Eclipse: Rollups Powered by Solana's Virtual Machines | Neel Somani

Transcript

if you use something like the Solana VM where neon evm already exists where they're working on move VM by code interpreters we get to benefit from all the surrounding infrastructure and we get all the benefits of the Solana VM things like local fee markets which all the Roll-Ups are going to need eventually what's up everyone welcome back to another episode of zero X research today is May 8th and we have an awesome interview lined up with Neil the founder of eclipse a project enabling the deployment of customizable Roll-Ups it's a really good interview so be sure to stick around for that but as always we are joined by three members of the blockworks research team effort and Westie capital and ren Dan is actually not feeling too hot today so we got an extra seven from the research team so so

lucky for you guys uh effort I'll pass it over to you for your hot seat or cool Throne yeah so I have um two people on or I guess two entities on the cool Throne this week uh putting coinbase and myself on the cool Throne so I'll say myself first by saying on the January 18th blockworks research uh Xerox research podcast I said there's a really good chance and these are quotes there's a really good chance we see coinbase go from cash flow negative to either neutral or positive by the end of the year and they didn't necessarily go cash flow positive they did lose 170 million dollars but this past week they announced their earnings for q1 with a positive adjusted ebitda of 284 million they beat uh Wall Street estimates which had them doing about negative 86

earnings per share loss to a positive 45 earnings per share gain they ended the quarter with 5.3 billion in cash they had a net revenue of 736 million which was a beat of approximately 10 or so they had a huge increase in interest income because of uh interest rate increases from the FED although that there is some concerns that Q2 might be lower just because of the overall decrease in usdc Supply we finally saw after like two rounds of cuts in 2022 we finally saw a head cow reduction about a thousand employees so you saw a massive decrease in overall Opex I think it's a really good story for coinbase this is still despite like recent increases in prices this quarter

um you're seeing them be cash flow neutral or positive uh they're able to have this kind of business operation in the bottoms of a bear Market I can just imagine like how much they can churn profit in an upcoming poll um on the news last week coinbase earnings after the coinbase earnings announcement they jumped like 20 in the stock overall crypto markets are down today on May 8th but if you like to actually look at coin's stock today they close relatively flat I don't I really can't imagine there's much sellers at these levels considering the overall like sentiment uh that coin has right now I love that you brought receipts you know you had the date of the podcast so I gotta respect it yeah um but yeah with coinbase like I know in the past they've said basically in Bear markets they're

ready to lose money and sort of make most of the money in the bowl um but it's good to see that even in a bear market now they've uh really focused on being cash flow positive and they've done a good job so yeah like super bullish coinbase love to see it yeah a strong point the coinbase has been doing a lot of things in q1 they acquired One River asset management and now they have their own asset management department they launch base their own L2 they launched International Exchange and they also have wanted as a service so you know coinbase is like all gears forward on basically everything and part of the earnings car a very strong emphasis of the earnings car was that they want to diversify their sources of revenue so that they make money in all

market conditions and I think sort of the steps that they've took has basically demonstrated that and I listened to their earnings cost for coinbase a few interesting points at the start of the earning calls Brian up from first state that he had no intention to build a decks on base and I think a lot of people asked that given this sort of regulatory uncertainty but actually towards the later end of the car he said that as long as they're providing what customers want there will be interesting opportunities to monetize on the deck side as well I'm not sure what specifically he meant by that maybe they'll find a way to extract money out of the sequencer but that's definitely something to look for going forward and under the regulatory front

there's obviously that was noticed from the SEC that came out around two months ago they have that active sort of court case going where the SC hasn't replied them but actually if you look at a lot of the data staking represents three percent of coinbases net revenue BTC and Eve represents 56 of trading revenue and I think it's relatively safe to say that those are not Securities at this point and almost 20 of their business is international so even if the hammer really came down it wouldn't be the end of the world sure they would lose a huge amount of trading volume say all of the else redeemed Securities they would lose 44 of their trading volume and those outs do probably have a higher trading spread than BTC and e but definitely not

the end of the world so I think they're in a good spot yeah I'm excited to see when base actually Launches on mainnet if they kind of carry forward this Narrative of mobile first because obviously they have that app and if you could actually use some of the dapps within the mobile uh app or or mobile coinbase wallet I'm not even sure if they have a mobile coin business wallet I'm a metamask user but nonetheless curious to see that effort I think you were the first one to put themselves in the uh the cool Throne so so good on you but I feel like you talk about coinbase every other week so I've got two questions for you what do you think eth does in price over the next Bull Run like from you know Peak to trough and then what do you think about coin that's

a really good question um I mean hopefully in a bull market eth goes up hopefully I mean right now it's at what eighteen hundred dollars approximately today on May 8th um I would have to assume that it does at least a 5x over the next cycle ideally higher um I think coin right now is at what a 10 11 billion dollar market cap uh they made they were making upwards of two billion dollars a quarter last cycle um that's approximately you know a nine to ten billion dollar annual revenue um I think they're a 10x honestly a 10 to 15x I think they are going to be the higher beta play in the upcoming bull cycle assuming we have one I personally

think they are the best value play in crypto Bar None they have the users they are legitimately like a legitimate business um they're expanding their their product Suite uh into derivatives they're growing internationally when you have Aptos and sui sitting at like 10 to 12 billion dollar fully diluted market cap like would I rather have that or would I rather have coinbase like I think it's a no-brainer um I'm very long coin not Financial advice but I I'm gonna follow my Fearless bald leader to the promised land I love you that I guess I just struggle with if you're expecting a 5x out of eth and that has to happen for coinbase to do well right like let's just take it as it is we need asset prices to go up in

order for a coinbase to ultimately succeed over the long term so I guess I just don't see the value in trying to go for a 10x over a 5x with all the regulatory risk that coinbase faces like I would absolutely hate myself if I balls long coin and you know there's a massive Bull Run and then all of coinbase's businesses got taken out in the US I just feel like that's somewhat of a risky play I think that's fair um it also could be depending on like how tough regulatory obviously the regulatory environment and coinbase in the United States is but one of like the I want to say dark horses but one of the things I'm going to be closely watching is how hard does the hand come down on binance um internationally domestically here

with their binance us operation um I think at the peak bull market evaluations last year I'm sorry two years ago Finance was valued at like 300 plus billion dollars and I'm assuming at the next Bull cycle we see even higher all-time highs that could if coinbase gets a similar multiple or a similar valuation to binance last cycle that's potentially a 30X I'm personally being conservative I think in a 10x I could easily see 1520 to 30X which sounds crazy in a publicly traded Market but we know like how high beta uh crypto is regular stock market um and I think coin is just gonna be higher multiple to them but I agree Sam I I think regulatory environment is like

a huge risk uh but I'd also imagine that if coinbase had like a really big regulatory Crackdown on them that the rest of the crypto ecosystem would suffer um just because of how much institutional volume a loan coinbase has they have like top I think they have the 25 largest um institutional funds like in the world using their platform I'm sure there's institutions using binance as well but a heavy majority of like I think future uh net demand is going to come from like the US side assuming regulations are clear yeah that's fair strong agree there crypto definitely would struggle of coinbase got you know taken out of the US so uh anyways Ren who you got in the hot seat of Colton yeah I got Lido Dao

in the hot seat this week so around one month ago Sushi swap got exported for around 1800 West that was a result of them upgrading to their V3 or were actually utilizing the uni V3 contracts to upgrade their protocol as a result of the hack the exporter paid around an 800 E5 to the validator in order to get its block included that router data was run by one of the Lido validators and ninety percent of that bribe got sent to the protocol so whoever had if stake they get like a provider share of it five percent of that got sent to the node operator and five percent of that got sent to the Dow treasury so that's roughly for the eve

and basically someone at sushi shop has went to the Lido form and say hey can we have a 40 effect and the votes going on right now right now the light of Doubt is voting no we're not giving you the 40 effect and that basically sets an interesting precedent for sort of muv validators and exploits going forward more specifically is a validator or is a liquid sticking protocol sort of operator on the hook for any exploited funds my personal bias is No it should be purely up to the protocol to go seek the exporter and ask him for the funds that he got away the way I see the Mev Vibe is that it's an

additional cost of capital that should be born by the exporter that's money that he spent and he probably would have spent either way maybe even if his like transactions didn't go through right just because he wanted his button because it's so badly and so that's a cause that should be brought to him um but yeah it's just interesting to see how this will potentially set a precedent and I think one thing is that the dial here does not want to act as an arbitrator between the exploited protocol and the validator right sure the validators run the validator for Lido but I think in this case Lilo Dallas going say hey no we don't want to like be the middleman in the conversation just go talk to the validator find him yourself yeah this is definitely a super interesting

governance vote I know the team at Sushi seemed pretty confident when this first went down that they'd be able to extract some of that uh ease back from Lido but it looks like the vote is going uh the other way which again I would agree with you Ren that that's probably the better decision because as soon as you say yes to this then sets a weird precedent going forward not only for Lido but for others taking liquid staking protocols as well as just individual validators that are doxed I think you know it could potentially cause a lot of issues down the road and I wonder if something like this brings more Credence to something like eth burn for Mev or rather than gonna go into like an entity that's

known and someone saying hey can I have my funds back instead it allows the network to be completely neutral and not necessarily pick an individual that could or could not be liable um either like individually or maybe even at a legal level so yeah I wonder how the conversation goes from here on Heath Burn yeah definitely agree with both your takes too like I don't think the Dow or the validator who got lucky enough to mine that block should be obligated to you know return the funds the exploited protocol that sets a very dangerous precedent in my opinion I did want to take a second this episode to call out gov Hub our new governance product we just launched it last week it is an incredible product it's basically

something that tracks governance proposals from the very early ideation phase like when the conversations are happening on telegram Discord Etc through the Forum through the actual snapshot vote and when it gets implemented uh we we personally think just as people who are in this stuff every single day okay it's incredibly hard to track even when you have a full team of people doing it like all day every day so we wanted to surface all the information that we've been Gathering and be sure to return that to our subscribers so if you haven't checked that out at blockworksresearch.com be sure to and I am very confident you will find it as useful as we do but uh Westy once you got in the hot seat or cool Throne yeah it's somewhat related but on the cool Throne I actually have eth

um both as staking Heath as well as eth is the asset um so yeah like meme coins and speculation of the past couple weeks have been bumping up the staking rate um both as a result of increased gas fees as well as just Mev from Bots like Jared from Subway racking up that Mev um so right now I think Lido's quoting 6.6 APR and I can imagine other liquid sticking providers like fracks are quoting even more which I think was up from five percent a couple weeks ago which is just I mean incredible that's like a risk-free rate within D5 um and then beyond just the staking rate the burn itself is incredible like if you pull up ultrasound money that's

quoting like a negative 2.7 percent inflation rate for eth which is just mind-blowing um and then when it comes to each staking as a whole yesterday we actually saw the the exit Q zero out and the entry queue is around 28 000 validators which would take like roughly 15 16 days to get through um and so we're gonna see the eth staking rate start to climb over time as like the execute stays at a pretty minimal level and the entry queue keeps growing um and yeah we saw like uh a lot of fighting on the timeline yesterday when it came to like eth fees being too high and whether that's good from an overall design or adoption standpoint but all I

know is that whenever this conversation comes up on my timeline it's because something is happening where users are paying willingly paying the fees to use the chain um and so yeah it's been an interesting week and really good for uh etholders as a whole when you said ethos on the cold front for a second I was gonna say in this market because the chart's not looking too good today but uh Wesley I'm curious what your thoughts are with Celsius I know I think like through their liquidation process they have like a decent amount of State D through through Lido so when those withdrawal cues open up for them I'd have to imagine like that could potentially create like a couple billion dollars in cell pressure which is I part of me feels like what you're seeing in the market right now like this risk off

going into uh light opening up the the withdrawal queue yeah it's an interesting question uh we don't know exactly when they're going to withdraw and how they're going to liquidate the assets I don't believe it's a billion dollars I believe it's much less than that so I don't think it's a it's a huge overhang on the market but at the same time like obviously because Celsius does need to liquidate their Holdings that is like automatic cell pressure and there's probably like I said in a previous episode when it comes to like the execute we're going to see sort of waves as they're like specific events and I think Celsius is one of those events we also have Lido enabling withdrawals in a few days and that could potentially be another event although I don't think

it's going to be that big of an event because I think they'll have enough eth sort of in their buffer to handle short-term withdrawals so I think they'll be okay um but yeah Celsius is definitely like the biggest overhang when it comes to withdrawals and once we see that go through I don't really think there's much on that end let's see I thank you voted for a very great Point like there's like a lot of salty individuals on the timeline saying you know this is not the future of blockchain this is unusable for like the Normie but the fact is gas fees are so high because people are using Eve if not it wouldn't be so high right sure maybe speculation on Pepe and other meme tokens isn't the most valuable use case and not exactly

where we hope the industry would be after 10 years of hard work but I mean it shows that block space and like the demand for the block space is still there right and it shows that there is like a sustainable model assuming you don't like infinitely scale block space and validated requirements for blockchain networks out there and that there is a portion of this that will be solved in the future you know as like eip4884 I'm getting the numbers confused now um but all the scaling Solutions start getting rolled out like these are problems that will have Solutions and eventually when we reach the next cycle you know where New actually new participants come into the market not existing participants who rejoined the

market coming they may for example onboard straight into an L2 without ever going to an L1 and at that point maybe that's where the capital is and all of the speculative activity I'm hoping just this but maybe by that time all of the speculative activity will be taken based on l2s rather than L1 but the reason why a lot of this is so happening today on out once is because the network effects are there the money's there the liquidity is there and so if you want to create a really big meme token you're going to launch it on if L1 is there any kind of metric you can look at Westy do you think that kind of indicates people's confidence in the I guess the event going into the Lido enabling withdrawals like I was thinking maybe the Steve to eat Peg but even that

doesn't really feel like it'd be a great metric to look at you have any ideas there yeah it's an interesting question I don't know if there's any like good metric to look at I do think the Steve Peg isn't interesting one although I'm not sure it's perfect because let's say Steve is is trading like below an East Peg that actually gives Credence to people to withdraw from Widow because you can Arbitrage that Peg and so if anything like I think it's probably the best metric to know like where it's trading to know like the general confidence in SDS going forward but in terms of like trading the withdrawal event itself I think eth might be just the best proxy because people think they're withdrawing to then sell that

eth but overall there isn't like a best metric do you think Lido's market share goes up post withdrawals or or goes down and blocks to Rocket pool fraxies coin I mean probably not coinbase East but um other competitors yeah it's tough to to maintain the market share that they have so I think just based off of that and based off of other derivatives offering higher yields uh with things like frax for example I do think they'll lose a bit of market share but at the same time sdes has a lot more like uh market share and like Network effects within D5 with things such as like ave's like Leverage looping um staking over there which I think is a

big contributor to the supply as well as just like using SDS as collateral in other places such as maker Etc I think it's definitely the most established and so I could see it maintaining market share but at the same time I think it's pretty right for uh another competitor to come in and uh steal a bit I think one thing that the market doesn't even include uh last thing about Lido is the a lot of their Genesis validators are like large infrastructure providers outside of ethereum ecosystem so like P2P is I believe like the founder or the Genesis founder of Lido so they run a majority of the infrastructure uh I'm sorry they run infrastructure for a majority of the cosmos chains for example I think they're large validators in Solana so I think the market

typically obviously because all the liquidity and all the economy is really on ethereum but it once lito or Lido starts going to other ecosystems and start providing staked Solana uh liquid staking staked atom um etc etc like you can easily see lydo's market dominance like as a whole not just the ethereum like continue to go up and I feel like that's like a blind spot for a lot of crypto Twitter a lot of people that are just solely focused on on the ethereum ecosystem like Lido's market share or overall like asset staked under under management can just go parabolic as these other ecosystems grow effort do projects on the cosmos ecosystem typically count um staked Supply in the circulating

Supply and the reason I ask is just you don't see many people talking about the like amount of staked eth going up um at the same time as the burn like so if you actually didn't include that in the the e-circulating supply like that would paint an even more bullish picture and you know you could even argue if the entry queue gets pretty long it's even longer than cosmos's uh 21 day on bonding period yeah I think that's a good point I mean one of the the cosmos ecosystem has like the exact opposite issue that I think ethereum has where um and somebody correct me if I'm wrong but I think like 12 to 13 of the entire Supply stake today for ethereum um maybe somewhere higher teens today but like Cosmos ecosystem has the exact opposite where overwhelming majority of

the supply of stake 66 67 I actually think today in for Cosmos Hub specifically around 70 of the entire Supply is staked um and there's like a whole issue with having that's that State Supply actually be used in the D5 ecosystem so there's like some really interesting developments in liquid staking Solutions in the cosmo side uh stride being like the major provider there but uh to answer your question Sam um they can they still consider like stake Supply still being part of circular market cap even though there's like a 21 to 28 day on bonding period for those assets to become liquid but unfortunately really hasn't changed most of the price action because most Cosmos assets have been down only probably because of the high inflationary staking rewards uh but I think liquid staking is

going to make a huge unlock for Cosmos D5 and I'm really excited to see that unfold over the coming quarters gotcha well along the same lines of high transaction fees I've got Bitcoin Maxis in the hot seat uh Bitcoin is like widely known to have a long-term security problem like the block subsidy is going to decline you've got to make up that that Delta to some degree with transaction fees to go out to revenues or minors um so brc20s are this new thing it's basically a super inefficient token standard built on top of the ordinal Theory and channeling got actually made a really good comparison here on Twitter saying that it's kind of like if every time you transfer an ethereum erc20 it was like you you had to Mint and nft

right alongside with it and then these account balances actually need to be indexed off chain in order to figure out you know who owns what in terms of the erc20 balances or brc20 balances so super inefficient honestly but uh it's giving bitcoiners the ability to speculate on Meme coins because apparently they're jealous of the Pepe millionaires that have been minted over the past few weeks unisat is the name of the marketplace that people go to to trade these things but you either need to have had 20 transactions on unisat I believe on unisat in order to be able to trade these things or you need to have held a pass from the marketplace for 500 block confirmation so that's like I

don't know two three four days probably way longer than that with how long block times are right now um but uh but yeah so Bitcoin minor Revenue last week was actually composed 15 of transaction fees and ordinalments so that's like the the highest ratio that's been since April 2021 which is pretty wild to think about that it's been over two years since we've seen minor Revenue composed of transaction fees this heavily I would tell people definitely uh be careful with this one honestly um it's super liquid there's long block times on bitcoin uh could end up in a really painful crash because right now everyone's just trying to get in so there's like 20 mints and like everyone's trying to buy these things and who knows what the unwind looks like

especially if transaction fees get super high and the Network's really congested um but yeah I don't I don't know I guess people are talking about is there a way we can internalize this this transaction fee Revenue to bitcoin holders but you know that's how proof of stake works and I'm pretty sure Westy has some thoughts on that uh but yeah I would just say definitely don't go uh all in on this one and I guess just one other question I have is if you're a minor and you're seeing transaction rewards in a block be equal to the block subsidy why would you ever want to give that back like wouldn't you be incentivized to kind of almost DDOS the network and keep transaction fees super high like I don't know this just has some crazy

implications for Bitcoin and it's definitely the most exciting thing that's occurred over there in quite some time yeah I think a lot of the conversations on Twitter have been super interesting I mean you have your Bitcoin Maxes that think this is like a DDOS attack in that like Bitcoin should just like not accept these transactions um which is pretty ridiculous because you know they've been fighting for Bitcoin adoption for years and finally when it's adopted for something all of a sudden they're against it which I think is pretty funny and then Sam Yeah you mentioned there was conversation around like giving these fees to bitcoin holders somehow which I'm not sure if that makes sense because you need these this Revenue in order to pay miners especially as the the block subsidy

Falls um and I Nick Carter said something interesting where maybe there's some sort of like minimum subsidy or minimum like fees needed to actually keep the network going and then like whatever's on top of that can go to holder somehow which I think is an interesting conversation but it becomes a lot tougher under proof of work because a lot of those fees are needed to incentivize these minors so to keep doing their job and so I like jokingly tweeted on Twitter you know that there is another consensus mechanism where token holders do provide the security and I think it can help a lot but I don't see Bitcoin going to prove a stake anytime soon um but yeah just wanted to bring that up as well I think a really interesting play if you don't want to buy an ordinal uh you don't want to buy a brc20 the

barriers Venture way too high like Sam said like so many people rushing in you don't know if the rod is going to get pulled out from under you um but I'm going to quote myself for hopefully like a future episode but I think it's a really interesting play in a long publicly traded crypto miners uh it's probably the easiest job on Wall Street to become a traffic analyst just following Bitcoin miners because you literally just have to know what is the block subsidy what percentage hash rate do they have have and it really and they the miners already give you like a good idea like how many additional uh hash rate they think they're gonna have like incoming quarters really simple math to do this but there's no way any Wall Street analyst knows what the hell a brc20 is and to Sam's Point before over the weekend we

sell transaction fees go above or equal to uh the block subsidy for a whole day if this trajectory continues if we see a full month to two months of ordinals and transaction fees on bitcoin continuing at this rate um I guarantee you that wall Street's not going to really understand to know that like miners are actually having a large increase in Revenue over time and we see some of these publicly traded miners seriously beat estimates um I just think it's a really interesting play I'm going to look at it uh again not Financial advice I'm personally not in any publicly traded minor today but it's something I'm going to be following so this can this trend continues it could be a really interesting play for the coming quarters yeah I definitely agree with every

Capital here I mean if you think about it Pepe has almost been out for one month and sure maybe he has like kind of topped in some sense I hope so for my mental health um but either way I definitely still think it has legs to go right and on another fun like sure speculative activity could be a way to solve like Bitcoin security budget issues but speculative activity always dies at some point you know or at least it comes in like Peaks and trials you don't want like a security budget that's unsustainable for like two months and it works for three months that's not exactly very secure so to say and I would also say the Bitcoin network isn't that functional right now right there's 500 000 unconfirmed transactions in the

member that's almost double the previous all-time high that occurred in 2017. um if you work out the math Bitcoin process is an average of 3.1 transactions per second so it'll take 44 hours just for all of the unconfirmed transactions in the membrane right now if no new transactions come in which is obviously not possible given all of the speculative activity happening right now so yeah but definitely need something to pay attention to yeah the minor play is a right curve play that I actually feel like will work so I love that claw and I I think in three months time after Q2 earnings you'll be back on the cool cool Throne uh effort but I guess I also find it interesting that people in the Bitcoin

Camp always point to proof of stake is like okay the rich get richer this is kind of the same Dynamic if it persists because you're basically transferring value from users transacting on the network to the miners so it'll be interesting to watch just all this play out I don't know fascinating times for Bitcoin for sure I think that's a good place to call it though thanks for coming on guys uh over to the interview with Neil from Eclipse all right we are here for the interview with Neil the co-founder or founder actually maybe Neil you can specify that for me once I hand it over to you of eclipse um it's great to have you on Neil hey uh great to meet you guys all right so I actually was listening to a podcast that you had like four months ago and I did not know but apparently you were

building an evm type Solution on Terra uh in March that's when you left your Trad five job and then obviously Tara imploded uh two months after so I was just kind of curious I needed to get your take why did you decide to build in the Terry ecosystem why evm and then also um what were the thoughts going through your head were you just like man I just left a great job like why did I do this wow that's a while ago so I have to think back a little bit but I think the biggest reason why I was interested in Tara was honestly traction it was growing really quickly the UST was ripping uh there was a lot of interest in it and I was just thinking about all the interesting D5 Primitives you could build on top of that so I wrote some

blog posts talking about interest rate swaps and a bunch of stuff using UST and then I thought I read a power background I was a Quant and set it out at the time uh doing Power and Gas I thought this could be interesting because uh Bitcoin mining and I think it's probably long enough after my time I said well like it says but it was like actually impacting the demand side in some regions as something that was actually meaningful to model so I was like okay now this represents an opportunity cost over batteries and some of these power plants like Brandon Shores were actually ripping out power plants and sticking uh Bitcoin rigs in their place uh when it economically made sense to do so so I thought that was interesting and I thought well now they're being exposed to the wholesale price electricity the

price of Bitcoin and the difficulty this is something that you'd want to have some native on-chain hygiene 4 so that was an initial motivation too but yeah I left uh Tara Deepak very shortly after so I didn't spend too much time there the reasoning behind why bring evm compatibility to it was really just that there's a ton of UST I felt like it was like dry powder that just needed some use case as the anchor yields went down because I think if they had recently implemented the dynamic rate for yield for anchor and I'm I'm gonna just assume that the audience just already knows like the history of Channel and stuff so not worth going into but yeah that was my reasoning I was like let's basically we need some uncorrelated sources of demand which could come from some of these ethereum daps or some of these

jobs that are going multi-chain of course my thesis changed pretty substantially when Terra depacked even my thesis on evm compatibility and the what it does for an ecosystem uh kind of changed in the sense that and this is something people warned me of when I was building the Terry evm but they were like you know evm compatibility brings a lot of really low quality applications there's a lot of forks and sometimes these Forks end up being very successful possible like sushi swap but a lot of the time they don't and they're very just there's there's no actual pmf and there's no reason why that output succeeded in one ecosystem versus another and it's just it's something that doesn't really exist in other Industries outside of crypto but here in crypto we're like let's just take an idea and put it just regionally very nearby and see if it rips there even if

it didn't work in the first place and I think that's kind of a broken approach to product uh strategy and product development so that's how my thoughts on evm compatibility change although I think it's a great go to market tactic and I think it's great for portability a lot of those reasons still apply it's like the react native of crypto you write one place and you get to deploy everywhere but my question is just like why do you wanted to play everywhere is that something that's like are you trying to access more users and if that's the case is it because you've completely saturated the blockchain that you're deployed to and if you haven't saturated the blockchain you're deployed to then maybe there's actually some more product work you need to be doing rather than just like blindly deploying to other ecosystems so given that you're

building Eclipse I have a decent idea of what your answer to this question is going to be but over the last seven or eight episodes of Xerox research we've really been diving into these different Theses of what blockchain evolution will look like over the next couple years you know the idea of app genes or a more modular view of the world or even just like the high throughput monolithic Giants and so I want to get your take on all that what do you think is the most dominant form of blockchain if you zoom out even just the next couple of years yeah so the one thing that the model let's have right now is Network effects they have a lot of liquidity on these chains there's developers who already write for those platforms and they identify with the brand I think that a lot of that liquidity has left some

ecosystems like if you look at Solana there's nothing compared to what it looked like during a bull market of course if you accurately measured what was the tvl during the bull market maybe it actually is a little more commensurate but that's the advantage the disadvantage is that there are many reasons why a new chain would choose to be a monolith over being a roll-up assuming that the roll-up Tech is fully built given that the roll-up Tech is not as fully developed as like Cosmos SDK and that's hard for me to say because it's like I think we've been do we have like a very cool attack right now and get way higher throughput than what you'd get with any existing robot blah blah but the role there's things like sequencing for example which I was talking to you guys a little bit before this call I thought Josh Bowen's episode

was awesome I think the future of sequencers is something that I'm really curious about and that I'm still putting together our thesis on but as far as the rest of crypto I think that what we'll see is a lot of these apps that don't really need crazy customization stuff like amms which are actually adapted to chains in many ways like in amm probably existed on ethereum largely because it's too expensive of an order book so these apps that have already adapted to existing traditional chains can probably stay where they are or maybe move to a shared roll-up but apps that are really pushing the frontier which is what I'm hoping to see in this next wave consumer apps like gaming fully on chain games uh things that are and fully Unchained games is the topic of its own and I don't want to open up a can of worms

there but physical physical infrastructure not works I think are really interesting for eclipse and we have a handful of those to play these are the apps that I think will need customizations at the execution layer and they're much better off having their own chain l1s are hard to deploy it's very expensive it's cumbersome need a reliability team so by deploying a rollout they can avoid a lot of those pitfalls awesome that's a great intro into your kind of broader thesis I'm sure we're going to touch on a lot of those things you mentioned pretty deeply in this in this episode but I guess can we just start by providing a high level overview of what eclipse is and exactly the problem it's aiming to solve yeah so the context is that uh I mean this is just historical context that many viewers are probably aware of but

ethereum gas fees were historically very high and there have been many attempts to solve for that so there was polygon POS and binance smart chain which were essentially evm compatible forks and that I think it's a large reason why they precipitously took off because it was just timing and it was that time of day where there was really no alternative to the ethl1 if you had evm compatible code of course I mean EDM having all its evm chains was in the specs so early if you could like EIP 155 I think it's where chain ID is introduced it's not something that's like that novel the idea but this was the initial scaling solution and you had uh fast all ones like Solana and then there's the alternate Vision which is the roll-up Centric road map

like arbitrum optimism and these are all basically solving the problem of limited block space uh solving for high gas fees and and then along with that first Vision with all l1s is like the cosmocentric vision app chains where they never really took off precipitously where we have thousands of app chains that are actively being used and there are folks that are working on solutions to make it very easy to deploy a cosmos L1 right now but there's not really any stickiness there because what I realize or what what I think a lot of people realize is that the value of having a cosmos L1 isn't really about lower gas fees because there are other ones like Solana or something that give you low gas fees it's actually more about the customizability that having an app chain

gives you so that's the benefit that we kind of like naturally uncovered about app chains and that's why the whole like Cosmos ABC ice division between consensus and application layer is so great because you can cause customize the application layer but not worry about the messy internals of consensus such as what helium had to do for their L1 which was developed before Cosmos SDK in existence so um so that's that's the full context on what existed before and where the benefits of different ecosystems lie like Cosmos you get customizability Solana and these all L ones you get low gas fees and then the Roll-Ups get the benefit of sharing the security of ethereum so eclipse is basically taking those core properties and letting you pick and choose and say

I want really low fees but I also want to be in the ethereum ecosystem or maybe I want to be in the cosmos ecosystem and I'm okay with a beefier execution node I just want as much throughput as possible so we allow people to make those trade-offs by dividing up these different concepts or properties of a blockchain into these modules and the same vision as Celestia and actually Nick why did Celestia is the first person that reached out to me when charity packed he said hey man sorry to hear about that let's let's do something else uh and he was really creative explaining just the last year vision of the future which is basically a blockchain has a few properties one is that it has to execute transactions so that's a compute State transitions it takes in transactions second it has to establish the ordering of those

transactions and make them available to everyone in the network so that everyone can independently verify okay this is indeed the end result of executing some block of transactions that's consensus and data availability and and then the last step is verifying that those State transitions were actually executed correctly and that's double name and that's really only a thing for Roll-Ups so Eclipse just takes those three concepts and separates them very cleanly so we let you deploy some customized execution chain whether it's evm svm some other virtual machine down the line you get to pick your consensus in da layer that could be ethereum if you're down to pay the price it's probably not a great solution right now and actually our block time is so short that it's basically prohibitively expensive uh you could use Celestia eigenda Avail

BNB chain we're using their Greenfield Solutions so sometimes customers will request something special like for injected they want to use a centralized to start until Celestia is alive so you can customize the da layer and then you build in those additional customizations on top of the execution layer to facilitate whatever kind of application You're Building maybe you're a game and you need VR apps you need verifiable random functions maybe you're like a um like you're doing an nft match and you don't want to charge gas now you can make a gas maybe you want to do something special in the mempool like redistribute Mev these are all options available to you when you have your own chain awesome that's a great background there and I want to dive a little deeper into the actual architecture right so Eclipse

itself is just this settlement layer and then essentially Roll-Ups will plug into this and then they have the ability to now choose where they're settling down to through their da layer um and you mentioned that you were kind of going to provide all these options through ethereum or Celestia polygon Avail um is that going to be something that's available at launch or is that something like kind of like a more of a vision You're Building into so our chains are all over the place right now we have probably 10 chains on Celestia we have a handful On eigen Da and some of the ones that really want to expedite their main Nets are using Central sta which is a solution that we just built in-house basically posed to like the Google Cloud equivalent of an S3 bucket like Google Cloud Storage or something that's where

the blocks are stored for them so that feature is already ready and then as far as the execution layer customizations those are things that for gaming we've pretty much developed the ICP or the ideal customer profile for other verticals like D5 for example we're coming up with these novel constructions and seeing because we haven't really expanded entity file and we've deliberately avoided it just because there's so much surrounding infrastructure that's needed they have issues around liquidity fragmentation and you have to really make sure you're solving a real problem for them before you try to scale a strategy like that so we've been putting together a couple of Novel constructions which I probably shouldn't share on the call because they're not ready yet but we're working with a couple of design Partners on that to see if uh if there's pmf there hey feel free to leak that we love the

good uh the good Alpha leagues um but uh I fear of this being a bad analogy please let me know but is it fair to make a general assumption or uh parallel to essentially Eclipse being similar to like arbitrum one and that l3s can plug into arbitrum L1 and that will settle down to ethereum whereas wolves can plug into uh eclipse and then settle down to an L1 of their choice the thing is that like for our Roll-Ups you have to it has to be an eclipse that plugs into our Solomon layer and theoretically you could probably Force op stock to somehow use our settlement layer but the assumption is that it's also an eclipse chain that's uh that's executing as the L3 so and I I hate the terminology L3 L2 I just use that just because it's simple but um so basically

we're providing an honest minority settlement layer so it's a settlement layer that basically adds very few if not like no additional trust assumptions depending on how you frame there's never really no trust assumptions but uh we're adding minimal trust assumptions at the settlement piece we let you pick your L1 and then we also have a specific execution layer which will let you deploy we could run it for you which is what we're doing right now for all the chains or in the future we'll possibly use some shared sequencer Network might have a sequencer fee Market there are different ways that we could do this and now am I right in my understanding that the settlement layer is an optimistic design and if so how do you plan on incentivizing people to submit fraud proofs in in the case of an invalid transaction yeah so right now all the

eclipse chains are optimistic Roll-Ups in the future we have this DK proof of concept which is like a so the Solana VM is it's a Berkeley packet filter virtual machine so uh I mean your processor earning theater doesn't have like a BPF by code interpreter so typically you you take that compile it to like uh I don't know like x86 or something so we changed that there's some existing Library called Solano our BPF we output risk five by code instead and we add in some memory packaging and we use risk zero which is a zero knowledge risk 5 VM and that's how we do the ZK settlement and that's still in development that'll be probably the right the right choice for the majority of eclipse chains there's some arguments to be made that some of the change should remain optimistic as

far as incentivizing people to verify or just submit fault proofs the plan is basically this should be the um the people who want the chain to work correctly so if you're an app if you're a game or something and you're you're a player that's playing worlds for example which is a fully on chain game with the clips then if you really want your money if you want to have that confidence that your money is being handled properly then you would run the um you would actually run a node yourself and what do those node requirements look like so right now we haven't optimized it at all it's about two grand a month without any like additional cost cutting we've been told that we probably get out on the order of hundreds or something it's not something that's been a priority for us right now but uh but yeah it's it's

on at the max it will be two grand let's say two grand a month right okay and so kind of taking a step back and going into more of the architecture side of the side of it so how does the settlement layer communicate to the DA layer right so let's say uh you know I'm a I'm a roll-up an eclipse rope and I want to settle down to Celestia so I would speak to the settlement later but but how does that message get passed back to Celestia yeah those nodes in the settlement layer run like clients for Celestia so they'll post it on my client it'll post it to Celestia and then as far as if you're so this is the weird part but the settlement layer itself the way that it's an honest minority is it is also a roll-up so our and so an

eclipse L3 is a smart contract roll up on the eclipse L2 which is a sovereign roll-up so this thing doesn't settle into like ethereum or something instead of passes fall proofs or validity proofs directly to like clients and that's that's how the eclipse L2 works so this way it's like honest minority all the way down until you hit the L1 at which point obviously if the whole one gets reorged then then that would uh impact your rollout can you dive into like kind of the meaning of an honest minority like what does that actually mean in relation to like you know in contrast to ethereum let's say yeah so like if you look at a consensus like tendermen or something if you have 33 of the chain that's honest then you're guaranteed that no incorrect like behavior is going

to occur and if you have 66 then you're guaranteed liveness so 66 is the honest majority assumption it's that you need most of the chain to be honest for this chain to continue in order for to enforce correctness whereas an honest minority assumption is less than that it's just you don't need everyone to be honest you just need to be well pure you need to be connected to someone who's honest and that honest person will tell you the truth and the weakest honest minority assumption would be one event so that's like if you have a small contract well up like arbitrum on ethereum assuming they enabled fault proofs and they they decentralize the verifier anyone it just takes one honest person in the entire world you don't even have to know who they are you don't have to connect to them with this

Assumption of being well period is that's a pretty reasonable one because if you think about it even a full note on ethereum must be well peered in order to understand to get what's the correct state of the network you have to talk to some honest one they have to give you the the blocks and that's that's like a necessary condition of being a part of the network otherwise you're essentially being Eclipse attacked got it got it so the svm why did you choose the svm wanted like the distinct Advantage is that it provides eclipse that was that's been such a discussion with so many people like it's because I basically we wanted to provide multiple by codes so we wanted to make it so if you want to use evm by code move uh svm something else then that's all available to you so there's different ways we could have

approached it one is maybe just Fork op stack and re-implement the interactive fall proofer with uh different byte codes or something different virtual machines that seemed very manual and cumbersome and it also meant that all we have is a bytecode interpreter at that point but we lose all the benefit the surrounding benefits of the Solana VM meaning you lose parallelism you lose the local fee markets you lose like any additional advances they make we have to maintain parity which is just like a pain like we don't want to constantly be checking like oh Salon added a new system program now we have to implement that so that those are reasons why we didn't want to do that another option is something similar to ZK sync maybe you compile everything to some like llvm intermediate

representation convert that to some bespoke byte code which is specific to Eclipse uh but I feel like ZK sync they spent a long time trying to implement for example UL is a language that not too many people use and it's a huge accomplishment for them it takes a lot of effort but it's not it's like incrementally you still don't get very much from that effort that you're putting in the marginal reward for each additional language seems very low whereas if you use something like the Solana VM or neon evm already exists where they're working on move VM by code interpreters we get to benefit from all this surrounding infrastructure and we get all the benefits of the salon of VM things like local fee markets which all the Roll-Ups are going to need eventually things like parallelism which is necessary for high throughput things

like seahorse Lane lets you write python programs and run it on the Solana VM so we wanted all that and that was the reason why we picked this a lot of VM and it also allows us to bring the svm to other ecosystems such as what we've done for injective polygon near some of these other ecosystems which haven't been announced yet we're spinning up these essentially svm Roll-Ups for them which allow Solana projects to easily enter their ecosystem awesome yeah isolated fee markets I think are one of the most exciting developments uh at least for me personally I think that really will be a new standard for for blockchain as a whole but I'm curious so on the eclipse settlement layer itself will there be any transactions other than the Roll-Ups uh posting their call data down or it like I guess what I'm

asking is can somebody come and build an application directly on top of eclipse itself without building a roll-up yeah it's a restricted execution environment so yeah no you can't just deploy yeah we don't we don't want people using the settlement layer for execution just because it kind of goes against the ethos in many ways like the settlement layer should just be good at settlement and we might even make additional changes to that execution layer in order to bet uh better facilitate settlement interesting so one of my hesitations with some of the da layers like Celestia for example is there's really no way to have a trust minimized bridge between Celestia and whatever external ecosystem so I'm worried about the security of the actual data so do you think one of the big Target markets for you guys is to

serve as that settlement layer that can kind of act as the intermediary between these da layers yeah the thing is like it's only trust minimized if it's like between so this eclipse layers uses Celestia for da so if you have your ex your L3 also using Celestia now it's trust minimized assuming you have a like client running for Celestia plus the settlement layer plus your uh your execution layer like you you could uh you could make it trust minimized but I honestly just feel like there's like the trust minimized Bridge idea is just so overrated like but first it's people that disagree on definitions for it but the second I just don't see the value of it the the user experience for a trust minimized bridge for an optimistic well-off just sucks to weight the

challenge period typically and I just don't think that that's going to be what facilitates interop between uh between chains in the future nice okay yeah that makes sense and um so why don't you think ethereum l2s kind of use their own paralyzable execution environments today is for example like the svm yeah part of it is uh I think that it's still very expensive to use ethereum for ta so making it parallelized just makes it worse now it's like you have far more transaction output or far more blocks being produced and we have some right like look at fuel VM uh fuel was you know or it is a layer two on ethereum So it's possible for us we just found that directly settling on ethereum was

prohibitively expensive and it's still kind of expensive even for optimism for example like the fees aren't like zero that's it's not it's not reflecting the cost of free Block space for example so and I think like if you look at Solana or something the cost that you're paying basically is reflecting zero like roughly zero cost block space the price you're paying is like you're describing just a local fee if everyone's trying to mention nft and there's 10 people who want it and there's only two of them then the price should go up that's the only way to fairly order those so I think that those are that's kind of my thinking it's just that you know ethereum I'll choose the early the most obvious way to uh to start out is by just forking death and do things like

mini Gap make it single threaded but I think now we're starting to see more sophisticated Roll-Ups pop up and I'd be surprised if single threaded evm ends up being the end-all be-all it just seems extremely unlikely to me given so many applications can be facilitated the moment you enable parallelism right and you you had mentioned uh you know one of the great things here is being able to inherit some of these advancements that get made um fire dancer for example is there any uh unlocks that happen for Eclipse given the creation and public publicization of fire dancer yeah it's huge for us because I mean if you look at the Solana L1 uh not everyone's gonna upgrade to fire dancer whereas for Eclipse we can upgrade all the sequencers it's this weird thing where sometimes we benefit

from things that ecosystems are doing more than that original ecosystem even benefits there's a lot client being developed on a Solana called Tiny Dancer and we've been chatting with that team and it could potentially be used for Eclipse too I'm trying to come up with other good examples but it literally happens all the time where I'm like that's weird how they did work that's almost better suited for eclipse and it makes a lot of sense in a roll up and it only kind of makes sense on a layer one yeah no that that makes sense as well um and so when you think about value accrual like where does that happen in the context of eclipse yeah that's a really interesting question and the way that we think about archonomics is kind of similar to traditional SAS but just more crypto native so some kind of like

fixed plus variable where the fixed cost maybe is staking to decentralize your sequencer that's not really a fixed cost it's more like an opportunity cost but um you know you buy some amount of tokens you you put it up and then the variable cost is mostly I mean you definitely have to charge it to settlement layer because you have to compensate people for receiving those fault and validity proofs so that's like kind of a variable cost where the variable component is the number of blocks produced and that also seems fair because if someone sets their block time really low they probably shouldn't be paying as much to us and you could see a world where we charge a transaction fee I don't know if that's the right approach because what will happen is you'll cannibalize your biggest customers if you're a game running millions of transactions you really took

off there's some point where you're like why am I paying paying Eclipse so much money just for you know the the benefit of running or transactions we can do this ourselves and they've kind of they'll kind of grow outgrow your ecosystem so we don't want that to happen so that's why I think transaction volume maybe isn't the right play no that that's an excellent point because one of my fears about shared sequencers is that they come more like they kind of turn into like a launch pad right because if you create this ecosystem that is bustling with Mev for example then that's valuable to internalize um so yeah I I kind of like your approach of being cognizant of the fact that you can't just essentially tax these larger players out of existence yeah I think good shared sequencers we'll have to do

some kind of Revenue sharing because there's no way that Eclipse with our like let's say we we want to put like 20 chains on a shed sequencer why would we do that if it's just going to be extractive so I think it gives the more chains you have in your ecosystem or your roll up as a service ecosystem the more libraries you should have given that you can move all these chains simultaneously and kind of push your weight around so where does the ordering actually happen for Eclipse chains then right because I'm just thinking for shared sequencers like if I was a rope would I be able to leverage a shared sequencer and Eclipse yeah right now it's first come first serve and it doesn't the executor and sequencer are basically the same but in the future you could separate those components you basically have a some like quote unquote

lazy sequencer or done sequencer it just does the ordering uh sends those orderings directly to executors they execute the block and then the uh the result is posted to the settlement layer the block is pushed to some da layer it's also theoretical separating these two components and yeah definitely interested to see when something can create or tangible that we can use in terms of interoperability how are you thinking about that Neil like are you I know you guys have some implementations you're working on with IBC and with a project called hyperlane but I just I guess I feel like the interoperability part of this equation is going to be a little bit more difficult to you given how modular you guys are in nature yeah in the short run that was one of the criteria that we'd use to sort verticals

or to rank what areas to enter it's like what's the need for composability in this vertical that's why I think it's like a yield or aggregator or something not a great fit for their own roll-up and that's part of why we've been avoiding D5 whereas if you look at gaming a lot of the transactions are within that same game they just blow up the chain they typically hit their own contracts and let's say they're using third web or something they can just deploy those contracts to their own chain as well so that's what we've been seeing for games and that's why I think it's been really easy to get traction there whereas something like uh like let's say small cap nfts those guys seriously need to be where everyone else lives because they need to be where the liquidity lives so so yeah that was

that's definitely something we've been thinking about and that's going to inform our D5 construction too we want to be very conscientious of the fact that D5 is composable in nature is what makes it so great so we want to retain that as far as like how we've been approaching it yeah you mentioned IBC hyperlane so bridging and basic things like that is one simple solution I think that the shared sequence not to go back to sequencing but I think it's a shared sequencer can enable a lot of that too uh given that they can do those sorts of atomic compositions and maybe you can like a bid to include a block that or to include like two transactions necessarily must be executed in some order or something like that I think I think there's uh stuff that can be done around that that can better facilitate

cross roll up uh interoperability So speaking you know more into the cosmos like it almost feels like the idea of like Roll-Ups is almost like the Natural Evolution of the cosmos SDK and just the ability to launch a a roll-up as opposed to an app specific chain um how what's your kind of view on that do you like do you do you view uh eclipses kind of like that Natural Evolution of uh the cosmos SDK or not at all yeah I I feel like there's an inherent tension and that's what's really fun to play with which is that I mean in many ways we are so aligned with the cosmos ecosystem we're IBC enabled we use Celestia which is a cause and you know it uses tender mint and it's a cosmos SDK chain with many modifications

and we align with many Cosmos projects that's where I came from originally and a lot of the concepts and inspiration for app specific Roll-Ups is we're definitely indebted to Cosmos for that reason but Roll-Ups are also viewed as an ethereum concept Roll-Ups are anchored to ethereum most of the time so it's it's definitely one of those things where I feel in the future there will be very few reasons to deploy a full layer one blockchain given that you're only getting downsides the the really big upside is you get to maximally extract value but when you're initially finding pmf that's not really where your focus should be anyway you should get something that people really enjoy using and then focusing on extracting value it's like when you're a SAS business a

tiny SAS startup of like three people they're trying to charge companies like 50 Grand right off the bat when actually they might be better off just charging their cogs or uh or maybe doing some sort of like get a couple of design partners and maybe charge them just like cost of Labor and things like that figure out the pricing model later once you define that core ICP and product so that's that's kind of why I feel like Roll-Ups are a great breeding ground for Innovation because it makes it so easy to get started at the level of sophistication that a layer one typically was required before specifically uh back you know I saw you guys were working with skip for a little bit just on discussions with Mev where did those land and uh we have like a bi-weeky with um development because now I mean this is

off the Record but we're doing some uh I can't say anything off the Record when it's being recorded and posted but we're doing some stuff related to nfts which might have some impacts on the mempool and the reason why the engagement just never really took off and we never really implemented it is one it's non-trivial to implement because Solana removes the mempool and we rip the Solana VM uh out of Solana so that means that we took Gulfstream with that we might want to reintroduce a mempool for many reasons including shared sequencing but for now there is no mempool in the eclipse chance so that's one reason the second is that there just wasn't any demand for it from the types of apps that we're targeting um even for D5 I feel like there isn't that much Med you know and that's why

I mean crypto is so funny because it's like it's it is it's so different from web2 and now we're having people that are like hey maybe we should like try to frame our stuff as a web 2 type of model so they're like hey guys we have like Revenue we're pulling in like I don't know like money and then you ask them how much and maybe it's like a couple like a couple hundred a day or a few grand a day and in web 2 you're actually better off just not even saying that because that that's not good like yeah cash is cool but only if it's like something that you're ready to actually optimize for and grow really aggressively but if you're only able to pull in a couple Grand a day then uh that's not really the kind of thing to be bragging about unless it's something

that's growing really quickly so that's that's kind of my view it's like when there's so little Mev on the Chain especially for games like that's not our games are not a lot of them are not heavily financialized at all I think none of them are really none of them are like player or anything these are just games that are fully on chain first person shooters like crazy things like that uh they're they're not really places where you'd capture Mev anyway so we never we ever implemented it in terms of like competing with ethereum because I feel like it's kind of fair to say that you are in a way given that you know ethereum is going for this roll-up Centric settlement layer for for the world so how would you respond to um just the fact that ethereum has such

a first mover advantage in terms of decentralization and security like how will Eclipse as a settlement layer for Roll-Ups eventually get to that point so I view it as complementary because ethereum does multiple functions right now that's what's so confusing about it not only is it acting as a Sodom and layer it's also doing consensus and da which it'll do even more of after you know dog sharding and all that uh and it does execution of smart contracts natively on the L1 so our point is just that we actually don't think it should be doing all that and ethereum has a great validator that there's tons of security backing it it should be a consensus and da layer and that's pretty much how we use it when we use eigenda and that's why we're really excited about which firm's building because it's

very in line with how we want to use ethereum and that's that's where we see the complementary intersection as far as why you pick uh like a dedicated settlement layer over ethereum as a settlement layer is really just because there's some operations that are so expensive basically prohibitively expensive to settle on the e-fl1 I think someone trying to settle the Solana VM on the Intel one is going to go through a lot of difficulty they're gonna experience the same like challenges that we face and ultimately uh which allowed us to building our own Sovereign settlement there so I'm curious to hear more about what people are building um you've mentioned gaming a few times that seems like a no-brainer application but what else is there is like consumer applications another big one I would imagine so the way that I've been thinking about it so um just to answer

the question directly immediately a physical infrastructure has been really huge for us so react it's now going to be rebranded to Daylight these guys install like a meter in everyone's house that can track their power consumption they track your solar panel generation your battery recharging they take all this enormous amount of data and post it on chain uh and then at this point they haven't made it public yet so I don't know if they're gonna end up encrypting it or what the plan is but there's just so many interesting things you can do once you have that data you can optimize the power in someone's house you're like all right we should turn on the thermostat at this time let's um recharge the battery here or discharge it at this point and it's especially interesting for me just because I used to be a Quantum assuming power so I just find it

very cool so that's that's an example it was wave who's doing uh like kind of like consumer data on chain and you can do the gdpr enforcement on chain two they have some huge Partnerships coming when to just decentralized proxies so we have a bunch of bunch of physical infrastructure stuff and then we have Roll-Ups for layer ones that's another place where we have really obvious pmf where if you try to ask a L1 do you guys want to support svm or other execution layers and bring these up to your ecosystem it's the easiest style uh folks like BNB chain have been reaching out and with a few other exchanges like OKC some of these other we haven't announced all these so I don't want to like go down the laundry list but but yeah a lot of roll-offs appreciate having different or a lot of layer ones

appreciate different execution layers so that's been the categories that we've done so far and now we're testing out these early areas where it's not as obvious how a roll-up fits in you can't give them a vanilla roll-up but this is cases like nfts D5 like what's the right specific offering that's tailored to those verticals what's the template again in the same way that for gaming a template often is like centralized da don't charge the native token in gas instead of charge like usdc or make it gasless uh an evm that's that's what I'd consider a template what does that look like for D5 and probably it wouldn't maybe it'd be somewhere where a roll up where just the liquidity there's just all sorts of like different constructions you can do basically so we're still iterating through those we

have a few different constructions that we're testing out with our design partners and I think once we get one that's that's really compelling of folks then I'd want to scale that to So speaking of D5 you guys announced a pretty interesting partnership or alignment with uh Catalyst they to kind of be that like liquidity layer can you speak to that a bit Yeah so Jim and I have just like chatted a bit on it I'm excited to see where that goes because it's a real problem like having liquidity fragmentation across Roll-Ups is going to be assuming look you have like let's say a thousand Roll-Ups by the end of next year where does where should the liquidity live should live on the settlement layer doesn't really seem quite right because like we were talking about the settlement layer should be restricted in its function and execution

so yeah I could see some use case for a primitive like Catalyst and it I mean it's just hard to predict where the liquidity is going to live and it's one of those things that I I wouldn't make any bets on it because I think with a shared sequencing there's uh maybe it doesn't matter there it's just kind of confusing to see uh what where that'll end up but in the short run I think uh shared shared liquidity is like a really obvious one are you at all worried Neil like how is the consumer actually going to get to the Roll-Ups that are settling to Eclipse like because I'm thinking about it through my head like I think Cosmos has been hard to get to since day one and until the sex Integrations with like osmosis and Adam itself and then um yeah I guess it took forever for a

lot of decentralized exchanges to integrate with arbitrum and optimism so are you at all worried about liquidity being able to get to these Roll-Ups yeah it's like a bridging interoperability question right like luckily a lot of the infrastructure can just be used out of the box meaning wallets uh evm wallets are basically built to be multi-chain so the question is just how do you get their money there tactically in some cases they don't even need money right some of these Roll-Ups they're gasless or it's the chain themselves that's subsidizing the gas so those cases are easy and that's especially kit true in the case of games for cases where they seriously do need money uh yeah we're I'm excited to see where hyperlink goes in terms of they have some on-ramp off-ramp that they're developing a lot of other offer on-ramp off ramps that we're working with so yeah definitely

want to make it really easy for liquidity to get there if we're uh like looking at some of the specific products we're working on one of those and have key products I was talking about natively in The Mint size the first step it asks you to do is Bridge some money over and then you you wait there you actually do the minting and then you can Bridge it back for easily so this might be something that's built directly into the front end of applications this is kind of going back to something we talked about earlier in the conversation but if you're looking to be a settlement layer for a lot of different types of virtual machines that support different types of programming languages how does it actually work to get that from you know high level source code in a smart contract down to byte code like what

does that process actually look like and does that mean that there's going to be need to be additional developer tooling built out in order to copy and paste a uniswap onto like an arbitrum deployment that settles to Eclipse yeah so so just just to reiterate though we wouldn't support like an arbitrum chain on Eclipse it has to be an eclipse execution chain just just to rephrase that but uh yeah as far as how uh like well there's additional scaffolding needed we wanted to keep the original bike code intact so we didn't want to say like okay you actually have to compile to some other view component evm and it goes to something else instead we natively interpret that ebm byte code we could also natively interpret BPF by code so that means you get to use all the same tooling and that matters

because like for example um like seahorse Lane which is the python thing for Solana if we if we tried to cut things off at let's say the rust step or if we basically try to compile in a different way then I'm concerned that we would lose the backwards compatibility with all that tooling so we want to let people use their tooling as is and then we just figure out how to take that by code in and make it work awesome well Neil it's been great having you on I'd love to give you a chance to kind of give some like some closing statements here and anything you want to leave the audience with as well as where to find you and learn more about Eclipse yeah definitely so if you're a game really pushing the frontiers of uh what's possible on crypto if you're a physical

infrastructure network if you're an L1 and wants a roll up if you're even a D5 protocol who thinks that maybe a roll-up could solve a problem that you're facing or some other vertical reach out to us Twitter is really great it's eclipse fnd on Twitter it's not Eclipse fdn that's the band in my existence uh that's eclipse fnd or you could DM me directly it's Neil salami n-e-e-l salami like the meat and that's my Twitter handle and uh and yeah definitely follow follow us on Twitter because that's where we post most of our updates and we have some exciting stuff uh coming up fantastic and we'll put all those links in the description of this pod as well uh and I will definitely say get it get it be sure to check out the eclipse blog post

I got some really great information on there but Neil it's been great speaking with you today cheers thank you