DoubleZero Mainnet-Beta Launch with Austin Federa | Livestream

Transcript

What's up, guys? Just wanted to give a quick shout out to today's sponsor, Apptos. We'll hear more about how Bitcoin, DeFi, and Apptos is heating up later today. But for now, let's get into the episode. Nothing said on Xerox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Pocachio, Ryan, and our guests may hold positions in the company's, funds, or projects discussed. Good morning. Welcome back to another Zerx Research live stream. Today uh we've got a bit of a special one. D0ero uh is kicking things off today and we've got Austin Peda uh co-founder of DoubleZero here to join us. I've also got Ryan

Connor, Cash Flows Connor here on the show um to talk all things. I think we may also have Nick Carponito, our deep pin guy at Blockworks Research joining us here maybe momentarily. But uh how is everyone doing today? And maybe awesome for you. Um probably a busy day, but uh how are we feeling this morning? Oh, you're muted. >> Oh, been a very busy last few weeks leading up to this. So, uh it's it's awesome to have the network launched. It's been a ton of work by everyone at DZero Foundation, Melbec Labs, uh all the different core contributors, all the different fiber network contributors.

So, it's been a busy few weeks here. >> Is this your um is this your first token launch or did you launch the Salana token as well? No, I joined uh Salana Labs in December of 2020. So, they already had a live token at that point. >> Oh, wow. So, first token launch. >> Yes. >> Congrats. That's awesome, man. >> Thank you. >> Very cool. >> Very cool. We just had Nick join us as well. Happy you could make it um as as our DPIN expert, I guess I would say, here at the research team. Um maybe just to kick things off, I I'll skip some of the ad reads for later in the show. Um uh Austin since we have you maybe just to get into the conversation around0ero um the 2Z token etc. If you want to give

us a quick background like inspiration for behind the protocol like why it needs to be built why you decided to build it you know why leave Salana and go build double zero um so on and so forth. So the core vision of0ero is to enable blockchains and other types of high performance distributed systems to move beyond what the public internet is capable of. And you know we sort of think about this as as like oh everything just uses the public internet right it's like well uh you know most traditional trading systems uh do not run over the public internet Apple Microsoft Open AAI all of these large technology companies we think of them as public internet companies. Google you think of as a public internet company.

Meta you think of as a public internet company. They all run massive private fiber networks that are much more performant than the public internet because the public internet can't really keep up with the needs of a company like that. Uh and you know up until this point blockchain has always had the public internet to run on and no alternative. And the reason for that is kind of simple. you won't, you know, it's fine if all your Google data runs over Google's private fiber because you're already trusting Google with all of your stuff. You're not really concerned about the additional transport layer concern. But in crypto where we have, you know, validator networks run by thousands of independent contributors and independent participants, you don't want the network layer to be a point of centralization in that. And so the main

sort of innovation you could say of the double the d0ero network over what you get in a traditional high performance fiber network is it's run by multiple independent contributors. Uh we have 12 independent contributors on the network today. And that basically means that you have certain amounts of censorship resistance and security guarantees that you would not have in transiting over traditional fiber. That's kind of the short version of it. And like uh the the real impetus for this was realizing that the software clients of blockchain systems were actually now fast enough to take use of this technology. This wasn't the case a few years ago where the limiting factor really was the quality of the software. Software validator clients from Agon uh a excuse me from

fire dancer to Agave by Anza to Aptos to Suie to a lot of these networks today they actually are quite performant on a validator client perspective. The thing that's holding them back is how quickly they can perform consensus, how quickly they can move state around the world. All of these things that are now governed by the fact limiting factor of the public internet. That's that's super interesting. I love the framing and I'm so there's like a lot of things there, right? There's like performance I talks of censor censorship resistance. I'm super curious. You guys have seen a lot of adoption since the start here. I think you know we internally we we track um we kind of comp you guys against like goto adopt adoption over time from like the start

of their announcement to now and um you guys are outpacing that historical adoption not to say that you know you know GEO is a very impressive team and you guys are actually being adopted at a faster rate which I think is really interesting. So like what's what's been the customer feedback like what do they love about the product? What are the gains that they're seeing? like I would love to get a view of like what validators think and what they're gaining so far. >> Yeah. So, you know, I'll say when GTO launched it was a very different environment. Not only were we in a bare market, but there wasn't a lot of revenue generation sources on Salana.

Um, and what JTO had to do is basically create an entirely new class of revenue. Uh, which they did very successfully. We're at a place now where the optimization around that revenue is very competitive. So we see people moving data centers uh for you know 10 basis points of additional MEV in a block. There's a lot of competition uh especially among wellst validators to like ek every little ounce of performance and profitability they can out of that system. And so the zero network is part of that story. are, you know, we will not succeed ultimately if we are not making validators more money because we run a global fiber network with all of our contributors and there's significant opex associated with that

network. And so the promise to validators is that you know there will be new types of systems built on this that not only allow uh there's sort of two components. One is you make you enable blocks to be larger on Salana so you have more fees because there's more transactions that can be included. That's kind of the most base layer one of, you know, if I can move more stuff, I can get paid more because each block I have has more in it. And the second one uh really comes down to new types of revenue that are not really currently possible. And you see this in traditional exchanges when you see the cost to transact go down or when you see the time it takes to transact go down, either the exchange gets faster or the exchange gets cheaper, you see actually more revenue coming through these

systems. Um because it is a classic thing where like yeah you can you know Oracle can sell $20 million contracts to seven companies or you can be Slack and you can sell a $5 subscription service to 100 million people. Um and it really is that kind of volume versus individual transaction kind of model there. Um and so that's kind of that that's really is our our north star is can we make validators more money. What we've seen in the in the early days of mainet beta and on test net as well is that we're able to do things like reduce skip rates uh which is basically a time when a validator is supposed to make a block but for whatever reason they can't.

Maybe they don't have fresh enough data all these other types of things. And so preventing validators from losing money is similar to making them more money. Um and so it's it's a more complex story uh for the benefit to a validator. But the benefit to a network like Salana is actually you know outstrips the benefits to individual validators and that is where you run into classically a cold start problem when the aggregate benefits are felt by all users of the network but an individual validator doesn't necessarily have the incentive to make that choice. Um and that's kind of where I think like there's a lot of social pressure on Salana to always keep improving and make the network faster and faster. There's a stake pool that delegates to validators on D0ero to sort

of help compensate them for some of that as well. Um, but it really is all about increasing bandwidth and reducing latency and letting these systems be able to reach their theoretical limits. I I love the skip rate data. That's super helpful and and puts things into context. Um, I know you guys released this dashboard um on on performance of your network. I would love if you could could you dive into some of these numbers for us or just like help us explain from like a high level. I'm seeing you know average earned credits percentage you guys are besting the public internet by like 50 bips.

>> Yeah. >> Um average missed credits you know there's three there's 3,300 for the public internet only 443 on the zero network. Like can can you tell us what we're looking at here? Yeah. So these are these are basically the financial metrics that are very like easy and objective to measure on chain which is like there's a there's a thing on Salana called timely vote credits and if you accumulate too much of a negative balance it can it can impact your ability not only to get in certain stake pools and receive delegation. Um but it can impact reward rates as well. Um and vote latency is really how late your validator is is voting. Is it voting behind the cluster? And there's other

penalizations for that as well. So these are a bunch of metrics that really came from like work with ANZA and the Salana Foundation on what are some sort of like base level metrics we can kind of start with um that show the difference between the public internet and the zero network. Now you know over time we have to incorporate things like uh you know what is the median fee per block for a block on zero? Uh you know is that higher or is that lower than the public internet? we see it's higher in in a bit of testing, but it's very hard to kind of attribute some of these things. Um, and then eventually we'll have to incorporate things like additional MEV from JTO and other types of sources that can make validators more profitable as well. So all this data though in this

dashboard, this is like the really cool thing. This is all driven on chain. So all of this data is written into the zero ledger and that's where this is actually pulling and generating this from. And so you can see in real time, you know, what the link utilization is for a specific link in the chain. And you can also query the chain and you can get all of this data yourself to monitor and verify things. >> Very cool. And if we go down, Danny, could you go down to telemetry metrics? I think that those are like I think that's very like these are this tells the story right here. I think uh where this is, you know, correct me if I'm wrong, but this is latency from like location to location, right? Like all over the world.

>> Yeah, exactly. Okay, so if you mouse over one of these, you can sort of see uh what is zero uh and then what is the sort of zero advantage compared to the public internet benchmark along that same route. Um and that's kind of where you can see like oh and then the one below it, the chart below, if you scroll down a little bit more is the performance over the public internet. Um and this is a percentbased increase. And so what you'll see if you kind of go to the far right of that chart is there's actually several routes that uh the public internet is pretty good on and that's because these are more modern cable systems and more public internet traffic is also transmitting over those routes. Um but you know then you see uh a bunch of the other ones where you see

like oh man like there's actually a whole bunch of areas where the public internet really is not performing particularly well. And the cool part about this, maybe not the cool part about this, the interesting thing about this, especially when you talk about the public internet, is this chart changes all the time. Like the public internet can be extremely performant for a limited duration of time and then just you get routed onto a different cable system or there's a cable cut or something goes down for maintenance and suddenly your performance gets terrible. Um, and that's one of the really interesting pieces that we've had to look through with this is you will see um sometimes when a very highly used cable uh goes down for maintenance, the public internet performance actually increases because the public ISPs that used to route you over the cheapest

cable say, "Man, we want to use this cheap cable. It's not available. We have to use this one that's slightly faster." And so, you know, ironically, when there's a major cable outage, sometimes the public internet gets more performant because the cheapest cost route is the thing that's impacted. Um, so really there's like two components of this. There's the momentary additional performance of the zero network and then there's the just rockolid stability from a latency perspective. Um, like if you look at sort of this like uh New York to Sao Paulo link here, like that latency time is the same 247 365. as long as the cable is up at latency time is the same.

That is not true of the public internet pings by any means. Um those have a high degree of variance to them. And there's something called jitter, which is sort of the measurement of how much that variance is over a given period of time. Um but if you look over like a 24-hour period, you will see dramatic changes in latency depending on the time of day and depending on, you know, just how your data is being routed at that given moment. So that variability I mean how much does it really puts into perspective how um inefficient the public internet system is for actually a link to go down and then your performance to improve like yeah there's no um >> what do they call it like there's no quality of service it seems if you are someone who's playing the latency game

uh or who's where latency really matters um so I don't know like how much does and how much does that impact like validator planning or searcher planning or performance like >> is is that like are they screaming from the rooftops like ISP like regular ISP agreements like are really holding me back like is this going is this um um certainty around the var variability that you guys provide is that how much of a value ad is that to these players >> so I'll give you an example where there was a cable system across the Pacific that went down for maintenance this was scheduled maintenance this wasn't some sort of unexpected event uh it was properly alerted and everyone was supposed to know about it. Suddenly a

whole bunch of validators in Tokyo started getting uh really high skip rates and they started having really high vote latency and they couldn't keep up with the cluster and they're like what what happened? Nothing changed. There was this whole conversation of is there a bug in the latest client. The answer was no. What had happened is their data was now being routed by their data center to get to the United States. It was going through Europe. It was going around through Asia, through the Middle East, over Europe, and then over through the Atlantic. It was taking the long way around. And it was doing that because this cable system had gone offline. And this was a completely known event. Everyone who monitors these things knew this cable was going down for maintenance. But running a validator, you don't think about these things. You don't think about like,

okay, when when you think about is my server running? Is there power in the data center? Does the data center have internet access? But once it leaves the nick on your node, you're not really usually thinking about these types of things. And so that was kind of a little bit of a wakeup moment for folks when they were saying, "Oh, we actually like need to be not only aware of geography, but aware of topology of these networks." And most and this was sort of not something people were were generally optimizing for, especially in crypto. Um, and so it really does matter. I would say that that if you're a validator, all you need to be is fast enough. you just need to be fast enough to keep up with the chain, to vote on time, to build a block when it's your turn to build a block. If you're a

trader, you live and die by latency. Um, that if you're a searcher, you live and die by the freshness of your data. And so there's a few different things that zero can do. The the first is sort of the most obvious one, which is delivery. that if you locate a server that you are trying to trade on on the zero network and you're trying to talk to a validator on the zero network, it will be the fastest path between those two things. Even if one of your trade servers in New York and the validator you're trying to talk to is in Singapore, we'll beat the public internet pretty much every time on that. The second one is using think technologies that are not available on the public internet like multiccast.

So multiccast is this really cool technology where it's basically hardware acceleration for packet replication. So right now on a blockchain like Salana, what happens is you build a block and then you have to send it out via something called turbine. And turbine is basically this like uh giant block fan out where you say I'm going to send it to 200 people. They're going to send it to 200 people. They're going to send it to 200 people. It's this nice fractal diagram and in a very short period of time, you've got, you know, all the block data synchronized all around the world. What's the problem here? Well, different people get data at different times. If you're in that first fanout group, you get data before the second group or the third group. And that is a huge advantage in trading. That's a huge

advantage for a searcher. It's such an advantage that Jetto and others actually run a sort of uh alternative to Turbine called ShredStream, which is designed to get people faster state updates than they get through Turbine. Um, and that has been obviously a huge part of JTO's uh success from a searcher perspective. Uh, it's so successful that they have competitors who run like prop amms and types of things like that that are are are doing the same exact thing. Um, and so what we really see from this is that latency really matters and freshness of data really matters. And those are two things that the zero network because of the both the technology that it uses and the fiber links that it operates on, it's able to deliver both to validators and then to searchers and traders as

well. >> I feel like you've um really gone into the value that the zero network provides. Um I think maybe on the other side of that you know the 2Z token launched today as part of the you know the core of the protocol there. Um I guess maybe the other side of that coin would be what what value or what um maybe what revenue streams or fee streams do we see 2z or just double zero as a whole um sort of getting out of that arrangement uh maybe in the future or you know where we're looking at in the media term. >> Yeah. So uh the token is a really integral part to the network and how it functions. So the the token yeah launched launched today uh launched at the same uh valuation as the previous round which was through the uh validator

sale on coin list uh which is pretty exciting to see. Um, and basically the token is your payment source on the network. And so if you are a validator operating on the network, you pay a percentage of your block rewards in to use uh the zero network. And then what happens from there is those tokens are basically about 50% of them is burned and the other 50% are distributed to network contributors, the people and entities running the fiber according to something that we've built called proof of utility. And proof of utility is a different mechanism for distribution of rewards than you get in proof of stake.

It actually much more closely resembles a proofof work system. So the thing about proof of stake is you're ultimately trying to secure a network with stake. It's right in the name of the thing. Um and so the stake really matters because these are stateful networks. The zero network is effectively a stateless network. We don't have, you know, $2 billion of USDC on chain or something like that that we have to secure. we're really only securing data in flight. And so what we use is something called chappley values. And chappley values are this economic and mathematical concept that says how much worse would a system be if we pull one component of that system out. And so the nice thing about this is it balances based on how network links are used. If you show up for the zero network and you

contribute a really valuable link, you will earn uh more rewards for that link than someone who contributes a less valuable link. And just like Bitcoin, doesn't matter if I'm Michael Sailor or, you know, if I just own like a tenth of a Bitcoin, if I'm contributing 10% of the hash power, I'm going to get 10% of the rewards. And that's not true in a proof ofstake network. Um, so this is a really nice feature of this that actually encourages competition between the network contributors. Uh, the other piece too is because 50% of those um rewards are are are burned, you know, it's a civil resistance mechanism uh for data transmission on the network. Uh but you know there also currently is no inflation on the protocol.

>> I'm hoping to shift gears a little bit. I would like to know um you know you've had um you've had really awesome experience at you know a very important protocol Salana you got to see um the space evolve um from a really interesting position. Um 2024 I think Salano was like very much the leading chain. Um I can't say the same for 2025. It's clearly in the conversation is is clearly a leading chain but like the competition is getting more intense. Um you guys seem to be a pretty important part of why Salana will be able to either extend

that lead, maintain it or you know leaprog some chains. I'm wondering you know what what are the next steps for Salana to like become like a leading ecosystem in your view? >> Yeah, I mean I think competition is fundamentally good for innovation and good for consumers and you know for a long time uh Ethereum and Bitcoin enjoyed a regulatory moat that has been removed. Uh I think for a long time Salon enjoyed a performance mode that now a lot of people have caught up to as well and that actually I think just increases the quality of products. Um the launch of something like like Hyperlid absolutely lit a fire under some developers on Salana to say okay we have to figure out like what is our

response to this. I will say though that 0ero is not a Salana project. Um we are base layer neutral infrastructure. Uh so Salana is the first network we're supporting. There's a bunch of L2s we've been talking with and running a bunch of tests with. Uh there's a bunch of other L1s as well. Uh there's this new project called Shelby which is a uh hot storage network that Aptodos is building. Um they've announced that that's going to run uh on zero as well and so yeah look I I have a soft spot for the Salana ecosystem. I spent four years working there. Um, I think there's great things in the future of that for that network and I think it will remain competitive for years to come, but I'm very excited for the competition we're seeing um, both in the more application specific

blockchains like the per uh, networks as well as just other fast blockchains and nice credible takes on how you can architect a blockchain differently. I really like what Mega ETH is doing with some node specialization experimentation. Apttose has some really cool ideas along those lines and then multiple concurrent leaders, multiple concurrent proposers from Salana. Um I think that's a an incredibly compelling vision for global DeFi markets. >> Yeah, speaking of those other ecosystems, like what do you think what's the time to um actually serving those ecosystems? I saw like in the the validator pre-sale, I think there were some EVM chains or validators participating, some Aptos ones. Yeah.

>> So, there's some evidence that there's some support out there, but um I don't know what's the timeline on that. >> So, because this is like an OSI layer 1, two, and three network, it's way below the blockchain or the smart contract or the VM space. So, you know, support for other networks on the zero network is completely doable and actually we have uh a bunch of that work already done to support multiple uh blockchain ecosystems. So it's really up to those protocol developers, those validators, the people who make decisions within that network to decide, you know, have we hit a bit of a plateau on our software performance and do we need to think about, you know, is it time to go faster than what the public internet

allows? Do we want to do that as an organization? I don't think the Ethereum L1 is ever going to make the decision that they want to go faster than the public internet allows, but a lot of L2s, that's exactly what they're trying to do. um as well as new L1s that are launching. So, uh you know, I think it's a pretty a pretty interesting world that we're seeing. Uh and Zero is really ready to support anything that wants to run on it, whether blockchain systems or non-blockchain systems. >> That's actually really interesting. I there was a conversation this week, the um internet in Afghanistan went down.

>> Yeah. >> And um you know, there were some old Ethereum tweets that came up and some new ones about you know, censorship resistance. that was that's part of your story. Um I don't know would they maybe they do want to use D0ero for censorship resistance purposes. >> Yeah, I mean there's definitely fallback options. I think the challenge is um 0ero is not a residential internet service, right? We're not coming into people's houses uh in part because that's an incredibly regulated space and in part because it's a you know unfathomably expensive thing to do to run fiber to everyone's house. And so there are areas where this can help. I mean, if you have a authoritarian government that turns off all of the

internet, including the local internet and just all of the connectivity and all the cell towers, zero is not going to do much. You basically need Starlink at that point. And they're probably going to jam Starlink, too, because that's actually quite doable. So, it really depends on what you're trying to prevent against. Now, you know, in a situation where like truly the entire internet of Afghanistan goes offline, like, okay, maybe that's that's a bit of an extreme one, but you look at something like Russia's invasion of Ukraine and a lot of the internet did go down, but what did not go down were sort of critical communication channels and private fiber for the most part. And one of the nice things here is the kind of space is operating in is usually a space reserved for enterprises and governments. There's

not a lot of like like projects that have access to private dedicated fiber. It's mostly something that's used by big businesses and governments and because of that it tends to have its own carveouts and it tends to be treated much more as a missionritical system. You can sort of think about, you know, back in the day, uh, back in 2020, I think it was, when a bunch of, uh, different social media networks were getting upstart networks were getting censored and removed from things like Amazon web services and Facebook was blocking access to them. There was never a call to like Verizon do deep packet inspections on every traffic that comes from this thing and block this web server like at the base layer infrastructure level.

um it it is treated a little bit more like electricity where it's like you know you can do crime that uses electricity but the power company is not usually at fault for that. Um and that's kind of one of the things here is the lower level we get in the stack the sort of the more socially expensive it is for the government to start interfering with that type of traffic. And so I would call that soft censorship resistance. It's not hard censorship resistance, but it's much easier for a government to turn off to to instruct someone to turn off access to a website or to talk to a residential internet service provider and say, "Hey, you got to block this thing than it is for them to like go into a data center with a giant pair of pliers and start cutting fiber outside of sort of immediate Salana L1

upgrades and um maybe performance optimization on the Salana L1. one um and then upcoming FPGA upgrades that I think we can talk about in a second here. >> Um what do you see as like the the next most logical step for D0ero to expand to another ecosystem? Is it other SVM based chains or network extensions be that like Fogo or Bullet Chains network extension or is it the ecosystems that are most in need in the short to medium term? >> Yeah, there's kind of a few different ways to look at this. So the FPGA work which we'll get into that is a little bit more ecosystem specific. So there's a lot of work we can do for EVM and that but that work has to be done. Um there's sort of two ways to think about like

what do next steps look like? There's networks that desperately need this today and that was sort of why Salana felt like the right place to start. Um there was a real willingness there to do it. The other way to think about it is new networks that haven't launched yet. They're getting into test net now. it's very easy for them to just say, "We're going to locate all of the validators on the0ero network um or the L2 or something along those lines because you're starting from scratch. You don't have a migration problem, all these other types of things." So, I would say the hardest networks to work with are probably those that don't really have a problem, but are also mature enough that they have people who have a way they like to do things and don't want someone else telling them you should do it a

different way. Um but there's some other you know there's some interesting uh networks out there that have sort of come back and gained more attention recently are doing more work with AI and suddenly they've realized the data rate to that they can synchronize data between the nodes is actually like a limiting factor to some of their growth uh even in non-defi markets and so yeah the next network we don't have one to announce at the moment um but there's a lot of folks in the last few weeks who have uh expressed a lot of interest in both learning more and working with us on these things.

>> And um I guess circling back, let's dive in on the edge spam filtration FPGA side of the project. Um I'd love to learn more about that. >> Definitely. So FPGAAS are field programmable gate arrays. They're they're basically uh integrated circuits that can be reprogrammed in the field, which is compared to like the chip in your phone, which is like it's it's made one way and it can't be made a different way in the field. Um, so that's kind of how these these technologies work. They're really good at certain types of operations that you can now hardware accelerate. And so some of the early applications for that in a network like Salana or Ethereum um is signature verification and transaction dduplification. And so you you know

quite simply it's just ED25519 math that says hey do the signatures match on this data and if they don't you can throw that data away. And the reason you can throw it away and not cry censorship is that data would never be eligible to make it into a block anyway because it would fail on replay. Every other validator would reject that block if you put it in because it has signatures that don't uh that fail on verification. Uh same thing with duplicate data. You wouldn't pack, you know, a ton of the same transactions into a block because the fee payer would only work once on that type of thing. Um and so those are kind of some of the early applications for this. The nice thing about FPGAAS is they're very fast at these these types of uh operations. So we can ddup uh 100

gigabits per second of data. We can signature verify 100 gigabits per second of incoming data. And there's a lot of other things we can do with the FPGAs over the long term like bring precision timing into networks. And so you actually can timestamp every packet as it moves through an FPGA. Uh there's a lot of cool things you can do with that around order book time alignment. And there's a lot of other systems in Tradfi that really rely on precision timing, but that precision timing always involves a lot of trust in the current systems. And so we think we can figure out a way to bring high precision timing into uh you know a network environment without having that become a trust assumption product be that something actually can be verified.

>> Awesome. Well, Austin, I want to say I think we're at the end of our time with you. I know you've got a busy day ahead of you. Um really appreciate you coming on talking about double zero. I'll just open the floor for you maybe here as to lead you out. Any last words, things you want to say? >> Yeah, let the network about to launch. >> Look, if you if you are a validator and you're interested, uh we'd love to have you come operate on D0ero. If you are a protocol developer or a protocol founder, uh and you know you've got problems with latency or bandwidth, uh we'd love to talk. >> Awesome. Thanks so much for coming on.

Really appreciate it. >> Thank you. Congrats on the launch, man. >> Yeah. >> All right. Uh before we chat any further, guys, uh want to do a quick shout out to our sponsors for today's stream. Actually, I think just one sponsor today. Uh shout out to Aptos. Aptos with nearly 400 million or Bitcoin DeFi is heating up on Aptos. With nearly 400 million in BTC assets on chain, Aptos users can now earn yield on their Bitcoin via EchoABTC and OKX's XBTC without the typical bridge risks and high fees. Thanks again to Apptos for sponsoring today's stream.

All right. Um, we can get back back into it. I guess I wanted to just have a little chat um kind of post Austin's kind of deep dive for us there a little bit. Um, how are we feeling Nick? I know maybe to lead this off. I know you wrote a little bit bit of a piece uh for the Blockworks Research subscribers the other day. Um a flash note on it. I guess I don't know whatever you guys want to dive into. I saw that there was a good bit of commentary around like the tokconomics of of the protocol like the breakdown there. Um but I don't know how how are we feeling? Do we have a a particular lean here? I did see that uh 2Z launched at like a 6 billion or so FTV here at the open

market um and kind of trending down off that. Quite a big jump over the I think it was 700 or 750 mil valuation of the previous round if I'm not corre if I'm not mistaken. >> Really? >> Yeah, it was 750. I think we're at 5.5 bill now. Um but I think this is one of those things that'll settle off. It's uh a little bit of a mispricing, but I do expect it to be trading above the pre-sale FTB. Um that said, I think probably the most interesting thing we're seeing now is like woke up today, double zero's got 23.5% of the um mainet stake penetration on Salana. when they hit 25%

um or I guess maybe taking a step back currently um validators are paying 5% of their base fees, voting fees and priority fees. Once they hit that 25% threshold and then sustain it, it'll be 5% of geotips as well. And so that's really like one of their first major milestones. It was something that I was anticipating would happen, you know, at least a couple weeks after launch, but it looks like the validator adoption is increasingly speeding up and I I don't think that it's going to be slowing down until we're at least past that threshold. Beyond that, the the next major threshold in terms of fee capture for D0ero is the 5% of inflation

rewards, which is really the last milestone in terms of um capturing on the network. But that's at activated at 60% so a super majority of mainet stake. >> Yeah. I guess maybe slightly related to that they they did just have an announcement today about their stake pool adding another 10 million soul to their stake pool. So they have 13 million total soul. Um and I think a good portion of that is used in their delegation program similar to what Salana does for their delegation program. So they can, you know, subsidize um, you know, some amount of validators to basically join the network. Um, which seems meaningful. So I guess to your

point about maybe hitting that 25% mark, um, it may not be that difficult if they have this kind of huge cash of soul to incentivize additional stake to to come on board. >> Yeah, absolutely. It looks like they've deployed about 3.5 of that 10 so far. I'm sure it's a busy day, so I expect that to be deployed by sometime next week. But that said, yeah, it's going to be the the second largest pool after Gito's pool and I think only slightly short of that by about 2 million soul. >> And yeah, I'm I'm definitely really excited to I mean, I guess you've seen the Salana Foundation delegation program sort of tapering off in the last 8 12 to

18 months, maybe. And I think it's awesome that Double Zero is sort of taking that spot and being the sort of I'm a small validator. I'm I'm running a, you know, a community validator. I need help. Like this is the the place to join. I guess maybe the other thing we didn't talk about um and is maybe a broader point to discuss with both you Ryan and Nick um around tokens maybe deepen tokens generally but zero and I think deepen tokens generally um there was a no action letter sent by the SEC in regards to the 2Z token

um you know basically you know describing it as not a security um based on the you know the information that they've provided to the agencies um which feels pretty meaningful that it seems like the deepin sector kind of got a nod here broadly um that these types of tokens are you know safe you know not securities is not going to be attacked by the regulatory agencies at least as they are today um I don't know how do you guys is that a new tailwind or did we like feel this coming kind of based on how the administration's been stanced since you know last I think it was sort of on the horizon.

There's been quite a bit of work from multiple parties leading up to this and there was a few months ago sort of a deepin coalition that was formed between Helium Akos Render and maybe two other projects where they went down to DC and they've been actively pushing back on any uh securities laws that would be applied specifically to deepen tokens. And so it's I think D0ero's no action letter and then the following comments from Commissioner Pierce were certainly something that we weren't expecting so soon, but definitely something that was in the cards and um I think most deepen projects will benefit from. The

important caveat here is that in the no action letter and in the the comments from Commissioner Pierce, there is some interesting wording and I don't have it in front of me around basically that you know it's it's um it goes back to the verifiability of your revenues and the verifiability of the the work happening on chain. So >> your more mature deepen projects, the majority of them today are are operating like this where you can see everything on chain and if something's not on chain, there's a publicly accessible source that can be verified.

But some more nent projects and I think many other um sort of deep and adjacent projects aren't prioritizing this level of verifiability. And so I think this is more of a wakeup call than a green flag for for those teams. Yeah, I do see there is this note here from uh Michael Shaman, chief console, but stating there's specific note here around programmatic transfers being a key key piece of this. Uh which I think goes to your point around having this, you know, structured in a way that things are happening onchain automatically. you know, you're not making part of the protocol is not being defined by like handshake agreements, you know, offchain um that are big movers and shakers there.

>> Yeah, I feel like we're oscillating back and forth between like um you know, for a long time I think that maximal decentralization was not an advantage and it was actually advantageous for you to act more like a company than a decentralized protocol. And now it seems like the we're moving toward the an SEC that actually favors some level of decentralization and that's actually starting to become an advantage. So it's like a moving target for teams. But this this is really cool. Like I think it's it's a huge announcement from the SEC, but we're so numb to it, right? Like we've seen we've had so many positive

announcements recently that I feel like this one was overlooked. But I mean really substantial um and important. >> Yeah, I think your point about like the level of decentralization is interesting because it it does feel like now there's more of maybe a sweet spot where you know probably ideally you still want this core protocol labs team founding team that is really making all the decisions so you can you know grow, optimize for growth, expand etc. you know, whatever that most important um factor is in in the early stages of a project. Um not bogged down by like Dow governance, for example, to make key decisions. Um but at the same time, you know, you might be hindered if the way

that certain decisions or or actions are being made um you know, if the SEC is going to take a particular stance there, uh you might have to ride that line a little bit more um now than you've than you've had to. Do we think this opens the gates for at least Deepin token or Deepen project foundations to be either on short or launched in the US by default? >> Yeah, it's I mean I feel like teams have to be thinking about that, right? Um I think you know US is the capital of capital and being elsewhere was kind of a disadvantage. Well, the only advantage

was that you weren't um um subject to a hostile regulatory regime. And now, you know, why not why not be where the action is? Um like everyone in cryptos in New York City, like why not take advantage of that? >> Yeah. Yeah, I guess the only trade-off would be if there's some level of reporting requirement or you know amount of meetings or disclosures that are required to get to this point where um you get sort of the okay green light um from the agencies or if you know they made they have made something of a blanket statement here but I don't know if it's quite as farreaching as you know hey if I launch a new um DPIN network today I'm like kind of given a a green

flag by default or if I have to sort of work my way there. Um the those sort of steps or hurdles to kind of get be accepted in that manner might be uh a reason not to. But um maybe they'll release some more guidance here. Like the ETFs, I think we've seen good good moves in that area where um they're looking to get to like a pretty standard like you know fill out XYZ thing, have have these types of um this type of setup with your ETF filing and you're good to go sort of thing. So, I think if you get to that point where it's very clear, then uh it would make a lot of sense.

>> What do you guys think of uh 2Z or the zero project as like a as like um like a moment for deepen? Like this changes kind of like the market perception of deepen. I feel like you know talking to deep deepen founders even the successful ones like there is there's like negative sentiment toward that sector. Um there has been for a long time. I haven't shared it, but I do understand it just from like a token price performance perspective. There's been like a lot of disappointments. Like I don't know. To me, the zero story is super compelling.

There's like obvious PMF uh adoption has been pretty rapid. Like could this turn around the whole sector? >> I Yeah, I think to an extent like this this opens the doors to change sentiment a little bit. I think what really opens the doors to changing sentiment in the deep sector is going to be after 2Z has been live for a month or two and we're starting to see burns happening on chain moving back to the the deepin revenue meta that I feel like has sort of floated out of reach in recent months maybe even in 2025.

>> Yeah, I think I'd agree with that sentiment. I think um I don't know a lot of a lot of the the crypto markets today have been at least for onchain protocols has really been centered around seeing the revenues actually turn into value acrruel to the token um like explicitly and not just generically. Um so to see you know the the fee revenue split that they're getting from validators for example turn into a buyback or a burn of tokens or you know acrew to a protocol related you know treasury something along those lines um would maybe be a solid confirmation of that I think >> yeah so go for it Nick sorry

>> just uh adding on top of what Danny said I think the no action letter from the SEC DC really I mean like by extension enshrines the buy back and burn process at least for deepen networks maybe for all projects in crypto but that's something interesting and I think that's a a huge catalyst for teams who aren't necessarily doing anything with their revenue quite yet. >> Yeah man try I I it's like kind of cliche I brought it up a bunch but I'm going to bring it up again. Um, deep in things are the only things that I can explain to my Dreadfi friends and then they like get it. Deep in things or like maybe an exchange like I think now that Hyperlid's printing so much like they're starting to grasp that. Um, but yeah,

just like physical infrastructure, real world like it looks like telecom or it looks like a data center thing. It's just deep in I I feel like it it is there's the potential for this moment where trifi just um it just get gets hot in the trifi crowd and they really like the stories and they really like the valuations and you know I think what are the two examples one was um Bill Aman purchasing the H&T token that was a big one and I think he also uh Oh man, he brought up another network. Um, but like for someone like Bill Aman to kind of, you know, tweet

about his excitement of this of Dpens, it like he's like the classic value investor. Um, he's like a Warren Buffett style type of guy. Like if these stories can resonate with him, um, you know, if if D0ero starts printing, making meaningful revenue, burning the token on chain, um, yeah, I do think that there's probability that like this narrative really could take off and and it might not be with the crypto crowd. could be with a trifight crowd. Who knows? >> Yeah, I think a a big question is going to come down to at least for zero like their growth going forward to see them saturate Salana obviously would be big.

Um though if you have questions about maybe Salana's future trajectory then to see them like make their way into other networks. Um there's probably not a ton that it would be meaningfully impactful today, but um I don't know, you could you could pick out some of the at least some of the larger networks that rely on, you know, high speeded high throughput, you know, your sweets, your apttosises, and then maybe like single sequencer fastchain type of deployments. Um a hyperlquid obviously would be incredibly interesting as well. Um seeing some traction in different areas would be would be interesting. Well, yeah, that implication of the, you know, the SEC saying or or, you know, implying that perhaps, you know, these L2s, they

need to decentralized in order to not be considered exchanges. Like, okay, like a lot of the EVML2s are at a performance disadvantage, and now you have to decentralize. Now, you're at a greater performance disadvantage. Like, that's an incentive to use double zero. So, you could, you know, there's a there's a path where that um where that happens. That's pretty interesting. And I I think it makes sense if you think about something like, you know, Mega ETH we had on bread guy a couple weeks ago, but you know, where they're really just trying to ramp as much throughput as possible, then the like potential latency gains feel meaningful if you're trying to cram, you know, 20k TPS through one, you know, validator.

>> Well, and I think there are architectural design decisions that you can make now because double zero is live, right? Like if you can design an L1 or an L2 from day one to be composable with D0ero, there are, you know, ways that you could optimize your client, ways that you could optimize your chain that weren't previously available to you, which I think is super interesting. But I also tend to think that the TAM of D0ero is much larger than supporting blockchain ecosystems. I mean, think about applications in sort of like content delivery or things like distributed training. like it it almost enables such a large swath of new applications if they were to move to

I guess support uh new applications in you know maybe a year or two. I think that you know there's there's a million ways that you could aggregate private fiber and apply it to um a specific use case that may even generate more value than double zero on all L1 and L2 chains combined. Yeah, we'll see. I know that that's like I I think of the double zero white paper they kind of highlight CDN's as a as an as a as a potential customer. Um I don't know. Um, I guess if they're relying on the public

internet, they have that those kind of like they lack the latency guarantees and if you need them, you can either build your own network, you can, you know, rely on um some private fiber that you're renting out or you could um or you could use this network. Yeah, we'll see what the performance stats say, right? Like if if they can show the performance, you're going to have some guy at some CDN where performance is like the only thing that matters be like, "Hey, this is actually a viable alternative. Yeah. And I guess to the point around, you know, if you have the option of private fiber network, you know, does the kind of cryptoeconomic design here like subsidizing some of the validators and maybe that subsidizes some of the cost like would that make it

meaningfully attractive to like a CDN for example to go this route? Like are they going to be meaningfully cost competitive with those traditional routes would be my question there which we'll we'll have to see. I don't think it's it's not clear right at this moment. >> I was listening to another stream that Austin was on sometime yesterday and they asked him what the closest competitor to zero is today and he mentioned Cloudflare and Okami which are your two biggest public CDN providers. Um which I think is really interesting. I mean obviously architecturally it's very different from something like a cloud for Okami but at the same time it's completely composable with both of those networks. Um, and we just got word yesterday that Pipe Network, which is

basically trying to build a onetoone replacement of Cloudflare in the deep sector, is going live with their token on the 8th, so Wednesday of next week. So, super excited to see where things go. I know that Double0ero and and um Pipe Network have partnered to some extent and so this could be an awesome catalyst for them to launch their network on Double Zero as well. >> Yeah. What's the what's the partnership there? >> It was one of those general like you know what you see on Twitter like we've partnered with Blank with no announcements. Um, so I don't have any details there and I think a lot of people would say the two networks are

competitive, but I really view the two networks as completely composable. >> And what do you mean by completely composable? Can you be a little bit more specific? I think for places where the zero network is unable like there's there's not existing fiber but maybe using the public internet there's an optimized route through pipe network they could utilize that in their infrastructure and then on the other side of things if there's places where it's going to be faster to deliver a packet via pipe network the0ero network could offload a packet to the pipe network to get it to the next data center and then to a cable it's um really just a route optim optimization problem and it's a very

complicated problem but I think it's something that we are likely going to see um different approaches to because I mean obviously we can't have a single private fiber cable between every data center in the world like there are going to be places where we need to use the public internet and in those places the routes need to be as optimized as possible. >> Makes sense. Um, before we close things out here, I'm going to do one last shout out to our sponsor for today's stream, Aptos. Uh, with nearly 400 million BTC assets on chain, supported by a secure, fast, and affordable MBM environment, Aptos has become the BTC 5 growth chain.

APOS users can now earn yield on their Bitcoin via Eko's ABTC and OKX's XBTC without the typical bridge risks and high fees. With support from Ekko, OKX, and STAX's SBTC, Aptos is the place to go for best-in-class yield on Bitcoin. appreciate the support. Apttose, let's close it out, gentlemen. Um, I guess any last thoughts then on zero token? Um, the tokconomics were a big sort of question mark that I saw on the timeline and even internally we were talking about quite a bit. Um, a bit of a different approach I would say than most launches lately. So um you know not like a no community allocation or something along those I I guess they

have like an ecosystem kind of portion of tokens um via the foundation um but you know 1% to the validators via that sale um a large amount to to Jump and Malbeck Labs those two labs teams that contributed to the project and then to other kind of like early insider contributor teams as well. um quite a bit different than like your maybe more crypto ethos, you know, CT aligned ethos project that, you know, gives 10% of the tokens as an airdrop or something like like that. Um I don't know any thoughts there maybe to close it out on tokconomics, general thoughts on on 2Z.

>> Most important part of tokconomics is making money. structure doesn't matter that much when you're bringing in when you're bringing in cash and providing a lot of value. I think we see that in the market today and um I think you're probably going to see that with 2Z. >> Yeah, I think echoing what Ryan said, time to market was extremely impressive. Um and at the end of the day, they they don't need retail participants for this network to succeed, right? like there's there's no reason to airdrop tokens to a community of people who, you know, retweeted all the the tweets on your account or yapped about you. And so, yeah, I think it's awesome to see and I'm super excited to see where Zero goes

from here. >> Yeah, no Discord allocations. Um, it it does remind me, I think Mike Dudus maybe had a tweet a couple days ago talking about how more more crypto more token launches are looking more like kind of like company launches. Um, and I think Mippo followed it up and said if we just started calling them companies and not protocols, maybe it would make more sense. Um, we still need to solve the one little issue that we have this dual token and equity structure. um and maybe some of that, you know, a lot of that gray area goes away, but um I think more and more we're seeing steps in the right direction generally when it comes to tokconomics, when it comes to revenue flow, value acral um a lot of those things are improving. So in this case, yeah, I agree with you, Nick. I don't I

don't know that airdropping, you know, the the hype boys on Twitter really matters for zero. They're not really selling the product to them. And my final thought here, on the other hand, if you have access to private fiber, if you're running a data center that has access to private fiber, this is a generational opportunity for you. I mean, how what other avenues have you had to monetize your private fiber with more than one single application? Um, so I'm super excited to see exactly how that plays out as well.

>> Cool. We'll leave it there. Well, thanks for hopping on, guys. And uh glad we got to chat with Austin about the launch. Uh and we will see you all out there the chat uh next week. No, no stream tomorrow, but we will see you next week. Um Bach is out unfortunately. So hopefully we can have him back and healthy for a fresh stream on Monday. All righty. Thanks for coming on, guys. We'll see you next time. See you guys. [Music]