Avalanche, Ethereum and the Future of Distributed Computing w/ Steven Gates (GoGoPool)

Transcript

[Music] hello and welcome back for another episode of The Strange water podcast thank you for joining us today's episode is a bit on the longer side so we'll move through the introduction quickly St Gates is the founder of Goo pool one of the more prominent staking services for Avalanche while you may be familiar with them because you've delegated your staked avac or maybe you've used their liquid staking derivative GG avac they've become a major player in the infrastructure that makes up the Avalanche

ecosystem and yes you can stake your avac with goo pool but if you're a builder looking to deploy a sovereign app chain so secured by the Avalanche Protocol no one is going to give you deeper Fuller and better service than goo pool while this conversation covers all of the basics like how does the Avalanche protocol subnet structure work to what makes Avalanche a compelling ecosystem to be building in this conversation also aggressively explores some of the most basic nuance and important questions that lie at the bed Rock of the blockchain industry questions like what are the

implications of the hyperf financialization of everything to what is the endgame state of the major blockchain ecosystems in an industry where tribalism is just part of our DNA conversations like this are a stark reminder of the value of real human conversations held across ecosystems as I'm sure you'll agree by by the end of this episode learning how people in other conversations think can add so much more to your understanding of what you know and love and maybe even get you falling down a new rabbit hole one more thing before we begin please do not take Financial advice from

this or any podcast ethereum Avalanche and decentralized Computing will change the world one day but you can easily lose all of your money between now and then all right time to start the show Stephen thank you so much for joining us on the strange water podcast absolutely R thanks for having me of course man so before we uh get into this one and like I'm really excited about this one because you know we we don't normally talk about Avalanche and I can't wait to get into like why that's an exciting platform but before we get to to any of that um I'm a huge believer

that the most important part of every conversation are the people in it so with that as like a frame um can you give us a little bit about yourself who you are like how you found kind of computer science and and uh got into technology and then ultimately like how you found crypto why you didn't run away and like why you settled in the Avalanche ecosystem yeah I love it so how did I get exposed to technology or how did I get into computer science um there's actually a fun picture of me like 3 years old with one of the original computers and I was like just playing with mouse and the keyboard uh so both my parents were always technologists uh they're although we came like we're immigrants from Hungary

in Eastern Europe and then came to America um but it's like always kind of technology has been it's like AI security blockchain I'd say those are kind of the three in space four predominant topics uh in my house growing up up for sure um so I think like then you know of course playing a lot of video games you know had definitely summers in high school where I never left the house and was just just playing with the boys playing you know Team Fortress 2 CSG go and Dota 2 um and yeah good times but then through that definitely exposed me to the more logical way of thinking kind of like engineering mindset of problem solving okay here's a I'm at a there's B how do I get there how do I problem solve

through it um so then I think during uh actually in college or rather when I was starting to think about going to college or university um kind of the biggest thing on my mind was like I was also played a lot of music so I was like do I go and then like try to make it make it as a musician or do I pick something else and I went with my brain inside of my heart and was like all right well I can probably learn to love engineering so like let's at least check that out and then keep music as kind of a hobby um so kind of doen head first but then through college like the way I kind of floated uh sophomore junior year of college was I would go to these hackathons coding competitions um every single weekend I would like kind of

think of an idea find a team kind of design out the idea on the car ride over to like uh ant Arbor Michigan or to like OSU or Penn State or whatever and then like we would get there get to work took it pretty seriously uh pitched our heart out and then through that made enough money to kind of like have pocket cash and also like buy some small Tech and also pay for a portion of my college uh which was pretty incredible and that's also what exposed me to entrepreneurship uh in a more serious way I I've always been entrepreneurial but uh in a more structured like okay here's what a sales pitch looks like here's how you fundraise here's what a product is here's who the customer is um here's how you have a team like I think back then I was probably most proud about how many

coding languages that I knew uh now I'm definitely most proud about like the teams that are building their own teams in go go pool um like it's it's absolutely fantastic to see it's phenomenal um so through kind of all that is how I really squarely landed like coming out of college my biggest thing was do I drop out and another fork in the road like do I drop out early and start doing startups or do I graduate then do startups I cut it down the middle graduate a little bit early raised a little bit of funding for the first kind of startup which was a uh AI video interviewing tool before AI really existed and before anything to do with AI in the cloud was out there um so we

were building a lot of uh operational tools for that and then after like a year and a half in we had no Revenue still everyone kind of point the finger at me of like okay uh Stephen you can talk to people you go figure out how to sell this thing and get us money um so then another year and a half on bu of me kind of learning sales fundamentals from scratch learning how to build up a sales team learning how to work with the our sweet spot ended up being the top 100 staffing firms in the world uh which is a very very different culture than hackers in a basement or like crypto natives creating the next kind of like a or def5 protocol it's like very very different culture um and different way to talk to people different way to book

calls and carry deals forward and close these like monster deals U but so that's where we found The Sweet Spot then Co came we lost 90% or 80% of our Revenue in literally a weekend like it was it was quite Fantastical uh my co-founder like looking at you like holy [ __ ] this is like actually happening like Co got announced and then boom Friday Saturday Sunday Monday like we just everybody canceled paused you know they also like batting down the hatches cuz the segment we were going after was highly affected by Co especially early on um so that definitely sucked uh and then we kind of grinded our way through at chewed a lot of glass bled a lot of Tears uh kind of rebuilt buil the business through Co and then as we got to a more stable spot had

entprise contracts kind of like looked at each other like why are we dying for this like do we want to die on this hill or because our product had also morphed into kind of an Enterprise product and less so about creating a technological innovation we're like is this why we got on the game we're like no not really so let's just put this on maintenance mode and then start looking for the next thing then we had another mini Venture during that but anime Montage of us kind of trying out different ideas finding our groove um we landed on lightning in a bottle of we're trying to create new business models for Content creators especially like during covid and postco was a very big thing um and through that is how I came into to take crypto much

more seriously so that's when I would say I transitioned from crypto curious to becoming crypto native whereas like right during that time um and and we had always approached crypto as two things there's crypto cryptocurrency which is the coins and the price action and defi protocols and there's blockchain technology and we were approaching from a very blockchain oriented view very in infrastructure heavy um and that's how we landed on Avalanche is because we were just looking for a way to run our own app chain for this thing that we're fundraising for um and then as we went down the rabbit hole of like okay subance is really the only thing Cosmos Polkka dot subnets subnets is really the only thing still now it's the only way that we can like start off start a

blockchain small keep the same infrastructure and just scale it up just like I would scale up a uh just like I would scale up a mongod DB instance right or like some any database that we' use internally it's like that made sense to us like okay yeah this can scale and we'll just keep it there and cool that makes sense and we can make it flip it make it permission list and make its own decentralized economy eventually um so then through that process went on the rabbit hole like okay subnets read the wi paper look at the code Tinker with the code run our own create our own tooling because there's not much doxs or tooling at that that point uh and then that's when we start getting like genuinely red pilled we're like holy [ __ ] uh if if we could solve as we're

building out all these Ops tooling and whatever if we could solve this problem not just for us but all the future Stevens in the world all the future Builders like that could really move the needle and we kind of got obsessed with that kind of thinking um and then hence gole pool decided okay like this is this is our first kind of like Toe Hold so we pivoted completely just to focus on this we were so convicted um uh and then yeah started off with gole pool which is a decentralized liquid staking protocol built to help Avon subance grow and decentralize safely uh and then now we're that protocol is growing now we're running 10 or 12% of the uh validators in the Avalanche Network are being launched through our protocol we have a liquid staking token that subsidizes the

cost for running your own validator node um and then we have a ggp token that is acts as like collateral to make sure that this Market remains trustless of matching up Hardware operators to uh liquid stakers um and then now as we're kind of building this out we've just announced Bloom which is an open framework for Subs to decentralize so now we're starting to see that the the dream is starting to become real of now any Builder will be able to like start with their own small permissioned app chain grow it iteratively and then using Bloom actually connect them Google protocol add in more Valor nodes attract more delegators um like diversify the network security um and then the important thing there like we feel our

unique perspective is that that has to happen iteratively so Bloom is really geared towards helping teams like make one test grow a little bit learn about it view the analytics make the next version grow learn next version right and then that way they can kind of sequentially grow out their blockchain Network versus I think what the market thought would and should happen is sort of the cosmos approach of uh like on Day Zero you have 150 nodes right right off the bat and then that can just start grow and get to like 2,000 nodes uh but what we're seeing in the market really is that like that works really well again for crypto native teams actually doesn't even work really that well it's a huge [ __ ] hassle uh but it works

well enough to get things off the ground and rolling um but then for like for every one crypto native team that has a cool idea there are like 100 crypto curious teams who want to experiment and try different ideas and for them especially the way web 2 entrepreneurs are kind of built and trained like it just doesn't make sense to like boom go out in a big bang spend 30% of my tokens at tge just to attract validators for an idea by the way I don't even know yet we'll have product Market fit and we don't know if it'll generate Revenue so that's the whole kind of perspective that we're taking on the app train space is like these crypto curious teams there's a lot of them very very profi proficient and very expert Builders um and it's these people were trying to

really help understand and wrap their heads around like what is a crypto rabbit hole and how do I decentralize yeah man so much there and like I really appreciate just the the full background so um like before we really get into the like this next phase of go-o pools and like the bloom protocol and all this stuff like I want to rewind us back to that moment where you you've kind of like put on maintenance mode you pivot out of your last startup and like you're looking for problems that need to be solved so can you talk a little bit about like what like we know kind of the punchline of this story is you ended up on Avalanche because you believe that Avalanche at the time and now was the only place where you could really like

deploy a scalable like app chain uh in a way that like could achieve your vision but can you talk a little bit about like what was your vision and like what problem were you trying to solve and then maybe a little bit about like at that moment when you're kind of realizing okay this is the point of a credibly neutral space and this is the point of permissionless and blockchain like what really attracted you to um like Avalanche when as you said like Cosmos has kind of a similar like Vibe of your own app chains and now ethereum with the L2 and like rollup as a service thesis like we're seeing like very similar things so can you just talk a little bit about that like genesis moment of realizing that like you need

to be an avalanch Builder or climber or whatever you whatever fits in the theme I I would say we definitely came in with our own perspective about how blockchains can be used in the world uh because we weren't already Crypton native like we had our own fresh idea our own fresh naive thoughts right of like look like we think what's really cool about blockchain uh is that it can create an economy that lives outside of yourself everyone owns it but no one owns it it's this incredibly neutral space and because of that it creates a lot of trust and buyin um that's the first component to it it's like the blockchain tech itself can help create this decentralized economy that we can influence especially in the beginning

but it'll it should and would if it became successful snowball into its own thing that always matches what the customer preferences are right it needs to be agile but what's cool leading to the second thing we thought was interesting about blockchain um is that tokens turns out are a great way to coordinate and and incentivized behaviors in people uh and what's even [ __ ] cooler is that as an entrepreneur you think of okay how do I acquire users I would give Facebook $110,000 a week and start running AB tests on my ads versus how do I acquire uses in a token based world it's like okay I have a token I predefine all the rules for it so again it creates that corbly neutral people can trust it um and tokens scale

frictionlessly right like one token that's launched in the US cannot be accessed by people in Hong Kong and Singapore on Day Zero it's like instant so you get access to the global market instantly and it scales frictionlessly like it's perfect right like you can and then creates its own economy can spread by Word of Mouth it is the best user acquisition uh kind of mechanism that I've ever seen like like it's actually incredible I think it's so underappreciated in crypto um but yeah I would say those are the two things that made us think like okay for what we're trying to do blockchain and having a token really can make a ton of sense because from our perspective um we were

trying to build or we were building a AI video editor for Content creators or like create Clips they can create their own montages and that's all cool but was even cooler at that moment was uh the content creator themselves thought like okay cool that saves me time it's like kind of a math equation for them like cool I could to spend two hours less editing every week um but their Community was actually who was like holy [ __ ] you're telling me I can just watch my my favorite twitch streamer and then start creating my own fan montages out of their content their like Evergreen content and then I get to post it and just like have my clout you know I get to earn create my own business model have ad Revenue Etc um and that's really why we started paying attention to crypto and blockchain specifically we're

like okay that's the lightning in the bottle this is the light bulb that's going off in people's heads um for everyone xqc he has 200,000 people watching him every single day there that's a lot of little mini content creators right like that's a that's a significant amount of throughput in scale and then we're thinking like okay now how do we just organize this into this economic model that we don't run all the infrastructure ourselves like I don't want to build out my own roadblocks like economy you know we don't have time for that so what can we do that we could ship in three months oh we could roll our own blockchain and then we can use a token to kind of be the uh be the grease in the wheels of this of this economy uh and then the answer of like so with that perspective

and the kicker of we want to make this big quickly right like we're here to move the needle for people in the world um and for that to happen like you stack up these top streamers then you stack up the top YouTube creators and then all the top podcasters it's a lot of information like all that data needs to go someplace um so we needed a very high level of scale especially also cuz like we had VC connections like okay like I could feasibly raise a $15 million round for this and then it's like bang like we need to go Global instantly so that's why blockchain made a lot of sense had the promises now as starting get into the practicalities and the realities of it like especially at that time polka

dot like felt really funky to like go through election Cycles it's like such a Crypton native um kind of perspective on how do you get do shared security and how to have network security which is fine but that wasn't us like we're not going to sit here like dude I've got we're trying to raise like 15 million from VCS go for series a and like build a whole [ __ ] business like get to 100 million AR like I'm not going to play this like uh election cycle game right and then for Cosmos for them we just seeing like okay this can't really scale past 100 150 validator nodes but again for level scale we're trying to go for it's like we needed a consensus algorithm because it seemed like that was the bottleneck we needed this consensus algorithm that could really like truly handle 1,000 2,000 10,000

validator nodes and add them in in the space of two years years that's how we're trying to line up the infra um and then that's how we landed on subnets it's like okay snowman consensus can do that uh there's all sorts of cool promises about Advan War messaging which wasn't really a thing back then but there'd be like a bridging solution implemented this thing can does start off permissioned at first and can turn permissionless uh we can roll our own token or have no token at all we can get toj the gas token so there's all sorts of like levers and knobs especially as you dig even deeper into the code uh there's all sorts of like levers and knobs that you can kind of tweak and pariti especially as they keep building uh so that's why to us it just made the most yeah it just practical I was like

okay this is the only choice process of elimination so before we get into like Avalanche and that choice I just want to like hover over this conversation around like the power of tokens because look man I totally agree with you that that like we're seeing something like new here and I think what's new here is that like through the construction of token were able to incentivize use with like real hard financial value now like we got to be careful with that because that Financial value is based on like things that aren't illegal Securities but are like kind of like you know and you never know where the price is going to go and you never know the Insiders and so what like it's really hard to call it real

Financial value but if you like boil away all of the um bells and whistles right that's essentially what we're doing and so I don't mean this is a leading question or a loaded question or whatever but do you think that uh bringing this like tokenization and this hyper financialization um is going to have like negative consequences on Creator economies and like we're already seeing that creators built for the algorithms and then if you add add this layer of like tokens on top of it I W wonder if things start to degrade even more so I just want to get your your thought as someone who's thought a lot about how to combine creation and tokens like what's

where do you think see this going yeah so there's a few Concepts to tease apart here is like yeah people are building for the algorithm but they're not being told what the algorithm is there's zero transparency around that and that's why people are trying to hyper optimize for this black box and the Black Box shifts every single hour right like when does Uber do surge pricing even it's like okay we sort of know but like do we really know how do I plan my own business my own lifestyle around this algorithm that just like shifts underneath me like creators are looking for and they're starting to demand transparency and security uh and neutrality out of the systems that they use right like you can and you can see with Elon with Twitter that was one he

very briefly investigated blockchain to host the Twitter algorithm and and like host the parameters of it and then he's like oh there's no systems that I could actually use to do this right like not even aval subnets can handle the scale of Twitter at the moment Al that's like exactly what they're trying focus on solving uh so then instead you just open source the code it's like okay that's good enough right especially for right now like the creators they can start like figuring out okay what actually does matter um because it's a it's a discoverability problem um but I I think that's where things can get irrational and the hyperf financialization can start coming in and weird like adverse incentives start kicking in is when people don't understand what they're building on because there's no

transparency around it so now it's just a race to the bottom everyone's just trying whatever they can they obsess over it like how does Google SEO work that was another that is still a huge market right but it's all because there's this algorithm people don't know how it works and I think as soon as you introduce a token onto that that's when you'll probably get some Frankenstein bastardization version of like okay here's an algorithm we'll get tokens for following the algorithm but we won't tell you what the algorithm is well people love tokens so then like it gets worse right it's a downward spiral versus if you innately host it on a blockchain system it's like okay look like maybe the algorithm is codified in something that looks like a smart contract like all right and here's a

token it very evenly and automatically permissionless distributes kind of incentives based off of how you rank towards the algorithm or whatever and also here's the government structure for how to tweak the algorithm it's like suddenly now that feels a lot more comfortable at least I don't know about you but M with lizard brain my lizard brain gets calmed down a little bit of like okay now I can make my own bets how how important is it for me as a Creator to build out my own novel content and how important is it for me to commercialize my content it's like now I can start making educated choices of no I'm I really just want my own content I don't I don't care about the algorithm so I just release whatever I want maybe it Poss doesn't that's fine or no I'm Mr Beast I am here to game the or not game

but I'm here to like play the algorithm to get the wisest distributions possible so I can create just the biggest YouTube channel in the world it's like okay bro here go for it it'll be nice and competitive or something in the middle and I think most people almost 99% of people will be kind of middle of the curve there of like look I want to create my own content and get my message out there in the world and express myself to the world and hear their feedback uh but also because I'm a Craftsman but also like I don't care about fully fully getting commercialized I just care to get commercial enough so that I can pay like three months of rent right and then they can start Mak their own choices yeah what what you just made me think of is like we've had we've seen

this happen before and like I'm a big Reddit lurker not never posted anything I think but um I don't get really like my crypto stuff from Reddit because like there's just not that much energy there but what I did notice is they went through this huge thing like during the bare Market or it was recently where they were giving out like moons but like some uh oh right Co on like arbitrum right arbitrum Nova I think I don't remember but they're giving away some token based on like the amount of Engagement your comments got and that engagement was based on like reddit's algorithm which um you know is probably more benign than like some of the crazier ones but it's still just like a

total black box and I think on the oneand like yeah the quality of conversation probably dropped like it's just people like Farm you know creating conversation for a different purpose but I guess like what you're saying is both on the Creator side but also on the like viewer the consumer side like at least if we understand what the rules are that people are trying to like yeah it's like what's genuine and what's not what is you just trying to score points on the algorithm versus what you actually think Rex you you I mean it's like viewers want authenticity yeah and and I think like one of the cool things we've seen about crypto um which like you hear a lot of stories like this they

Vibe stories and then like the individual people are hard to find but like you always hear that in crypto like we found that like you know 500 like real fans who are like willing to buy your nfts and like that kind of stuff is more valuable than having like a million Twitter followers and so um I I mean I guess I like believe that um but yeah I mean I just think that that we're entering like a whole new world because of the technologies that we're creating no absolutely and I think uh you can feel self assured in your belief of that because I think you see that across every business model maybe ever um I can't really think of any business model can you oh maybe advertisement where

advertisement doesn't really care about the idea of a champion they care about the idea of an impression and think of like SEO maybe that's the one business model we just like doesn't matter who sees this thing like the person paying for it just wants numbers um but even then like as a customer as a person paying for Facebook advertising like that person still wants like no dude I want to like find for like the 500 die hards who like can't live and breathe without this product I'm selling right and then it's like find that match you know so I think we can go all day on creators but let's shift back into um Avalanche and goo pools and like really so the the big the next thing I wanted to ask you about based on like your story of how you guys decided um first

that Avalanche subnets was the right thing for your video editor and then realizing like oh my God that was so much work let's just make a company out of what we needed to do to get started but like the the thing that jumped out to me is that like you were uncomfortable with the idea that your um subnet like could only run 150 Val like you expecting like way more than 150 like 2,000 or 10,000 or like numbers in those order of magnitude and I guess like my question to you is or I guess like as some for some context like I'm becoming more and more concerned with like any that's like yeah we're just going to have like hundreds of computers

running this like random piece of software and like we'll pay tokens but like I just I think there's a finite amount of people willing to like I'm I'm an ethereum Staker like it's a total pain in the ass like even I'm thinking about quitting so like just to get rid of the stress and like I'm a maxi and so I guess suff like all to say is that I believe in like credibly neutral Bas layers based on like thousands of nodes I believe in and like having some redundancy like maybe having five or 10 or 20 like uh machines running something like a subnet but like can you talk to me about why like for your vision of what like we're building here it's like really important that any company can

build up a system that is like able to scale to these like massive massive numbers yeah so two things and I'll go with the first one briefly first one's a little bit more tactical about this example second thought like we think a lot about like where's the issue going second is more of a macro CH that I think is just undeniable so we can kind of tease apart both but the first is like why did we strongly believe about that uh two things one again we want to go Global like we want this thing to be huge like bigger than twitch.tv right it should be some the market cap for this should be some mix of like twitch. TV plus Apple Music Plus Spotify plus YouTube right like just huge right like to really move the needle like truly like we had a mission we're like all

right like let's [ __ ] do it like we're able to um I really think that it's going to improve someone should still build this maybe I'll build it after goo pool like I don't know but um like this thing has to exist and has to like shift the market create a new market equilibrium where just every Creator is now it's just default choice right where people are now using this sort of like uh business model system um but the question of like okay so why do you need so many validator nodes is like one t something that big you'll need a lot to create that Curly neutral layer uh but two specifically for goto Market strategy it was really interesting um creators actually really love the idea of running a valid node for a decz patreon right so

now it's not just patreon running all the servers who also determin the algorithm also determined the Cuts Etc um and they can change the rules whenever they want but now creators are like wait you're telling me like oh [ __ ] I could run a node for this especially the early ones especially the really really big ones who are more Savvy and like oh [ __ ] yeah this could be big it's like a new way for for them to kind of support the creation of the startup where some person at the level of xqc would could like run a node actually buy the token and STI the tokens on it and now it creates a level of credibility for this whole system but also it's not just him it would be his 50 other buddies who are content creators as well so now it's part of the system like okay

everyone owns it but no one owns it right and that's where the neutral neutrality starts coming so that again think about go to market um as an entrepreneur you think about okay so that's my first segment got twitch now time to go for YouTube much bigger much much bigger audience they'll care about different things uh for them to it it has to be like you need a certain level of neutrality at least in our Discovery you need a certain amount of neutrality to get somebody like Mr Beast to take it seriously right because if if this thing has got like two validators on it and it's just like two small fry content creators Mr Beast would be like H this doesn't really move the needle for me like why why do I join this network like why should I support this and kind of weave it into the fabric of my business

um so that's for us like why we needed more than 150 is because there's a lot more than 150 really really really good content creators out there and we wanted to use the Valor node specifically as a go to market strategy and it seemed like it was going to go very well uh that now these people can actually like run their own node which is also cool because there's a real example of this working uh in Japan there is a loyalty points subnet and I forget the actual loog but it was earlier the Summer where 711 and like three other kind of gas station s companies or convenience store companies they're all running one Valor note each for this loyalty Point subnet that now connects all their all their audiences right and then they're they're

hosting Lo points on this kind of like shared blockchain that's pretty incredible like to construct a deal like that where you get these people with their own incentives their own vested interest their own audiences their own segments that they're going for and then to be like yo like you on a Valor node you're other five competitors are also inv validators this is just going to be something for your industry it's not like you're not going to win more out of this than they will they're not going to beat you out on the market because of this because you're all running validators right and it's like suddenly that that's that's highly interesting pretty cool to construct deals like that and and just to pick that apart a little bit um so I my background before I found crypto I was uh I worked for anheiser Bush inbev so

like Budweiser Bud Light and um I first I was in tech Innovation then I was in like just traditional hardcore Corporate Finance but like something that is like very noticeable is like when we would always go to like bars and restaurants and say like hey we're working with this technology partner it's going to like give your point of sale the ability to I don't know like do promotions like the second the Packers score right or something like that and like there is just so much suspicion around like well who's this company like do you own them are you going to get all the data and it was just like no man it's just like some some [ __ ] company we found that does like a cool thing you know and we just

want to pay for it because we think more people will buy Bud Light if you do promotions like I and so um again like I full disclosure just I'm skeptical that there we're entering this world where like a bunch of people are going to like be running nodes to power like hundreds and thousands of different services but um well I agree with you there I don't I don't think I think the case for let's just say retail which you can manage just people wearing an non masks and it's like okay who's this person I don't know but it's you it's me it's everybody right it's like I I I also agree with you I don't really see a world where just average retail uh is going to be running like five valer nodes in their basement I don't think so but what I do

think so is people like 7-Eleven who they run a Val with their Ops Team to create like this service this new service for the industry that they think is Roi efficient for them and it like unlocks does what they've already been doing but better and unlocks new use cases it's like that's more the trend that I'm seeing um which is a little bit different right but I think there's an open question on um like if we take Wall Street would if you got paid in Wall Street Coin to run servers for Wall Street would you do it are you US based I forget yeah yeah I'm in Los Angeles yeah okay so like like would people do that like I'm not sure maybe it's a system that touches every single person

like everyone has a 401k yeah I guess like let me put it this way like I would like that money and my fiance would like that money but like only one of us is capable of running a node and I think like the people that are capable of running a node like are just not that many and like they're security minded and like uptime and frequency minded and and so like I like I'm already stressed out by running an ethereum node I can't imagine being someone who's running like 10 things and so like our already limited pool of validators is like limited by just like their willingness to expand

themselves and so like that's what I get stressed about I I would agree um one thing we're seeing um I think to achieve that sort of dream the ux of a Val node and we think of as a validator is going to have to change pretty drastically like one thing that we're seeing in for us we for gole pool um we release this product that's like a oneclick launcher so in one button launch a validor node and then we work with a partner a very trusted partner working with them they're great but they're the ones who manage the infrastructure but it's your stake and you get to do whatever you want with the node right but like they they're just going to handle the Ops behind it so actually this is a a great jumping off point because I've been meaning to to to we let's let just like level set what um

like some basic stuff about Avalanche so like can you like just explain to us like I think most of us are anyone listening to this is familiar with ethereum and so like we think of like Avalanche as I believe it's the C chain and it's just like a evm equivalent like space that like is faster and like its own L1 but like can you just explain what the construction of avalanche is like what a subnet is and then what go go pool is doing yeah for sure so um the Avalanche network is really just a bundle of code that lets people run their own blockchains and we organize those blockchains into subnets so like a subnet Loosely whenever somebody says

subnet they Loosely mean like look here's an easy way for you run an app chain um that's what they want to Market with that that's what like the basic layer is then then they're like okay well what's our first blockchain like what's the first use case for this cool new tech this blueprint for for blockchains like what's the first plan we should kind of like Implement um they're like oh [ __ ] well ethereum's huge all right let's make an evm we'll call this the primary Network so there's the pchain which kind of runs the whole show that controls the metadata what subnets exist who are the validators for it like that's kind of the coordination mechanism and then there's the C chain which is meant as a pro of concept of like look here's here's one thing you can do with the subn technology is run your own

blockchain um they started off working the evm and then basically modified it very heavily to make it work with this new consensus algorithm soup it up lower gas Fe like all that stuff and then there's the xchain which was another proof concept it's like here's a hyper efficient way to trade only trade assets it's like just a trading chain um and then what ended up happening is D5 summer happened and then all the incenter programs happened and then nval Rush happened and then everyone flooded in to the C chain to play around this new def ecosystem that was coming up um and then they got exposed to the whole subnet idea of like oh this whole thing is really supposed to be a network so that's kind of what ended up happening which is kind of funny yeah can and then can you explain this like what a

subchain is maybe through the story of that crab game and like specifically cuz like that's I think how most people probably like Got U exposed to this whole construction they're retro at this point um but that's a cool story so basically as part of this whole like you know so defi happened and then pay to earn games happened right ax Affinity like all that stuff then on Avalanche a group created a game called kada which was a uh pay to earn like crab racing game basically you know buy crabs whatever play earn the token you know whatever cre a little com it it was pretty fun art was cute um but end up getting really popular like really really really really popular uh and that caused gas fees to spike enormously um

which then degraded the like a experience or the compound experience or the unisoft or Trader Joe experience right for all the def5 people you're trying to do defi stuff they're like now suddenly paying it wasn't as crazy as ethereum gas fees but they're paying like 100x what they're used to and what they're expecting to like perform their types of Trades um so then the kado team was like oh [ __ ] well let's just let's move it out to its own subnet so then they migrated all the crabs over to their own subnet which is now its own little sandbox it's just localized had the own localized fee market so what ended up happening is people bridged over to that uh transaction volume on the kvata subnet was like huge just cuz everyone kept kind of playing the game there and on C chain transaction volum

went down gas fees fell down to what like Traders would want um and now everyone's happy right like there's still liquidity for the crap token on the C chain but the actual game is being played all the transactions are being executed on the Kata subnet um and then it was like the perfect use case of like oh here's here's an here's an approach that works for scaling blockchains it's like you don't need to suffer with really high gas fees and have people compete all the popular dabs compete um instead you can like take aular adap or the breakout star put them on their own subnet now they have their own environment their own rules they get to control it they add more utility for the token because now it's also gas fee like it's all you know they get to experiment with it um and then yeah people on the C

chain now they're happy because they can still play the game but now they have lower gas fees to do with their C chain activities so can we talk through like the actual construction of like how this happened so just let me guess and tell me if I'm wrong but is it essentially every like node on this network is in some way or or in the full way um like managing the consensus of the pchain the primary chain that is like um that is coordinating all of this and then like there are specific nodes that are like dedicated to running the C chain like the evm chain there's specific nodes that are dedicated to

running the cbata chain and like that is that and and then like how does the token avax fit into all this so the pchain or the primary network has a bunch of validators in it completely right about that and now a subset of those people eight nodes to begin with then peeled off they're still running the primary Network so still performing consensus for the B chain the C chain you know that you still see the men poool for all that stuff um but now like literally what what's literally happening is then they spin up another binary on that same piece of Hardware that is the Kata subnet binary and now that's a new process that starts up it it requires its own Ram uh its own hard disk space and it also runs its own

consensus so it's like literally you're almost copy pasting like okay everything that's happening for primary Network now it's boom create another instance that's running for the Kata subnet and so that way they're very separate like there it's literally its own sandbox um and then how does the avax token like fit into all this then for the AAC token where it all fits in or value cruel the AA token is okay there's going be lots of teams who want subnets to run a subnet you first need to run a a primary Network validator which is 2,000 ax minimum so basically people buy the aax token they stake it to start validating the main chain and then they get to use that stake to start up their own subnet and then that subnet maybe

has its own sticking requirements like I think they requires the uh you need to stick a certain amount of like the Kata token to be a validator they ran like an auction for that and whatever um so that's how the avax token fits into all this but I think it's actually there's a really big proposal in the community right now where trying to figure out like it turns out that was a really good idea especially when the avax price was low when aax was like five bucks it's like okay that could be reasonable um now it's at 40 and it's like not so reasonable to spend $40 times 10,000 avac you know like whatever that number is like like $400,000 or whatever um not so reasonable to like upfront cost just to buy aax $400,000 worth and now I also

have to do all the computation and whatever for the main chain plus the buy and cost just to run my own subnet so now there's a really big proposal about how do we tease this apart yeah how much like Risk so I I'm assuming it's just like a proof of stake like the the P chain is just like a traditional proof of stake chain where like you put up stake and then you run the program and if you don't cheat like stake is fine but if you cheat then you get slashed that's how the consensus works yeah exactly uh but your principle doesn't get slashed just the rewards get slashed oh well so like yeah I I wonder if like yeah as the price goes up like you can just Bas anyway I don't know I don't need to speak on behalf of like aval

Labs but it's just like I mean provide like RIS basically like 0% loans to people for this avax if it like basically can't be slashed that's what's happening right now basically um um is that people are yeah they're basically renting avac that's kind of the business model at the moment but what sucks is like aaac is playing to win right and there's like a specific set of use cases for Block space um that I think subnets are really good for but to rent avac that requires one Dev who's in the basement in Brazil to like figure out who the hell is Luigi so I can DM him on Twitter and be like Yo dude can I like rent aax from you or or whatever right or like talk to other

humans um that's not really the world we want to live in it's not super permissionless like we want to live in a world where anybody can kind of go down the rabbit hole and spin up a subnet without requiring this huge upfront cost um kind of the model there right now is pay as you go so that people would be paying like maybe 10 AXS a month why is that the model because like the lesson we were learned from cata was exactly the opposite which is like start on like the general purpose chain and then like once you're so big that it's a problem then like yes it's expens it's $40,000 to um like move over to the yeah yeah you're completely right um so the reason being is that we're seeing a lot of crypto

curious teams who want to experiment with subnets not crypto native teams and crypto curious guys or these teams they have their own ideas so subnets allow you to program in your like any VM there's a team building a move VM right so it uses move but uses the Avalanche consensus to make it just hyper fast um even faster than it is which is insane um so because of that flexibility any Builder can build whatever VM that they want there's there's a hyp SDK which is a framework to let devs just Lego block a their own templated VM so you can imagine if you are a um if you're like helium they're building a Internet of Things blockchain essentially so like you don't like do you need solidity for

that do you need the evm for that do you need need all the other stuff that comes with the evm just to like program up like rasby Pi be able to talk to each other and like be able to run these lowlevel blockchains um the answer is like no you it actually kind of sucks because now you're competing for gas it can kind of be slow doesn't have the operations that we need Etc so then they start writing their own custom VMS using these sdks and that's like one one very specific instance of why people would just go straight to a subnet is just because like they can't use the evm for forever reason doesn't make sense for their use case well then I guess my like very unas for suggestion to aval laabs is like we've seen like some really incredible like um consensus based VMS

like especially in the last like year um just like deploy a d and f chain like for the next most popular ones true that's a good point yeah I guess that's more of a BD problem now though right it's like as soon as you deploy so like we there's an L1 in the C chain right so let's just deploy another L1 another L1 another right like the salana VM like why not why wouldn't you do that yeah teams are doing it it's just that I think there's um I think it's more of a BD problem frankly at this point it's like it now you can release it the tech is there but how are you going to find all the teams to to build it yeah no I mean I guess like this is the solution to the other

BD problem which is like it's too expensive for like teams to get in oh to like have them just host like look here's a bunch of yeah like we pick them five most popular if there's a six most most popular we'll add that one too there that is interesting another good Insight um that's happening with the games right now so the um I think there are two subnets but the one I'll talk about is the uh the Merit Circle Dow so they have their beam subnet and they're sort of acting as a pseudo gaining publisher but providing tools and support um maybe investment I'm not sure uh but what they did was they rolled their own subnet and then they're just for games that they work with games just Deploy on to that right and then they

just you can add many blockchains to one subnet you know so you they just keep adding new blockchains so that every video game or every wh 3 game they just have their own chain right I thought that was really clever we see that kind of like publishing model pop up a lot in subnets yeah yeah man I I like want to just ask you more about goo pools but um I just let me jump to this question at the end which is like um like what's really crazy to me about this conversation is how much the road map of like Avalanche and ethereum are like really converging it is interesting isn't it it's like there's there's a problem space and people broadly know the

solution but now like everyone's converging sort of on the same principles like implement the same principles but in different ways which it's pretty interesting yeah and I guess like I guess like to turn it into a question like I mean what what what do you think that that like means for let's say like the three major ecosystems cuz like salana seems to be really like doing its own thing with like modular blockchain but so for Cosmos Avalanche and um ethereum like if we're all like skating towards the same place do you think that that inevitably means that like we become all one ecosystem or do we like remain kind of like three ecosystem kind of connected by Bridges

or like I guess like the real like hard-hitting question is like do you believe that in the future there's really space for more than like one trustless Computing environment um I'll preface what I'll say with you're talking to an entrepreneur who talks to these teams every single day and I'm constantly pipelining constantly prospecting who's this a fit for who's not a fit for why do people use l2s why people use salana why people want some n um so that's very much my perspective which I think is probably different than what the VC perspective is is Angels like retail Traders like whatever so I can only kind of like speak to my like what I see um what I see is sort of like two things one is just in terms of business

Theory uh I think people constantly underestimate not I think but overall like kind of the principle of startups people constantly underestimate the size of certain markets it's like you like you don't quite grasp like how big these markets can be so people constantly underestimate and it's way easier to look at a competitor and be like okay they have five customer customers but wait I have three customers I want those five customers right instead of thinking about wait let's go explore hold on there's you know there's a whole City's filled with people who are curious about blockchain and they're just looking for Solutions like they're constantly doing Google Searchers they're they're on Twitter they're like listening to spaces they're consuming content like this because they're just trying to educate right and so I think that's the first thing that we need to be careful of is

that it's really easy uh for people to kind of like draw comparisons be like no we're at war or we we will eventually inevitably be at war or it's only space for one um but it's not really what we no for sure get off Twitter if that's your opinion um yeah yeah exactly um so that's that's like my first perspective is like I talked to so many teams who haven't even heard of salana you know or like haven't even heard of L2 and not cuz like you know they just like you know they're on month two of the exploration right it's just that's how it is um then kind of the second perspective I have on this um is I think because the Market's really big a lot

bigger than people think the like everyone is converging on the same principles but I think they'll be appealing to different segments so for Avalanche and that's that's a chain by Chain Network by Network decision um uh but I'll I'll ask you a question after this but um like what I see in subnets is like it's really appealing to to like big app chains people who want to run really really big kind of global scale app chains and they want to scale into that within one to two years it's not really like we are seeing Indie Studios and just especially devs just want to experiment like that's especially with tokens it's so interesting to see these devs who are bootstrapping but they view the token as

like wait no I can I can create a chain that's just as big as you know JP Morgan subnet but I just I'll use like a crypt native way to do so versus like have a team so that's kind of cool um but what I'm seeing is that like subnet seem to be really good for a really high computation use case so if you want a really high scale or you have high computation needs or you need really really flexible computation um like seems like subet are a pretty good fit for that there are kind of multiple success stories coming out of that um so I think and I think like Cosmos has its own thing right if you want kind of defi like Cosmos is pretty good to have kind of defi app chains have them talk to each other there's a community there

there's liquidity like that's kind of cool um and then here's my question it's like what are you seeing on the L2 side for me I see people Sy to gravity towards L2 it's like cool this is a very accessible way for me to experiment with block space so I'll experiment and I'll touch everything and kind of like wrap my head around how all this stuff work um and then the second segment I see is like eth has a ton of liquidity so like what we saw blast L2 it's like okay like you can put up a [ __ ] landing page with cool branding yeah I mean that's not a L2 it's literally just uh like Honeypot yeah so so it's but it's interesting right like there's a business model now there's a lot of you know very eth whales who are like you

know like how can I push this you know with the new things so that's like a market there that like a subnet probably can't really tap into um or at least I don't see how a subnet could tap into that within like four weeks put up a landing page and attract the whole eth crowd um so it's kind of those are kind of the two things I see it's like direct commercialization and kind of experimentation but what are you saying I mean I think like first and foremost like you just have to like remember that we're in an industry that is like like completely delusional and mental and I think like I love that preface well like just you know like your whole like blast seems ridiculous until you remember like that like Luna didn't seem ridiculous

until it was too late right and like Avalanche hasn't had like too many of those moments of like that mag itude so um like I hear you but also like I do think that if something like I I think the reason that blast got like $700 million in like less than a month and they probably have more now that prices are pumping is that like Paradigm backed them and we're like all like very much believe rightfully or wrongfully but like it is clear that everyone believes these are the last days of the be the bare market and like everyone's just trying to get in and like build up points like this points thing is just crazy to me and so um I think I think

like number one like that's the lens you have to look at everything through um I think under that like where actually interesting stuff is happening um like blast is a scam until it's not right but it's definitely like a scam right now like even the Paradigm guys were coming out and being like uh uh and so like whatever right like I think Igan lay was like a really cool idea until it turned into the exact same thing and like now it's just like literally like absurd um and so you know I think um under that like what's really like cool about ethereum to me is like the just like

acceptance that we're trying to build like the next generation of the internet and the next generation of the internet internet like when you think about like blockchain space as HTTP like there there's one that wins out and it's not because like it's better or like we can go back to like all the other things like the the point is that it's just like the one that like we all decide like works well enough and that's that's literally what credible neutrality is and so my whole like conversation earlier about like being skeptical about getting like a bunch of people to run a bunch of different computers is like kind of this like like surrender to the belief that

um like there really just needs to be like one credibly neutral space like there needs to be one HTTP or like SSL or you know these basic building blocks of the internet and then from that everything will Spring forth and then on top of like now when we're talking about the L2 layer like everything that we're talking about for Avalanche like I see the exact same like conversations and like examples H like starkware is like basically this like other world that is just as alien to me as um Avalanche but like it's clear they're spinning up Stu like a mutable X sounds exactly like what you're um the the example like the gaming uh subnet right or um like I

could just go on and on about that kind of stuff and I think that for me again it's just like first principles like what what we're doing is continuing the like the internet didn't stop being developed like we're continuing that and um for me that's like where my like kind of ethereum maximalism um comes from no I love it uh just to push on it a little bit um so I understand the htgp htps reference right it's like this is a protocol um I guess the argument is probably that it's meant to be a protocol but I've been hearing a lot of arguments and kind of what I'm seeing from the builders that they don't really view block space

like that they view having an L2 it's like okay ethereum is the main server right has its own cost to it and I use HPS to talk to it I use protocols to talk to it and the rules are defined by protocols like how blocks are being made that's a protocol U or consensus but the like okay if that doesn't work then the analogy that the builders kind of like what I see in their eyes is that so every L2 is sort of like a microservice or it's a way to scale out like a little cluster of like hey this app is working really well let's give it five servers now instead of like at an Enterprise um it's might get a little

technical but at the at an Enterprise level it's like you start off with the monolith right you build out a lot of code all the devs working on that and that monolith is running one gantu server with just a lot of ram um and then it's like oh [ __ ] but wait people are making a lot more read requests than write requests to like search queries or like you know a response from a search query um so like that specifically needs we whole thing so yeah Val get its own little like 10 servers that that will scale out horizontally first and then start scaling up and then the model starts kind of like turning into this cloud of computer modularizing right yeah sure modularizing yeah yeah I mean you're right I yeah um but uh so it's like there's like the server itself isn't a

protocol like I and like even the aspect of scaling out the system you you sort of follow protocol but it's more of a verbal social protocol between you and your other Engineers on the team where it's not like oh this thing is going up so now it'll automatically scale like these rules do exist but right now frankly used more as a convenience to save our like save Engineers who are on call from waking up at 2 a.m. right like just no Serge is happing at 2: a.m. okay just scale it up we'll pay a little extra because sleep is more important right it's like more like that versus like no like we need to scale this so then it'll scale automatically and the Machine builds the machine you know what I mean and and I don't know I'm trying to rationalize that with the kind of the

or rather I'm trying to understand I mean I think that like that um is a reflection of like I think I think that's where a lot of the energy is right now um and I think like and that's where like builders that are like actually focused on like creating companies and like especially like through our lens like you know the lens of the our craziness of our industry like trying to flip something around quick enough to like do a token and like catch the upswing right like and and listen like no no uh shade thrown on them like Unis swap like was changed our understanding of what blockchains are and like that's what they did you know

like I have no problem with that but um I do think that like a lot of what you're talking about is a reflection of like that part and I think like you go to the ethereum like protocol research like reading like directly what vitalik's writing what like guys like danrad and um Justin Drake and like you know core like ethereum Builders are like really focused about like like building this like kind of like perfect settlement layer that is like ready to accept like orders of magnitude more and more of inputs from um like rollups today l2s today but like what we're finding in the magic of ZK

cryptography is like all of these other applications that basically allow you to do all this crazy stuff off chain and then like in one proof like settle it on chain yeah and so like what what I like more and more I'm convinced of is that like ZK is this magic technology that allows us to project Computing from like high Computing environments into like limited Computing environments but specifically the evm so that like the idea is like do whatever you want on like a single computer on like a subnet of a thousand computers like whatever it doesn't matter do whatever you want and then just send the ZK proof and then like that is kind of I think like the

unlock that like helps you understand like to me ethereum is like today what the internet is is like this like weird like thing that happens to exist between all these centralized entities like around the planet that are like connected to each other and then like this is the Internet it's and it's like kind of emerging and the point is is that every entity on the Internet or sorry everything on the internet is like an entity that's uh centralized and like controlled offline and what like what blockchain does but like specifically what I think ethereum will do is like provide that one like entity that just like is of the internet itself it's like

the ethereum of the internet and so um ZK is that technology that that like magic that allows you to do like more and more complex things off chain like that is basically what starkware is doing is like getting that cryptography Tighter and Tighter so that they can do more and more offchain and then just like prove it with just like one proof um and so anyway I'm rambling but like that is um like ZK is like the the why things are getting so exciting right now um in ethereum world right well I can definitely get behind that especially in terms of and here we're talking like pretty decently abstract with like some proof points and this to me feels very

similar to kind of like how people think about Bitcoin coin it's like okay this is bitcoin's use case or segment it's like a store value incredibly neutral decentralized a pretty awesome asset it's like you know that's it's pretty good and they've made enough progress where it's like oh [ __ ] there's a Bitcoin [ __ ] ETF now like could work like this is going to work uh that's pretty cool um and I can definitely see also like for ethereum I could see it absolutely grow to this like kind of global siment layer where it's like oh [ __ ] it's like if you squint it's like it's like H there's like arguments against it same as Bitcoin but also like oh [ __ ] there are a lot of proof points right it's just be

growing it's like oh [ __ ] this could really work you know um yeah which is pretty cool yeah and um yeah so anyway I do think like I want to get back to go go pools like with our last like couple minutes here but um yeah I do think that like the jury's still out for sure and like my biggest belief is that all the like good work that's being done on like avalanche on Cosmos on salana like on Phantom yeah that's the L1 right yeah like on all of these l1s is that like either they're going to be like basically corporate chains and like that's fine um or they're going to like eventually find a way to inter like to settle directly to ethereum and like

that work's not going to be wasted that's just like how you plug into the world computer I would love to see that world too I think that's totally cool cuz I think subnets the only really I think the core value props of subnets is like here you can make a app chain customize it for your own rules bootstrap it pretty easily because there all these validators ready to get started and like get you off the ground um solve solves the cold start problem for you use a token create the economy and build your own app chain and then there's no reason why you couldn't just settle to ethereum it sounds fine that's what the if that's what consumers want yeah yeah well and then like small plug for listeners um I did an interview with risk zero over last summer and like they did they've already gotten to a point

where um they have like Linux uh running with the ZK proof like everything it does so like that's how you you can project yeah it's like it's incredible like but we're basically showing that you can do arbitrary Computing and then create a ZK proof and then that can go into any blockchain environment and then you've effectively moved that Computing into that uh blockchain and so like that's definitely the future um and like has implications for all of us so but like again can you like tell us like what you're doing and like um like I I guess we'll we'll use this to sign off like if people like why what's the ideal person that would use you like what are

people looking for when they come to you and like how can you help them um like set up their stuff on Avalanche yeah so we have two audiences one Crypton native two crypto curious for the Crypton native people we're simply put the highest yield way to stake avac two ways to do that one through liquid staking it's like okay like you go play in defi it feels a lot like Lio like it's good um and then the second way is run a validator node you earn extra yield from in The Valor node but you put up your own capital and you get matched with liquid staking assets by staking the ggp token and that's also really cool so why would you want to run a valid node because then that blends over that is now and also like why stake GG ax um both are geared towards creating a

decent taking protocol that is all geared towards helping these crypto curious people all the crypto curious teams get started bootstrap their own subnets get validators from the protocol um get stake or avac security from the protocol um solve the cold star problem so then they can kind of keep building but I think for us what we're kind of doing uniquely which you know definitely stems from me just being an entrepreneur and like just you know whatever but it's like the way seriously the way all these teams are trained and even just every Silicon Valley Team every proficient team is trained is to decentralize iteratively like release your app chain then start decentralizing in a very iterative pragmatic way right and then from there I think that's what gole pool

is um was highly useful for so if you're looking to build a high programmable and especially a very very scalable from Day Zero app chain then I think subet are probably it's good enough definitely good enough to like check out and read docs and message around just to kind of like see what can the tech do for you um and then gole pool helps them kind of grow and then our company uh or our onore company um also does a lot of services to these teams so we help them Implement bridges help them figure out to economics help them figure out Market making you know like all the other kind of Crypton native stuff that a we two team would have to kind of pick up we we provide all sorts of services and small

programs for as well as grants as we also do grants for for teams I keep forgetting to plug that one awesome man well um and how can people get in touch with you like what's the where can they find you on Twitter where can they find um goo pools on Twitter it's stvn GTS Stephen Gates without the vows and then the gole pool is goo pool with an underscore at the end of it awesome man well I really appreciate this I really appreciate you letting me like just get my ethereum out and um man I just I learned a lot about uh like what's going on in avalanche and like why it's exciting and um just like yeah what's going on over there so man I appreciate it thank you yeah I've forn lot as well thank you so much well have a good one

and uh see you around cheers