 million dollars to build a constellation in of satellites in space but I met so many people during that experience Matt was one of those and you

know sort of getting back to present Matt and I got together in late 2015 and we white boarded what are the the biggest opportunities in you know Bitcoin blockchain crypto and that is the sort of Red Hat of blockchain format there are a lot of open source projects there's a lot of developers a lot of innovation but at the same time if you're a large enterprise business like a Goldman Sachs at JPMorgan some of the you know the the bigger household names you're not going to rely on a volunteer developer at 3:00 in the morning when your software is failing you need that

you know professional support professional maintenance that's that's essentially what Red Hat gives big businesses enterprise today and that's what we formed block around was that you know taking blockchain and specifically you know Bitcoin aetherium the public networks to enterprise but what what surprised us was this you know not just the fortune 500 but what I call the crypto 500 so many startups are these days well funded and they need help they need blockchain expertise they need

people to help tokenize this or that and so we formed block labs which is kind of like a Xerox PARC or a Bell Labs to complement that and that's where metronome and some of these other token projects are coming so there's like the enterprise side of the house working with the fortune 500 and the böck lab side of the house building decentralized networks and those really feed each other so one of the main products that you're selling it block I think what what types of solutions are you building for enterprise don't you have the sort of technology but you also have this consulting business not no not really consulting we have a product

block enterprise that again sort of similar to Red Hat is sold for a monthly subscription so you get the software as well as you get hot fixes maintenance updates customer support etc and that's that's the product block enterprise that's our one software product and then on the other side of the house we build decentralized products like metronome I really believe that when you're ten years in the future when I shares Blackrock is building the next ETF they're going to build it like we're

building metronome and some of these products and so that's that's the other side of the house we we don't really do consulting okay I missed I misread the website then so to say on the topic of enterprise for just for another few minutes what what what types of things are you learning I mean coming from the open source space and working on on Bitcoin and these sort of anarchic distributed systems what sort of things are you learning from working with enterprise that have very different needs this is coming from someone who spends most of his time selling blotching to enterprise as well so yeah I can relate to that and what do you see as the future there is

this something that you think will okay at the moment there's there's a massive need right and enterprise and Fortune 500's are are hungry for this technology they want to experiment with this technology and and see how they can use it and presumably to understand how it might change their business do you think that this is something that will continue or will open systems sort of take the lead at some point and become the dominant place where innovation occurs well I think that and block very much built its strategy around open systems well.all and open networks will always be the driver of innovation and so very specifically our block

enterprise product for example is only open networks only software that came from open networks that have been field-tested with real money over time and so that's sort of Bitcoin and the bitcoin cousins and aetherium and the etherium cousins and there are a lot of young whippersnappers software wise that are wet cement but strategically we we ask ourselves what is going to generate that innovation over time it's going to be the open source community it's not going to be just to you know pick on one particular company it's not going to be a customer relying on our three and only our three for our three block chains

that's a higher total cost of ownership for the customer and a smaller community and therefore you rely on r3 much more to generate all the innovation that you as a customer are looking for whereas if you stick with open networks and open source you've got the whole universe of Bitcoin aetherium Manero z cash all of that innovation to pull from and where are you going to be 12 months from now 24 months from now if you have that open source open network strategy you're going to be pulling from the same piece of the same source of innovation everyone else is pulling from it's not a

sidetrack like proprietary systems and so open networks always win opens always wins with that said I think that private blockchain is always going to be around that's essentially like a VPN of sorts and you know privacy and private networks and private data distributions they always make sense but the software the robustness that comes from openness open networks the innovation that comes from openness and open networks you know I really do believe we're reinventing the Internet you know none of you know

the apps on our smartphone and the the you know the the websites that we're familiar with today none of that would have happened if you needed a license to use the Internet openness permissionless innovation that's what blockchain brings and that's what the internet brought 20 years ago and for enterprises they'll they'll dabble with private networks they'll set up consortiums because that that's sort of a comfort level but it's really just blockchain with training wheels the the action the innovation that happens out in the open yeah very much aggrieved his perspective I would like before we go to metronome I would like to come to topic that of

course also many especially those following Bitcoin have been very well off which is a segue to xfig right so the scalability of debate of course has been going on for many years I mean I think we did podcast on episodes on this podcast like back in 2014 about that topic and then I would say kind of the culmination of that was segue to X last year where a group of people and and you were a very key person there pushed for a block increase to 2 megabytes as well as activation activation of segwayed of course we did gets a great but not not the 2x block size increase and now this is also kind of facilitated the split

into become cash and and Bitcoin so just looking back on this how what's your point of us as we have some distance on that what happened there well the you know starting at the fundamentals Satoshi introduced a temporary limit you know many years ago that one megabyte base block size limit and it was always the plan when he introduced that limit to increase it at a particular either block or date and so that was always the working plan that was the plan that was communicated to

the market and what many people build businesses on but starting sort of with Bitcoin XT in 2015 is there was you know push back to following that sort of original Satoshi block size increased plan and there were there was Bitcoin XT in 2015 Bitcoin classic Bitcoin unlimited Segway to X those are all sort of progressions and attempts to follow that original upgrade plan to increase the block size

and each time there was you know mud slung and and all sorts of you know DDoS of nodes and shenanigans and things of that nature that pushed back against that and it was you know the segue to X was sort of the latest chapter in that and it was a really disappointing spectacle of pushing back in some quarters against businesses that have been asking for this for years and ultimately didn't go in that particular direction so at the end of the day there was a consensus and you know the world

moved on my predictions you know were either sort of path a or path B path a is Segway it succeeds you know obviously it didn't and Bitcoin largely continues as one coin in one community or path B is what I call the messy divorce and that's essentially that one faction one and you know wasn't able to come together with some of the other factions and so you have a split and you've got not just Bitcoin cash but you've got a bazillion Bitcoin Forks out there you've got a ton of tokens you've

got people like the deke red team from 24 months ago you know moving to an entirely different platform you've got this sort of you know it's a spreading out or a Cambrian explosion of both projects as well as Forks and that's all of that is you know fed in part by that messy divorce phase that I talked about so we're we're in you know the the second of two predictions is that messy divorce phase and this is entirely predicted and we'll we'll sort of see where it goes from here and so a messy divorce that's also messy there was for

you like you also feel personally you've moved on from Bitcoin and focusing oh no not at all we have a lot of Bitcoin customers so you know we were still full bore on Bitcoin itself so big on customers you mean four-block yes and what does that mean become customers would you actually okay they they pay for our block enterprise product in Bitcoin our block enterprise product is a saucer story that provides Bitcoin aetherium it'll soon provide

litecoin Bitcoin cash both at the node level the wallet level SDKs modules basically everything you need to either connect a Bitcoin spend some Bitcoin check your Bitcoin it's sort of that infrastructure software so it's a an enterprise hardened node if you want to oversimplify so if you connect a Bitcoin network and you want to run a full node for example you can either again depend on volunteer developers and unpaid support or your if you're an enterprise you can consume hardened qaid secured software and the support package along

with it and so that's what we mean by Bitcoin customers as customers that are using Bitcoin in their businesses they're using our infrastructure software to do that ok ok and what right you may use the term messy divorce it did seem you know quite vicious at times and and you know certainly we were to some extent also saw that you know in comments and stuff like that so do you feel like there are some important lessons that you take away from that or what are some things you learned during that whole segue to X think that you didn't know before you know it it was

basically what we expected is that in previous you know iterations like the Bitcoin classic and the Bitcoin unlimited you saw a lot of astroturfing you saw DDoS of you know Bitcoin core alternatives you know you saw companies sending executives all over the world you know you know throw mud at me and throw mud at other developers and stuff like that it was really quite silly but all of that was expected we expected unprofessional behavior from you know other you know prominent blockchain companies and and we got it you know

Bitcoin today over 80% of all changes that go in the Bitcoin core are originated from one of two companies and no surprise the developers and contractors and execs who worked for those two companies were some of the loudest on social media so they're you know all of this was entirely expected none of it was a surprise so again down to you know that messy divorce outcome gray so I'm moving on to to our last topic of today's episode but an important one which is metronome so metronome is a project that has been I

guess you could say spun off by block right it's it's a block product so could you please tell us what does metronome why did you build this product and what problem is it fundamentally trying to solve sure so metronome is a new cryptocurrency sort of a design from cleanslate cryptocurrency with an eye on resilience durability something that'll last a long time so there's one of the things that was has been obvious for many years not just with you know the various Bitcoin dramas the various theory of dramas the theory em hard Forks we see all this stuff why

should a currency or an asset be limited to a single blockchain and why should that money supply not be engineered for the long term so we really looked at what is the best of etherium what is the best of Bitcoin and what's the the latest technology in terms of building a cryptocurrency that will ideally outlast its creator what's the cryptocurrency that will outlast blocks existence how can we create and incubate something like that one of my philosophical and

philanthropic interests is the the long now foundation it's long now.org it's one of the groups that is building among other things a 10,000 year clock a clock that will continue operating for 10,000 years and the philosophy there in ghent you know highly generalized is that we pay way too much attention to the short term we you know corporations look at quarterly numbers the stock market looks at quarterly earnings we plan for the next month the next sprint the next quarter the next year we need to instead plan

for the next decade in the next 25 years the next century and so that was really the motivation behind metronome is bitcoins supply for example declines to zero it haves every four years a theory UM's currency supply is a big question mark right now it's five ether per block new money supply but the developers have openly communicated that that's going to change we just don't know how it's going to change so if you're looking at it from a monetary perspective a currency supply perspective there there's a big question mark in the future of one of

the foundational currencies so metronome was really the genesis of that is if we start with a clean sheet of paper what would we build in terms of a crypto currency that's there for the long term and so that's what we came up with it's a ERC 20 compatible cryptocurrency that runs on any chain that supports aetherium vm and it has extensions for ER CA 2 7 which is sort of the the latest token standard it adds mass pay which Bitcoin has but it's new to aetherium you've and this saves a lot on

transaction fees a lot on gas if you can have one transaction on an eighth chamber people you know that's no sweat for Bitcoin multiple transaction outputs but that's new to aetherium so we engineered that into metronome subscriptions which are new to blockchain in general because block chains are pushed rather than pull tight payments we added subscriptions and several other payment type features so it's really a cryptocurrency from scratch that we want to be durable for the long term let me just jump in the

one point here which is one of the so interesting but I also find strange things about metronome right because metronome doesn't have its own blocking but it leaves a lot right here am I so in in one way it seems kind of strange to me to say okay we're gonna build this thing that's really really durable it's gonna exist forever it's better than the existing platforms that aren't built for long term but it it's dependent on them or particularly tomb and it's built on top it seems like clarity me no I totally get it and you know computer scientists we're used to thinking abstractly and we use the blockchain is

a security layer that this or a transport layer for metronome but at the same time we said it's so important that if it if you're on a single chain and you have that token basically you have to sell out of that token to leave that universe to leave that blockchain whereas with metronome we draw the analogy to you if your metronome asset is a gold bar you can take that gold bar to a new warehouse that's importing your metronome from one chain to another and maybe that warehouse is a little bit better maybe it has nicer security cameras outside or something like that

to you know to make an analogy but essentially unlike other sort of cross chain products there's no asset exchange there's no swap and so for tax purposes that's very very very important if you're doing for example a cross chain swap going from Bitcoin to litecoin you just had a tax event you know maybe you bought your Bitcoin in 2011 and when you exchanged your Bitcoin in 2018 for litecoin you just had a tax event pretension potentially a very big tax event and so even if it's a cross chain atomic swap

you're still moving through assets whereas with metronome it's the same asset moving to a different blockchain and so that's the that's the new and different part in terms of cross chain so I'd like to to dissect this there's a lot here so one of the things that that sticks out on your website is is this idea of a self-government portable and reliable system so we've covered the reliability aspect I think what you mean by that is that this is a system that is meant to last for a very long time right where the currency continues to be created over time the portability aspect

being able to move these coins from one blockchain to another and we'll dig into that in a few minutes but the self-government aspect could you describe how metronome is self governed what does that mean exactly sure so this import/export mechanism you export your metronome and your metronome only and from one blockchain and you've import your metronome and your metronome only into a new blockchain or you know possibly the same blockchain and so the self-governing part is that each stakeholder is selecting where their metronome will live and so for example

and metronome is self adjusting so for example if half of all metronome holders are on the eath classic chain and half of all metronome holders are on the eath Shane then the daily auctions are split in half and half the daily supply of new metronome appears on the eath Shane in a daily auction and half of the new metronome daily supply appears on the eighth classic chain and you participate in different contract sets and as a result it is self selecting you control your stake in your stake hole block doesn't have any say whatsoever

and where you put your metronome and so that's the self-governing aspect is if you see that hey maybe troubles on the horizon on the etherium chain then I'm going to port my metronome over to the it classic chain and let the let the storm clouds pass but it's in your hands to make that decision block has no control over where your metronome is or you know how you transfer it okay thanks for pointing that out so you mentioned auctions so let's let's then dig into the different components of metronome so there are essentially

four smart contracts there's the the auctions contracts the proceeds contract there's an autonomous convert a contract and then the the contract that issues that token the ERC 20 contract could you describe so the the flow of metronome tokens in these contracts and sort of like from the auction to say like a potential trade of eath for metronome for instance sure sure so the first contract which is not really in that flow that's the ERC twenty-year see eight to seven token management piece that's what most other tokens have I like to call aetherium lol

ledger of Ledger's and that's what ERC 20 is and that's what this is and it's no different from that we added like I mentioned some new features mass pay subscription and some other features the second contract auction every day after the initial auction of 8 million on day 0 every day there's a daily auction of two thousand eight hundred and eighty tokens and that's to a minute and that is sale at using a descending price auction and a brief explanation

descending price auction it's not like a reverse Dutch auction it's a bit different it's amusingly like crypto kitties is that the auction starts at a very high price and it ticks down every 60 seconds until you hit a market price where some of the tokens are sold and the auction ends when all of the tokens in the auction are sold so some people might buy at 1/8 some people might buy at 0.5 Heath some people might buy at 0.1 E and it's settled at the price you buy so like the rate and auction to contrast everyone

gets the same price the lowest price in the auction in a descending price auction everyone gets exactly the price they pay at that time and it ticks down the price is set at a specific time so from there the auctions receive eath into the smart contracts set and the auction buyer they have metronome in their wallet so where does that go unlike every other ICO where the eath goes to the company's bank account in metronome we're we're we like to call it it almost an Una's the raise doesn't come to us there's no presale there's no

you know whales are already in by the time the public gets to it there's just the public sales just the auctions and the eath from those auctions goes to contract number three the proceeds contract the proceeds contract is basically a big savings basket all it does is hold each now everyday 0.25 percent of the total balance of all the eath in that proceeds contract goes to contract number four the autonomous converter contract so 25 basis points of i if there's a thousand ii or even a million eath in that

proceeds contract every day point two five percent of that total balance goes to the eath side of 1/8 metronome trading pair and that's what the fourth contract is and it's we call it an autonomous converter you it acts as both a changer as well as a market maker it is based on the bank or algorithm it's a direct simplification of the bank or algorithm you send eath and you get metronome you send metronome and you get e and there's a particular market price that's inside the contract and if the

price is out of whack versus other secondary markets other exchanges then you have an arbitrage opportunity you have an incentive to interact with that autonomous converter contract so the flow goes from auction to proceeds to autonomous converter and the last detail and this is a very key detail is that that eath comes from that proceeds contract just to the east side of the eath MTN training pair that creates a arbitrage incentive creates an incentive for you to deposit empty in and get some

of that e to bring the autonomous converter back to market price or back to market equilibrium and so that's how it buys metronome on the open market it's it's not essentially like a price floor type mechanism a dynamic price floor that helps incubate the metronome system over we estimate three to four years it's like that proceeds contract is like a slowly deflating balloon that deflates that store dthe over three to four years hopefully incubating the metronome system to the point where it's

self-sustaining so I think Bank and and this kind of auction thing is it's not easy to wrap your head around but of course for people who are interested in we've done an episode about Bank or previously so they can go check that out as well now just to understand this unlike a very high level when it comes to what's the point of this it's basically the idea that this all this efj is going into this contract and it's after it's basically used to support the price of MTN so do you expect that the result would be some kind of stable coin or somewhat stable coin um no no it it's

going to be subject to the price dynamics just like any other supply constraint token which is pretty much most of the tokens out there it just helps in that that first incubation period what we don't want is just sort of an up-and-down and then it goes to zero and so during that incubation period when we're trying to build a community around this it supports the currency during that incubation period and so after that it's sort of a bird that we hope flies on its own so so of course many projects right a they raise money right in that money is then used to build software to many

projects this point have a lot of money right so the crate is like ecosystem funds built ruling etc etc now here basically all of the proceeds are used just to support the price floor so how exactly like what's the mechanism by which this would create a community or incubate or green ecosystem well it's super important to us that we don't create yet another foundation being involved in Bitcoin since the early days we saw the the drama and mess involved in the Bitcoin foundation there's been you know some drama with the etherium foundation you know a time you get

humans involved there there's drama and we really wanted to design this to be as resistant to that as possible and so creating some sort of ecosystem fund means you have to create gatekeepers who were doling out tokens and making you know very subjective choices at the end of the day you know we're building an autonomous system one that doesn't rely on human gatekeepers and so that was always the the first and last rule when building metronome and so that meant that a ecosystem fund that you know where Jeff or someone else is doling out

metronome to build this that in the other that that's just not in the cards when you spread a cryptocurrency when you want to boostrap a new cryptocurrency into existence you can't bootstrap it with the notion that on day zero everyone has to rely on block and what block builds otherwise it's not gonna be a success also we're building software we're building wallets mining pools SDKs all on our dime but at the end of the day we need to build a wider community and we think that a foundation and a fund is actually a bad idea because it creates a dependency like

drugs create dependencies yeah I think that's that's a you know there's certainly very strong arguments and issues of having you know decentralized organizations spawning these centralized systems I think and I'm a huge fan of dowels by the way and I want to see those succeed and I think there's there's a right way to do it but you know this is not a Dao douse would obviously be Securities and we need to stay far far away from the truth but still I'd like to come back to the question because it's unclear to me how this mechanism of ether being used to support the price of MTN would incubate this community or create asifa system or

even provide incentives for that I mean no it provides price Li or yes right yeah it specifically is maintenance for the economy not for the community so it's not money for the community it's not a fund for the community and we specifically designed it so that we're not creating a community fund because that would get us into the Dow Territory and securities territory and that's just a bad idea for something that we want to be here a hundred years from now and so we want to not create those dependencies we want to in fact engineer against you know having humans in the loop in a particular manner and so we feel that

we've built the the not just the product but the software around it such that that will be attractive to people and that will be where the community building comes in is that here's a cryptocurrency engineered for the long term and all of the base attributes of that will be what builds that community you know bitcoin and litecoin they didn't have a Community Development Fund they just started and people recognized their engineering attributes and built Bitcoin businesses built like coin businesses so I think that the the model of you know we need to give you a shot of adrenaline from our

Community Development Fund actually hurts in the long run so I wanted to also come back to the topic of interoperability because of course it's an interesting topic very important topic also topic I've been working on a lot so there to me sort of superficial to me reading the claims metronome to be honest they seem implausible right like it does not seem that this would be possible in particular this sort of issue a so so you have metronome tokens right they initially Ani serum and now you're kind of allowing to move them elsewhere and then they can be moved back they can

move between any chains so did the sort of scenario that immediately comes to my mind here is wouldn't this mean that you know if if any chain gets like corrupted or we could double spend then essentially you know let's say I can double spend metronome on one chain I can plot them on the other chains or doesn't that just mean the security of the metronome system becomes you know kind of equal to the security of the weakest link in all those chains no we're basically reusing the same algorithm as Bitcoin and aetherium etc is we have a history of the money supply changes inside each set of metronome

contracts it's like a blockchain on block chains and so if one say double spins or violates the rules it just like in Bitcoin when you violate the rules you instantly become invisible to everyone else in the metronome universe so if we go off on you know Jeff chain which let's say inflates metronome supply by 2x then no other metronome chain would accept my metronome ported out of this corrupted system and so basically it's the same algorithm the Bitcoin uses for validation the same algorithm that aetherium uses for

validation but Howard Howard chains aware of each other in this protocol basically the the simplified version would be that you when you're porting your metronome you're also submitting other people's transactions to that chain at the same time and that's required to provide a proof from other chains to your local chain and so people are essentially the vectors for spreading metronome money supply change transactions across many chains and the there's a stake weight associated with it and so for example if

80 percent is on metronome and 20 percent is on our excuse me 80 percent is on the eath twenty percent is on eath classic and you want to say port to chain XYZ then the stake weight is going to be 80 plus 20 minus whatever your stake is moving to that new chain and so the eighth history has an 80 percent wait a sec has the 20 percent weight and so if you try to introduce a corrupted history you are measured against that stake weight on each chain but so just hypothetically speaking

let's say I I have or 20% of MTN live on earth classic now if here in classic gets attacked somehow someone uses this a double spend and TN another chain does that essentially burn all the MTN that was on the theorem classic chain yeah if the chain suddenly gets corrupted and no longer follows standard smart contract rules then it's it's gone rogue so all of the things that live on that chain at that time are destroyed yeah that's basically the same as chained death except since its metronome

you had the opportunity if you had foresight to move your tokens off the chain before it gets corrupted where if you're if you're holding etc' you're just screwed but if you're holding empty in at least you have a chance to move off the Etac chain right although on the ET cie chain y-you may have some recovery I mean there may be some kind of brief attack but then but it seems like you know Vivendi and it's like there's no recovery right once once there is this double spend or something it's it's done well definitionally if the chain is intact then metronome is intact it won't

permit a double spend if the chain is intact and so if a double spin happen then the chain is corrupted and etc' is corrupted and so how does it know that how do those are the chains know that a double spend happened is there there's no is there some sort of social consensus on like kind of governance like okay this China's going work we need to stop accepting Metroid's it's just like the Bitcoin and etherium validation procedures is it's either a transaction is is either a valid or B not valid and if it's not valid then it just doesn't exist from the standpoint

of other chains and it's the same as a Bitcoin transaction is Bitcoin transactions are either valid and in which case you process them or they're not valid and they just don't exist from your standpoint so it's it's just reusing the Bitcoin algorithm inside of a set of smart contracts okay can you explain that I don't understand how that is reusing the Bitcoin algorithm so eh I mean we're we're kind of getting into basic blockchain here is a blockchain is a container for a set of transactions and the transactions are shared across many nodes eventually they're collected into

a block and the block is then shared across those nodes and each of the transactions and blocks are validated according to a shared set of consensus rules and if any of those transactions or blocks don't validate according to those consensus rules then they just don't exist they're rejected there they're not validated that's how Bitcoin pers it prevents double spends is that double spends aren't validated they aren't valid according to Bitcoin consensus rules so similarly a double spend of metronome money supply a double port is just rejected in the same way

that a Bitcoin rejects a double spend and transactions and blocks are shared similarly to you know between contracts sets by users who want to import and export their metronome so you have a blockchain inside a blockchain with metronome okay so so this may be the way to think about this which is kind of hard to wrap your head around that almost if you okay in Bitcoin right we have different nodes that communicate produce blocks so in metronome a blockchain is like a node a set of contracts is like a node a set of

contracts is a full node and those will have sufficient capabilities to like detect hard Forks or any kind of events like that in other chains yep they've again it's they process them just like Bitcoin and aetherium process new transactions and blocks okay well I mean it will be interesting to to read more a bit about how exactly technically is gonna work is certainly a novel here wealth novel and it's not novel we went with what worked we know blockchains work and so we put a blockchain in our blockchain there are all sorts of meme pics I'm sure we could

dress up along with this so so that does bring us it kind of thinner next point which is that you guys have announced right that there's a metronome these token sale is coming up very soon can you give us an idea about the timeline on that yeah it's currently early March and we set a specific date ten days before the launch will publicly communicate the date very specifically right now we are in the middle of auditing we have hired not two not three but heading towards four aetherium smart contract auditors

to really beat this up we just open sourced it on our subsidiaries github and we're looking to have a public stress test on test net before launches well we're building some interesting wallet features to go along with that and to help with the testing so it's a one and done type of launch once it's live we have no ownership over it we have no ability to turn it off or change it and so it's something that you got to get right the first time and so we we're only going to launch when we are happy

that it is secure for consumer use and ready for the long-term so what I'm curious though is because March beginning of March you know that's almost now right we're almost there I mean actually this podcast is you know I don't exactly know what shades coming out but you know it would be right then so one thing that I I found a little bit difficult is you know reading through your materials you guys have on the website is that it goes into very little technical detail so for example if you talked about this the different chains being you know kind of verifying each other how this tokens are move like all of that stuff is this there's not much information especially since the the

idea is the system kind of you know runs itself once with the launch right but you guys aren't basically it's not just you have an idea and you're gonna work on this for two years and then it's kind of ready in there alright so will you publish more information on this before yeah the cross-chain spec is a separate document and that's about to be launched in probably seven days I think we're polishing that every single dang document has to go through legal wrangling as well as engineer review which is very annoying but swear the times that we live in and so we're going to be publishing that we're going to be

publishing a sort of a how-to by type document that describes the descending price auctions in more detail provides some trading strategies like limit orders dollar cost averaging that sort of thing because it's a new auction format there's no no presale much to to whale's dismay I get like two or three emails a day of how do I get in the pre sale I want in the pre sale and you know we we have to say go the you know sorry go to the public sale so that that's sort of that format that we're looking for those two documents are going to be

coming out in the next few days we're also open sourcing all of the porcelain that we've built so far that's the SDKs the wallets the the world's first as far as we're aware PRC 20 mining pool we're going to be operating that as well so all of that is getting opened prior to launch cool well Jeff thanks so much for coming on and I certainly look forward to that information and learning a bit more about how exactly metronome is gonna achieve those things because it certainly would be an interesting thing if you can create one if the a token that's kind of not dependent on any of

the chains it lifts on so that's a very interesting direction so yeah thanks so much it was a pleasure having you on absolutely thanks for having me on I appreciate it and of course thanks for listening for once again tuning in so we are gonna have in the in the links to the episode of course you know links to metronome website the owner's manual which is a little bit like a white paper and some other documents that they have published also there has been actually some source code I think of the smart contracts published so you know we link to that so if people want to dive into that there you can do so as well and and yeah so thanks so much for joining us so you can subscribe to the show on iTunes

SoundCloud your favorite podcast app or you can watch videos on youtube.com slash episode of Bitcoin and yeah so if you want to support the show you can also leave us an item's review and otherwise thanks so much we look forward to seeing you again next week [Music] [Music]