Is Canton ‘Permissionless’? Why Crypto Is Fighting Over What the Word Means

Transcript

So, I definitely want to tackle this question of whether Canton is permissionless or not. And I think in order for the audience to understand this, we need to discuss the issue of the super validators. So, you've all before we dive into the meat on this question, I just had a very quick little fact check I needed to make, which was can you clarify the number of super validators? Because I saw 13 on a few different sites. I saw 46 on the tie. I didn't know why there was this discrepancy. 46. It's just that they choose to run on like node operators, and those are the ones that are 13.

Oh, okay. That's interesting cuz yeah, multiple sites said 13, but but only one said 46. So, I wasn't sure. Okay, so then why don't you just define what a super validator is and give some examples of the different types of institutions that are in that group and then explain why it's invite-only to be a super validator. So, I'll start with the end, which is not invite-only. The model the model of how do you become a super validator has a process no different than any other chain. On Ethereum, you have to stake 32 ETH.

On certain chains, you have to stake even more. On certain chains, you can't even become a part of the sequencer. Most L2s, you have a centralized sequencer. There is no multiple participants in the sequence. There's some L1s like I think Hedera, closed a closed network of uh of a few entities that can run the the sequencing. On Canton, everybody can become an SV assuming the network agrees with a supermajority that they are an additional value add to the network. So, there's nothing there's nothing that would prevent Unchained from saying like we think we can add value to the Canton

network, and as a result of that, we'll become. So, we decided we decided that you know, in most chains today, um you know, the model is is staking. Our view is that although staking has some interesting properties, one of the things that a lot of chains have had a lot of challenge is how to actually bring activity to the network. And our view was that although securing the network is a very important component, our thought was that actually adding sweat equity and value to the network is much more important. And and and and again, we can be we can be challenged that it was the wrong decision. It's stupid.

It's all good. But our thesis was so many chains have written really good technology, have done a really good job actually creating really novel, interesting technology, and then fumbled on the go-to-market. And therefore, what we said is securing the network is important, but actually we wanted the people that own the network, the super validators, not own the whole network, but own kind of like governance on the network and make important decisions would be those that actually are not just staking the network, but actually have skin in the game, meaning they have put a significant part of their business

or an important investment in the business. And therefore, anybody can apply to become a super validator. You put a proposal, and if you got a supermajority vote by all of the super validators, you join as a super validator. And those names will go all the way from small wallet providers that have been early in the journey of Canton and have put quite a lot of investment to DeFi protocols that have built on the network and have made serious investments in the network all the way to Broadridge or Tradeweb or SBI or DRW or Visa, right? It's not This is not a closed-source of the, you know, Wall Street cabal that is like trying to like preserve their

strength. It's The idea is that everybody can participate, but our measurement of why you should become a super validator is because you add some kind of non-linear value to the network compared to just being a passive participant on the network. That's really that's really what a super validator is. Okay, and Let me Let me sharpen this word, cuz I permissionless in crypto and blockchain is a very special word. It's like, you know, it's it's like it's like the word democratic. It has all these other extra valence that we put on it as a culture because it's been so core to what has made crypto crypto historically. So, explain to me So, you've you've countered many of the

people online saying that oh, Canton's not permissionless. You said no, it is permissionless. Can you explain what you mean by that? What does permissionless mean in the context of Canton? And what does it mean and what does it not mean? So, permissionless to me is that first of all, everybody should be able to build an app on the infrastructure. Everybody should be able to participate in the infrastructure, meaning I should allow any person to be able to connect to the infrastructure, participate in the infrastructure. It doesn't mean that just by connecting to the infrastructure, like I gave the example on the internet, I will have access to every asset on the network or that I will have access to every application on the network.

And again, everybody can try to become a super validator on the network. It doesn't mean that they will be able to. And again, I you know, I think that I see your point about like it's democratic. Again, I I challenge that because I would say that most L2s then would not fall into this democratic um um definition. And yet nobody said a word about it because again, it's a centralized sequencer. The operator of that sequencer the day that they want can flip the switch moving from public permissionless to fully private permission, and all of your assets now are locked on that L2. Right? You cannot do anything. They can decide

unilaterally to censor any person that they would want on that L2. Again, I gave example, there's a few L1s that have a permissioned set of validators running the consensus for them. My my view is that I would say that Canton is much more permissionless than those. But again, we came up with a different model of how to set who can participate as a super validator. I don't know. I can't remember what's the number for some of the L1s today, but in order to be a full node from a staking perspective, we're talking about tens of millions of dollars.

That is not very permissionless in the sense that like most average Joe cannot become a full node. Right? So, I guess my point is we just came with a different definition of how you can join in a permissionless manner. It doesn't necessarily mean that everybody would be able to participate in it. Right? You you agree with me that not everybody can become a full node on Sui today. I mean, So, your definition of permissionless is basically you come and ask for permission, and then if it's granted, then you can participate. Well, that So, I was going to say something like that. I I feel like you're painting this equivalence between there being a minimum requirement on Ethereum and Solana and these other chains, which

isn't the same thing as like kind of needing to apply on Canton and then being granted the permission by the existing validators. Like there is literally a permission moment of entities deciding, you know, will we let you in or will we not? So, that's not the same as needing a minimum requirement. Well, just to be clear, in order to meet the minimum requirements, a group of individuals came and set their permissioning about it. So, just because you could say What what I'm happy for you to say is that the permissioning on some chains are a bit more objective or more objective in the sense.

But again, if 2/3 of the full nodes on Solana or Sui or Ethereum were to come together, guess what? They can change those permissioning today. And they have done that in the past. So, so you're you're you're you're you're again Yeah, I mean, it's But like I said, so I would still say that one is meeting a requirement, and then the other like you apply and then you're granted permission where you're not. >> You're meeting the requirement as of right now, I guess is my point. And again, like it's it's like saying that these networks are fully permissionless, and and then we find out that a chain went down because the foundation did not pay the AWS bill for all the nodes. I

mean, we can take this to an extreme of how we want to have these arguments. Everybody can say I want to become an SV, and if the SVs vote in their favor, that is fine. On every chain today, if 2/3 of the full nodes decide they want to censor one of them full nodes, they can do that as well. And again, there have been multiple examples how all the pure definitions um immutable, not true. There have been hacks. We forked the hacks. I mean, it's no longer immutable.

All of these definitions that we claim to be so pure are only true until they're not. And my only point is, again, I'm happy for Canton to be criticized that it is not permissionless in the same way that Ethereum and Solana is. I'm totally fine with it. I'm I'm totally in agreement with that. I'm explaining our rationale is that anybody can become a super validator, and if you look at the spectrum of the types of companies that are super validators on Canton, there is no very unique way of saying like, "Oh, they're clearly going after just banks." Because there as as of right now, there's not even one bank that is a super validator. Maybe not for

long, but as of right now, there's not even one bank that is super validator. And there are traditional FMIs, and then there's also like really new degen kind of like uh crypto providers that are all SVs. So, clearly we are not trying to permission only Wall Street per people. We just thought this is a model that would actually create value to Canton as we've actually been able to prove. And that's it. I mean, I I don't have anything else to to defend. And I think that this is where where where we started. My point to Haseeb was I think that suddenly everybody's nitpicking

Canton use of the word permissionless because like I said, I think Hedera is a permissioned state of validator. Nobody's like going and throwing flames about like, "Why are they calling themselves permissionless?" Nobody's I mean, to your earlier point, Hedera's not winning, right? You guys are winning, which is why there is this spotlight. Yeah, but so what, Yoval? I And like I don't want to belabor this, but I I think it's more that like there is actually a moment where the validators are granting permission to whoever's kind of like applying. So, it's just it just like I don't want to go into the semantics. I understand the points you're making that, you know, all these

different entities are setting standards and like you have to meet them or not, and this is something that is decided by a certain group. Like I I get your point. I'm just saying that there is an actual moment where permission is either granted or not in Canton. But I do want to ask about that. Like what percentage of entities that have applied to become super validators have actually become super validators or been rejected? For the most part, all have been approved. Not necessarily not necessarily immediately. There have been feedback from the network about like, "Hey, this is not enough value given where Canton is." But again, Stellar, Ripple, BNB, every L1 fully permissioned set of uh validators.

I I again, I I'm I'm just I'm just very eager to understand in a non in a non bag in a non bag uh kind of uh Yeah, well, Yoval, let me let me say like I agree with you that there are a lot of chains that have this kind of structure. Where basically you have a central group or committee that decides on who's going to be let into that committee, and they participate in consensus, and they're basically stewards of the chain. Um the difference is that usually the way that we describe the consensus for these networks is proof of authority.

The authority can be a single party. It can be a small committee. Um but generally there's a term for that. It's been around forever. We have a long long history of proof of authority chains that have these kind of committee-like structures. It sounds like that's what Canton is doing. Not that dissimilar from a lot of other chains that have this kind of um you know, institutional banking-oriented go-to-market like Stellar, like like Ripple. Um I guess the the the the reason why you're getting all this pushback is that again, it's like calling something democratic, right? It's like, "Well, you know, it is democratic because if you want to vote, you can apply, and then we'll decide whether you get to vote."

Like you could you could argue that's democratic, but that's not what people mean when they say democratic. Right? Um I think that's why you're getting such an allergic reaction to the use of the word permissionless is that it's a very special word in crypto culture. The same way the word democratic is a very special word. Listen, I appreciate that, but I I think I will again disagree because I don't think that anyone would say that BNB is proof of authorship or something like that. And again, most of the chains I I can tell you that until Canton started getting a lot of heat, I think we would have all described Hedera Stellar Ripple, BNB, Base, Arbitrum. I could keep on going as public permissionless chains.

And I don't think that they would have gone into that nuance. I just don't. But again, I gave my thesis. Our thesis is that the SVs can go up to 100, can go even beyond. Right? There's nothing There's nothing that actually There's no cap on that on that model. And I guess from my perspective, I you know, I've explained that a lot of chains when they design their tokenomics and their structure are trying to solve a specific problem. And, you know, some chains said, "Oh, in order to have the token rally faster, we'll just create the the full node that you have to stake significantly more money."

They didn't actually solve for the usage and actually building on the chain. And you know, are there other drawdowns to what we've done? Again, clearly from the marketing perspective, we're getting heat from using the wrong word in its purest form. On the other hand, you could say, "Look, we've actually brought stakeholders that put a lot of skin in the game and actually build a lot of things without any grants. We've given to date two grants from the Canton Foundation." But what about rewards?

The rewards are objective, Alex. They're for everyone to see. So, they are objective. There's no kind of foundation that did a pre-mine and is sitting on a treasure of dollars that is deciding in a very opaque manner who gets who gets what reward and for what reason. So, yeah. We actually align the incentives in a much more objective way with the builders. And who decide what degree of rewards you're getting as a validator who joins? What do you mean? Well, well, you're saying like it it's unlike grants, we have a transparent and straightforward model of who get gets what.

So, I'm wondering like who who decides what level of super validator You you have these different levels, right? Like uh tiers with each higher tier, the the more you you reward you get. Like who decides on this? It's vote. All all the super validators applications are public for everyone to Okay. That that's fair. So, so basically it's a permissionless model where an initial set of participant decide uh uh who becomes the next participant uh and how much will they will get. And um um That That's fine with me.

So, it's I I I I think that like I have much less problem with the uh with Canton calling itself permissionless because it's really obvious for everyone what it is. If you have to apply and you get you grant permission, uh you can call yourself permissionless. Like it it's it's very, you know, everyone who has listened to this conversation now make their may will make their mind uh and will will have an opinion. I think it's like it's very straightforward. I think it's a lot more interesting to talk about whether it's uh a blockchain or not because they those the this definition gives very different properties, and I think we have not yet explored all of them. Bitcoin changed how money works. Citrea changes how Bitcoin scales. Citrea uses Bitcoin as

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