JitoSol: Building Solana's Hot Seat DeFi Moment | Lucas Bruder (Buffalu)

Transcript

Solana is there's certainly sacrificing like some decentralization I think like uh at least in the current state you can't really run I could probably run a valet from home but like that rich person can't and so I think that that is okay in my mind and I would rather have like this L1 that's just super composable super easy to use it's like uh someone that studied Computer Engineering in college just like super fascinated with computers and like there's a lot of chains that are kind of like ignoring the most efficient way to do computation and move data around between servers

and so I think that like that is super interesting and I think Super under explored okay what's up everyone welcome back to another episode of Xerox research this show is made possible thanks to our fantastic sponsor the atom accelerator if you're a developer looking for a home industry the atom economic zone welcomes you today is July 10th and we have a great interview lined up with uh Lucas bruter the co-founder and CEO of Judo Labs but as always before we get into the interview we're joined by two members from the blockworks research team Ren and Xerox pibbles to discuss the latest Market happenings Ren why don't I kick it over to you for your hot Cedar cool drone sure I got someone in the hot seat today that someone is

awesome intelligent so Arkham intelligence has gone on a pretty good reputation I want to say over the past one year so the more so taking over Nathan's spot as sort of like on chain and then it takes platform to track fellow funds water addresses and whatnot today they announced their on chain intelligence exchange basically it's a marketplace where anyone can buy and sell info about blockchain wallet address says about funds and how it works is that if you're looking for some info you can paste the Bounty for that and then anyone that has that info can sort of pass it and offer that information up um and then once it's verified you get

the Bounty that was originally agreed for I don't think there's anything inherently wrong with that um but where things start getting a little hairy is um in the Twitter thread of the announcement for their outcome token they talked about how de-anonymization is a destiny in crypto market and will serve as a foundation for a self-regulation of the crypto economy and you know if you've been through crypto at this point like part of probably Warrior and it is so that individuals can have the Privacy that we think we all deserve and occurs like core mission is spotted Point number one in their newly released white paper kind of goes against all of that um and then they also release the tokenomics for the

Arkham token 20 goes to core contributors 17.5 those investors few percent ghost advisors and 17.2 percent goes to a foundation treasury which I think will be controlled by Arkham themselves it doesn't sound like a down treasury just because of the word foundation makes it sound like a bit centralized that adds up to around like 60 um so yeah just bad vibes I think I was still I still want the privacy and uh on-chain analytics platform coming out here is saying hey I'll go is to de-anonymize everyone every one of the address will be dogs and have an Associated name or email it's just not a good look I think what would be a good

idea to ignite some ponzienomics with their token is if you don't want your information docs or if you want it removed from the platform you have to buy the token and pay with the token straight to their their treasury yeah this kind of like brings up the broader point of like this docs to earn Paradigm that they're kind of creating um definitely a bit odd and CTS in an uproar about it understandably so given how animinity is pretty popular in our industry and you know that's probably produced a lot of harm but honestly it's probably done a lot of good as well people definitely feel more comfortable saying and speaking truths when they can kind of uh do so well Anonymous so a bit

interesting to kind of think from that perspective but it also I think like Arkham's getting a ton of black back last year and it's not like like I guess you know you can hate the person doing it but it's all like people are kind of coming at them for you know being the ones to dox people but like if you can already be doxed on chain then like it's not them doing it the information's already readily available of course like creating a Marketplace to assist in the creation of that in like you know uh pushing that information forward is one thing but I don't know I I definitely tend to not like this especially given you know they haven't really been seen in the best of light uh really with like as it pertains to their

token um like why does an intelligence platform need a token it's probably a very fair question I don't know if on the other side of the coin like I think it's kind of cool that they built a product that people actually like to use and they're trying to incentivize certain user Behavior you know with a token like it's an actual kind of interesting application of using crypto with a product but I agree Dan it's kind of like what is the actual point of integrating a token with this thing so I guess we'll see how it pans out but I at least give them some credit for trying something different even if it doesn't really support something that we want in particular yeah I I killed a sentiment that like token doesn't really make sense like that stablecoin makes much more sense

and now I guess his token price is going to be volatile as hell I do think one area where like an Intel to Earth model can be applied is in the world of Finance they're like super shadowy hedge funds out there that pay for satellite images of like Jewel-Osco parking lots or the use of the track like local weather conditions or they use it to track like a shipping Port sort of like activity and they use that to predict trades and sort of like there are long or short positions that feels like a potential Avenue for like a Intel to earn sort of like Grassroots Marketplace like that definitely seems like a good application but yeah something about this is about in the wrong way but I

agree with that you know like if someone can dodge you then like it kind of failed already like you've been dogs it's just that someone has figured it out there's nothing that wrong about like someone just passing that information to someone else for a price you know and let's also not forget that like one of the core reasons of for a blockchain is to improve transparency so if you're coming to an open ledger to you know perform Shady actions that was probably a bad idea in the first place that doesn't I mean it's just like you gotta be aware that that is a core value proposition here of a blockchain and you know the Privacy chains are something people are trying to figure out for this very reason you know we just had a podcast

with uh Sunny from osmosis and they're like how do we build a more privacy focused decks that's one of the questions that they're you know toying with and trying to build so there are still people focused on on privacy and I think there'll be a pretty interesting market for uh you know privacy focused blockchain Solutions but that's just clearly not what ethereum or many of the our largest layer ones are today so um yeah you can it'll be but I guess the other point here is how do they go about people tying outside information that's like say off-chain information to an address on chain because you know I feel like this does incentivize just from some truly Bad actors like exploiting um email addresses and things like that

especially at a time when you know it feels like to me at least Twitter spam is at an all-time high and there's you gotta really be careful but mindful about the links you're clicking uh it doesn't really feel like a great time to be pushing forward for you know people to kind of wish bad things upon other people I guess this conversation semi-adjacent to like you know prediction markets when they first became a thing where like okay well now you're kind of getting the territory putting prediction markets on other people's lives like that's clearly a bad thing um this is it feels like a bit less extreme version of that but at the same time like killing an anonymous self is is really doxing them so it's kind of interesting yeah if I had to guess

though this is going to be one of those things where the token launches it it goes to zero everyone stops talking about this in like a week and honestly like I don't I never even seen screenshots of like the Arkham intelligence dashboards anymore on Twitter so I don't know nothing burger and I think they completely kind of destroyed their user base in one day so yeah I think that's a rightful spot on the hot seat Ren if you were uh looking for an alternative though there's some there's a platform called Watchers and I'll put that in the show notes I've been toying around with it recently and it seems to be doing a pretty good job I'm not not ready to like go all in on this being you know my my Arkham slash nanson tool I kind of use all three at

the moment uh for you know just varying things but it's definitely a smaller project worth checking out so again I'll try to get a link in that to that in the show notes I've got a cool throne so I've said that and let's uh Stargate slash layer zero um it's done a ton of uh symbol volume and it actually just had a nice little move this morning someone decided to aim 10 million into the perps and they started moving the token um there was like a GitHub comment that was posted I want to say like two or three days ago and it said that zero the new token will be used for gas fees

um and the most recent interview they've had with anyone from Stargate says that Stargate V2 is one to two months out and it's understood that the zero token will actually launch when Stargate V2 happens so stuff to keep an eye on for at least the next few months yeah I'm curious to read more about Stargate V2 I haven't uh heard too too much but it'll be interesting you know as you mentioned the Sybil volume is like incredibly clear but it gets like increasingly interesting what else star the V2 version will will offer right because I don't know we Ren you wrote a great report on the future

of bridging once circles cross chain and uh messaging platform is kind of live so I'd love to get your take on like do we really need another Bridge or a more popular Bridge or kind of will that role of bridging assets across different blockchains kind of Fade Into the background once cctp goes live yeah I think um just bringing another multi-chain which obviously got hacked for roughly 130 million dollars at the end of last week I feel like a lot of these videos people are finding out that at the end of the day they are controllable or like directly managed by a multi-sig wallet all of the largest hacks you know like Ronin was a multi-sicking

um party Network got hacked for like 566 or I think 600 million BNB chain like uh 566 million like probably more than two billion dollars has been lost two wages today and it's always like some centralized entity doing some like funky stuff or like avoidable human error I want to say and so I feel like the rich space has kind of gotten to the point where like you shouldn't be asking uh how trustless is this bridge you know like just accept the fact that perhaps most of your videos are going to be centralized but who do you want to trust more and as far as new Bridges skills such as CCTV I think it makes sense right for the token issuer to also be

the one operating the bridge because sure it's like a additional centralized Vector but also provides you a lot of leeway in terms of the fact that if something goes wrong the token issuer can freeze the usdc that's been traveling through the bridge if something goes wrong and they can reissue usdc to like uh repay people that got screwed over in some way because they're frozen it so like the underlying collateral is backed and I think the space will over time converge at least for bridging and especially for stable coins converge to uh sort of centralized visual institutions as far as other bridging solutions for like non-stable coin

non-centralized stablecoin tokens I also feel like an increasing proportion of that bridging flow will be valid or solved through um a centralized bridging station like CCTV I think one area that I'd be interested in seeing with there is zero whatever is you're talking to announcing is that they raised 120 million in April and at that time it was for a pretty big APAC gaming push um I have no idea what you would use like there is zero for gaming for but I'd be really interested to see if those thousands have anything to do with that yeah there's so many details left to uncover so definitely be super interesting to keep an eye on it I can

take a stab at the hot seat next I've got uh Antonio from dydx and I don't really know if this is gonna end up being a hot seat or a cool throne but I've been talking about dydx on the show a few times over the past few months so I feel like I gotta throw them in the hot seat to be even Keel but basically earlier today he tweeted that dydx is going to be punishing validators who extract Mev through a metric that uh accurately and statistically measures Mev per each validator using the execution price of fills in their blocks so basically over a long period of time uh if certain validators are off offering worse execution for users that means they're extracting Mev and then they could potentially be slashed but this slashing mechanism isn't actually

enshrined into the protocol it would be left up to either governance or I'm not really sure exactly who's going to be in charge of of making these decisions around slashing but I think the general idea if I understand correctly is more so social consensus and making sure the validators know that Mev isn't going to be tolerated if you want to be a part of their active set and earning those trading fees and inflation or dydx rewards so um I don't know I guess I just kind of expected more of an Mev mitigation uh just at the actual protocol there than I did this kind of soft rollout through social consensus so I'm sure they're going to iterate it on over time and obviously this is an insanely hard problem to solve there's a lot of

different teams working on it but nonetheless I just kind of expected a little bit more yeah I I agree it's definitely no easy problem to solve muv but also sort of like one of the whole benefits of F chains was that you know you get a lot more control over sort of Mev value capture a customizability of like Mev Solutions and that's something really big that skip protocol is working on within the sort of Cosmos ecosystem and so for Antonio to come out and basically say that hey you know like our Mev sedition is just don't do it if not we're gonna slash you like it doesn't seem like the best solution I'm not like a good like charity by any means but I don't know what if there was a bad idea

that perhaps like he's like a quote-unquote dumb validator he doesn't know what he's doing he uses like a bad like transaction ordering algorithm and algorithm faction mess like extracting Mev you know or for example someone's providing someone else with like a bad execution price because he knows that order flow is toxic for whatever reason you know that also seems like a fair reason to mess off someone's execution but I could slide them out um so yeah it's definitely like a tricky problem I'm definitely not qualified to like solve it or talk about it in in depth but stashing seems like too symbol of a solution you know it feels like there should be some in protocol mechanism to sort of like

fight Mev or like the ability for people to capture Mev rather than just say don't do it at all yeah or even like internalizing it somehow like if you created the Meb yes it makes a worse trading experience for users but at the same time if you can return that and distribute it as rebates to Traders based on how much fees they paid or open interest or something along those lines like that feels a little bit better than just threatening to slash validators based on per like certain behavior that isn't actually a part of the protocol's rule set so yeah I'm right there with you in Dan here you got in the hot Cedar cool Throne I got a uh got a cool Throne this week so I'm gonna put Lido in the cool Throne which is probably due to put me

in the hot seat at some point but uh e-staking overall has hit 20 of Supply as staked uh so no surprise there to really see that number continue its Trend higher uh and it's it's definitely showing zero signs of stopping so right now there's about 650 000 active validators and another 80 000 are active are sitting in the activation queue waiting to come online and of course that's a gradual process which is operated by the consensus mechanism and so because of that we're seeing another 12 and a half percent basically of the current validators set is like literally just sitting there waiting to come online so um that number is continuing to go up

only and Lido is kind of dominating not only the original set of stake but also the new flows of steak as they come online so right now they have about 75 percent of specifically of the LST market share and about 32 percent of all eth state is done through Lido um so of course there's you know some concerns around one entity controlling too much stake um you know the the other side of the aisle there would tell you okay yes there's 32 percent of all e staked with one entity however there's 29 or so validators that are actually managing that stake um so the actual risk is is charted amongst those entities uh and they actually you know recently passed a governance prop unrelated to uh their

stake breakdown but a prop to S you kind of dog food their own uh their own LST and stake their 20 000 eth in their treasury into fake teeth so what's interesting there is with the yield off of that staked and unstaked or the now staked eth they can kind of can fund their operations or just you know hold on to that extra yield and use it to increase their Treasury and there's definitely some contentions around whether or not that's a great idea but overall I think that we've seen a push for improved treasury management and that alone is exciting to me and so you know when you're looking out as to which Protocols are exciting and going to continue to be exciting into

the next the next cycle uh that we also desperately Hope to come uh Lido is definitely on that list you know their potential for a cash machine uh just given that you know right now they're doing about 600 million in fees with a 10 take rate Five of which goes to the Dow so right now their total fees is about 60 million and or excuse me their total sales or Revenue has about 60 million and then to the Dow is about 30 million so when you start kind of doing running some multiples on that based on their current valuation about 1.7 billion market cap and 2 billion fdv you know the the math doesn't really make a ton of sense at the current youth price of course as since they have the nominated cash flows

um you know as eth improves then so do their cash flows which is this bit of an interesting Dynamic of like how do you value a uh you know a protocol when they're trying to Value things back in dollars when their cash flows aren't denominated in dollars so it's a bit interesting there but you know sitting at about a 60x price to Dow revenue and about a 30X price to total sales um you know that's definitely doesn't make it sound cheap but again it's kind of primed to do to do I don't want to say do well and of course none of this is not Financial advice but it uh it's definitely sitting in a dominant position within its Market sector just a few points on sort of like the 32 percent of all safety obviously that's creeping very very close to the point

that 32.3 percent where if an attacker wanted to they could prevent a chain from finalizing but as Dan mentioned right like a lighter split between 20 different validators today I don't think that's as much of a concern I think one interesting thing that was highlighted earlier this year was that naido ran a vote in their governance forums about whether they should self-limit and basically everyone voted no whereas rocket food conducted the same vote and basically everyone yes I do think they're sort of like a ideological difference um between the two and it should be interesting to see at what point do people start worrying you know if later becomes like 50 of State teams do people

start really for lack of themselves and asking for some like in protocol like balancing mechanism in order to balance out the quote-unquote concentration between like um people that are staking one thing I want to say there is you know frax came out and did the same thing and they're like hey we're gonna self-limit you know Sam K said that of course I don't think that ever made it to a governance vote but it's a lot easier to say You're Gonna self-limit when you don't have 33 of the stake or quite frankly you know a path to getting there in the near term um so you know I I commend them for coming out and doing this but at the end of the day like you know once you once you have that stake in hand it's it's a bit different

um to kind of be like yeah we'll self-limit but I don't know interesting just an interesting thing to think about because I don't think there's anything in the rocket pool code that says you know if greater than 32 percent of the uh assets of the Network's assets are in our possession then we'll you know a switch will automatically flip where new deposits aren't allowed yeah I know there was talk too a while ago on the Lido forums to let gosh I'm gonna botch this potentially but it was somehow letting like eth holders have governance rights over the light of no it was steath holders wasn't it over the ldo token holders decisions so that way it would hopefully align incentives better but I don't really even know if that ever got any legs but I mean I

guess for the CounterPoint in terms of like how bad is this I would say Lido rocket pool any decentralized LST provider does do a lot for diversifying you know consensus and execution layer clients so that's a big plus but obviously the more important part is probably going to end up being the actual stake weight so I don't know it's a bit of a it's a bit of a bit of a tough nut to crack honestly I want to go further and say sort of like the market eventually in the long term expresses its preferences right and so if the Market's preferences are a preference for liquidity utility of safety for cross multiple protocols integration ability to do like cool things with

steak thief and Nido and they added that more than the decentralization of ethereum then that's just a market expressing his preferences you know they're just saying that okay I don't care that much about decentralization relative to like all of the other things that I could do with State and I feel like if you're staking me if like chances are you know like what you're doing you know like you're securing the your network you're not just looking at it and going oh okay I get it like get some yield you have like some symptoms of like what you're contributing to and so yeah that's that's what I I view it as it's just an expression of Market preferences and if it turns out that I don't know like those like 70 of us they

give them so be it that's just the market saying that doesn't care that much about decentralization yeah that's an interesting Viewpoint Ren and you know the other thing here is uh there's definitely some winner take all forces in the liquid sticking uh kind of landscape right like the idea of having an LST is to you know continue holding the underlying asset and get its benefits so in this case you're getting solid collateral which is eth with the yield and now I can go use that as throughout D5 just as any other asset or I can just hold it on my own and just accrue those rewards so the idea of using it across other D5 applications you know there there's definitely like the risk of like okay well now I'm holding an asset that's in

a few more smart contracts like I I want to use the safest asset and you know we generally perceive the safest asset as being you know the asset that has the the bundle of cash behind it that you know it's just been essentially sitting there as a as a bounty for black hats that want to go Target that and exploit it um so there is like a time element where you you do battle I know you get Battle tested and hardened through time um and you know Lido's had billions of dollars in tvl for quite some time their withdrawals contracts were live you know one of the first not the first but in the in the top tier of protocols to push those live of course new contracts means new new risks and those are hardening as well and so it's it's kind of hard for

me to see a world where Lido you know starts losing market share rapidly even though you have rocket pool which is putting a decentralization decentralized ethos first and coinbase which is putting like convenience first and frax which is putting a yield maximizing solution first and we really haven't seen either those other three things uh kind of get the the Lindy behind them as as lydo has who you know honestly their biggest win was being the first LST integrated into Ave that's that's when you pull up their supply chart and that that was the Apex moment for them I think one interesting black horse that I'd like to see how it plays out is eigenlayer especially when we say can goes live like for example what if the second or third largest LSD photo Focus

okay sure we're gonna opt in for a few like eigenlayer Services we're just gonna do like I want you to do diligence we're only going to restake for like the super large Ergo or the super large like middleware but because of that we're going to provide an extra four percent uh if taking yield and then maybe later will need to do something there you know like maybe everyone everything falls out of light or starts flowing to like this other like it's taking photos I feel like that would be an interesting thing to watch and I would guess people will have to vote on that right if Ryder wants to sort of opt-in into eigen their mistaking there's going to be a very contentious um governance vote around that especially if you get to a state where there are like relatively protocols safe

services that you can restate for and they're providing like a decent amount of like sustainable year over that you've taken yield I feel like that would be a very interesting Dynamic to watch play out yeah I remember SRI Ram when we brought him on the co-founder of eigen Lair was saying he was interested to see how the market would value a truly decentralized validator set because he was saying like maybe this application will only let people restake who runs solo at home validators or maybe this one wants to exclude Steve um so I'm excited to see how that plays out although I do tend to think that pretty much Everyone by default is going to choose Steve just for the sole purpose of what Dan said in terms of battle testing and network effects and liquidity

um but I guess we can just kind of keep our fingers crossed and watch how it plays out Dan you want to tell people what's good with the atom accelerator absolutely Sam yeah so shout out to the atom accelerator for sponsoring our show you know again if you're a developer helper looking for something interesting to build in a way to start kind of get kick started get that initial round of funding the atom accelerator is definitely the way to go the The Cosmos atom economic zone is is getting more and more interesting as each day passes through so definitely come to the atom economic zone to build and I know they have interchange security which gives you the ability to launch a new consumer chain with the benefit of the cosmos Hub security they have IBC which gives you the ability to have interop with every

other chain you know we have that out of the box native solution which is becoming increasingly important across the industry um you know Duality is kind of setting forth the standard of what those proposals should look like by bringing a new order book decks to the atom economic zone uh stride is is really kind of pioneered what that looks like and is continuing to push the advancement of lsts and of course Noble was bringing native usdc to the ecosystem so uh you know they have a a grants program running the through the atom accelerator that does rolling monthly grants in batches of ten thousand to one million dollars so again if you are looking to kind of bring a development to the Adam economic zone be sure to click the link in our

description and now on to the interview with Cheeto Labs alright guys we are joined today by Lucas Bruder the co-founder and CEO of Judo Labs Lucas thanks a ton for joining us I think you uh you picked two great areas man sitting at the crossroads of Mev and liquid staking is probably the two most engaging uh cornerstones of D5 today so can you just take a second to briefly walk us through what Cheeto is and what it offers to its users yep first off thanks for having me uh you guys have been putting out great content recently so excited to be on here uh so Cheetos uh high performance Mev software for the Solana blockchain that aims to help the network uh run at like

higher performance so you know I think most people to sing this are probably familiar with Mev but for those that aren't it's the value that can be extracted by block producers on network by reordering inserting removing transactions and we basically aim to make that as efficient as possible perfect and so most of our like if more ethereum Centric or ethereum focused listeners are maybe a bit confused at how Mev Solutions can kind of be paired with like a liquid staking solution just given how you know ethereum is kind of gradually enshrining uh the muv Boost protocol into the base layer itself so can you kind of walk us through Solana's

design since it's not really compatible with like full block proposing and really what the Solana Mev supply chain looks like yeah yeah so um there's a few main differences between Solana and ethereum Mev um so I guess the the most obvious thing is that Salon is very fast you know that's 400 millisecond block times every leader gets four consecutive slots or multiples of four consecutive slots in a row and they're kind of balancing you know all over the world and every 1.6 seconds so um past that

the other main large difference is that block production on Solana is continuous so on ethereum you I think the block times around 12 seconds so you essentially have 12 seconds where the state is kind of pause and there's no transactions being processed you kind of have this PBS system running where Builders are submitting to relayers and they're doing the simulation and at the end of the the 12 seconds they'll submit their for the The Proposal will take the highest block on Solana the block production is continuous so um you know the the slot starts and the validator starts to execute those

transactions and send them out basically during the whole 400 millisecond slot time so this makes what we're doing pretty difficult um there's no there's not really a time where like the state is paused so it's it's kind of more uh similar to like high frequency Trading so you're you know where you are in the world your latencies how much time you're spending processing things is very important and is that like really the biggest challenge today is the fact that you know Salon effectively has like this continuous block time rather than these discrete intervals where transactions can effectively build up uh yeah I think that's

that's definitely one of the large challenges I think the other thing is that the amount of like Mev spam on Salon is much more than what it is on ethereum that's kind of the reason I guess that's like the reason why my co-founder and I started Judo kind of had the kind of saw what was going on with polygon BSC and these other like high throughput low fee chains where you have you know if your fee is a penny or hundredth of a penny basically any Arbitrage that creates a profit over that is going to be profitable so you're seeing like tens to hundreds of failed arbitrages per block and

um just like dealing there's the latency is hard and then also just the volume of transactions that are coming through that are Arbitrage related is pretty hard as well and then you guys also have Judo Solana which is like a custom client focused on extracting Meb so how does that work and what percentage of the network is actually running that client so yeah Guido Solana it's very similar to MAV Geth which is you know flashbots kind of first uh iteration of more efficient Mev extraction it's a custom client similar in how Mev Geth was based on Geth Judo Salon is based on the Solana Labs about air client and there's a few things that it does in

there the main thing is it knows how to process bundles so it knows how to like execute uh bundle sequentially and handle all the Locking and threading knows how to handle like the Mev tips and there's also some uh functionality in there that will um basically enable like our systems to get access to State faster so that we can update our simulators and kind of predict and know what's happening as fast as possible and that just means that the system will be more efficient and extract more imev the net the amount of stake that's running it today is I think it's around

uh like a hundred it's just over 100 million Soul which is currently at roughly like just over 27 or 28 of all stake on the network interesting okay and then with fire dancer coming along does that change things at all is that like an upgrade that you guys are going to need to undergo or what does that look like yeah so yeah there will be a judo dancer um I think they're making very good progress on fire dancer we're keeping close eye on how things are going um I've heard I think Anatolia on Twitter said the other day that they're trying to get it running on testnet it's unclear if it's uh the full fired answer or this like Franken dancer where it's kind of a mishmash of Solana labs and

fire dancer uh by the end of the year but um you know as that develops we're keeping close eye on it it will definitely be very different I've kind of taking a look through their code it's uh it's very dense it's all it's all written in like C and you know they they care a lot about their performance so um yeah there will be another like fun learning curve that our team's looking forward to diving into a kind of like learning how that code base works uh you know they're basically rewriting everything from scratch so there would be another like learning experience there how do we kind of plug into this and then uh you know when the when I don't know how long it's going to

take for the network or Solana stakers to increase the throughput of the network but that will probably have a big impact on how the Mev is performed on our system so that's kind of something that we're starting to think about as well okay very interesting yeah that was that was a great point because you know last time we talked to Anatoly like fire dancer really does seem like a pretty big uh scalability or just Improvement performance Improvement to these entire Solana networks so excited to kind of see that one play in as well and so what do you think talking back to the the Judo Solana client then so this effectively the the unlock to me sounds like the ability to read and process

bundles uh and so I'm imagining that the just like in ethereum you know you'd have Searchers to create bundles and pass those along through the network um is that kind of the exact same process with the Solana Judo client and how do transactions ultimately get included because you know if we have validators processing four blocks at a time um it I would imagine it would only be validators that are running the Geo Solana client that can actually push through those Mev transactions yeah so yeah I think you asked about the transaction supply chain earlier so I guess diving into that for like 30 second tldr essentially there's there's no mempool in Solana so when you send a transaction through your wallet it'll get forwarded

to an RPC server uh at this point ethereum would kind of like gossip it out or send it to builders or you know there's a few different things going on there on Solana it'll send it straight to the leader and the next like one or two leaders in uh it will attempt to get processed there and there's kind of some forwarding and retry logic that goes on uh Vegeta Solana there is this edition of a relayer it's a little different than the flashbots relayer but essentially a validator tells RPC servers to send transactions there and then they get forwarded to the block engine Searchers can kind of see what's

going on or what's about to happen and then they can submit bundles to the block engine and the block engine will attempt to simulate them and re-simulate them when necessary to basically predict what the tip is going to be and then every 200 milliseconds there's a uh we kind of like discretize the time so basically every we run an auction every 200 milliseconds that's tunable and um at 200 milliseconds will basically take the highest paying bundles and forward those to the GTO Solana validators and yeah you kind of mentioned this earlier but um

the bundles only work with Judo Solana clients so Searchers right now need to manage kind of two code paths for sending transactions uh the normal ways you know they because there's no mempool they are basically reacting to state that has already been uh they're reacting to transactions that have already been executed and with our system they can kind of simulate uh we we added simulation and points for simulating bundles so I can like simulate what's going to happen in you know basically they'll take a transaction a user's trade simulate it figure out if if that trade will create an Arbitrage opportunity then they can send a bundle

to us with that user's trade and then their trade immediately after that and you know we'll take the highest payer right on okay and so then there's ultimately a tip that goes from the the Searcher to the validator and that's what gets passed on to the uh the Judo liquid staking solution is that is that correct so yeah that will get the tip will get passed on to any Staker on that validator so on Solana you can have multiple like multiple stake pools will stick to the same validator and then you'll have a bunch of people that are in stake pools sticking to those valid errors too and so those tips go to anyone that's staking on the validator so Judo soul is uh I think it Stakes to like 38 valid

errors right now that ranjita Solana so those 38 stake accounts will get the Mev and then that uh that basically Judas soul is like a reward bearing token so um the amount of Soul backing one cheetah so it will increase over time okay right yeah so it's got like that that rap stake teeth model where the the exchange rate is what's increasing over time to accrue those fees and so you know you mentioned the 38 validators that you have running the about 850 000 Soul stake right now how do these validators get uh Chosen and then how is is just stake equally distributed across those validators yeah so uh the minimum

requirement is to run the Judo Solana client and the performance there is the same or even better than the normal client and so the rewards there are like naturally pretty high um there's a lot of high quality operators running it I think there's like 100 145 validators running Judo Solana right now and so um that's kind of you're running Geo solanas the minimum requirement and then past that it's a basically a process of like looking at how well the validator performs and that's uh it's pretty hand wavy right now but you know they're there's work being done to make that uh

more automated and transparent that's super interesting because Lido obviously only has 29 node operators and you're already up to 38 with obviously much less Network penetration no sorry so they're running 29 on uh ethereum uh 29 node operators amongst all the stake but it sounds like you have like yeah were you saying you have 145 uh there's 145 running Judo Solana client and then Judo Soul uh the stake pool Stakes to 38 of those okay gotcha so like are you trying to expand that validator set as much as you can or how does that look yeah I think like one of the benefits of liquid staking is kind of Distributing

there's no slashing on Solana but basically Distributing the downtime risk across a lot of validators that are high performing and then um so we're always looking to like expand that to like high performing validators how do you think about like geographic location when it comes to validator selection just given the low latency requirements I'd imagine collocation must be pretty big here yeah um I think the like the decentralization is super important uh I think we kind of saw what happened with flashbots in the ofac thing where uh you have a lot of validators and block builders that were us-based and they

were essentially not touching tornado transactions you know that they did get included eventually for people that were outside of the US and don't necessarily answer to the US government but um you know I think that was a good showing of why it's important to decentralize your validator set and we like the stake pool is looking to maximize like the kind of geopolitical decentralization so you know trying to hit um trying to have multiple countries and make sure that stake is distributed uh pretty like

decentralized or you know spread out across multiple countries um the block engine is kind of the same like we have uh like Amsterdam frankfur Tokyo New York and we'll probably be spinning up more pretty soon here so I think that um we can I think that Mev can potentially be used as like a carrot to kind of get people to decentralize somehow if you like set up if you kind of if you set up something like in uh there's a lot of stake in Amsterdam Frankfurt but if you set up something in like

uh like a Paris or uh like South America or something then there are Valley areas that care a lot about decentralization and they will actually move to that block engine okay and then you I've heard this mentioned a few times around the concentration of steak in Frankfurt for what's the reasoning behind that for a long time there's a lot of stake on hetzner and that's her it's a like a data center server provider very very cheap fees um and there's running about air is pretty expensive you know Solana gets a lot of uh I guess uh feedback or I guess you could

just call it hate for that um or it's like oh it's too expensive to run it uh you know we pay like anywhere from 800 to a thousand dollars a month per valid error uh hetzner was like 175 so that's like saving uh you know a few thousand dollars per year so I think that was kind of the original reason I think hetzner like blacklisted the ports that Solana uses brought down testnet and people were like oh this is like pretty serious so jumping over to to Judo sold the the liquid staking token itself you know um pulling up Solana Compass we really see that you know it performs quite well

so um Judo is actually the third the largest staking pool with coming behind marinade and Lido some marinades got an average yield of around six and a half percent Lido 5.8 and Judo up to 7.2 so you know assuming that most of this yield is driven by exactly what you know what we've been talking about is that Mev extraction um how like are we seeing a large amount of Mev be extracted on a daily basis and kind of what is that Trend looking like yeah so uh the Mev that's being extracted by like the Judo Labs block engine is still pretty small relative to all Mev there's a lot of engineering improvements that need to be made made to make it extract

more but uh you'll start to see that kind of rolled out you know within probably like the next month or so there's going to be a big change in the the way that the bundles are selected so I think that will be able to hit way more I think most of the yield comes from like choosing high quality validators that really know what they're doing and um like really care about Solana and the performance of their validator and so I'm also curious because you mentioned that like a there's kind of being some Mev left on the table um but I'm more curious about like almost from the network as a whole so like I'll you know notoriously hard to get data around this but it does seem

like a majority of ethereum Mev as related to just Dex activity whether it be sex to Dex ARB or sandwich attacks that does seem to be like a core piece of of what drives Mev value for ethereum um and you know given that Solana kind of has a fraction of the Dex volume do you think like you know there'll be a different way where Solana sees a ton of mov coming from something else and or how do you kind of view that Dynamic playing out yeah I mean I think there's there's a lot of similar factors at play to ethereum that when you see uh a lot of volume and like people trading and um also like speculation like what we saw with like Pepe and some of the other

uh coins like there's a lot of Arbitrage and Mev that happens because of that and we're saying the same on Solana like when Bonk was kind of the thing to trade for like I think it's the beginning of this year there was a ton of Mev and we still see that occasionally where like someone will sell like some low liquidity coin and uh generate like a few thousand dollar Arbitrage for a searcher so I think uh as as far as like I think the the Mev is like roughly the the amount of volume is uh somewhat influences the amount of Mev

but I think the thing that Solana has going forward is that there will probably be less Mev than ethereum just because there's so many more efficient defy uh like pieces and the the default infrastructure and Solana is so efficient so you're seeing like um you know like the Ciela clmms like radium and orca uh serum open book and then like Phoenix that um Central limit order book and they're just generally exposed less Mev than you see on amms so I think that there's always going to be Mev but I think that the users on Salon are going to be

better off than ethereum when it comes to Mev interesting now when we talked with Anatoly like I don't know a couple months ago he was talking a lot about isolated fee markets does that have any impact on Mev uh yeah definitely so I think like what we see is that when there's um on on ethereum there's kind of just like one I'm oversimplifying it a lot but there's basically like one resource it's just block space and there's not really any separate notion of like state or anything so if you have all these people that are like speculating on like Pepe or uh you know these Arbitrage Bots that are doing trades they're taking up block space from like nft mints and transfers

and there's not really a way to like separate the fees for those things we're on Solana with these like isolated fee markets basically uh the idea is that every account uh I guess every transaction will bid on a set of state and your access to that state will be based on what you're bidding relative to others bidding on the same state so in the case of like a uh you can have like arbitragers like tipping like half a soul or uh I guess using like priority fees and that shouldn't impact the price or the uh shouldn't impact the price or the amount that people pay for an nft mint

that's like the I think that's kind of the dream um in reality there's like some work that needs to be done on the the scheduler inside the valid area that's kind of like figuring out how to pack this block but I think that um you know the Solana labs and some of the engineers that are spending a lot of time on that so expect to see that improve a lot so yeah I guess one question I have spawning off of that is really just how much how I guess what percentage a hard question to answer but what percentage of transactions do you think are like can actually be processed uh in in isolation and don't actually overlap State like of course when there's like a super hot nft mint that can kind of be like bucketed onto its

own thread uh but in the case of everyday activity is it fair to think that a lot of these transactions can actually be processed in isolation uh yeah I think so like I think when you have a lot of I mean like a an order book or a market is always going to be single threaded as far as I know there's like no way to multi-thread it so you're always going to have some contention there but uh oftentimes I know like volatility you have a lot of markets moving together and every one of those markets is separate assuming that the uh the program architect architect did it well and there's no like overlap of accounts so I think uh like the Orca like soul usdc is separate

from like Orca Judo soul soul so those can kind of be traded in parallel um as far as like I mean I think Salon is kind of aiming to be this like ultimate L1 where you have all this activity taking place there's uh not going to be like l2s or Bridges or anything so um if you have a lot of activity going on on those things then all those in Arbitrage should happen at the same time in parallel as like a game or a notification or uh liquidation or nft mint so I think um there are a lot of things that can happen in parallel it's actually something I've been like wanting to look

into I just don't have the times like looking at the data and like seeing how parallel is it actually um in theory it should be very parallel getting back to the the liquid staking token discussion so Judo soul is there a take rate that you guys have or or what does that look like uh what do you mean take great in terms of like the percentage of you know rewards to some go to gido some goes to the um validator operators Etc yeah so uh the like stake pool operator will take four percent fee on that right now so um that's a the current fee for the stake pool and that's collected every

Epoch which it's uh four percent of the inflation Mev going to the stake pool operator and as a tokenless protocol would you say there's a path towards value accrual in the future that you're looking to embark on or how do you think about value accrual for Judo in general yeah I think there's a few ways to do that um I think like liquid seeking tokens get their utility from being from having a lot of Integrations and being used across a lot of uh like dex's having deep liquidity I think that there's like um obviously there's like a little smart

contract risk the gdus the geosol stake pool has been audited I think like for Force to five times so uh past that like liquid staking in my opinion is like purely Superior than just the normal staking um I think the like the the fees will go to the treasury and the treasury will kind of decide what to do with the fees right and so when we think about the liquid saving landscape for Seoul today you know we have marinade Lido and Judo kind of like leading this pack um what do you think really separates Judo from from getting adopted and becoming the number one liquid staking provider so I think that

um having the best delegation strategy for where stake is deployed uh not only from like a client standpoint but also location standpoint uh I think that's kind of like an underexplored area and something that um you can kind of expect to see more of in the future is like uh how how do these protocols determine who gets stake and who doesn't who has the opportunity to uh kind of keep these protocols running

and I think something else is like uh there are there aren't really like super decentralized liquid staking systems that on Solana I think maybe you could like consider Lido like super decentralized but you know they they're still kind of this uh centralization component of it and um basically like decentralizing the complete I think there's a lot of value in like decentralizing the complete operation of the pool and how do you do that trustlessly um so I think there's a lot to do there and

then a lot of liquidity um how do you figure out where the liquidity goes uh do you want to incentivize like Judo Soul usdc pairs or can you just rely on like Seoul usdc uh Pairs and um there's one more thing I wanted to mention um oh yeah so I think that like when you start to automate these Services they kind of look like um they kind of look like other like validator sets as well so like how do you when you have these

people that are like cranking stuff and keeping things running off chain and they start to uh kind of look like valid air sets so like how do you incentivize people to do top participate those and things like that so those are kind of some of the things that we're like thinking about and I mean the design space is very large it's it's a hard hard problem to figure out what to focus on yeah yeah absolutely and then if I'm not mistaken the LST Market on Solana in terms of like percentage of Supply staked is a lot lower than that that you see in a lot of other proof of stake ecosystems so do you have like a thesis as to why that is the way it is yeah I mean I think there's a lot of uh

like structural reasons why that is compared to ethereum so ethereum didn't have withdrawals until this year um where Solana basically had withdrawals from day one there's not really a withdrawal or activation Q on Salon it's like two days so you can actually get out of your staked positions pretty easily and then um uh I think the the defy ecosystem on Solana is like a little less mature than ethereum is so I think um that's kind of why it's like so successful on ethereum compared to Solana but I think that like no uh there hasn't really been like a team

or messaging that has really like nailed it on Solana so um it'll be interesting to kind of see you like what messaging resonates with people and um like what what kind of narrative what kind of messaging like how do you kind of strike a chord of people because I think the the market on Solana is a little different there's a heavy like nft community on Solana so how do you kind of uh figure out what they want in message liquid sticking to them I think that also you know as we're seeing with like margin 5 their points and Cipher points um there's kind of this like Resurgence of default activity and I think that

liquid staking is kind of the like one of the most if not the most important assets for defy so um you know you can stake Soul into a liquid staking token like GDA Soul get like six or seven percent and then go use that in D5 and uh until now there's been like some decent defy options but I think we're starting to see that stuff really pick up now yeah that's interesting you flagged the margin five point system that they're running right now I was actually looking at that the other day and interestingly I noticed that Judo soul is actually these uh most deposited liquid staking tokens so although uh you know marinade and Vito have larger Solutions at the

moment their token holders seem a little more dormant in a little less active than some of the Judo holders which is a pretty interesting uh concept I think I think over uh over ten percent of the circulating Gita soil is deposited in margin Phi in the growth of judah's soul I think over the last week I think it's grown 32 percent um that's in like Soul terms not with the not including the price of soul I think it's up it's always been on a tear recently um but yeah I mean it just kind of shows you like there there's like Capital

that's waiting to be deployed on Solana and uh people are waiting for the right teams and the right opportunity and I think um a lot of people are obviously speculating on air drops as well um which we've seen in the past has been pretty uh pretty lucrative it also can drive a lot of activity to protocols yeah absolutely and I I just do Wonder like I I assume you know you know you've been around for a little bit and you kind of experienced all the FTX stuff of last year like and you know obviously the people using your protocol Judo Soul like they're they're here for Solana that they've been around the block like

their actual loyal supporters and I think that could probably explain some of the margin Phi activity you know with seeing that as the largest deposited asset but what has the vibe been over in Solana since the FTX implosion like I'm just curious to get your take on the matter yeah on the ground yeah I mean it's been really rough I think um not only like internally and seeing a lot of liquidity dry up and kind of um there are some people that will claim that they called and they saw that SPF was evil from the beginning but I think most people can't say that and you can add this entity or this person that was kind of like a good spokesperson for Solana and they turned out to be a total

scam and it's kind of like scam by association like I think that's kind of the the way that some some like uh he's I'll just call them ethmax is interpreted it or it's like a salon as a scam um but there's like a lot of teams that are super dedicated to building on Solana they believe in this like ultimate L1 that tries to be as efficient as possible with the hardware in these computers and so like while it was super rough for a while and kind of like from like the plane home from breakpoint last year to like maybe like January to like even middle of this year

I think uh that was a little rough but I think there's a lot of people that kind of stuck around and there's a lot of camaraderie that's forming between these teams and that are really trying to like uh basically like rebuild from uh what was left so I think like we're seeing especially in like the last like two or three weeks or like even months um there's kind of just been like this slow grind where you're seeing more and more people talk about Solana starting to get more mind share but I think the last like two or three weeks has just been insane like uh there's just been good tvl growth good

price action um a lot of people talking about Twitter we have a slack bot that sends a message every time one of the Judo Labs or Gina sold Twitter is tagged and it's just like blowing up non-stop so it's like things are starting to look up again uh and then I think there's a lot of people that are excited about fire dancer as well um so I think things are things were pretty rough for a while but I think they're definitely getting better and I think there's a lot of teams that are taking ownership and it's like this is like our time to shine this is our time to like rebuild no one's going to do it for us we just have to take it into our own

hands and do it and that's definitely like the attitude we're taking oh yeah I love to hear that it does feel like we kind of turn the corner a little bit I mean cross our fingers the every time I say that I feel something I feel like something I'm curious what do you think uh what Primitives do you think are missing from Solana D5 in order to like enable lsts to flourish or maybe even just Salon a D5 more broadly yeah um I think uh kind of like some curve like exchanges I think would help a lot um I think that uh safe safety Above All Else

um there's a lot of people that got burned between centralized exchanges and like hacks and safe protocols I think super important uh it's kind of an obvious though um I think there's a lot of interesting things on uh like Automation and things that are like only possible in Solana so like stuff like I think like lefinity is pretty cool Camino or you kind of have these like protocols that are uh like using automation to manage D5 positions and uh you can just adjust it adjust the positions so frequently that um

I think more things like that are needed on Solana um but I think like yeah I think the main thing for like lsts is the market is so small right now it's like less than two percent of all Soul that's staked is in liquid staking so figuring out a way to uh there's got to be a messaging to figure out ways to get normal stickers into liquid staking and like a liquid sinking system that's like safe need more curve like exchanges on and on Salon I couldn't agree more there but one of the things I like One Core difference between eth the asset and sold the asset is exactly what you've

been mentioning is like this messaging and the narrative around like ether's hard money it's deflation area it's programmatically deflationary and it's got that whole movement behind it of you know ultrasound money as it's as it's oft called um but like that is a very different and almost it's intentional it's an intentionally a different route than Salon has been taking and they're like not emphasizing it as money but where I think that gets interesting for lsts is because you know lsds are effectively yield bearing collateral just a better form of the underlying asset and that's why I think they've seen so much popularity on these because eth itself was already the most common collateral type and now you have like a yield bearing version of that but if Salon is

not money why do lsds still remain interesting collateral types I mean you can if you're if you're staking then you are uh you're getting like roughly seven percent but you can't earn any yields in D5 so I think that um when you stake and you get a liquid version of it you can actually go and um put it into like a soul Judo solar Soul Absol pair and earn additional yields on that through some like curve like uh decks or something so I think that um it's just like an extra source of yield then better than normal staking

yeah something I thought was cool was just because you know you've mentioned how Solana is like really known for the nft community I thought that that uh partnership between I think it was mad Lads and a purpose exchange on Solana like I would love to see more of that I feel like that's like a fantastic way to try and rope in the average user on Solana into like yeah D5 ecosystem yeah yeah definitely um yeah what Armani and Tristan have done with like Gathering attention around backpack and uh Mad Libs has been incredible and I think that especially tensor to like there's a lot of people excited about tensor and Magic Eden and um I would like to see more liquid staking integration with those two

um you know if you have like an order resting or if you're putting in bids why can't it just be in some liquid staked assets at least you're earning yield or if you have like a wallet on there then put it into liquid staking um but yeah I think there's they have a lot of things that they're working on so it's uh you can ask but uh everyone's so busy like trying to like scale and prepare for what's coming and so looking to see more liquid staking Integrations in like the nft space soon for sure and then zooming out just a little bit I did kind of want to get

your higher level thesis just why is Solana the best way to scale for blockchains yeah um I think that the if if we're gonna talk about the best way I think it's like interesting to look at other the way others are scaling so I think Cosmos you kind of have this like app chain thesis where every app is a chain I think the uh there's a lot of like ux open questions there like hopping through Bridges and transferring from like uh one chain to the other that I think like my parents aren't gonna know how to do that even like I have issues with that

sometime like between like Ethan and L2 or ethereum and Solana uh I think the same thing exists with l2s as well um L2 space I haven't explored it a ton but you know there's a lot of bridging and uh I think it's just like hard to reason about and I think there's a lot of like everyone's like oh someday it'll just be like abstracted from you and no one will know and um I just don't see that happening for a while I think everyone's too busy building l2s there's like how many l2s are there now like 10 20 30 like this is like all this liquidity going to be fragmented between all these like how do I bridge between

these um so I think that like Solana is there's certainly sacrificing like some decentralization I think like uh at least in the current state you can't really run I could probably run a valet from home but like that rich person can't and so I think that that is okay in my mind and I would rather have like this L1 that's just super composable super easy to use as like a someone that studied Computer Engineering in college just like super fascinated with computers and like there's a lot of chains that are kind of like ignoring

the most efficient way to do computation and move data around between servers and so I think that like that is super interesting and I think Super under explored in the area um I mean we're kind of seeing like some of this happen with like uh What uh georgius a paradigm is working on with ref which is like way faster than any other like or it's it's looking like it's going to be way faster than any other like system than just like I think the way that Solana is like focusing on that and making that their core priority and just kind of like leveraging cores so you can get through

like bare metal providers or like Amazon or Google um you're just like makes sense to me um there's definitely a lot of work to get toward there's definitely a lot of work that needs to be done on the Solana protocol and I think that we'll see like fire dancer and the jump team to uh and then Solana labs in our team to like contribute towards that um but I think that like the I think the there's a lot of like engineering complexity but I think system complexity is like much simpler than all these l2s and things yeah it's honestly tough to argue with

that thesis and then especially like if you go over to Solana like the user experience is incredibly smooth I will 100 give give you guys that like it's so seamless Phantom is by far in my opinion the best wallet like as well as xnft backpack like that's super super cool so yeah I I definitely admire the fact that you guys are like trying to go for the consumer you know what I mean yeah I mean it it's kind of it was a contrary intake for a while but I think every day it gets more and more likely I think anytime someone uses if you anytime someone uses Salon or like I use Solana myself I'm like holy it's like so fast you go back to ethereum it's like you pay like 10 or 20 dollars

and um you know you at I guess like the fastest confirmation you could get is like 12 seconds essentially um so like when you use Solana and it's like uh it's like a just like a traditional centralized server where you like click a button and it's like okay your transaction has been processed like there's something magical about that and uh I just I like Solana I like the experience like the teams working on it um super excited about the future and speaking of xnft backpack you guys actually just did an integration with them is that right yeah there's the uh Vegeta Soul staking application so you can actually go in there and

um State deposit soul and mint cheetah Soul through there yeah I really like the idea of just like using your wallet as more of like the app interface I think that's definitely pushing in the right direction again being consumer focused yeah I think we like need to explore it X and ft is more I think everyone does I think uh Armani is kind of like showing us the way and like bringing us to the light and uh I think there's a lot of like unexplored stuff that you can do with nfts that I would love to explore more right on man well this has been a fantastic conversation I appreciate you

being so generous with your time but I want to kick it over to you and just kind of give people the CH or give yourself the chance to give the listeners a shout to where they can find me on Twitter learn more about Judo uh yeah yeah so uh my Twitter is Buffalo there's uh Judo Labs Judo underscore Labs Twitter and Gina underscore soul uh you can learn more about what cheetah Labs is doing at Judo dot WTF and then if you want to stick to a soul you can navigate to judo.network awesome thanks a ton Lucas and real quick where's the best place to find uh Judo focused analytics so yeah there's a website that we built uh called the cheetah Explorer it's

explorer.geto.wtf you can view all Mev data that's happening on Solana there you can view arbitrages you can also take a look at the bundles that people are submitting through the block engine see who's tipping the most what's included in the transactions and um if you have any requests or feature requests or data you want to see stop by our Discord and feel free to ask there that's awesome thanks a ton Lucas and we'll uh be sure to include all those links in the show notes as well so thanks a ton Lucas and uh it's great to speaking with you [Music]