Centralized Builders Bull Case, Bear Market Conference, zkEVM Problems | EthCC Reflection

Transcript

I see this like growing acceptance that the escape hatch or being able to force include your transactions and account to the L1 make it okay to be a centralized sequencer and I think that is [ __ ] and I think it's [ __ ] for two reasons one because I would never be able to figure that out my my stuff will be gone I'd be I'd be the last out you know I think realistically what's going to happen is like the big guys the the hedge funds the exchanges all the like elite players that are actually very tech savvy will understand how to do it they'll migrate their assets and then me a low minnow I'm gonna be caught up there I'm gonna be hold on to the boat and I'm just gonna be laid out to cry

what's up everyone welcome back to another episode of zero X research brought to you by the atom accelerator if you're a developer looking for a home in the industry the add-in economic zone welcomes you you'll hear more about the atom accelerator a little bit later in the show but today is July 24th and we are switching things up doing an ECC recap and we're joined by uh Mike and Matt uh we're lucky enough to be in Paris last week spent a little bit of time over there and it was honestly a very refreshing thing to go do the The Vibes in the the conference were a lot better than I think a lot of us expected but before we jump into that uh we did want to take a second to shout out our own conference permissionless 2 which is the world's largest D5 and crypto native

conference bringing Builders researchers investors and thought leaders all into one place in the heart of Austin Texas you can use code 0x30 for a 30 discount and if you do end up coming be sure to hit us up on Twitter or on telegram so we can go and grab a beer um but uh yeah I think this would be a good time to just kind of start like what did you guys think the overall Vibes were at ECC in Paris yeah I mean I was like you mentioned I was pretty surprised that the Vibes were like positive you know when you spend all day on crypto Twitter and you know in the depths of a random protocols docs like if things can get a little a little Bleak at times but I just want to like Echo the sentiment that that doesn't seem to be the case with the people that

you actually want to be in a positive mood right the builders and that was very much so how I viewed the average participant of of this conference not a lot of tourists nine out of the 10 people you talk to who were very very high signal who are like building a meaningful part of the you know uh crypto ecosystem it was really really cool really really refreshing um and like yeah everyone was just excited about things which feels like a huge sentiment shift from the last six to 12 months honestly I would Echo that there's just such a discrepancy in between Twitter which I gotta actually put my hand up I still don't even know what the hamster joke was I just completely missed that on my feed but now my whole feed's referencing hamsters

and I don't even know what people are talking about but there's that going on on Twitter and then there was the reality of what happened in Paris this last week and I just I just want to add you know we we've been hosting conferences for a long time I've been to plenty of bull market and bear Market conferences this was a a large outlier in terms of usually 18 months into a bear Market you're like deep into apathy you know conference attendance and excitement tends to be a lagging indicator in crypto so like by way of example yeah I remember consensus in 2018 like six months after the you know the bull market let off and people were still like yeah might still be a bull market and then the year after attendance dropped 90 it went from like 10 000 people to one thousand and it was

really you were just in the doldrum so that's that was my mental framework going into this conference and it just could not have been further from the truth it was like more people more excitement solving real problems than yeah it's just like that's just very abnormal for their space and I just think very like it bodes extremely well for the current moment in time the right curve was in Paris the left curve was was uh racing hamsters on crypto Twitter and the middle curve has just given up they're not here anymore full agree full agree on that everyone there was looking at the right stuff you know as a count abstraction Mev looking infra how do we support the next billion users on chain and it was really refreshing having you know so much excitement around that I heard the attendance at the conference

was double what it was the year before so I thought that was kind of surprising and uh and you know fun fact and overall I was really surprised by you know how much also money was being spent um I don't I don't know if that was surprising to any of you guys but there's a lot of parties a lot of events a lot of great conferences a lot of uh money being spent so I thought that overall like you know even though the emotions and sentiment in the industry is so low it isn't being reflected in reality at least in Paris last week yeah that's a good call out Matt I also thought just the collaboration between the different factions of people was kind of interesting uh Dan and I had the pleasure of hosting the ZK on conference that matter Labs helped put together the

the team behind ZK sync and it was just kind of wild seeing Jordy from polygon and then Alex from ZK sync and other people from like cross chain interop protocols using ZK like to actually just like sit in a room not talk [ __ ] about each other's protocols on like like they do on Twitter and instead like be like how do we like make this work like how do we actually make it so our ecosystem of l2s and l3s can actually interoperate with your ecosystem Susan l3s without it being like a one token wins all scenario so I thought that was super cool to see like live in person go down yeah yeah no that's that's interesting as well and I think one of the interesting takeaways that I don't know how I feel about this yet but everybody there was building

infrastructure literally nobody was building an application on top of that infrastructure and part of me is like you know I guess like the The Optimist in me is like okay good because the current infrastructure can't even support like true true usage right if a billion people like we're looking for I want to come use an application on chains it's just not going to work um so you know it we do need to keep building this out but it would also be nice if we were luring some more people into our industry and like building things people actually want to use and like not just forking another perp decks and um you know putting some more DJ assets on there like there's a uh definitely a long list of things that could be getting built that like that crowd wasn't necessarily there uh so I'm a bit

torn on that but I'm curious if you guys uh can relieve me of my pain in any way I can't relieve you I had to say the same takeaway there and there's like I've got like I could put my cynical hat on and give you an answer for why I think that is but then like a more realistic sort of maybe empathy aesthetic empathetic hat but cynical hat Mike you know would say you know infra is very hard to Value right so you need a token uh always an infra and it's very hard to Value so it's a pretty good thing to build you know you can pretty much just point to The Tam and say look at how big this damn Tam is you know launch token um and that's like pretty good the actual like empathetic hat mic is to say you know there is a bit of a real

chicken and egg problem when it comes to you know apps and the infrastructure that they're built on and this isn't like wildly unlike other Tech Cycles where infra gets built and then there's a lag of like six to 18 months where it takes apps like a while to figure out how to build on that but the chicken and egg problem being you know in order to have good apps you need good infrastructure to support those apps but also at the same time the we don't know what these apps are going to look like yet and really the infrastructure should support the needs of the application so there needs to be this virtuous feedback cycle that just hasn't kicked in in between the developments of at the development of apps and infrastructure and I think a couple of the interesting solutions that you're that you're

starting to see crop up is actually teams building an app at the same time that they're building kind of like an SDK supporting set of infrastructure so I would actually port to point you on the gaming side of this uh Scott sonardo at Argus Labs actually developed a game called Dark Forest but they're also building a supporting uh roll-up SDK for gaming which is pretty interesting and actually most of the l2s are kind of doing this too you know like ZK sync or optimism they all have their Stacks along with one like sort of general purpose like ZK era and then there's also the ZK stack and there's sort of a a broader framework with different modular components that you can plug in to build in their ecosystem so I thought

that was actually like the closest thing that we saw to kind of exciting apps getting built but yeah that's kind of my opinion on it it was also a little bit sobering just to hear some of the problems like these ZK EVMS have like like live like they're nothing like you know safety critical problems but like I don't want to call anyone out here but you know there's there's reasons some of the major Blue Chip D5 protocols aren't actually over there yet despite despite having like already signaled support to go over there yet you know so it's like these things take time and I think we're just heads down building in a bear market right now and that was very much the vibe and everyone's just trying to fix them so that way when next cycle comes we can actually launch all these all these dabs so ZK sync is working to

fix the one problem with era and like so when you um you know post a block and there's a time stamp it's usually associated with that block and this allows things like um say token incentives because you know if you give token incentives on a pro rata basis to LPS in a pool for example like you need to know how long the LPS were in the pool in order to like actually have them accrue the proper amount of rewards um and so like with most l2s the time stamp that you call when you're on the L2 will return the l2's timestamp meaning you know L2 General have faster blocks so they need to have the appropriate time for each block well in the case of DK sync when you call uh the the L2 timestamp it actually Returns the L1 timestamp meaning the last time a

proof has been posted to the L1 so therefore there's like a 20 minute Gap in between or like a couple minute Gap in between actually getting a new L2 timestamp and this is like a critical issue for getting uh you know as Sam mentioned like these large D5 protocols on chain uh and so it's I think it's like an interesting problem to kind of see one of these ecosystems have but again like they know that there was going to be like they know it's a problem they're building out a solution for it um I honestly think this just had to do with like there was a huge race to get to production between a lot of the largest players and this kind of feels like one of the things that I was like okay well yes we've we've made it there on time but you know we still have some things we

need to build out and so I think there's just some Dev tooling things that really need to get built out around not only just like ZK sync but ZK EVMS more broadly when you have like this new infrastructure again you need to keep building out the tooling so it's like step one build the infrastructure step two build the dev tooling and then step three build the applications that people actually use and it feels like we're in between step one and two right now how often do proofs get submitted to L1 for most of these chains uh that's a good question I I think it's like a matter of like minutes right now just because ZK well at least with bujim and speaking specifically to the word ZK sync um you know they've really optimized their approver it's something they spend a lot of time doing uh right now boo Jim's

running in like I think they call it Shadow mode basically so it's like running in the background not effect it's sort of like a test net in some way um and so it's a matter of like it's gonna be a matter of minutes at scale but as which is pretty in contrast to optimistic l2s where like more transactions can be more expensive it's like more transactions will actually mean that proofs get posted more often because you kind of need to hit that threshold where it becomes affordable to kind of like dissect the cost amongst the the active participants in that specific proof something I thought was interesting was I went to arbitrine day and it was I agree with you you know I met very few Builders the entire time that I was in Paris literally I think outside of Arbor from day I met maybe two or three in

total and there I actually met you know people building The Gaming space defy space none of these were you know ideas that I was there particularly Innovative or maybe gonna bring a ton of people who aren't currently on chain on chain kind of no Catalyst nothing like that but at the same time there are these you know there is way more building going on on Arboretum than on any of these other l2s and it's interesting that I hear so often from for lack of better words like Giga brain crypto people that ZK Roll-Ups are the way to go I've even heard a few times people say like the optimism stack is that office is better place for devs to build than on arbitrum but at the same time it's Arboretum has this huge Dev community and it's growing and it's like well you know you can

build this great ZK roll up in theory but if you're not attracting all these status can build there is that where it's gonna settle and that's something that I definitely have been thinking a lot about like the you know do I care more about the tech stack is that long term a better bet or am I going to focus on arbitrary where today devs are actually building see for me this goes and to clarify like in the last comment like I'm not shooting on TK sync I'm I'm actually the most personally bullish on the ZK stack as a whole yeah I got pilled pretty hard on that actually this trip yeah exactly and so like but I was wondering like when I saw the CK sex stack announcement we talked to Alex and Anthony a couple weeks ago on the podcast I was like well why is nobody

there and like Sam and I finally discovered that answer like it's this time stamp issue and it's like okay that's like a small trivial problem that will be fixed and then we'll see these large applications get over there then you'll see like start to see like okay does this actually scale does this actually make sense um the question then becomes what does the future look like like is it more of this app chain thesis where you have hyper chains plugged in as l3s on top of zkc gear or some other chain or you have like some more centralized validium type solution using like a ZK Porter that they offer like we don't really know yet because one of the questions I am still like trying to dig into the answer to Is like who who is going to build these l2s that or these l3s that have these custom

Solutions like is it going to be a large payment processor like a Visa Mastercard or like a stripe or someone of that nature or is it going to be like still someone more crypto native focused like somebody wants a more customized decks or something like that for example and that is still very much an open question in my mind yeah I you know like some thoughts on just interoperability like one one key takeaway for me like I'd be curious if you guys agree with this idea or not but I thought this was sort of a bullish and bearish Conference in terms of interoperability like bullish in the sense that I think interoperability is going to be solved on the L2 layer between different app chains within one sort of platform but I don't see there

being a lot of interoperability between different big Roll-Ups or Layer Two so like for instance uh these sort of hyper chains I feel like it they'll solve the interoperability problem within sort of the ZK sync stack or the ZK stack so all those app chains that the ZK stack supports will be interoperable but I think an app chain that exists on ZK like using the ZK stack will not be super interoperable between like an app chain on the op stack and my thought process is that the most likely outcome is going to be like two or three big Winners um and they're like a whole bunch of reasons why I think that's actually the case but I sort of see like two or three

big winners of these sort of layer 2 ecosystems where all these things are interoperable and then there's like kind of shitty longer term in our operability where there's some kind of like you can get these two things to talk over like a longer more expensive time frame but won't be good for a day-to-day sorts of interactions so that's that's how I sort of see it playing out I'd be curious what you guys think about that yeah I think that ultimately we're going to all be ZK Roll-Ups to be honest and I think that there's going to be a certain design that everyone kind of converges on and I really do think it's going to converge on One Design I don't know what it looks like I it's really hard to guess the timing but I do think that's ultimately what's going to happen

so that way this composability across every ecosystem is kind of like within one hood and one Tech stack um and I guess just another takeaway like on the same vein of you know optimistic versus ZK is just I'm convinced these optimistic chains are going for adoption first like arbitrary and optimism and then they're just going to implement ZK stuff as it gets further developed like they want those Network effects they want those developers and Builders to come over there and get the users like it's just such a good game plan it makes the most sense and I even saw I think it was optimism the other day uh awarded to rfqs for ZK interoperability I think one was the risk zero who actually was at the unconference that Dan and I moderated in um in Paris and then uh can't remember

who the other one was but nonetheless it's just kind of a testament to the yeah I think we really forget how important BD is in this industry like like oh we break we just made this amazing thing that will change the world but we're not going to tell anyone about it because they're just going to find it because we're the best that seems to be like this idea that a lot of uh Dev teams have and it's like you got to tell people you have a product or else yeah you got to distribute distribute and people forget that I don't know um but yeah Mike I definitely agree with you like I got a good I got a good uh new crypto vocab word for you so these like ecosystems of l2s will be constellations so you'll have like CK's uh zk6 constellation polygons constellation maybe Scrolls

constellation and you're right like you won't have that constellation sounds a lot better than wall Garden doesn't it it does it does and this probably goes back to what I was just saying like distribution maybe that was where their Pitfall was and they built this great Tech but couldn't get in the hands of people um I think wallets have a lot to do with that I'm almost positive we'll get into that later in the in the show but uh but yeah so the idea of like how to get interrupt between constellations actually came up at the ZK on conference and they're like okay if we were gonna do this like what would it look like and basically to interrupt is enabled within like a single constellation so say the ZK stack hyper Bridges exist because of the shared Bridge contract the the contract that's actually on the L1 that

holds the assets and a shared prover and so um if you have those two things so you're using the same ZK circuits and have all the Assets in the same contract that gives you this interop like you can blindly trust hyper chain a and Hyper chain B because they're built using the same Tech stack but you can't have that between say polygon ZK AVM and ZK sync Arrow let's say if I was trying to bridge between the two they're different circuits so I can't just blindly trust them and we're using a different L1 Bridge contracts the assets aren't actually in the same contract so to get around this you know let's say like in a couple years out from now polygon CK evm and ZK sync error both have insane

provers their circuits are great there's no reason not to trust them they're Simply Built in two different models well then you know at that point maybe like the ZK sync community and the polygon Community can be like okay you know we both have a great Tech I don't want to switch to yours because I like mine and vice versa but we do have like I trust your system that can happen but you still wouldn't be able to have the actual bridging take place because the assets are in different contracts on the L1 so the only way to make this possible would basically be the ZK sync uh ZK stack uh constellation and the polygon constellation combining assets within the same shared contract but this opens up like this

whole can of worms of okay now our assets are together so we're basically like commingled here so your governance can't like mess with my assets and I don't I'm sure your governance doesn't want to mess with our assets either like there's this huge thing so basically um this is kind of like one of the themes of the conference was like that would need to be enshrined and basically ungovernable um and you basically just have to have this like ZK evm shared liquidity Bridge contract that holds all these assets that get blasted out to these EK evm constellations and if you you'd have to trust all the circuits there it gets in this like whole messy messy thing really really quickly and then like who gets to plug into this how do they determine who gets to plug into this if you don't get in this like cartel then your evm

doesn't have comp or your ZK stack constellation doesn't have interrupt with everyone else like gets into this whole mess so I strongly strongly agree with what you're saying Mike in that there's just not going to be interrupt for a quite that is just so far down the list of things we need to build if if David were on this podcast you know what he would say something about it IBC IBC and message security baby that's what you would say sounds like that can solve some of that yeah so I have a I have a lot of thoughts to unpack on all these subjects like we started off with Mike's point of you know is it going to be these off-chain Builder option market makers who are just uh creating some sort of

unified liquidity layer even though it's not really unified but that's bringing liquidity from one network to another or kind of are we gonna have interoperability similar to how the ZK stock works and Hyper bridging but one thing is hyper bridging is async composability meaning it's like you know it's interoperability but over a period of time so it might take a couple minutes I don't necessarily think that that's the best solution it's not bad but it's not great because you know like you can't really do uh you're one of the for instance what if you're trying to buy Pepe on arbitrum or some coin that only exists on arbitrum obviously but it's not actually there and you have Ethan mean that it's going to take you like 8 to 12 to 15 minutes to actually get that transaction to go through like maybe that's not ideal so like I'm not

sure how I feel about the async or synchronous composability and that kind of goes back to what you were saying Dan with like the this this idea of a shared bridge on L1 is kind of how the secret relapse but there's also the idea of like you know sharing a sequencer which would allow for Atomic composability or atomicity so like immediate ability to uh within the same block have communicate between these different ecosystems which to me sounds better obviously it has a whole slew of its own problems associated with it and then kind of to your point Sam it's like this is this beauty knife fight between l2s is about to come into production like we're going to see you know often some arbitrim ZK saying scroll Stark net Etc and their BD teams and their grants programs just paying enormous amounts of money to have any interesting app can

build there so it's like uh you know I've I haven't really formed great Theses on all these different topics yet but I I hope you're wrong Mike I hope that we have you know at least on-chain settlement like even if you have off-chain market makers who are fulfilling orders like with account extraction or or intense like I hope that that's kind of where we end up with on-chain settlement at the end where you still don't have any trust assumptions involved and you do kind of have this unified liquidity but obviously it seems like at least my takeaway from Etc is that's like five ten years is out at a minimum you know on the earlier side so um while I could hope for that I do kind of agree with you all right let me let me make my case for because the centralization of of Builders

um so you were starting to get into some of it there and I actually wanna as I was listening as as one does uh walking on my way to work this morning uh I was listening to Xerox research just catch it up on the latest step and I I listened to this this episode with uh with Brian from layer zero and I actually wrote down a little quote um and he said what bridges are doing is solving an inventory problem that's what they're doing you have assets on chain a and you want to do something on chain B so they're managing an inventory problem which is largely I think how you would describe the job of a market maker you are warehousing risk and managing inventory so I wanted to set that up to say like there you got you know layer zero when the you know Giga brain you

know Bridges like Bridge actual sort of crypto Solutions describing very similar set of problems that like a market maker might think that their job is solving but let me just lay out like what I view is like the three big drivers of centralized Builders right and the the bull case for centralized Builders is like they give a much better user experience right like eventually like chain like chains are very difficult to use and this kind of gets into intense based architecture but driver number one is the intense based architecture right so basically if we're gonna have this multi-chain world with different Roll-Ups and different layer ones expecting users to be able to figure that out is simply not realistic um like even me who I would you guys are

more Unchained native than I am but like I have a lot of trouble just frankly moving my assets around to where I want them to be and I have a heart attack every time I move them through a bridge I'm not even sure what I really have at the other end of the bridge and you know if if even you know I'm on the left side of the bell curve firmly but you know if I have these questions then like I just don't think it's uh you know probably feasible that that many people will figure this out what's what's coming in to solve that is intense based architectures that is to say instead of like having to execute each one of these transactions there will be some sort of pool a protocol where you can submit complicated sets of preferences that will then you will then Farm those out

to sophisticated on-chain actors read Builders they will go and execute that against some bar which is determined as you know good at best execution right like best execution was another theme of the conference um early examples of that are uniswap X and cow swap right but people that are building even further out would be like anoma uh and Chris goes who by the way is one of the original and he like kind of designed IBC so smart guy there and smart team so intense-based architecture is in the meantime are going to drive this need for like Builders or like abstract doors who can abstract away a lot of that complexity number two driver is these uh uh a shared sequencers actually so Matt you were describing like shared

sequencers will provide Atomic composability they can do atomic inclusion but they're dumb pipes and they're not State aware of what's going on across different Roll-Ups so you need someone to actually do atomic execution as well so in order to get that Atomic composability or cross domain Meb or anything you these shared sequencers are literally designing a big a pipe that only a big Builder can can fit with so actually shared sequencers are actually a driver for big Builders too and then the last one is actually something metallic was describing which like kind of went over my head so I'm going to try to just uh but like he was describing like the state of proofs and like proofs there's some uh like set of standards and proofs that are changing but proofs

have a very high fixed cost very low variable because roughly the amount of things that go into these like aggregate proofs will be the same but like posting one proof will be expensive High sort of barrier to entry fixed cost and that's good for big Builders um I'm not sure if metallic listens but metallic I hope I just did you justice um and uh and like all of those things together I think mean that we'll have larger Builders like I I would actually say Matt that it's as long as the I think the acceptable compromise to make is as long as we have a very decentralized set of uh proposers um and hopefully as many Solo proposers or self-stakers as we can I think that's an acceptable compromise but sorry guys

that was a long diatribe like I'd be curious what you guys think about that as well are you uh I've been thinking a lot about sharing sequencers as well I talked to uh Ben from espresso uh you know shout out to them they recently announced their launch on testnet with polygon tkb I'm super exciting to see that in production um and it's just like it makes sense technically why you'd want this right you get to decentralize your sequencer there's definitely good branding there that's the right thing to do and it's starting to like actually work um so I get that my unanswered question is if I'm a L2 with an abundant ecosystem with a lot of activity people are like on top of my chain why that

like that economic activity is happening on top of me why am I willing to opt in to give that economic activity to somebody else I strongly agree I think of it the same way I actually tweeted yesterday I was like I think l2s are just Visa Mastercard equivalent for web three like think about it what a Visa and MasterCard do they settle transactions like they submit them for settlement they literally detect fraud like it's the exact same thing and then your transaction so I I strongly agree with you it's like why would an ecosystem of l2s that's settling all of this value want to give away that primary value proposition to a shared sequencer

Network it just makes no sense and actually I don't know if you got to ask Ben from espresso systems if they have a like because originally we asked them this on the Pod like two months ago but I think they're gonna shift their revenue model to actually return um you know wherever the most Mev is derived from that Revenue will actually go to the respective chain and then we'll take a little cut on top I think that model is actually an amazing idea and really hard to put in practice like one thing I've been thinking a lot about was you know if you have a map extracted sequencer because Mev does exist on LTS even with version First out ordering through you know sax Arbitrage like to binance and unit swap so how do you extract that value and give it back to users and the problem is in extracting

value we figured out great mechanisms to do that but how do you actually know which users that Mev came from or in your case how do you actually know which chains that map came from I guess you could host separate auctions but then you're probably bring in a latency issue and Mike's what you were saying like I know that's true with shared sequencers but I'm not sure that's necessarily true with centralized sequencers so if you share this is going to sound ridiculous and I apologize but if you share a sequencer between multiple ltus that's a centralized sequencer so you have the same so you can see same centralized sequencer on multiple networks uh you know it wouldn't be that hard for them to run a node and be State aware so I kind of don't really you know I don't really buy into the decentralized

sequencer thesis I haven't seen how that's going to work in theory but I kind of do buy into maybe you could have uh quasi-decentralized sorry a quasi decentralized like six or seven sequencers or one sequencer that does multiple Roll-Ups but obviously this is like a design space that's very and unexplored okay I have I have pushed back against all you guys there so I'm gonna say some spicy stuff and you guys tell where I'm wrong because uh so in terms of like why shared sequencers are gonna be necessary I think there will be some use cases that eventually demand more centralization or even if it's not that eventually there will be a regulatory need for these protocols to decentralize their sequencer set like I

I actually would guess like look the Mev extraction is really good they're printing money for the time being but I think for people to ultimately like to your point before like there's a reason why a lot of these major daps have not migrated like I think that is very significant right like people don't like why have there's already cheaper transactions and I think part of that is because of the security assertances that you get on eth main chain and they just have not been able to replicate on that on L2 so if they want that then you need to you need to go uh or they need to they need to find a way to decentralize sequencers and also provers I would say for the ZK stuff the other thing that I would say is I am going to go ahead and say I think

I've see this like growing acceptance that the escape hatch or being able to force include your transactions and account to the L1 make it okay to be a centralized sequencer and I think that is [ __ ] and I think it's [ __ ] for two reasons one because I would never be able to figure that out my my stuff will be gone I'd be I'd be the last out you know I think realistically what's gonna happen is like the big guys the the hedge funds the exchanges all the like elite players that are actually very tech savvy will understand how to do it they'll migrate their assets and then me a little minnow I'm gonna be caught up there I'm gonna be hold on to the boat and I'm just gonna be laid out to dry I just don't

think I'm gonna figure out how to do it the other thing too is that you can imagine a world right where like da costs are going to be way cheaper up there computation is going to be way cheaper like there will be businesses that are built on these layer twos that will not be feasible uh on main chain right like in a world where you actually have apps that achieve product Market fit are servicing millions of different users have tons of different transactions that are going through every day those economies are going to be built are going to be built with a certain those businesses are going to be built with certain set of cost assumptions and you can't just migrate that down to main chain right like none of the economics

will work but then also like if we have these you know multiple different if we don't get perfect interoperability like the stuff that you built on one chain won't just perfectly be able to Port over to another I just think that's a ridiculous assumption like let's be really generous and say after like two months you could figure that out your whole business is toast like if I'm putting myself in the shoes of a Founder I am not building a business on a roll-up that has one centralized sequencer I just wouldn't do it the risk would be too high so that's my that's my pushback so what do you guys think am I wrong I couldn't agree more with your first point like if there's not a button on

your website that says connect wallet and force withdrawal then like how the hell am I gonna figure that out so yeah I just strongly agree with that so so for this you know forced inclusion versus The Escape patch all right I totally agree sorry totally agree overall with your point about you know basically if you're holding a native asset in LP position or something of that nature on an L2 and it goes the sequencer goes down you're you're screwed because the Paradigm and a16z and whoever else are gonna get into eth and whatever other assets are held in that bridge contract on that one and they're gonna get out but if you're holding you know an asset that's actually in that bridge contract you will you will get your assets out so just like a little bit of pushback there

but overall I completely agree with your sediment um with the shared sequencers I don't see that as like a risk mitigated yeah I don't see it using espresso as mitigating all your risk that the sequencer is going to go down and thus the LT is going to lose all its value and um you know be a pro problem I actually think maybe even the opposite like I think maybe today if you're if you're trusting the gaming entity or whatever it's running arbitrum sequencer I think that I might have more faith in that than the untested Astra or espresso but maybe I'm wrong um but that's kind of my push back there I think I tend to agree with that last Point Matt like what you know there's centralization and decentralization has trade-offs and one of the pros of centralization is in my mind tends to be like performance in ux and I

kind of think like one entity running an AWS instance that's cranking out these transactions will probably be a do a better job at least in the near term um benfish had like a pretty good explanation on like why espresso will work and have like a low latency and not being like adding additional overhead that I thought was pretty interesting and I am for sure going to botch this but I'm going to give it a whirl anyways um and so we were having a conversation around like how is it actually going to work and basically you're going to have to have like another consensus mechanism that is operating uh these shared sequencers as they rotate in and to do their job and somebody asked like is just slapping another consensus

mechanism like on top of this thing like is that really the best solution here and it kind of feels like you're just stacking you know proof of stake systems on top of each other like you can kind of take that out when does it go when does it end like is this actually the best way and he had a great response and it was like look ethereum's already running two consensus mechanisms it has a slower time to finality one to make sure you know after this moment hits which is you know I think it's about 10 or so 10 to 12 minutes on ethereum we have like guaranteed finality and so that's one contestant consensus mechanism running that operation and those in between the point of finality and the lead head uh block there's another consensus mechanism happening that's getting validators to vote in a

test on the accuracy of this information in these blocks and that's why ethereum didn't go down when it had its client issue the uh gosh that's probably already a couple months ago now um and so like we already have two consensus mechanisms running ethereum today and if you just add a third one onto that it's like okay they jump from one to two feels like a lot but the jump from two to three feels fairly marginal and I'm like all right so if you just added a third consensus mechanism that was like basically executing transactions on an out on the l2s connected to a theory okay maybe that starts to make sense and then this immediately goes back to like well that should probably be enshrined and I feel like this is like this huge Narrative of like if there's any good idea today everybody just wants to get

it enshrined and I don't know if that's a good thing or a bad thing that brings me to another point that I heard at UTC which is something I'm so curious about it's been bothering me for a week now but the first day I get there Monday last week I went to this flashbots you know proposer Builder separation Salon or something or basically just Giga brains talking about the future of ethereum and how they're going to deal with Mev things like Med burn and Pepsi and all these other whatever moral story Justin Drake makes he's giving a presentation and at the very end the last thing he says is I've come up with what I believe is a solution to create based Roll-Ups that have saw instant uh you know soft confirmations I'm sitting here I'm thinking myself holy [ __ ] because okay it's like what's a base

roll up a Bass Roll Up is a roll-up that is sequenced by the L1 why is that actually not something that really we're using today or isn't really an implementation or execution mostly because it would have 12 second block times and it wouldn't really create much of a better ux than interacting with ethereum while it does still help with you know some of the problems around scaling but if you can have instant soft confirmations on a base roll up well now maybe all of this is dumb and I walk up to my ask how you know how are you going to do this he says you'll have to wait so uh you know one of my huge you know tidbits of information I got that I'm just that I'm just sitting on but uh I thought that was very very interesting Matt give the listeners a quick

definition on what a base roll-up is yeah base Roll Up is literally just a normal roll up but instead of using the like a centralized sequencer or a shared sequencer set or anything like that so for instance today arbitrum has a single centralized sequencer we just talked about espresso for a while which is another one uh that's you trying to create a decentralized sequencer asteroids and I've been trying to do something similar there's a ton of design going on in the flashbots forums and in other places such as like the arbitrum research forums about what these sequencers should look like and a base roll up just relies on the L1 on ethereum validators to do the sequencing one for you guys that I would like to to get your opinion on here so let's talk a little bit about like enshrining and this uh this idea of like moving back to

enshrining things um so one so sriram uh on yesterday's bell curve which y'all aren't listeners you go check it out so he actually said the explicit goal of eigenlayers to be enshrined within ethereum that's like his explicit goal what he wants to do after he said that we're at ethereum like ECC last week and there was a lot of talk about whether or not that makes sense to do um so outside of just like enshrining smart contracts that would help with L2 interoperability there's also this question of like frankly like eigenlayer and I think ethereum a while ago made this set of decisions where they wanted to limit complexity and

Outsource critical functions of the platform like block building uh something like to something like flashbots or um or delegated proof of stake or delegating stake to something like Lido and now ethereum is kind of reaching this point where it's like oh [ __ ] uh maybe this is too important to be outside of the platform or outside of the ethereum protocol itself and are thinking about like bringing certain of those elements back into ethereum the protocol and eigenlayer is a very interesting one um you know from my perspective which sort of is like on this spectrum of like there are two very different sets of design philosophies when it comes to how to manage your validators between

ethereum and Cosmos on the ethereum side they're like there was actually a great presentation maybe some of you saw this screenshot but a validator should be Cox which is just to say they should be really dumb and commoditized and spread out and Powerless uh kind of and then there's a there's the the cosmos philosophy is like what can your validators do for you your validators should be doing more than validating they can run application code you can do things like boat extensions and they can like weigh in on all these other things like they should be able to be an oracle if they want and eigenlayer is like the bridge in between so it's basically it's a good middle ground of doing like your validators don't have to also be an article Oracle but they should be able to opt in to becoming an oracle

right so it's like blurring the line between these design philosophies of the validator sets of ethereum and Cosmos and I sort of came away being like there will be something like if it's not eigenlayer directly that's enshrined it's Pepsi actually which stands for uh protocol info enforced proposer commitments that's the same thing there's like an enshrined mechanism which allows validators proposers to make a commitment uh to doing a certain action and if that commitment is not honored then the block that they propose will not be valid you know so like I feel like commitments are actually going to be a buzzword for the next like six to nine months you're going to keep

hearing these word commitments commitments and commitments refers to either this like spectrum of what a validator should do or it also will be Builders uh that again abstract away some of the challenges of L2 so like Dan that problem that you were saying before about like um you know uh like the the way proofs work right now on um on ZK era you know what you could do is get a builder in there um to be like do like little soft commitments or like say that yeah we think this proof like if the let's just say the proof time period is an hour you could have a builder come in and say I'm gonna commit I'm gonna issue like soft commitments in between this hour to

transactions that happen with the understanding that there's going to be a proof and extract some profit that way so I actually think commitments is going to be a big buzzword over the next like six or nine months and that's what it refers to but yeah what do you guys think do you think eigenlayer should be uh uh enshrined like is that the best solution here and when should that happen because today eigenlayer has some uh restaking going on but I don't believe any of these Solutions being built on top of the eigenlayer are live yet so do you wait for this thing to get like big and then be like okay this is clearly important people clearly demand it let's enshrine it or do you try to front run that and be like you know at that point maybe it

doesn't want to become enshrined because it already has this native demand or do you try to get ahead of that and do it before it like occurs and risk enshrining something that never gets used I think there's a there's a good expert there's a good there's an even better thing to look at than you know uh Pepsi or Lido in this example which is PBS because PBS exists right through my Boost like flashbots created my Boost it was a short-term solution it wasn't meant to last that long but if we don't even try on PBS in the next six to 12 months there's a good chance that my Boost becomes you know a mature mature product that's that at some point like well why do we have to in China especially because now they're talking about like these caps on block Builders bids so it's like we're still gonna need

relays so you know every everything I hear makes me think like okay why are you even trying this in the first place um and the answer is I really don't know like to some extent and I this is gonna make me sound a little dumb but some extent I don't even really know what in trying something is like obviously I know like a account attraction was entrined with with you know erc4337 but at the same time like I don't even really know what it is I know it's including the protocol but it's hard to really put into words so it's like uh yeah I guess that's my take there I agree with that take plus I don't know if you remember a while ago but there was like a a bug in in Med boost software so like had that been implemented and enshrined like from the

get-go that could have been a lot worse than it actually was so I agree that these things should be tested in production before you just go hey like let's go ahead and throw this in the protocol at the base layer like forever because you really don't know and I think that's kind of the strategy with the kind of abstraction too you know it's like hey l2's like please start working on this like I feel like you guys need to be experimenting with this and maybe one day we have it on the L1 and then just to the point of eigenler specifically I don't know what it is but I just have this gut feeling and it's actually funny because we talked about Ben from espresso but on that same pod with Josh Josh from Austria and he was saying I just know something's gonna blow up from restaking like you can't

leverage Economic Security over and over and over and over again and I know sriram has like a pretty good rebuttal to this but I tend to side with Josh I just seemed a little bit dangerous for something that we have that's so pure and and you know taking so long to build to the state to like really put in Jeopardy just on the new coolest idea I don't know man every time we get into these types of conversations about like the Troubles of scaling l2s and restaking and doing this and doing that it just makes me want to go back to Solana give me one single charge man like the problems over there really harder to solve than like this and we had to come up with like an entirely new technology and zero novel zero knowledge proving just to get to the point where

we can be like okay this thing could probably scale like that is mind-boggling and ah man I don't know sometimes it's just like I feel like we're doing too much to to make this thing work when maybe there's a better solution yeah let me let me like sort of build on that idea like the big difference between Solana and ethereum is that again there was a difference in terms of how validators should look it's like ethereum wants there to be lots of individual solo stickers and Val and Solana's more okay with like large institutional stakers that might leverage a data center right and be okay with paying more per month so let me just like let's assume uh Sam that eigenlayer actually is like fine and

doesn't blow up but like here's the other thing that will likely happen uh so liquid staking is taking off right like the stake rate is going up and up and up for eth which means that the return on staking like the average yield that you get for staking is going down and down and down and down So eventually what might be the case you could imagine a future even within the next like nine or 18 months that in order to like really profitably validate you actually have to opt into these other sort of uh eigen layer enabled restaking sort of solutions because is it really worth you know staking if you're getting like a two percent yield you know especially when the the three month treasury is at

like six percent that just like doesn't seem like a sustainable thing so you actually might end up having to in order to be like profitable as a validator you might have end up having to opt into all of these additional middleware type Hardware like doing eigenda which I by the way also think is a great product or opting into running sequencing software for one of these Roll-Ups so like any other number of things so suddenly like in order to be a profitable validator you have to do all of these things anyway that have a much higher cost in Hardware requirement and then where are we we're back with Solana we're back with Solana size cost bases and levels of complexity at the validator level so there's like this history especially in ethereum like very well intended

design decisions that ignore the economics of all the actors that are in the system um like not enshrining some way to delegate your stake is a good example of that like not being a delegated proof of stake consensus uh mechanism and like then the market finds a way like you don't enshrine a way to delegate you're going to get Lido uh you know you you take away proposers abilities to do this then you're gonna get eigenlayer it's just the market finds a way right and then what are we going to do make it illegal to to for validators like do extra stuff I mean how could you even enforce that so I don't know it's just an interesting it's just interesting I don't know if I even have a take but it's all these

things are converging sort of and then further to that um I think there might be like a logical push back to this but there's it feels okay so we have like a in that world we have a slowly consolidating validator set that's getting more expensive to run and therefore like kind of pulling out the number of uh at home stakers plus you have seven relays and maybe five to six builders that win a majority of blocks are we just recreating Trad fire and in with different major players or like what I don't know say I'm Matt like I'm curious to get your thoughts here I I just don't buy it I think honestly like if if the yield return in each native terms gets that low the float on eth is

going to be ridiculously low there is going to be no ease left to borrow there's going to be no eth left anywhere like the price would be going so high that you don't care if you're making point zero five percent APR because the dollar denominated amount like I've heard this argument I just I think the natural dynamics of supply and demand are going to play out here and like this is all just like people having a hard time wrapping their heads around the dollar price of eth versus like an eth APR personally this brings me back to a super interesting conversation that Dan Sam and I were having in the back of a club late at night with an insanely smart guy you know like we're keep in mind like a little had a couple beers but at the end

of the day we're talking mad because yeah I guess that's what we we do on our Friday nights anyway t-shirts had a couple beers but we're talking them we're cool guys oh God really really smart guy you know someone I respect heavily basically has this thesis that um for JP Morgan BlackRock Etc all these big Bank City Group Etc to get into crypto the way it's going to work is they're going to slowly acquire all this ethereum they're going to run validators they're going to run relayers and they're going to run Builders and in order to get included in a block that you know one of their validators proposes you're gonna have to censor because you know these companies are huge companies they have to abide by kyc AML and a host of other regulatory

enforcements so that's just how it's going to work and his thesis was that they were going to acquire enough eth that basically the entire ethereum network to some extent would have to be censored for it to work and uh you know that was kind of his base case for what ethereum looks like and in my head you know I'm arguing back I'm like there's no way this is what it is like if if those banks are going to acquire that much eth they're gonna go use a network like Solana or they're gonna go create their own blockchain where there's nine validators that is thumbnine and you can ignore 95 of the design decisions maybe 99 of the design decisions that ethereum has made in the past because those were all to enable decentralization and he's like well it doesn't matter that you think that that's what they should do

because youth is where they're going to want to be and all those but you know sorry I just thought it was such an interesting conversation so I wanted to bring it up and I thought related to this Solana convo as well yeah and all right so uh the night of I adamantly disagree disagree with you but I've kind of come around to it a little bit because the idea of why you'd go build on ethereum still kind of made sense to me because that's where the user like not necessarily the users because you're kind of coming with the users in the liquidity right if you're this like kyc Trad five player like you have the users you have the capital you're kind of like bringing the party with you but you still need the applications to use and that's something that a lot of other

blockchains like haven't figured out yet like okay yes there's a defy ecosystem that's starting to Blossom again on Solana but none of that is Battle tested for billions of dollars of capital whereas Ave and curve and uni swap are processing billions of dollars daily and like even like you know some of the OG D5 protocols maybe don't even get used as much anymore like maybe compound like still holds billions of dollars in assets and like to me that matters significantly um but like I also thought it was just interesting because he kind of like painted the picture of how this would actually happen and like I didn't necessarily think about this before and it makes sense right if you have your own like network of validators and maybe

only own like 10 of the youth Network you can whenever those validators go up to propose a block you could just look at one relayer that looks at one Builder and you're always there for picking the highest block and I like it is possible to have a centralization vector in ethereum and like you can argue whether or not that's a good thing or a bad thing but like it's possible today um but yeah I guess it does require buying a material position of steak teeth I actually um Matt on the night of I actually disagreed with you too but now I now I agree with you like like what you're describing actually is what like you actually had that sophisticated actor in the form of SPF like this is what SPF did he literally like was like yeah I

want to play these like weird games with ftt and all this stuff and he didn't do it on ethereum the cost of attack is too high and like I where I would actually quibble with this guy too I don't think JP Morgan is doing any of this stuff where what I do think is probably gonna happen is like Citadel is about to be a massive player in crypto or someone like them because they will figure this stuff out and they will find a way to like play these games and act as infrastructure and stuff like that but I think at this point doing that to ethereum would be too costly and what you're describing too is the ability to like the liquid staking protocols can facilitate institutional staking requirements with

kyc validators so for instance like Lido has a staking router they've launched a staking matter so instead of just being a whitelisted set of like 34 node operators or whatever it is there are going to be tons of different modules and there can just be a kyc'd institutional validator set run by like chorus one and block Daemon and what Lido can do is just connect big institutional stakers with like that validator set there doesn't have to be this weird they're co-opting ethereum it's like that'll probably just be a business and like Lido will be like a liquid staking as a service type token and they'll like intermediate and connect those things I have another I have one thing that one step further doing some alphan but I actually think Lido has a built-in bribe mechanism as

well so similarly to how now curve uh you know there's like a broad mechanism there you want to you do ve like lock up your tokens of ve and you can direct liquidity within the protocol let's say you're a citadel right or or JP Morgan or whoever like a big Financial institutional allocator and you want to allocate some eth right you want to allocate uh to the cheapest possible validator set right you go to Lido and there's the ability uh for you to you know be be connected with a certain validator set that meets your requirements and then the governance of Lido sets the fees right so you could either pay the fees that the Lido program that's like Lido

governance had set or you can buy up a bunch of Lido you can create a proposal that we want to include more institutional stakers and yada yada so we should lower the fees on this particular staking module to zero percent you get that passed in governance and then you you stake all your stuff and you pay zero percent to the protocol you see what I'm saying in the same way that like there's an incentive to buy Curve lock it up and then direct liquidity to your pool there's also the same incentive in Lido to buy up a bunch of ldo reduce your your validation fees and then validate that way there's some Alpha coming from Mike

himself so that's okay that's really interesting and I kind of want to work backwards because I have a couple of points um so that is pretty interesting and like I think we're gonna have to figure out a way to make tokens useful and we don't know what that looks like and like this is like a go to jail statement but like in the long run I think tokens are programmable Equity we always had this huge narrative around programmable money and like why that's important what that unlocks and like everybody knew tokens were like this cool thing but that's effectively what they've become like if you look at it today there's a lot of tokens out there that look just like equity and but they can also do more so where Equity gives you a legal claim on the cash flows of the business tokens can give you programmatic claims on the

cash flows of a protocol and I think that's like a narrative we're starting to kind of see the early Innings of play out and this whole debate in the SEC of what is a token and how should this be accounted and is it equity and are these like you know unregulated Securities and I think you're going to have three categories tokens equities Commodities that is the direction I'd really like to see things go but not to get on too big of a tangent there I just like the idea of like glido being like okay how are we going to make this thing useful outside of just being like this instrument we use to raise Capital um so excited to kind of see that and on your first point um I do have a question it's like you know if you're a large like let's I

don't know you said JP Morgan so let's stick with them for the example if you have these very very strict kyc AML uh terms and you have a business that generates billions of dollars and you're trying to like break into something new and that is not your core business that does not generate you billions of dollars are you going to take the risk of your staking transactions which yes you know through the Lido staking router it touched no malicious actors and you can guarantee and prove that but what if it's in the same block as a terrorist transaction or the Lazarus group sending a transaction like is that okay I I have no idea what the answer to that question is um and then just one other thing I I want to hammer down on that point but I did so ran some quick numbers and if you

were to accumulate 10 of the stake teeth today you'd have to accumulate five billion dollars of eth which is yeah so you to your point Mike that's probably not gonna happen yeah so like in order of response there like I think that friction that you're describing is why tradfi is going to take a long any Trad Phi that has like a fiduciary obligation it's just it's still far off like the pensions are not coming in in Mass here they're just they're just not doing it yet but like where you where you will see that is like larger and larger pools of like principal Capital so like I think it's going to continue to be like the jumps and the Jane streets and you know some parts of Citadel so I think those are the ones that are going to end

up taking risk they're the ones who are more tech savvy anyway and the institutional adoption is going to be a while and by the time they're ready to plan any sophisticated attacks like this or or Co-op the chain like it's just going to be too expensive and large and like I know we're all big Believers in crypto it's like yeah it's just five billion dollars to like Co-op ethereum imagine pitching that imagine pitching that in a bank you're here I got a five billion dollar trade idea for you magic internet money like I just don't I just don't see it so yeah I agree plus I also did get the chance to talk to someone from JP Morgan's research team on on the crypto side of things and uh there's two takeaways there one um there's a private blockchain solution called Onyx that he

is has been working on so I do think that's kind of the direction they're gonna head and then two um that he mentioned like the first you know D5 transaction they did on polygon and I was like oh [ __ ] I completely forgot about that I'm a fish brain because I work in crypto and he was just like yeah unfortunately though like the FTX stuff like definitely had an impact on our ability to actually mess around with these things so I thought that was really weird to actually see like the tangible effects like I guess a year later in some change of like large institutions actually saying like yeah like FTX was kind of a tough one and then one other big takeaway from a web 2 company that I uh talked to there was uh the thesis that it's really business to business and not business to Consumer

like apparently there is just zero demand from the consumer right now to actually use crypto applications and the thesis there was like I think the real use cases business to business going cross border between different business units is incredibly difficult today like there's a real use case for it so I kind of thought that was cool um but honestly the the main takeaway for me was just like they're still there uh which is really cool they're at ZK on conference in in Paris so I'm just kind of like wow all right that that's a good step since uh you know three years ago even I want to jump in here and take a quick second to uh shout out the atom accelerator for sponsoring our show again if you're a developer I'm sure our passionate listeners have heard this but again the point of the message is to

really bring the developers to the ecosystem you know if you're looking for a home looking for somewhere to build looking for a community that is actually excited to push um you know their project and their their economic zone forward it's the it's it's the cosmos Hub and there really is no second best here interchange security is not only launched been active but actually pushing pushing out new blocks and you know we talked about the ideas of eigenlayered restaking and why that's important well you have interchange security which looks quite similar in live in production today and you know further to that you also have IBC which we also got a shout out on this show uh as being just like a great interop solution that actually works and it's live today so we see these ideas of

things that actually work and that's personally refreshing and that's why I'm a fan of the cosmos ecosystem but we also have usdc coming stride pushing the advancement of lst's Duality sending setting the new standard for Value accrual when it comes to the contractual relationship with the cosmos hub for ICS so again if you are a builder looking to get kick-started on bringing a project to the cosmos ecosystem uh look no further than the link in the description that is the atom accelerator page they are doing grants on a rolling monthly basis from 10 000 to 1 million dollars so again be sure to check out that link in the show notes um but yeah I want to get back to that

that kind of discussion of what does uh institutional adoption look like and where where does it happen is is really this question that I'm playing with Sam I know you're uh not necessarily a fan of but you you have this idea of kycl2 is walk us through that and like kind of why you think that that's where these guys end up going to play yeah it's a depressing outcome honestly um better than a centralized I guess block building uh I guess Solution on on ethereum mainnet though so I think it's better you know it's better than the actual base layer becoming uh prone to censorship or prone to censorship but uh the general thesis is just it's pretty simple really it's going to be that

Regulators are going to require that big institutions know their customers and I think that the best way to do that is to control the on and off ramp like it'd be really easy to spin up a a bridging user interface for uky seed and then you hopped on the Chain you're kind of in your own little Silo you really don't interop anywhere except maybe like a cohort of other kycl2s and your constellation that you painted uh earlier Dan but uh yeah I just think it it generally makes sense there's too much to account for there's taxes there's you know like we talked about you know what what if you're in the same block as some terrorist group on the other side of the world like I just it makes the most sense and I think it's ultimately the way that Regulators can kind of get their way while we do too

because ultimately you can go down to the censorship resistant base layer that is ethereum um so not perfect but that is kind of a theory I I think is somewhat likely I'm not sure if I have any special Insight on kyc to l2s but it one thing I will say is I you know at some point along the line some compromises will need to be made either to you know fit existing regulatory regimes which I'm less of a fan of or or just like better user experience which I'm like more of a fan of if if there's kind of a buried at the heart of decentralization is this idea that you're going to a decentralize decision

making across a whole bunch of different people and sometimes they're really hard challenging problems to solve that like you really want in the hands of the most capable person and so decentralizing it will actually lead to a worse user experience outcome so what I actually enjoyed just to bring It full circle about ECC was I thought there was a lot of nuanced discussion from people about where decentralization makes the most sense and how can we maintain like the most important parts of the good parts of decentralization and but still get like acceptable user experiences you know because we've been lacking that so much in crypto so I don't know if kyc Dell twos are are

the way to go but I I do I do think that like some amount of compromise is actually a sign of progress and not a sign of like defeat yeah I feel like there is some Middle Ground here it's like if you want the institutions to come swim in the same Waters as everyone else it's like how do you build an environment for them to do that um without kind of giving up some of the core ethos of crypto and it's like that's a super unanswered question so um Matt I know you're dying inside let's hear it so I actually don't disagree right like I have to think about it for a second because you know at the end of the day uh onboarding even if the end result of crypto is self-custody guarantees with a system

that looks a lot like Trad five or no one can steal my funds I guess that's okay but while you guys got that you know great Insight from UTC I was looking at all these privacy solutions that are yet to come um for getting the name of the one being built on a Noma but it's an L1 privacy solution as Nevada thank you and Aztec which will be a zkl2 that will support privacy and I think at the end of the day this is still a huge space Maybe we don't spend as much time there but uh you know there's Builders building and and I guess we'll just have to see at least we'll have the option and you know the I believe that if you build it in a way that supports privacy and supports real censorship resistance that that's going to be where the end liquidity and

users end up and at the end of the day that's all that really matters right you can create your kyc Dell too but if you don't get users in liquidity it doesn't matter and if it gets all the users in liquidity well you know it wins so I guess as long as we have the infrastructure that supports both I'm okay with it I actually had this pointed out to me at the ZK unconference and it's like when we say privacy like yes ZK will likely lead the way on making this possible but what do we actually want like do we want like a fully uh you know like a blockchain where no one knows the addresses and you can't see the transactions and it's just like this black box basically like then okay probably not we've recreated Trad five so the other end is like you know

ethereum where it's an open Ledger where you can see everyone's address you can see the transactions you're doing you know the assets they've hold and they've transferred like where on that Spectrum does privacy make a lot of sense we had a podcast with uh Sunny from osmosis not too long ago um and he kind of hit on what they're trying to do is like there's their solution is kind of like maybe abstract away one layer of this privacy and like give the users um the ability to like hide their transactions but at the end of the day it's still it like doesn't remove the ethos of like having a transparent open Ledger um so I don't know maybe that's like a good open question to kind of leave the the listeners with this week is is what do we say what do we mean when we say we

want privacy in blockchain but all right everyone maybe it's a good place to call it thanks again for listening this week and we will see you all next week [Music]