Abundance: The First 1 Gigagas/second Stack for Sovereign Rollups - Hilmar Orth. Ep. 579

Transcript

so we started out actually building the first for three smart contri automation protocol on ethereum and then of course on all other evm based chains and this Market is is basically a subset of the overall block space market and as block space remains scarce and limited the market really to to automate stuff and to to stuff um is inherently limited by this and so we were sort of like hitting the the limits in order to grow the pie of of all the other things we're building we need to actually grow the high of box space we need to get more chains more applications this is then where we really saw rollups as the the solution how we can how we can get that and how we can then help projects

actually scale welcome to epicenter the show which talks about the Technologies projects and people driving decentralization and the blockchain revolution I'm Fred an and today I'm speaking with HMA art who is the founder of gelato one of the leading rollup as a service provider before I talk with him um let me tell you about um our sponsors this week though if you're looking to stake your crypto with confidence look no further than course one more than 150,000 delegators including institutions like Bido Penta capital and Ledger trust cores one with their assets they support over 50 blockchains and are leaders in governance or networks like Cosmos ensuring your stake is responsibly managed thanks to their Advanced me

research you can also enjoy the highest staking rewards you can stake directly from your preferred wallet set up a white label note restake your assets on IA or symbiotic or use their SDK for multi-chain staking in your app learn more at cor. one and start taking today this episode is proudly brought to by nosis a collective dedicated to advancing and decentralized future nosis leads Innovation with circles nosis pay and metry reshaping open Banking and money with Hashi and nosis VPN they're building a more resilient privacy focused internet if you're looking for an L1 to launch your project nosis chain offers the same development environment as ethereum with

lower transaction fees it's supported by over 200,000 validators making nosis chain a reliable and Incredibly neutral foundation for your applications nosis Dow drives nosis governance where every voice matters join the nosis community in the nosis DA form today Deploy on the evm compatible nosis chain or secure the network with just one gno and affordable Hardware start your decentralization journey today at nois diio himma it's uh super nice to have you back on the last time kind of we had you on this pod um was beginning of 2023 which was really different time very

different yeah thanks for having me again glad to be here so um you are one of the founders of gelato last time we had you and your co-founder LS on it's been a while so kind of maybe give us a brief recap of the history of dilato um and what's what's happened since early 2023 yeah totally so I think last time we were on here we we talked all about our shared history as well with you and the the other folks at at noses of course you were like early supporters of us at gelata when we started back in uh 2019 originally and I think it 2023 was the year for gelato where we really

started to Endeavor on our journey to scale web 3 and and go all into the RO of centric road map and this was kind of like the starting point when we started researching and developing what is now one of the leading Ro of service Platforms in the space um and yeah I think when we were on back then we we sort of uh started uh on that journey and I think passed forward to today and like one and a half years or so have passed I think since then right feels like a maternity of course uh but now we have uh 4050 rollers life on all platform um huge sort of chains such as whisk or Krakens Ink chain uh on gelato

among many other really great projects and we really saw I think in general as space the sort of roller Centric world might play out with uh any larger ecosystem or project or application now looking into launching their own chain um and yeah we of course continuously trying to to find what is the best ways of achieving this how can we scale web fre how can we help scale and these application um while remaining all the cool guarantees that ethereum and other uh ecosystem sort of bring to the table uh and yeah I think that's that's a pretty much a good summary I think we'll dive into kind of like rollups and Sovereign rollups and Native rollups and kind of like whatever

rollups kind of like in in just a second kind of back in 2023 and before that kind of you guys mostly did relaying right kind of it was kind of like a relayer network so is is that still going on and uh um what kind of what led to the shift um to towards kind of this um rollup as a service platform totally so so we started out actually building the First with three smart contract automation protocol um that really sort of got traction on ethereum and then of course on all other evm based chains we are still uh sort of running this service among um uh our transaction reading service which is

used by a lot of projects um for the account Direction sort of bundas and so forth uh what we realized though um at some point is that um this Market is is basically a subset of the overall block space market and as block space remains scarce and limited the market really to to automate stuff and to toay stuff um is inherently limited by this and so we were sort of like hitting the the limits of of these markets and we were like okay we need to in order to grow the pie of of of of all the other things we're building we need to actually grow the P of block space we need to get more chains more applications um more blog space and um yeah this is then where we

really saw rollups as the the solution how we can how we can get that and how we can then help projects actually scale because an easy example if you want to sponsor millions of transactions while it's still retaining like the security and since resistance of like an ethereum or some forth like you can't do this on ethereum that you will go bankrupt I think many people have tried and so you need to get more block case you need to create an abundance of block space in order to actually then achieve these sort of user experience benefits and and yeah this is sort of how we transitioned into into solving this fundamental problem first that makes a lot of sense in terms of kind of like why you decided to embark on on this endeavor so maybe

let's set the stage by kind of talking about what you actually mean by a sovereign rollup because kind of like when when we kind of usually talk about roll UPS usually um we we think about kind of like full rollups or validium um and kind of kind of meaning kind of like you have different parts of um the consensus mechanism that kind of have to check in with base layers so kind of in the full rollups um it's kind of the state and the data uh kind of with data availability and then in the validium it's kind of uh just the state periodically what happens in a sovereign

rollup because kind of like even the Monica Sovereign rollup it's sounds like a bit of a conundrum right totally and let me sort of as a disclaimer before I start say all of this def all of these definitions are highly complex it's like it took also myself like working on nothing else in rollups for two years a lot of time to really understand this and there are settlement layers and the and and and rolls and so forth and so let me try to maybe unpack and provide you with the definitions that I sort of I would love that um and a rollup for me is um a blockchain um that posts its blocks to another blockchain um at its very core

um and the blockchain Really for me consists out of um and this a rollup blockchain consists for me out of um uh a state so it's it has state then it has a certain State transition function which is let's say like a the evm um and then it uh takes in transactions through the state trans function to progress the Old State to the new state right and this is how the blockchain progresses now uh the cool thing about rollups um is that they you don't need to bootstrap your own validator Set uh and come to consensus around a certain ordering of transactions you can Outsource this to to another layer which we call mostly

the data availability layer right you can use ethereum for this you can post transactions this blobs to ethereum you can also use others like Celestia for this which are sort of purposely built to only do that and and this is at the core really what a rollup is um you just post uh your blocks to another chain and they come to consens around its ordering now if you think about it this is really all you need to have a rollup um you just need uh this of this this rollup is chain and then you need another blockchain to do content on the list of a transactions where it gets more well complex is now the bridging part and uh there's this nice saying it's like it's all just chains and Bridges at the end

of the day when we talk about rollups um and um why people now get confused about like okay isn't like uh like if I talk about like a base right now isn't Bas like a rollup yes it is a rollup but I call it an an enshrined bridged an enshrined Bridge rollup um so what does it mean it means it has a rollup so it posts its data to it other data avability like ethereum but it also has an enshrined bridge to ethereum which we in this case call the settlement layer and so what this means is that you can bridge in assets from ethereum directly to to to base right um and you can use

the the funds on on base and then you can you move you can move your funds out again um we we call like trustly with certain proofs that you provide back to the to the base layer which in this case is ethereum and what the the sort of like the unlock here what what what um what is important for Sovereign rollups is that Sovereign rollups basically um take this take an approach which is okay rather than having this world viw where we need this enshrined bridge to ethereum um let's cut it out completely let's remove this enshrined bridge to ethereum and let's only have the rollup which posts its blocks to a data

availability dat like Celestia in the case of the ABC stack and therefore fully Embrace like a more modular um decoupled way where we don't confuse and enshrine the bridge to the rollup we just detach it and we treat the rollup separately in that then what we do is rather than having this enshrined rollup you can take any kind of modular interoperability protocol that you would like for example a layer zero a hyper lane or whatever you want um and you can use that instead to bridge from assets not only from ethereum but you can Bridge Assets in from Solana from base from Arbitron from ton um and the the unlock here I think why we have

discovered this as being extremely Val and and actually potentially the future of how RS will be designed is that the current rups decks like and and this is where we think like what rops are they were designed back then with this very ethereum Centric worldviews like okay with ethereum we need to scale ethereum how come we scale ethereum by building these Network extensions around ethereum that look like ethereum and have a bridge to ethereum right but the world has progressed since then and now there is there are chains out there Bas arbitrum even like Solana a ton who knows right that have a lot of liquidity that and a lot of users that people actually want to access as well so it's not just scaling ethereum people just want to have a chain that scales but

Taps into all sorts of users all sorts of liquidity and this is what Sovereign rollups sort of have they're like hey rather than having this enshrined worldview and ethereum at the center and we are like the satellite that hover ethereum we we switch it around we put the application in the center and then ethereum is basically the largest planet like Jupiter orbiting um the Earth which in this case is your application and this is sort of like conceptually speaking how how I would view Sovereign Sovereign wups as a physicist I can tell you that Jupiter doesn't actually Uber the Earth but the sun in this case of course I I take your I take your point um I think I have a lot I have lots of questions as

to this so maybe kind of like let's start from a very basic understanding point of view so kind of I understand that um you post um the transactions into celesia Data availability solution in um rollups on ethereum kind of you do two things right kind of like you do um you post the data but you also periodically post a proof um that kind of the data takes you using the uh the using the evm kind of like if you kind of take all the the current state and all the data uh all the transaction data kind of it takes you to the new state right does this function

happen somewhere in Sovereign rollups or whom whom do I trust is my question so and that's that's the S like unlock one has to have so let's imagine let's let's let's say for example let's take an example here um there is like a rollup on on our a service platform called Ray they're they pretty decent tvl they're like a perex they use the arig orbit like they on l2u etherum right um they have I think 98 or 99% of the entire TBL what they have is bridged in by a third party bridges on the rollup um so by the way you see up over de but all the funds I think USC is

bridged in by a socket because they wanted to onor their users not by ethereum which is pretty expensive but by base Arbitron and so forth right now in this case what they are still doing is they are still sending as you say like these sort of like hashes these of St commitments to ethereum periodically because their stack is still built in a way where they have to settle ethereum but ethereum provides them with zero security because ethereum you have a if you have a in if you have an rollup anrin rollup to ethereum ethereum doesn't secure your rollup um ethereum gives you like consensus Around The Ordering of transactions if you use it for data availability right but the the

bridge this so like this this this notion of settlement layer like settling to ethereum the only thing what it provides you with is it provides you with a trustless bridge for the assets that are bridged into the rollup via the canonical uin Bridge um and if you have let's say 99% of the assets bridged in Via other chains such as base or arbitrum using let's say socket or a zero so forth then you get zero benefits and zero security from this chain because um what is like like why are rollups like why why why do you why is this like say you have a s rollup in this case why would it be secure without

sending the St commitments to ethereum right because if you think about it as I said at the beginning was a rollup you have inputs you've got State got a state transition function and then you have outputs right and so the only thing you need is you need this ordered list of transactions that everyone can follow right you can just spin up a note I can spit up a note we all look at Celestia in this case we see what is the audit list of transactions for this particular rollup and then we run a note and then we know okay I know myself locally that hey this state transition function has been run correctly and so I know that okay I received now $100 and you send me $100 right um ethereum um the ethereum only needs a proof like

this this this bridge to ethereum is like a light client um right because ethereum cannot run a note for this rollup right so ethereum doesn't know whether the state transition has been executed correctly so what um we do in order to like notify ethereum to say hey ethereum you can accept back funds from this rollup to to you is we generate proves that we post to this bridge smart contract like in terms of like fraud proofs or ZK proofs for example and this then allows you to move assets back and forth but this is only adding any benefit if you actually have funds in this bridge and um what is I think interesting I think Martin did a great talk at Defcon uh Martin kelman um and

um if you look at el2 beat for example what you can see is that for all the rollups that exist 60% of the funds of the tvl on all rollups are not bridged in by the canonical Bridge what this means is like if you if you sort of take this to the conclusion is 60% of the assets are sovereign so all the l2s on ethereum right now are already if you like like if you sort think about it 60% Sovereign there only are 40% ethereum rollups or only 40% of all the assets come actually from ethereum they might use ethereum as dat availability right but the Assets in there don't inherit the security and

this I think is a very important point to people need to understand and and what we saw chelato is that we have a lot of chains that have 0% in these roller Bridges because they don't want to use it they don't want to onboard people from ethereum they don't want to onboard assets that are issued on ethereum and so for them it doesn't make sense they just get overhead they just have to pay costs to ethereum they have a bunch of Legacy code that they need to use in these Lup Stacks that deal with all like ethereum related things like re Orcs and so forth and that's why taking the current trends to the conclusion would mean that actually what applications want is a way more Sovereign construction than what they usually have right now so maybe if I reframe this a bit um

would you think do you think it's fair to say um l2s as they currently exist are largely a meme and you uh refuse to kind of pay for this mematic security that kind of doesn't actually secure a lot of the Assets in whatever rollup you're looking at settling to ethereum if you do not use the bridge is utterly useless and you only pay and you don't get any benefits from it and yes this is then only a meme and you can you can generate as many ZK proves you want andos it to ethereum this doesn't add any security so to the funds on your chain so I fully agree with but

yeah okay I I have so many questions as to kind of how interoperability could or should work but maybe kind of let's take it from from the beginning so maybe let's look at um kind of how um so kind of I understand kind of what you mean by a sovereign rollup so kind of let's look at how your rollup stack works and kind of how you achieve the uh pretty impressive through throughputs that kind of you are achieving um and then kind of we can we can look at kind of like the wider ethereum rollup ecosystem later and look how we could could kind of un untangle this to a certain extent you guys recently launched um abundance so kind of the ABC

rollup stack um and uh what you can actually get with it is a one gig per second um Sovereign rollup solution first of all maybe maybe kind of um can you reframe the one gigas per second uh kind of number because kind of like if you're not very very hardcore in the you know gas weeds what what does that actually mean in terms of what sort of applications that could support totally um for for let's say for the end user this this might sound AIC cryptic right uh but I think the why we use the Giga gas measure or unit um to measure throughput

uh rather than sort like the traditional transaction per second measure I think that many people use is because it really like the blockchain throughput is limited by like EV evm blockchain throughput is limited by basically or measured in gas right so how much gas can we get into sing into every single block and um that's why the in etherum and so forth Bitcoin there's these huge debates about like block gas limits and so for right so we do bigger blocks right there's like all these all these discussions going on um and so what one gig gas like I think the easiest one to explain how how what an immense throughput gain this is is to put it

into perspective of what we currently have so if you look at let's say Bas right which is uh probably the the the the rollup out there with the highest usage right now in terms of users and gas consumption um it currently has 0.017 gigas per per per per second worth of a throughput um and this is sort of also where um the current ethereum Centric rollup Stacks clock out um uh we have customers on our Ro service platform at gelato which build like games and I like games as customers because they're like hey I just if I

have 100,000 users and I just put everything I want on sh and then everything is already full like they they really try to um max out these the the software and they already clocked out at 0.018 0.019 gagas per second with a throughput um on some of the ethereum stacks that we're using and so what we do is we do an 100x improvement with um ABC stack in terms of throughput compared to what you currently can do on like base or what this game could do so it is this is a this is a pretty big one if you if you want to use like the transaction for second sort of measure we have some sort of like uh I think it you can translate to like 50,000 transactions per second

but it it really depends on the transactions what they do how much computation in my head kind of like a small transaction it's around 100K gas so kind of that's kind of uh uh yeah so it's like a small transaction yeah so you're kind of 50 Xing the through of they're like it yeah one we can go higher than one gear I guess but like roughly 100x yeah okay 100x okay that that is uh that's a lot so kind of that means kind of you you can kind of onboard um you can onboard games um as an ecosystem because kind of that that kind of commit a lot a lot more transactions on chain and kind of like can't pay um the price point that many

financialized transactions pay right yeah so um so basically we believe that we believe in a world of abundance so abundant block space is necessary in order to actually create compelling applications for like a large number of users right in these games that we have we are not talking about them having millions of users right they still have probably like thousands of users or something but they're still already clogging out but the games is of course one big vertical that we also very bullish on that can actually bring in more retail people um but what we are and we are like very that we come from defi as well at gelato so we are always very focused on like okay how can we actually um rather than everyone trading

on binance how can we bring binance really on Shane how can we really build like fully decentralized sensorship resistant order books on chain for example right and and this is right now no like our the current Stakes are nowhere near close enough in terms of fruit to actually facilitate this right and I think this is this would be for me the biggest unlock we see like with Hyper liquid and so forth how successful you could be if you actually sort of go in this direction and and what we are mostly bullish on here is actually uh enabling people without like having to horizontally sh by multiple instances for now build like an onchain binance um on a rollup and and I think this is for us the the really exciting use case that this

enables why do you use Celestia as a data availability layer because of like if you look at if you look at base um kind of they're clearly using um ethereum um so what's kind of limiting them to uh 02 gig so it's it's really the it's really the lack of decoupling and um so if you look at the last sort of centuries or last couple of years and software development microservices architectur is really like a dominant sort of trend that you see right and what this means is that you decouple Individual Services from each other so

they run um sort of like in silos and you can improve them in silos you can scale them in silos you can make them resilient if one fails the it doesn't impact the other and you just make them so much easier to maintain because yeah if you change one thing here you don't always have to change another thing here right um the current Stacks right now are are pretty pretty couple so every time you want to add something on let's say the execution client or or or so forth maybe do improvements you have to always look okay what about the fraud proof what about the bridge on ethereum we need to upgrade it now in order to actually Encompass these change that we do here so you really couple bridging with the actual like execution and the

throughput which is basically if you have an enshrined bridge and your rollup this is what you do like the ethereum rollup Stacks they enshrine they combine the rollup and the Bri into one basically what we do is we decouple them from each other and we make them isolated which is what s nups do and through this decoupling plus of course like a bunch of improvements that we do to to the stacks sequences and so forth you can really gain these massive throughput benchmarks that we that we achieved um and and this is really the secret Source here so decoupling things from each other um and then optimizing each specific thing and when it comes to inoperability the great thing is you just use whatever interoperability layer that you like so um many of the chains

that are on gelo use for example the layer zero messaging protocol um others use hyperlanes permissionless Le Deployable messaging protocol um and these messaging protocols um are the cool thing here is that you can Define your own security uh and we are strong Believers in that especially for start like you don't need to over pay for security if you just get started as an application right if you just get started you shouldn't pay $10,000 $50,000 per per year to proof to generate CK proofs for like $100 in tbll right that doesn't make sense so you you this should be like a progressive thing you should have one modular

interoperability protocol and then as the more tvl you get and the sort of higher the risk is on your chain the more secure it should be and so um another great thing that we um believe in is we believe that with like what ABC St is built for is we don't believe like we think fraud proofs are sort of very weird sort of Middle Ground that we in right now you um you sort of like everyone uses to like not actually like most optimistic RS actually still don't use them today but it's kind of like this meme where it's like hey yeah you get in but okay you can't for getting out you have to wait seven days and no one really Waits seven days themselves right everyone uses like a an operator like a cross on something and AC cross

rebalances via Kraken and other Central exchanges and they then they are the only ones actually using the canonical bridge to wait seven days and get out again and so no one really really no one really wants to use them and so what uh allowing modular interoperability solution to be used means that you can instantaneously just with attestations bridge in from any chain to your chain in and out in seconds right away and when whenever ZK gets fast enough from a latency point of view and cheap enough uh from an a proof generation point of view you can just like flip the switch and go straight to ZK so basically what we do is we leap frog frog proofs we say hey just use for the beginning at the stations and then whenever you have high tvl and whenever ZK comes down um you just switch because ABC stack is fully

ZK forward compatible um and we don't like as other sexs we don't have we haven't built our own Kover and our own ZK evm pump scratch and some weird programming language and and so forth what a lot of other people do um we just are compatible with things sp1 with risk zero proving system with any other sort of jol ckvm that will come out of the market you can use them directly prove the entire ABC stack and they can it's again decoupling right they will work on the proving system they will make it they will make it great celesia works on the DA they will make it high through high bandwidth we work on the client we will make it High um throughput and combining all these things together in a super modular

way provides the highest throughput because everyone can focus focus on what they are good at okay I hear that let's talk about the security assumptions here so kind of like um I mean what you're rightly pointing out is that a lot of the security that's promised by L2 is not actually delivered by L2 but I think kind of like what I mean I'm paraphrasing a bit meanly here but kind of like if if I were to kind of um kind of put put put my finger on the wound uh I I would say okay you're not promising any security um but you're also I mean you're you're you're not over promising on security but you're also not delivering anything better than kind of what the l2s who are

over promising on security are delivering right so let's kind of look at your security assumption so say I want um I want to send a transaction to a sovereign rollup kind of I post um that transaction to to Celestia what um recourse do I have if for some reason kind of my data is censored and what recourse do I have if my data is not censored but somehow it's still not included so how I mean so kind of what what kind of like in the old rollup World kind of would be ideally kind of fraud proof and I hear you that that only works for bridged asset and so on but what what yeah so what are my security guarantees yeah

so back to the previous point of what a roll is right so the security of a s rollup is exactly the same as the security of a enshrined bridged rollup so the security is okay you we need to all agree on a set of ordered transactions right and if we have the set of ordered transactions everyone who's running a note can compute the new state based on these transactions right and and it doesn't matter if you post like of course you there might be an argument to say ethereum SDA um is is more censorship resistant than like another da such as Celestia right and so this this would be a security sort of tradeoff that we made here in ABC stack uh um because ethereum could be seen as

was resistance I would agree it probably is due to like home Staker like focusing on home stakers and so forth right but why do we do this why did we do this trade-off because Celestia is basically sort of what ethereum wants to be in terms of um its road map it basically started from with this Clean Slate when it comes to the rollup Centric road map celesia is built for rollup cesia says hey we are optimizing for one gigabyte blocks um and as soon as you post these transactions to Celestia and then and celesa of course still needs the SC unless you're still also not at the skate today to to handle like 100 ABC St rollups with one g per second that is not the case but they

have a clear road map um to achieve this um and I'm moving way faster than what ethereum is doing but the security is really coming from there um and now of course um the other security so the security is just the da layer right um and then everyone running a note but then of course you have the bridging right so and then okay how do you actually secure the bridging this is a this is you have to decouple these two conversations and this is where like basically our our our whole point is that look at these Bridges out there today like blast is the fourth largest rollup ethereum rollup right with $1.4 billion in tvl um and it has 84 2% of the assets are bridged in by leum rollup which is secured by the

fraud proof all like 82% are externally bridged in or actually not secured by the bridge itself for them there's like a caveat because they use this sort of like Vault system before that that escos all the eve but basically the bridge itself is not even securing these funds so you always have to look at who is securing the funds um and only um and how many funds to they secure and and this is really the security you get um and so yeah basically most draw UPS today are already not really benefiting from the security from ethereum and so we just take it to the full conclusion s and just stop using it then who who's securing the funds in um a sovereign rollup so is it kind of

the Celestia notes or who who who would you point to yeah so there like there an interesting point here is that who is the asset issuer first of all is the question right um for example ethereum issues East right and and the eth who secures e in general is ethereum right so if you would like to have eth on your chain then you will want to have a bridge to ethereum right and if you don't want to have any other external uh dependencies in terms of security you probably want like a ZK proof based bridge to ethereum right and then if this DK proof is so like secure and you

trust it then it's sort of like you have ethereum security right for usdc for example USC on ethereum or USC on base is actually issued by Circle so neither ethereum nor base provides you with any security for the usdc you hold on ethereum or base it's solely a server somewhere at Circle right that provides you with that security Now for Sovereign rollup again it depends who issues the assets so if you issue the assets natively on The Sovereign rollup it's basically Celestia um and everyone running the nodes who's securing these assets so it's just um a natively issued asset that you have and

there's a transaction that is sent to Celestia it says Hey I want to issue this asset and there you see now you got an asset on this on your own rollup and there's no external Social Security dependency you have of course if you want to bridge in assets from another chain right let's say you have a you have a you are on base and there's a natively issued asset on base and I think Bas actually has um 60% of all the TBL is natively issued on base it's most of it right so if you want to access these let's say mecoin on base then of course um you like the the biggest security assumption here is like okay the bridge first of all how how do you get the message and across from base to your chain and this is either like in a

tester right there's some notes that are running full noes and they're like checking the state transition on base and they're saying okay cool it was done correctly here I give you the asset you trust those this kind like a multi sick or in the future of course how it should be and this is the end game is it's ZK so you just have a ZK Pro that that then proves that the say transition on base has been happening correctly um and then base inher the security of course as from ethereum with its da layer I understand so kind of if you compare say Bas and a sovereign rollup so kind of the um the entity that kind of builds blocks on base is the centralized sequencer right so kind of

like in in effect it's some sort of coinbase entity a single one that kind of and I mean in in our rollups this is um the case to a certain extent so some rabs kind of have a very limited list of allowed um uh sequencing participants and so on but kind of it's always very short list that is curated by whoever kind of uh set up um the uh the roll up in the first place which is why kind of like truly decentralized sequencing is something that um kind of all l2's on ethereum will aspire to in some sense you're rightly pointing out that kind of

this is a very centralized function um but kind of can you compare contrast with Celestia so kind of like um if I kind of if I rely on Celestia for something that is issued on a sovereign chain um so kind of nothing that's bridged or whatsoever so kind of like say I I issue a coin on Sovereign rollup one um and that leverages Celestia what exactly are my trust assumptions um here as compared to um an L2 on ethereum that is it admittedly um not decentralized at this point yeah so I think um maybe to unpack this a bit like the and focusing on the

first part which is like the centralized sequencing uh part so um most rollups most World Frameworks today um rely on this notion of the centralized sequencer to give Fast pre- confirmations this is also the same for ABC stack so also in the ABP stack you have um right now A centralized sequence a model why do you want this because users especially like in high through prif applications they want to have um uh past blocks they want to have pre-confirmation like preferably below 100 millisecond right and we all know ethereum um takes rough 12 minutes or so forth to finalize so only after like 12 minutes you

actually know that your transaction got included and didn't get reared out or something right this is a long time to wait um so actually in this case um is already so like Superior with their new upgrade I think it's six seconds um and they have single slot finality because they use the 10m in consens mechanism so um there you actually after like you could already like if you think about based rollups right that sort of basically circumvent the centralized sequence um sensor sensorship problem and like the equicor a day on ethereum but they are very unuser friendly even if you don't rate to finalization wait 12 seconds on

last year you could build it today then you would wait like six seconds but it's still too too long that's why you have de centr sequences but we actually are very bullish on decentral sequencing um in general um and Celestia actually has on its road map to also have subsecond block time so I hope etherum will also get there at some point um and this will actually then enabled this to be much more sort of um pragmatic now I think the second question you had was around um the security of natively issued assets right um and um the security of natively issued assets on like a sovereign rollup for example are uh sort of twofold it's it's a bit difficult to grab you has around it but first of all as I said rollup is a state state

transition function and then the new state right and then you need the transaction ordering so you have a finalized list of transactions that have been ordered let say the first transaction is sayy I want to issue this asset right um and then everyone who's running this node basically runs the same state transition and knows exactly hey now the output should be that freder received these 100 assets for example right um the cool thing about the Sovereign rollup is the security also sort of relies on like social consensus it's a bit similar to ethereum right ethereum what we could do is if if like ethereum is also weird in that regard like in ethereum if everyone would now say like then with the Dow Fork right we said hey this

transaction had happened actually it shouldn't have happened let's all agree offchain and let all update our client and BM after block 100 suddenly this heck didn't happen right this was like the security at the very essence at the very core was always like social consensus you can just like fork and then you have to rely on everyone so like participating um this is again this is actually not the case for enshrined rollups right because they have this enshrined bridge to ethereum so they can't just Fork if they would Fork then the the bridge would have to be updated at the same time right so and they have the sort like dependency that makes them non- Sovereign and what a sovereign rollup is by not having this inin bridge is you could actually uh do similar

Forks than you do an ethereum so you can actually say hey if everyone agrees we just update the client and then this transaction that we included in our state transition function was actually not is not included anymore right and you you that's why Sovereign rollups are not l2s but they you can think of them as sort of modular or virtual l1s um but without the need to come to consensus on the data I know this is a bit tricky and this also took me some time um but but yeah so social consensus at the very end is then still like the arbitr of of of what is like the security but do you think social consensus is a good thing to kind of be relied upon kind of as a default so I

agree kind of that it worked once for ethereum um but it was also a very tight-knit Community there one kind of like the stake was way smaller than it is today kind of there was a very there was a very strong social coherence about um kind of condemning the acts of the Dow hacker and so on um so do you think this um is tenable kind of for f to use so like ethereum is still like the same right so it's it's all like deep down it's all social consensus when you drill down in the blockchain world um in practice the social consensus is highly restricted for

example it's another like of course uh it's an exaggeration but ethereum like you can argue that Circle or like ethereum or ethereum settles to Circle and tether right because a lot of the ases issued etherum are actually issued by Circle and tether um and they control such a vast amount of tvl on the chain that if ethereum wanted to fork in order to do something and tether and circle says no we won't support it then basically suddenly a huge chunk of the T I agree kind of circle circle and tether would be kind of the king makers to kind of decide which Focus the real one yeah and so so and so they are part of the

social consensus right and and this is the same for a sovereign rollup as they're similar to an L1 if you have Circle issue funds on the St and rollup or if you have certain Bridge operators that are issuing tokens based on other tokens that are locked on base for example on this rollup then they will equally be an arbitrator in this whole sort of fork chice ruler would say hey guys actually um we don't support this because this is somehow acting malicious or something so as these chains are always sort of social consensus at the very bottom you you always have this Reliant but you you don't want to have this be one party of course right you don't want to have this maybe be just circle but you want to have this to be a wide community of everyone in general and then as soon as you as long as you

have this you get the robustness of something like a theorum another question as to kind of the robustness so kind of on ethereum assets are secured by ethereum right um so if you look at Sovereign rollups assets are in that sense kind of secured by celestian the celestial stack if you kind of run a 100 uh Sovereign rollups on the Celestia stack don't you don't you think you'll kind of overload the security that kind of Celestia with a base token kind of offers yeah so um celesa is in a sense a

bit different to etherum right because we are talking only about like da right now celesa will have at some point ZK accounts which is like a sort of ZK verification uh uh system as well um but uh when you talk about the scal so the scalability of Celestia is really about the bandwidth of how much data you can send to it um and um yes for sure if we would have I think a thousand ABCs that growups a day that just send a ton of data to Celestia it will probably be full but um it is already two to four times I think more High has higher bandwidth than ethereum has today um and it is sort of increasing that band at a

pretty rapid Pace with a road map to one Gard blocks and um so Celestia for us is right now the only actual alternative for this sort of rollup Centric road map that we are seeing in the space and and I hope ethereum uh sort like will accelerate and will uh also provide it because of course the more bandwidth there is the better right um but in general um you bandwidth of course is limited right now on these these Networks and so will then also be the throughput of the rollups however that's why like um you do have um uh these uh sort of data availability committee systems right let's say if if if it

would be too expensive to post data to both ethereum or Celestia then you have these committees that sort of post uh hashes only hashes and not all the data to celestium so you can get addition scalability benefits at the cost of some trust assumptions of course but yeah so so these are the bottle neck but this where like this decoupling we are optimizing for this decoupling where hey celesia I let you guys cook you'll figure this out um and like we focus on actually making sure that the the rollup itself is as scalable uh and secure as possible so you already referred to this a bit earlier in the episode so my co-founder Martin gave a talk at um at Devcon this year talking about um ethereum's need for um Native

rollups I'm kind of uh explaining that kind of the the current rollup space um adds limited security as you have already pointed out and also kind of fragments liquidity because bridging between um different rollups complete mess as you boss pointed out so kind of his solution um was to say okay why don't why why doesn't the ethereum community kind of introduce um ethereum endorsed um uh rollups that kind of all work in the same way where kind of we can say Okay valuable assets are issued on ethereum they kind of bridged into the

road UPS they can kind of um rely on the security guarantees provided by ethereum for both bridging back to ethereum and bridging to another rollup and so on you saw the talk right and I assume you also kind of listen to the Lin debate with uh with Justin um what are your thoughts yeah so first of all I think I really um enjoyed Martin's talk and uh I really like his um intrinsic motivation to try to push the etherum community further and and try to resolve uh issues and um proposing Alternatives so I definitely applaud Martin for doing so and he's been a steward of etherum for a long

time um and I definitely uh deeply respect him for this um I think for me what his proposal is addressing is are two things really for me like there there's no Silver Bullet of course right now to just solve interoperability right how do you solve interoperability is you need like Fast real time fast and cheap realtime proving right if we have this then like inability is cool uh and yeah I hope at some point the Silver B comes around the corner and it's all there but uh it will take some time I'm I'm sure so what is proposal for me is is more so of a addressing is this is the value capture and the incentives um if we look at like I think

what he really sort of also deeply means is that right now we see we have like the optimate meosis we have the AR meosis we have the pingon ecos we have B sync ecosystem right and they're all building these sort of clusters and and and all the value really is being captured by the rollups right there's barely any value that trickles down to ethereum and um and this is kind of like where I feel ethereum finds itself in in innovators dilemma where um ethereum used to be there used to be this meme like ether's money and yeah there so much like this pristine scarcity of the ethereum block space is great because everyone will

forever use ethereum um and the more people want to use ethereum the more they have to pay and the gas fees just go higher and higher and higher and we just pay more and more B and E gets burned and this is great right and and it worked right we for a time we were like inflationary but then everyone was like hey we don't want to pay 100 bucks for transaction but bu roll up um and suddenly all these transactions all these priority gas fees and so forth they don't come to ethereum all this me it's not leaking to ethereum anymore it's now on the rollups and of course this means that ethereum this is what I meant with the Innovations dilemma has to is at a pivotal point right now so there we have to decide what do we want

to do do we want to have this layer and this is sort of a maybe also where I deviate a bit for some opinions of others but ethereum for me has to decide do we want to be a platform that caters exclusively to rollups which I think for me also means that it has to be fine giving up a lot of value to rollups um and has to optimize only for these rollups and like high bandwidth EA cheap fast ZK verification right and then actually nothing else all the old Legacy L1 state is sort of like just like technical depth at this point um or do we want to focus on

actually creating more L1 State like scaling L1 and execution having apps built on the L1 itself to actually capture all the value right because for me like based rollups and like enshrined rollups is a cool concept and what tries to do what Martin tries to do here is he says hey let's just have base rollups um we have this ethereum deployed rollups where everyone can build on there are plenty of them so there shouldn't be any scalability issues for Fore future there will always be at some point scalability issues but with both future we should be fine and like all the sequencing priority fees me and whatnot all goes to eth right and now we are back where we were like everyone just Builds on eth H but just

more scalable right and this indeed would lead to e the asset actually being sort of way more attractive in like the sh to medium term again I agree but and so it's a that makes sense it's a good proposal and that sense for for if you have this lens on but what I My Lens my lens is on like like a gelato what we sort of believe in we are um mostly catering to actually application developers and them and if I look at incentives here is that look if I look at the incentives um they clearly tell me that liquidity users M and so forth will go to the ecosystems and the

applications that are actually sort of building and investing all the resources in right Bas invested tremendous amount of resources in uh a coinbase invested tremendous amount of resources in Bas to make it what it is today right now they actually slowly reaping the benefits of it and why would they want to not capture it why would they want to give it away to ethereum right so um what we would need is we would need to recruit a an array of altruistic developers that see base and see the value they can capture but decide not to capture it and give it back to ethereum right and I think this is like the Dilemma ethereums or faces um if you think if you look at

the incentives you will notice that I don't think this is a likely outcome um but in this like taking this to conclusion you still wanting to serve all these rollups and you want to position yourself as like a key player on this market and you want to have like nice bridging with for ether your asset and and so direct it there you should maybe Embrace uh this could be one way but you might want to embrace like a slightly different model which is close to like Celestia where Celestia says we don't have any stage on Celestia you can't actually build applications on Celestia it's just like a super high through high bandwidth da layer and then what we do is we focus on very efficient cheapap ZK verification so the customers of

Celestia exclusively rollups whereas on ethereum there's like sort of rollups but only rollups that now like should pay everything to e and then still applications right this is like this weird Middle Ground um and so yeah I think it's it's a good proposal I like his idea um but but I don't think the incentives are there for developers to participate in in helping but if ethereum kind of were to come out and say look we see what all of you guys have done there with um kind of kind of these these uh different rollups and we see that this in this and this actually um are super nice features and we will kind of um use all of the work that you guys have collectively done with VC

raised money um and kind of synthesize an ethereum endorsed roll up of that sort I mean kind of you don't actually have to reinvest all the money that's already been invested because a lot of the learnings are out there and you can kind of just cherry pick right so kind of like say it would it would cost 10 million 20 million 50 million to kind of deploy 128 ethereum endorsed um rollups on top of ethereum right um that would under undercut the enti High current L2 system right so because if I'm a DEA um why would I deploy on arbitrum or base or wherever if I can kind of deploy on

the theorem endorsed L2 that kind of interoperate super nicely with all the other l2s where I don't actually have to have the headache of kind of uh uh liquidity fragmentation and and so on do you think kind of if um the ethereum community were to come out with that admittedly somewhat aggressive um move do you think that still holds kind of if if they say look thank you for innovating we'll we'll take it from here so there's also a lot to impact here regard like inability and and who gets inoperability and difference between like uh Atomic like L1 L2

composability and so forth so there like a lot of nuances to what ethereum can offer versus others so forth where I don't want to go into all of them but just from a high level point of view and an incentive point of view I actually made a tweet this morning about it because I rewatched the Martin's talk before our our conversation here and um I think what if you create incentives for developers to build the next base as a native rollup on ethereum then I do see this happen like this this could then happen right how would you actually do this right you would need to completely go away from the scarcity mindset you would need to completely go

away from the eest money like we need to now extract all the value mindset ethereum needs to go start from scratch and say like okay revenues zero cost High We Now issue even more e we say we pay for your rollup cost we pay for the DK verification we we incentivize liquidity to come into these rollups we build this platform and incentivize it with a massive program like what op is now doing with for example all the op stake rollers right they get massive incentives to join your P cluster you need to compete and like pay I don't know $40 million to to these

rollup projects that want to launch to these big exchanges if you want to get them on your platform right if ethereum would be as aggressive to say okay we are doing this um and all the value will leak to you for us now and then maybe in 10 years or so right we will start like taking a small cut on like the m and whatever right and so it's just a long-term play then I would say yes there is a this is a competing story because the incentives for projects to develop in a native rollup and ethereum are um are there if not then the incentives are not there and then the technical benefits that this Rings versus just having a sovereign rollup which can also generate ZK proofs which can also interoperate with the other

chains is not that strong and so yeah I feel we need to go aggressive and I would like to see that I'm all for it you're all for aggression fantastic so um maybe let's talk about say kind of this this Vision plays out or kind of even L2 is stay as they are and they kind of um they they slowly become decentralized and kind of um make good on the Promises they kind of have been there for a long time um where do you kind of see different sort sorts of applications kind of run in the long term right because I think um in this space there's often this idea of kind of decentralization is great and so on but

kind of like obviously decentralization also means redundancy in in in some sense and kind of like making each part um replaceable and uh and and so on so kind of 's a lot of overhead that comes with true decentralization so um and a lot of people don't appreciate that decentralization in itself is not a value right it's kind of like what you can in principle kind of reap from it as rewards um how do you think um different applications Will Group themselves onto different um blockchains or rollups or Sovereign rollups um according to what their security needs are rather than

kind of tribalism or kind of where they incentivize to deploy and so on because these incentive they can't go on forever right at some point kind of they will have to be recouped or kind of VCS will no longer kind of uh for f f out for kind of incentivizing behavior that's not going to be rewarded in the long term for sure and um yeah maybe to the point you mentioned with like decentralization is not I means to Android um I think what the property is that blockchains provide is censorship resistance right so this is I think what decentralization provides you which I think in today's age is extremely extremely valuable right if you look at like how we are sens getting censor in

the EU uh it's crazy right um and so sensor resistance will become I think more and more important and the security by the way as as long as we if we have sensorship resistant da layers and then if if we have ZK then the the only real benefit uh that like a decent decentralization will provide your sensorship resistance because like they verific the verifiability you can get from ZK right you can get have a c ciz sequencer with um ZK that works but they can of course sensor you right so um sensorization is definitely still important that's why decentralization is also still important on some level like the da layer for example um now how do I see these applications develop for me they're true

of applications that we we at J sort of have in our mind one is like the probably where the majority of like longtail applications will be and this these are not like the the hyper sort of defintive use cases um they will probably not care about censorship resistance that much um and they're like what I want is great ux high frut low costs um all of that right and what is that is like Central sequencer one gig uh you go out there kiddo and you just get these users onboarded right so I think there will be huge huge array of users uh projects that will do that because it's totally fine for them they

are they're not in the business of censoring their users right and then on the other hand I think there will be this new Financial decentralized fully censorship resistant a platform that will be built the onchain bances the onchain everything Financial where you don't want to have one party controlling the sequencing and so forth and and like uh the US won't interact with the SE Central sequenc of Germany and Switzerland and so forth or Citadel of of of Deutsche Bank and so forth there you need a credibly neutral censorship resistance platform but that can be super scalable and this will be huge in terms of value and so forth and I think there we see we will see rollups like we'll see rollups handling that but they

will have to be built uh in in a way more sort of like uh sensorship resistant manner potentially a base roll up with super fast block DS from the L1 or some sort of pre-confirmation layer in between um so what I believe is in general like ask ask answering the question about clusters I believe we will soon see a big movement that's why we are investing our resources in it into sovereignty projects will want to be as Sovereign as possible they want to Applications want to reap all the benefits of what they create from the sequencing from the users from the tvl and so forth they want to be independent they want to use modularity to their advantage by do custom block building and so forth they don't want to be limited in their configurations of what

they want to do um and so they want to be highly interconnected with CK um and um Sovereign in order to really reap the benefits of high scalability this is sort like where we see it but in the short to medium term you will have these clusters like the super chain cluster you will have the arbitrum cluster you have the the the whatever cluster so so it will be a weird time um but eventually I think the end state is Sovereign chain all interconnected like in the web too right you like your server is not part of a cluster if you build an application you might be in a data center but you server not part of the cluster you are a sovereign application and you have one protocol to interact with another like HTTP or something uh uh to to to to to

communicate um and apis and so forth uh but um you are still your own thing and I think we will look Sim what does it mean in terms uh in terms of kind of chilo and the ABC stack um for you in the next say one to two years yeah so as I said ABC stack is basically so like what we believe the future will be um our learning of the past two years working with hundreds of rollups and customers and listening to what they actually want um and so what we are really looking to build is how can we build the next onchain binance how can we build the next onchain Twitter but fully sensorship resistant

and highly scalable um and how can we build a platform to facilitate this um and there's this platform component which is of course like the r with service like this needs to be serviced and scalable and like very easy to deploy but then there's also the censorship resistance and decentralization part of it right how can you actually sort of facilitate this and this is also where like abundance at some point comes in to the picture um which is kind like the overall sort of brand of of ABC stack um and yeah this these are the the questions how can you build highly scalable sensor resistant Sovereign rollups um and yeah abundance is uh what this will be thank you himma so when if if there are people kind of

uh who want to try out the stack or kind of build um a sovereign Road up how can they find you guys yeah for sure so you can um check out Ed Network on Twitter at abundance XYZ for abundance um you can deploy a one gigas ABC stack test bet today on gelato just go to rasato network one click you got it um mainnet will go live in uh in January so we'll have the first Manet live super excited about this team is loged in to facilitate this and and get a ship um and yeah just follow us there and we'll we'll do some tweets Co fantastic H thank you