Solana, What’s Right And What’s Wrong

The Gwart Show
7 Apr 202455:04

Summary

TLDRIn this engaging conversation, Eugene Chin, co-founder at Ellipsis Labs and known as zerox on Twitter, shares his insights on the crypto space, particularly focusing on high-performance DeFi products like Phoenix on Solana. With a background in high-frequency trading and product engineering, Eugene discusses the evolution of his thoughts on DeFi, the challenges faced by liquidity providers, and the potential of Solana's performance to revolutionize the trading experience on-chain. He also addresses the importance of balancing technological innovation with core values in the blockchain community.

Takeaways

  • 🌐 Eugene Chin is a co-founder at Ellipsis Labs, focusing on high-performance DeFi products like Phoenix on Solana.
  • 🤖 Eugene's background includes high-frequency trading and product engineering, with a foundation in mathematics.
  • 💡 Eugene's transition to crypto was driven by a desire to improve upon the inefficiencies he observed in traditional DeFi liquidity provision models.
  • 📈 His perspective on AMMs has evolved over time, recognizing their value as a liquidity bootstrapping mechanism, especially for new tokens.
  • 🔄 Eugene sees a future where AMMs serve as a liquidity backbone, complementing more sophisticated order book systems.
  • 🚀 Phoenix is a proof of concept for demonstrating that active liquidity can outperform passive liquidity in an environment like Solana.
  • 🛠️ The Solana ecosystem has room for improvement, especially regarding its fee model and network layer issues.
  • 🔧 Solana's priority has been on performance and user experience, sometimes at the expense of incentive compatibility.
  • 📊 The success of Solana's token (SOL) is tied to the platform's ability to support a robust DeFi ecosystem, rather than its market cap ranking.
  • 🌟 In the long term, Eugene envisions a future where Solana can facilitate the trading of non-crypto assets, integrating with traditional financial systems.

Q & A

  • What is Eugene Chin's background and how did he get involved in the crypto space?

    -Eugene Chin is a co-founder at Ellipsis Labs, where they build high-performance DeFi products like Phoenix on Solana. He has a background in high-frequency trading and product engineering, with a focus on math during his studies. He entered the crypto space during the pandemic, initially spending time looking at DeFi and its developments.

  • What were the main issues Eugene saw in the current DeFi market that led him to start his company?

    -Eugene was not satisfied with the state of DeFi, particularly with the XY=K model and its replacement with Uniswap V3's concentrated liquidity. He felt that these models did not make sense from a trading background and seemed inefficient compared to traditional market-making practices.

  • How does Eugene view the role of AMMs in the DeFi space?

    -Eugene sees AMMs as a liquidity bootstrapping mechanism suitable for new coins, but believes they are not designed to be the ultimate solution for liquidity provision. He thinks AMMs serve a purpose but are not as efficient as traditional market-making models, especially for more liquid, large market cap assets.

  • What is the main goal of Phoenix on Solana according to Eugene?

    -The main goal of Phoenix on Solana is to prove that active liquidity can be competitive with passive liquidity in an environment like Solana. It aims to provide better liquidity than centralized exchanges by building a product that market makers can use to provide really good liquidity to end users.

  • What are some of the challenges that Eugene sees with running a high-performance trading platform on a blockchain like Solana?

    -Some challenges include the need to pay gas fees for every on-chain order placement or cancellation, which can add up quickly for active market makers. Additionally, the environment is significantly different from centralized venues, requiring a new primitive for on-chain liquidity provision.

  • How does Eugene view the future of Solana and its ability to support high-performance applications?

    -Eugene believes that Solana has been ambitious and successful in its mission, offering high throughput and credible decentralization. However, he acknowledges that there are long-term issues that need to be addressed, particularly on the engineering and research sides, to ensure the platform's continued growth and success.

  • What is Eugene's take on the Solana fee model and its impact on user experience?

    -Eugene criticizes the Solana fee model, stating it does not make much sense as it does not effectively throttle demand or provide a good user experience. He advocates for a model that offers better UX, such as one with a maximum escalation limit and a clear transaction fee structure.

  • What are Eugene's thoughts on the recent changes to Solana's MEV (Miner Extractable Value) situation with the removal of the mempool by Jto?

    -Eugene views the removal of the mempool by Jto as a positive step towards prioritizing user experience over incentive compatibility. However, he believes this is not a permanent fix and that a better long-term solution is needed to support the on-chain trading economy.

  • How does Eugene see the role of blockchain in the future of finance and beyond?

    -Eugene believes that blockchain, particularly through DeFi, is well-suited for disrupting the traditional financial system by offering permissionless innovation and access. He sees a future where blockchain technology can onboard a significant portion of non-digital assets and provide better financial outcomes for users.

  • What are Eugene's thoughts on the economic security of L1 tokens and their role in the ecosystem?

    -Eugene thinks that the economic security of L1 tokens is overrated. He believes that as long as there is an honest minority that can fork out malicious actors, the economic security argument does not hold much weight. He also suggests that the focus should be more on building a platform that optimizes for applications rather than token price.

  • How does Eugene view the competition between Solana and other high-performance chains?

    -Eugene believes that Solana has an incumbency advantage due to its early adoption and network effects. He thinks that while other high-performance chains are making valuable contributions to the space, Solana's head start and continued innovation give it an edge. However, he also acknowledges that no blockchain is in a finished state and that ongoing innovation is necessary for the growth of the entire crypto industry.

Outlines

00:00

🤝 Introduction and Background

The video begins with an introduction to Eugene Chin, also known as ZeroX Trader on Twitter, who is a co-founder at Ellipsis Labs. Eugene shares his background in high-frequency trading and product engineering, and how he transitioned into the crypto space during the pandemic. He discusses his dissatisfaction with the DeFi space and the motivation behind starting his company in late 2022. The conversation delves into the inefficiencies of the traditional DeFi liquidity provision models and the need for a more efficient order book system.

05:01

💡 Evolution of DeFi and AMMs

Eugene shares his perspective on the evolution of automated market makers (AMMs) in DeFi, from the XY=K model to the introduction of concentrated liquidity AMMs like Uniswap V3. He discusses the challenges faced by AMMs, particularly in terms of providing competitive liquidity compared to traditional high-frequency trading firms. Eugene also highlights the role of liquidity mining rewards in sustaining AMMs and his changing views on their utility, especially as a liquidity bootstrapping mechanism for new tokens.

10:02

🚀 The Vision for Phoenix and Solana

Eugene outlines the vision behind Phoenix, a product developed by Ellipsis Labs, which aims to prove the viability of active liquidity provision on Solana. He discusses the challenges of providing liquidity on-chain, the importance of profitability for market makers, and the need to improve the underlying primitive for active liquidity. Eugene also shares his thoughts on the ambitious goals of Solana's founder, Anatol, and the potential for a shared global state in DeFi.

15:04

🌐 Solana's Current State and Challenges

The discussion shifts to the current state of Solana, with Eugene acknowledging the platform's high throughput and credible decentralization levels. He highlights the various challenges Solana faces, including engineering issues related to the networking layer and the need for long-term research solutions. Eugene also touches on Solana's fee model, incentive compatibility, and the recent removal of the mempool by Solana's leading node operator, Jeto.

20:05

🔄 MeV, Blockchain Speed, and Decentralization

Eugene delves into the concept of miner extractable value (MeV) and its implications on Ethereum and Solana. He discusses the differences in how each platform has addressed MeV, the potential for faster blockchains to reduce MeV, and the trade-offs between speed and efficiency. Eugene also shares his thoughts on the ideal level of decentralization for a blockchain, emphasizing the importance of aligning with the platform's goals and use cases.

25:07

🌟 The Future of Solana and DeFi

Eugene envisions a future where Solana and DeFi can compete with traditional finance, offering better trading experiences and guarantees of transparency and auditability. He predicts a future where a significant portion of non-digital assets are onboarded onto crypto rails. Eugene also reflects on the broader potential of blockchain technology beyond trading, acknowledging the ongoing innovation and the need for a pragmatic approach to evaluating the value of blockchain applications.

30:09

🤔 Final Thoughts and Outlook

In the concluding part of the conversation, Eugene shares his personal views on the future of Solana and the broader DeFi ecosystem. He discusses the importance of continued innovation, the potential for new high-performance chains, and the value of differentiating Solana from its competitors. Eugene emphasizes the need for blockchains to evolve and improve, while also maintaining a focus on applications and user experience.

Mindmap

Keywords

💡Cryptocurrency

Cryptocurrency refers to digital or virtual currencies that use cryptography for security. In the video, the guest, Eugene, discusses his transition from high-frequency trading to the crypto space, highlighting the significance of cryptocurrencies in the financial industry's evolution.

💡DeFi (Decentralized Finance)

DeFi, or Decentralized Finance, is a financial system built on blockchain technology that aims to provide services traditionally offered by banks and financial institutions, but in a decentralized manner. The video discusses Eugene's insights on DeFi, emphasizing the need for efficient order books within this space.

💡High-Performance Trading

High-performance trading refers to the use of technology to trade financial instruments at very high speeds, often leveraging algorithms and advanced software to gain an edge in the market. In the context of the video, Eugene's background in high-frequency trading is relevant to his current work in developing efficient crypto trading systems.

💡Ellipsis Labs

Ellipsis Labs is a company co-founded by Eugene that focuses on building high-performance decentralized finance (DeFi) products, such as Phoenix on Solana. The company aims to improve the efficiency and performance of DeFi platforms.

💡Solana

Solana is a high-performance blockchain platform that supports smart contracts and decentralized applications. It is noted for its fast transaction processing speeds and low fees, making it an attractive platform for DeFi projects like those developed by Ellipsis Labs.

💡AMM (Automated Market Maker)

An Automated Market Maker (AMM) is a type of decentralized liquidity pool that allows users to swap tokens without the need for an order book or counterparty. AMMs are a common feature in DeFi platforms and have been a point of discussion for Eugene, who has expressed both criticism and evolving views on their efficiency and utility.

💡Liquidity Provision

Liquidity provision refers to the act of supplying assets to a market, typically in exchange for a reward or fee. In DeFi, liquidity providers offer tokens to pools or protocols to facilitate trades and earn incentives. Eugene discusses the challenges and potential improvements in liquidity provision within DeFi platforms.

💡Market Maker

A market maker is an entity or individual that provides liquidity to a market by standing ready to buy and sell assets, thereby facilitating trading and narrowing the bid-ask spread. In the context of the video, Eugene's company, Ellipsis Labs, is working to create an environment where active market makers can thrive in the DeFi space.

💡Product Engineering

Product engineering involves the design, development, and testing of products, often with a focus on creating solutions that meet specific user needs. In the video, Eugene's background in product engineering is relevant to his work in building high-performance DeFi products that address the inefficiencies he observed in existing platforms.

💡XY=K Model

The XY=K model refers to a constant product market maker formula used in some DeFi platforms, where X and Y represent the amounts of two different tokens, and K is a constant that defines the liquidity pool's conditions. Eugene critiques this model for its simplicity and lack of competitiveness compared to traditional financial market structures.

💡Uniswap V3

Uniswap V3 is a decentralized exchange platform and a specific version of Uniswap that introduced concentrated liquidity, allowing liquidity providers to offer funds on custom price ranges. It represents an evolution in DeFi technology and is mentioned in the video as part of the discussion on the progression of DeFi platforms.

Highlights

Eugene Chin, co-founder at Ellipsis Labs, discusses the development of high-performance DeFi products like Phoenix on Solana.

Eugene's background in high-frequency trading and product engineering led him to crypto during the pandemic, where he observed inefficiencies in traditional DeFi liquidity models.

The transition from XY=K to Uniswap V3's concentrated liquidity model was a significant shift that raised questions for Eugene about the profitability of simple liquidity provision.

Eugene notes that traditional market making is highly competitive and sophisticated, questioning the viability of simple on-chain liquidity models.

The concept of AMMs as a liquidity bootstrapping mechanism is highlighted, recognizing their value in facilitating new coin markets despite their limitations.

Eugene's vision for Phoenix is to prove that active liquidity can outperform passive liquidity in an environment like Solana.

The importance of addressing the fee model and providing a better user experience is emphasized for the success of on-chain trading platforms.

Eugene discusses the need for Solana to improve its networking layer to address engineering challenges and enhance the platform's scalability.

The removal of the mempool by Solana is seen as a positive step towards prioritizing user experience over incentive compatibility.

Eugene shares his views on the future of DeFi, predicting a shift towards on-chain trading that offers better user experience, liquidity, and transparency.

The potential for on-chain trading platforms like Phoenix to eventually handle non-digital assets and disrupt traditional financial systems is explored.

Eugene addresses the criticisms of Solana from the Ethereum community, highlighting the differences in values and priorities between the two blockchains.

The discussion touches on the importance of continuous innovation in blockchain technology, emphasizing that no platform is in a finished state.

Eugene's perspective on the role of blockchain in finance is that it should be fast, efficient, and permissionless, disrupting traditional systems to deliver better outcomes.

The interview concludes with Eugene's thoughts on the future of Solana and the broader blockchain ecosystem, emphasizing the need for constant improvement and adaptation.

Transcripts

play00:00

[Music]

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hey guys I'm here today with Eugene chin

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um known on Twitter as zerox [ __ ] Trader

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uh Eugene is somebody who's been in

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crypto for a little while now has very

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good thoughts I think on the space and

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also has become somewhat of a personal

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friend so um Eugene you want to give a

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little background and uh tell everybody

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what you do thanks for having me on G uh

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yeah I'm a co-founder at Ellipsis

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Labs we build product in di specifically

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high performance uh di products like

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Phoenix on

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salana I have a pretty standard

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background spent some time in high

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frequency trading more time in product

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engineering studied math in school came

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to crypto during the pandemic spent a

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lot of time looking at dii and uh yeah I

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was not too happy with what I saw and so

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my co-founder and I started the company

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in late 2022 and here we are

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nice uh so was Phoenix or Ellipsis Labs

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which is your company uh was this the

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first work you did in dii or were you

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doing stuff before um before you founded

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this like were you actually like writing

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code before that or no depends what you

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mean by work uh you know in crypto we

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call ourselves like independent

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researchers which usually just means

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unemployed so that was me for quite a

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while in crypto sort of exploring and

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trying to figure out what's going on got

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it yeah I think that's what I would put

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myself in that category as well as well

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wellth I don't know how much research I

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do but um okay interesting so you you

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did you sp you spent a little time in

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high frequency trading um I would assume

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this is what sort of brought you to

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looking at how Marcus function in Defi

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and eventually to the conclusion that

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defi needed a very uh efficient order

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book is this like would would you agree

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with this and then also what was sort of

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like your your view on how trading was

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occurring um yeah like the structure and

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then like how you thought that you could

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like

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potentially present a solution yeah so I

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came to crypto in 2021

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and spent a lot of time looking at what

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was going on in Defi and there was this

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whole XY equals k thing uh which I guess

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very soon after I got into crypto

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was uh replaced with unisat V3 the

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concentrated

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liquidity amm and this is just like so

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foreign to someone with a little bit

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more of a trafi background and you know

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there were all these papers saying

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things like if you provide liquidity on

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the XY equals K amm you're going to make

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money and it sort of just did not make

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very much sense to me and then as all

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the coins were going

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up uh I kept thinking okay like I must

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have something wrong here um all these

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positions are making tons of

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money uh despite being like really

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really

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unsophisticated liquidity providers

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because coming from the uh the more

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traditional side electronic Market

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making is extremely extremely

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competitive industry where you have

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these high frequency trading firms

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electronic market makers who have been

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in the business for decades at this

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point spent tens of billions of dollars

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on R&D to compete in providing really

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really good liquidity which means tight

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spreads and uh lots of

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depth and this one click XY equals k

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liquidity provisioning just seemed like

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there's no way it should be able to

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compete with

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that um and I think that's pretty much

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born out to be true it became like much

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more clear when the prices started going

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down uh and you still see

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this in crypto today where on chain

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especially with amm the spreads tend to

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be wider and the liquidity providers

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tend to not make money tend to lose

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money in fact uh often times they have

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to be compensated with uh liquidity

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mining Rewards

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um and I think I have a lot more respect

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for the amm today than I did maybe like

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a year or two ago uh I think it really

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makes sense as a liquidity bootstrapping

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mechanism where the onboarding cost for

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a market maker to start providing

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liquidity on a new coin can be

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relatively

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high and this does give like a one-click

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way for someone who is not particularly

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concerned with making money on providing

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liquidity and more concerned with um

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liquidity existing at all for example a

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team that is deploying a token um so I

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think there is a real use case there um

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but it does seem relatively Fringe uh

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and if defi is to compete with grafi

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which I think should be the goal I don't

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think the goal should just be defi for

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people who don't have access to binance

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or defi for trading coins that you know

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coinbase won't list

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um so for defi to be able to compete

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with trafi you actually need to also

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compete on product you need to compete

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on efficiency you need to build really

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good products for market makers so they

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can provide really good liquidity to the

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end user yeah and you've been like

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pretty vocal about amms I would say um

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at least from what I've seen on your

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Twitter you've long like been sort of

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critical of the model or at least like

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you know you you voiced um what you've

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just said now uh so you say that you've

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like sort of had a change of opinion but

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I want to ask you like specifically do

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you think that amms

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are I don't want to say useless but like

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not nearly as useful when it starts to

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come to like assets that are not on this

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long tail like do you see a future where

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amm are useful for these like very very

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liquid large market cap assets or do you

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think that like at that point like

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you're saying like we're going to just

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be trading exclusively on order books in

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that capacity I think they're likely to

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continue existing in some capacity more

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as uh like the liquidity of Last Resort

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the backbone

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liquidity

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um where you know there are times where

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market makers don't want to provide and

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so generally the way this works on

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centralized venues whether it's in trafi

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or in crypto is someone whether it's the

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exchange or a token team is going to

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strike a deal with the market maker

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to guarantee that there's going to be

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some liquidity at some depth uh like 99%

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of the time or almost 100% of the time

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even when it might be not profitable uh

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directly on the market making and maybe

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you can replace that with some sort of

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amm like

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construct uh but the amm is really not

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designed to be the Super General thing

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in my mind it's designed to have some

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form of completely onchain liquidity in

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an environment where

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one there's no guarantee there's going

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to be sophisticated market makers who

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want to show up and onboard onto your

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system and two when the whole blockchain

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like the entire Global state does call

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it 15 or 20 transactions per second it's

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just not conducive to any sort of active

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Market making activity so you do need a

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new primitive for that environment so

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for example I think like order books

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will never make sense on ethereum Main

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net unless ethereum main net someday

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scales to you know 100,000

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TPS yeah and that's long like that's

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basically been the rationale at least

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like for since the Inception of amm is

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that like you realistically can't have

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these like very high frequency order

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books on top of a blockchain that you

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know uh moves every 12 seconds but um so

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it to to that end um what did you like

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what were you looking for when you uh

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started like building out Phoenix like

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what was in your mind what you needed to

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do and then also we can kind of like I

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suppose move on to like salana as a

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whole and like how you felt that salana

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specifically would like enable what you

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were looking to do yeah in my mind

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Phoenix is like very far from a

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completed product it's just a naive

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vanilla order book implementation on top

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of

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salana with spot trading only

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and yeah it's really a proof of concept

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where first we need to prove out the

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product thesis that active liquidity can

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be competitive with passive liquidity on

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an environment like salana and it's not

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obvious that this is going to be the

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case because providing liquidity on

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chain is very different from providing

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liquidity on a centralized

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venue I think the most important piece

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is you have to pay gas the market maker

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has to pay gas anytime they want to

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place an onchain order anytime they want

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to cancel an onchain order and yeah that

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number might be very small but if you're

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placing and cancelling orders very

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rapidly uh you know those cost just add

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up and so you need enough volume to to

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make up for that and then the second

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piece is these active market makers

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really care about being profitable

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they're like sophisticated entities they

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know how to measure the profitability of

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a strategy they're not looking at

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you know some big green number on the

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screen that says 800% apy and thinking

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like okay that's like probably good to

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go um so the market liquidity providers

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are more sophisticated and more

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sensitive to profitability than a

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passive liquidity provider and the

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environment is significantly worse than

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it is providing on a centralized venue

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so it's I think like not obvious a

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priori that active liquidity is even

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viable on chain and so we had to prove

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that at first I think at least in the

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current market conditions or the market

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conditions over the last year which have

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obviously changed quite a

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bit

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uh yeah the the market makers make money

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on Phoenix they make uh quite a bit of

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money and are able to provide tighter

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spreads than the the amm now now that

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like we've proven that active liquidity

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can outperform passive liquidity you

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know we still need to make the core

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underlying primitive better because the

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goal isn't to provide better liquidity

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than Unis swap uh the goal is to provide

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better liquidity than than coinbase or

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binance or in the long run like the New

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York Stock Exchange yeah and this is

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something that anatol the founder of

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Sona is like very fixated on I mean this

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has been like a lot like one of his uh

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selling points on SOL he says like I

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think we can create this Global state

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that competes with Finance competes with

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coinbase first of all is this

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realistic um second of all just out of

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curiosity a little bit on your last

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question you said that market makers are

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profitable on Phoenix do you think this

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is a function of the flow being

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primarily non-toxic I don't know I

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actually don't know if it is or I mean

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is this like a long run profitable

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Market making strategy for them or is

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this like you said under current market

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conditions so those are kind of two

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questions but you can um answer how you

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want I'll answer the second one first I

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think it is always very difficult to

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make a long run general statement uh

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which is why is going to hedge with

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something like in the current market

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conditions there's a lot of non-toxic

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flow on salana today although the market

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makers were still profitable when the

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volumes were 1% of what they are today

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and there definitely are uh shall we say

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toxic uh actors uh I don't mean toxic in

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a derogatory way I mean it just in the

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nature of the flow

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and you know they're making money as

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well and as a market maker your job is

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basically you want to provide to the

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non-toxic flow while losing as little as

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possible to the toxic flow and so sort

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of the ratio of how much non-toxic flow

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to toxic flow there is uh matters quite

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a bit and yeah in the market conditions

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from six months ago when the volumes are

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1% of what they are today and also in

play11:41

the current market conditions the the

play11:43

market makers are profitable and of

play11:44

course they're adjusting their

play11:46

strategies given the volumes given the

play11:48

nature of the flow um you know very

play11:51

actively monitoring as opposed to again

play11:52

a passive liquidity provider and then on

play11:55

your first

play11:56

question one thing I've always respected

play11:59

about toly and his vision for salana is

play12:03

it's extremely ambitious I think Global

play12:06

shared State makes a ton of sense

play12:09

for uh defi specifically I think we look

play12:12

at the rollup landscape today the L2

play12:14

landscape and there's so much

play12:16

fragmentation

play12:21

and it really limits the usability and

play12:26

usefulness of a lot of these UHC ations

play12:29

are really these like pieces of infra

play12:32

where one of the biggest benefits of

play12:35

doing things on chain is the shared

play12:37

state where you have this notion of

play12:40

composability assets that can be used

play12:42

across apps in a very very seamless way

play12:45

and I think at some point you need to

play12:46

probably have some opinion on what

play12:49

pieces of State need to be shared and

play12:51

what can have more like asynchronous

play12:54

composability so for example I think it

play12:56

makes a lot of sense for uh in the long

play12:58

run of defi to live on the same shared

play13:01

State whether that's salana or somewhere

play13:04

else uh but maybe that doesn't need to

play13:06

be the same place as nfts or or dpin or

play13:09

whatever else is going on uh in

play13:12

crypto yeah I think that that's I think

play13:15

a lot of people are realizing this at at

play13:17

this point um okay so I want to ask you

play13:19

more specifically about like salana what

play13:22

you what what are your scene right now

play13:24

with

play13:24

like uh well transactions are very hard

play13:27

to land on chain as as you probably know

play13:30

um and there's like you have done a lot

play13:32

of research on this I would actually I

play13:34

don't know I'm probably just talking you

play13:35

up right now but I think it's also true

play13:37

that you're like one of the foremost

play13:38

experts on the salana fee structures you

play13:41

have some strong opinions what's salana

play13:43

doing right what's salana doing wrong

play13:45

like what are the issues and like how

play13:46

rectifiable are these you can just

play13:48

ramble however you want yeah there's a

play13:52

lot of problems with salana today um I

play13:56

think the most important thing though is

play13:57

like salana like kind of works it mostly

play14:00

works and it works at quite high

play14:03

throughput with very credible levels of

play14:06

decentralization uh which is extremely

play14:08

differentiated in the market today uh

play14:11

and one mental model for salana is

play14:14

basically since uh main net beta

play14:16

launched in March I think March of

play14:20

2020 Sal's basically been putting out

play14:22

fires the entire time where things are

play14:25

just completely breaking on the

play14:27

engineering side or

play14:29

uh on the business side or

play14:31

whatever and over the last year there's

play14:34

been a ton of time to you know pay down

play14:37

some of this technical debt think

play14:39

through some of the more like long-term

play14:40

research problems which salana just

play14:42

hasn't really had the luxury of being

play14:45

able to deal with this all has been in

play14:46

like this survival firefighting

play14:48

mode and yeah like the again the mission

play14:52

is extremely ambitious like you're

play14:54

building this massive distributed system

play14:56

that's permissionless permissionless to

play14:58

participate in whether it's as a

play15:00

validator um you know contributing to

play15:04

consensus or as like a user application

play15:06

developer and that's just an extremely

play15:07

hard problem so I think salana was

play15:10

founded

play15:11

in 2017 or

play15:14

2018 and the output since then has just

play15:17

been extremely impressive and I think

play15:20

it's super unrealistic to expect that

play15:22

Sal would look anything like a completed

play15:24

product

play15:26

today um so yeah mentioned that volumes

play15:30

have picked up by about 100x in the last

play15:33

six to to eight months and it's brought

play15:34

a lot of problems to the chain uh

play15:37

there's definitely some some of these

play15:38

like long-term issues that need to be

play15:41

addressed some of which are on the

play15:42

engineering side like the what we call

play15:46

the networking layer on salana which is

play15:47

really just part of the uh client

play15:51

implementation has some issues where

play15:54

effectively every validator has these

play15:59

like ports that are exposed to the rest

play16:01

of the world and there's you know

play16:04

trading opportunities very directly

play16:06

profitable opportunities to sort of spam

play16:08

this layer with massive amounts of

play16:10

traffic and it's a very difficult

play16:12

engineering problem to figure out okay

play16:14

how are we going to throttle this how

play16:16

are we going to assign bandwidth to

play16:18

different types of users or rpcs or uh

play16:23

or

play16:25

stake uh so there's a lot of engineering

play16:28

problems there are plenty of research

play16:30

problems as well uh I think salana

play16:33

historically is not focused very much on

play16:35

incentive compatibility very different

play16:37

from the ethereum side and I think it's

play16:40

worked out quite well for salana just

play16:42

really focusing on engineering really

play16:43

focusing on performance and sort of

play16:46

kicking the C can down the road on some

play16:48

of these uh thornier research problems

play16:50

which we'll need to get addressed at

play16:52

some point but actually have not been a

play16:54

significant issue to

play16:56

date on the topic of fees yeah I think

play16:59

like the fee model and just doesn't make

play17:01

a ton of sense right now where there's a

play17:03

couple things you're optimizing for with

play17:07

fees first you have some limit on block

play17:10

space

play17:13

and so like you can't increase Supply

play17:17

infinitely and that means you need some

play17:19

mechanism for throttling the demand

play17:22

which is almost always going to be on

play17:23

something like price and one really good

play17:26

way to do this is with uh like a GL fee

play17:30

model where you also care about the ux

play17:34

and we saw this with ethereum you know

play17:36

1559 where yeah there was the burn and

play17:38

all that but actually much more

play17:40

important in my opinion was the ux

play17:42

Improvement where you basically know I

play17:45

can send a transaction with some you

play17:47

know like small tip and then I'm just

play17:49

going to pay the base fee whatever it is

play17:50

and I know it can't increase by like a

play17:52

100x in the next block there's a Max

play17:56

escalation and you're just going to get

play17:59

your transaction in with quite high

play18:01

probability in most market conditions

play18:02

not all market conditions but most

play18:04

market

play18:05

conditions and this type of mechanism is

play18:08

really really good for the ux where the

play18:11

user doesn't need to spend time or the

play18:12

wallet doesn't need to make a decision

play18:13

on behalf of the user of oh how much fee

play18:16

do I think I need to bid to get in in

play18:19

some sort of like first price auction

play18:21

mechanism salana also has continuous

play18:23

block building so any sort of first

play18:25

price auction is still going to have uh

play18:27

inefficiency where I think you could

play18:30

make an argument for the efficiency

play18:33

being just as good with the first price

play18:35

auction on ethereum as um as a 1559 like

play18:41

model or or probably Superior I think

play18:43

the mechanism design designers would say

play18:46

yeah um okay also I wanted to ask you so

play18:49

jeto recently like did away with their

play18:52

me pool like I think you had talked

play18:56

about how bad sandwiches were getting on

play18:57

salana um yeah what do you think of this

play19:01

like is this one of the incentive

play19:02

compatibility problems that you're

play19:04

talking about or the others I actually

play19:05

like wanted to ask more what you think

play19:07

the incentive incompatibilities are and

play19:10

then yeah like so what is the situation

play19:11

like with with me now where is it headed

play19:14

is somebody going to step in and like

play19:15

just take a take goo's place and then

play19:18

also sorry I keep like just thrusting

play19:20

questions at you but the other thing I

play19:21

was going to ask is just like if you

play19:22

could um like synthesize the difference

play19:26

between meev that exists on like um amm

play19:30

that we see versus order books um and

play19:33

like if order books eventually are just

play19:34

going to like sort of look like

play19:36

traditional stat ARB or if there's like

play19:39

you talked about the difficulties of

play19:40

Market Mak or or the differences Market

play19:42

making on something like binance versus

play19:43

Phoenix so um yeah like I hope you

play19:45

remember all those things and because

play19:46

I'm not sure that I do but uh yeah you

play19:48

can just address any of those sure let's

play19:50

start with jto uh I think removing the

play19:54

men pool was a really really good

play19:58

decision

play19:59

uh and it is another example of salana

play20:02

prioritizing I mean salana here in like

play20:04

this very like vague nebulous sense of

play20:07

uh you know it's comprised of a bunch of

play20:09

different actors and of which like jeto

play20:13

is one and it's another example of

play20:15

salana prioritizing the user experience

play20:19

over incentive compatibility because

play20:21

yeah in the long run let's say salana

play20:24

makes no changes moving forward on the

play20:27

engineering uh and consensus side of

play20:31

things yeah the long

play20:32

run uh you lose continuous block

play20:35

building you end up with something that

play20:36

looks like PBS you might even end up

play20:37

with something looks like four slot PBS

play20:39

because leaders uh on salana get four

play20:42

slots in a

play20:43

row um and you also definitely end up in

play20:49

this PBS construction with some sort of

play20:52

front running

play20:53

capability and that's just like really

play20:55

bad for the user where you have these uh

play20:58

you know today the main use case on

play21:00

salana I would say like on any

play21:02

blockchain

play21:03

is playing the shitcoin game

play21:06

and a big part of shitcoin game is you

play21:09

want to place a market order Market

play21:11

order really only makes sense in a world

play21:14

where you have this first in first out

play21:16

type

play21:17

ordering uh because when you come into

play21:20

the market and you say I'll take

play21:21

literally any price or I'll take up to

play21:23

50% slippage or 99%

play21:25

slippage if that order is not executed

play21:28

right way if someone else gets to look

play21:29

at it first then you're going to get

play21:30

front run you're going to get the worst

play21:31

possible execution which is just a

play21:33

terrible outcome for the end user and

play21:37

yeah there's sort of ways around this

play21:39

with private order flow uh we're seeing

play21:42

this game start to play out or actually

play21:45

it's played out quite a bit on the

play21:46

ethereum side where uh you know some of

play21:48

the largest block Builders three main

play21:50

block Builders and a couple of them have

play21:53

exclusive order flow deals with some of

play21:54

these uh large senders of Market order

play21:57

shall we say these telegram trading apps

play22:00

where users are relatively execution

play22:02

insensitive

play22:04

and it's quite centralizing at the Block

play22:06

building layer of course where if you

play22:08

have more market share

play22:10

today uh the you're able to provide

play22:14

better guarantees to the incremental

play22:15

order flow so the cost to to serve the

play22:18

order flow is is lower for you

play22:22

and yeah if you play everything out to

play22:24

the equilibrium you end up with

play22:25

something very very similar on salana I

play22:28

think jto turning off the men pool is

play22:30

not some permanent fix I don't think

play22:32

it's ever been marketed like that

play22:33

certainly not by the jto team

play22:36

and what it does do is buy a little bit

play22:39

of time where uh yeah sort of going to

play22:43

have to figure out how to do Market

play22:45

order on chain

play22:48

if if you're going to be able to support

play22:50

some sort of shitcoin economy and you

play22:53

can do this with like a trusted

play22:54

sequencer which is what the layer twos

play22:55

do today um but if you want the sequence

play22:59

of set to be fully permissionless then

play23:02

you're going to need a better long-term

play23:04

solution so now I have two questions and

play23:06

that's I'm G to remember which ones they

play23:08

are okay so the first one is you have

play23:10

observed and honestly I would say very

play23:14

well informed on ethereum me and you've

play23:17

watched what's sort of UN unfolded in

play23:19

that uh in that domain what are your

play23:22

thoughts on just like the general

play23:23

direction of me on ethereum and like do

play23:28

you think that so like obviously there's

play23:30

been some I mean there's been a lot of

play23:33

opinions on this but there's been some

play23:34

opinions that ethereum has in some way

play23:36

like attempted to maximize the me well

play23:39

actually this is sort of a stated goal

play23:40

right the meev accelerationist whatever

play23:41

you want to call it they've said look

play23:43

we're going to like maximize it and they

play23:44

we're going to work out the Kinks but

play23:45

then there's people who have said okay

play23:46

well it's not so clear we're working out

play23:48

the Kinks and it seems to just like be

play23:51

accelerating um so I want I want to know

play23:53

like what your general view is on

play23:54

ethereum MV and then the other thing is

play23:57

how much of this because this is

play23:58

something that toally talks about a lot

play23:59

and you know there's also different

play24:01

opinions on this how much of me like

play24:03

just functionally is solved by by

play24:05

blockchain's gun really really fast like

play24:07

is it is there a way to

play24:10

um uh is there a way to quantify that

play24:13

like such that you can I I know that you

play24:16

know like it's the difference between

play24:18

onchain prices and offchain prices like

play24:19

this is like a lot of what contributes

play24:22

to M on ethereum for example but is

play24:23

there a way for you to say like we can

play24:25

push me down to a negligible amount with

play24:27

xeed or you know like the blockchain

play24:30

going this fast in in your mind so those

play24:32

were two two specific questions but okay

play24:35

I'll try to answer them in order this

play24:37

time so the first was on ethereum

play24:41

me I

play24:43

think ethereum has not had the luxury

play24:45

that salana has had in addressing the me

play24:49

problem where I think it was another

play24:51

case of oh [ __ ] is like on fire and we

play24:53

us to address this right away uh I think

play24:56

this was starting in like late 2019

play24:58

early 2020 as defi really started to

play25:01

pick up and you know there were all

play25:04

these mempool games getting played you

play25:06

all these failed transactions landing on

play25:08

chain which is much more painful on

play25:10

ethereum than it is on salana because

play25:11

the block space is so

play25:13

constrained

play25:16

and because there were like so few

play25:19

mining pools that were uh contributing

play25:22

like a large market share of Mining and

play25:24

there's like sort of no way to kick them

play25:25

out you can't like slash them there's

play25:26

like actually no option to

play25:28

to uh and I don't think a the would have

play25:31

considered this anyway

play25:33

but there wasn't really a way to uh you

play25:37

know nicely ask a minor to not do the

play25:40

profit maximizing thing and in that

play25:44

market we

play25:45

saw ethereum

play25:48

miners spinning up deals with Searchers

play25:51

sort of under the table we

play25:54

saw some mining pools attempt to extract

play25:56

Meb on their own

play25:59

and so this democratization angle I

play26:01

think made a lot of sense in that proof

play26:03

of work World

play26:07

um and you actually had to you probably

play26:10

had to enable sandwiching front running

play26:17

because all the order flow was public at

play26:19

the time maybe you could have just gone

play26:20

the private order flow

play26:24

route I think the real issue is you know

play26:28

moving towards proof of stake and

play26:34

PBS really having an emphasis on this in

play26:37

set of compatibility uh really having

play26:39

this focus on the solo Staker being able

play26:41

to make as much yield as the

play26:43

institutional Staker which is never

play26:45

actually going to be the case but the

play26:47

goal is to at least like decrease the

play26:49

Gap and hope that I don't know solo

play26:51

stier air drops will make up for the

play26:52

difference or more than make up for the

play26:57

difference

play26:58

uh and to contrast with salana the me

play27:04

infrastructure just didn't really

play27:07

exist and only started to get built out

play27:10

during this Market when there was very

play27:14

very little activity on salana and

play27:18

so the actors extracting Meb I would say

play27:22

in general like less sophisticated on

play27:23

the salana side than on the ethereum

play27:25

side which is just a function of the the

play27:27

market side

play27:28

and I think that will not be true in the

play27:30

medium to long run J has a very strong

play27:33

position in this market and I think they

play27:35

are able

play27:37

to influence For Better or For Worse the

play27:40

like where the Meb markets go on Sal

play27:42

today they have more than 70% of the

play27:44

stake I believe which is not them owning

play27:46

the stake it's just 70% of the stake

play27:48

running the jetto salana

play27:53

client uh and yeah I think like removing

play27:55

the men pool is one thing that I mean

play27:57

well to be fair they added it in in the

play27:59

first place there's no me pool by by

play28:02

default on salana transactions are sent

play28:04

directly to the

play28:06

leaders there's no PTP gossip uh of of

play28:09

pending

play28:13

transactions uh yeah I think removing

play28:14

that was just like clearly a good

play28:16

decision uh and then your second

play28:18

question was good but I forgot what it

play28:19

was my second question was just I mean

play28:22

you started to move that direction but

play28:23

it was just if you make it really really

play28:26

fast you make a block really really fast

play28:29

can you

play28:31

decrease me to I don't know a negligible

play28:34

amount I don't know if that's really uh

play28:37

a stated goal or I mean how how much

play28:40

does just making it really fast because

play28:42

this is something like anat says right

play28:43

like this is like one of his big points

play28:45

is like you make it really fast there's

play28:46

less than e it's just like period end of

play28:47

end of story and I wanted to hear your

play28:49

take on that like coming from like the

play28:52

more more looking at this as like

play28:53

somebody building an application top uh

play28:55

salana and yeah you can run with it from

play28:58

there sure yeah uh I guess my first

play29:02

point here is the application developer

play29:03

really needs to care about me because

play29:06

you can think of an application sort of

play29:07

as this Clos system so on Phoenix for

play29:10

example you have uh like market makers

play29:13

and you have uh takers you have two

play29:15

sides of the the flow and then what me

play29:19

sort of is is this like extraction from

play29:22

this Clos system and so if you're trying

play29:24

to build something that is sustainable

play29:25

you want to minimize that in the same

play29:27

way that uh you know if you're doing any

play29:29

sort of Market design you want to

play29:30

minimize the the toxic flow relative to

play29:32

the non-toxic flow with the

play29:34

understanding that you'll never be able

play29:35

to get to zero toxic flow and that

play29:37

that's

play29:39

okay

play29:40

um running the blockchain

play29:44

faster definitely reduces some types of

play29:47

me increasing amount of block

play29:51

space

play29:53

Also increases

play29:55

the protocol design space

play29:58

and so there's more things application

play30:00

developer can do to mitigate

play30:03

me at the end of the day though what you

play30:05

really care about is the proposer or

play30:09

whoever has the right

play30:10

to insert and order the

play30:13

transactions uh what really matters is

play30:15

how much agency they have so on ethereum

play30:17

they have this not easy but relatively

play30:20

easy problem of okay you have call it

play30:22

150 transactions and you have 12 seconds

play30:24

to like jam it into a block and me the

play30:27

[ __ ] out of all the retail trades and on

play30:31

salana it's like you have 1.6

play30:34

seconds uh across your four slots and

play30:38

far more transactions so it's like a

play30:40

little bit harder to to meev it uh no

play30:44

matter what though the most

play30:45

sophisticated me actors are going to be

play30:49

smarter and have more uh compute

play30:51

capability than like the the weakest

play30:54

validator and so if you're an L1 and you

play30:57

care about

play30:59

someone being able to run a node on a

play31:02

Raspberry Pi or be a validator with you

play31:05

know spending less than ,000 dollar a

play31:08

month on on compute and and Cloud

play31:11

hosting the most sophisticated Searchers

play31:14

are going to have much more

play31:16

capabilities and basically the only

play31:19

thing you can do here is reduce how much

play31:21

agency the proposer has which will have

play31:24

other effects like the transaction

play31:26

ordering will be less efficient

play31:27

efficient in the economic sense which I

play31:30

think might be okay

play31:33

because like the max efficiency means

play31:37

Max extraction which is bad for the

play31:40

users and bad for the

play31:42

applications there's this interesting

play31:44

proposal on salana from

play31:47

toi uh I think it's called concurrent

play31:51

block proposers or something like that

play31:54

where instead of having a single

play31:55

proposer per slot you have multiple

play31:59

proposers

play32:01

and let's pretend there's two

play32:04

proposers

play32:06

they each have a right to call it half

play32:09

the block space and then they pick some

play32:11

set of transactions that they're going

play32:12

to put in that block space and then the

play32:15

consensus mechanism finds a way to merge

play32:19

them into a single block and so you're

play32:20

going to lose a lot of efficiency here

play32:23

because two independent parties packing

play32:25

blocks just going to be less efficient

play32:27

than one one you're going to have

play32:29

probably more failed transactions

play32:30

because if I build a transaction uh if I

play32:34

send a transaction I don't know at

play32:36

execution time or sorry

play32:38

at uh at the time it's inserted into the

play32:41

block you don't know if it's going to

play32:43

revert or not because execution depends

play32:46

on

play32:46

ordering and so yeah you just like lose

play32:49

efficiency in all these places but you

play32:51

really you also reduce the amount of

play32:53

agency that proposers have which reduces

play32:55

the amount of extraction there can be so

play32:58

if you can run a system like that really

play33:00

really fast where you have like a ton of

play33:02

block space and you know we're just

play33:04

we're just going to eat the failed

play33:05

transactions and it's not a huge deal I

play33:07

could see something like

play33:08

that mitigating some of the problem in

play33:11

the medium to long run is a huge

play33:13

engineering lift to get there and

play33:15

there's also some tradeoffs where today

play33:17

on salana you get pre-confirmation for

play33:21

free because the leader is streaming out

play33:23

the block as they're building it and

play33:28

that is not just was your transaction

play33:31

included or not it's the state

play33:33

transition that comes with the the

play33:37

transaction and once you separate

play33:40

transaction inclusion from transaction

play33:42

execution then you have to wait for

play33:44

consensus and these multiple partial

play33:46

blocks get merged to know what the state

play33:49

transition is so there's there's going

play33:50

to be trade-offs all over the place here

play33:52

but that's the nature of this

play33:53

distributed permissionless system uh I

play33:56

wanted to ask your person opinion you

play33:58

don't have to speak on party lines here

play34:00

I want to ask your personal opinion on

play34:03

the level

play34:05

of I don't know I would I guess

play34:07

decentralization I can't think of a

play34:08

better word right now but what do you

play34:10

think the ideal chain looks like in

play34:13

terms of do people need to be able to

play34:16

run a Raspberry Pi or is it this idea of

play34:21

um a hundreds of data centers around the

play34:24

world um like what to you is

play34:28

I don't know what should we strive for

play34:30

in this capacity well it depends on what

play34:32

the the end goal is so for example if

play34:35

your goal is for the chain to be

play34:36

resilient to an event like World War III

play34:39

then you're also going to want to be

play34:41

robust to things like massive data

play34:44

center

play34:45

censorship and if your goal is to build

play34:49

a financial system that runs on chain

play34:51

and provides really good outcomes to

play34:53

users

play34:56

then you know your requirements might

play34:58

look a little bit different going off

play35:00

that a little bit what is your view on

play35:02

the sole token this isn't like Financial

play35:04

advice obviously I'm just like thinking

play35:06

as as the token used on salana and like

play35:09

what is the long-term vision for this I

play35:12

think CU I've talked toally and what he

play35:14

says is like what we're trying to do is

play35:16

build a platform and if salana if the

play35:18

soul token is like the 100th largest by

play35:22

market cap I think token on salana then

play35:24

we've done a good job because we've

play35:25

optimized for applications right um does

play35:28

this work in your mind in terms

play35:31

of yeah like developing a sustainable

play35:35

fee and validator structure so the L1

play35:39

token price matters if you care about

play35:44

Economic Security and I think it's not

play35:47

actually super clear how important

play35:48

Economic Security is but you could

play35:49

imagine a world where let's say the soul

play35:51

token was extremely cheap there's like

play35:52

no demand whatsoever call it like $1 or

play35:54

one cent and then that means some can

play35:58

come in and buy up like a massive chunk

play35:59

of it um are they able to force an

play36:03

invalid State transition answer is still

play36:05

no uh which I think is totally argument

play36:07

you see like one honest node to go out

play36:10

to the world and say like hey this guy

play36:11

with 99% of the stake is is doing

play36:13

something that's [ __ ] up so we need to

play36:14

Fork the chain and I think that's

play36:17

all quite

play36:21

reasonable

play36:26

um the

play36:29

l1s I think have the best argument for

play36:32

why the application actually needs a

play36:34

token uh it makes a lot of sense in the

play36:35

proof of work context makes a lot of

play36:37

sense in the proof of State context um

play36:39

whereas I think a lot of other shall we

play36:42

say like applications with the token or

play36:44

sort of fishing for a reason to have the

play36:46

token doesn't actually make sense for

play36:47

the product uh more makes sense as like

play36:50

a you know

play36:51

a uh like a capital generation mechanism

play36:54

shall we say and

play36:59

yeah I just don't really see any reason

play37:02

why you know if if the soul token is the

play37:04

H hundredth

play37:07

largest by market cap on salana why the

play37:10

chain like doesn't function I think the

play37:11

economic security arguments don't make a

play37:15

ton of sense uh I think it's quite

play37:18

unrealistic though uh maybe the way

play37:21

tokens trade will change in the future

play37:22

today they very obviously do not trade

play37:24

on any sort of fundamental basis so if

play37:26

you ascribe to that then like the fee

play37:28

model and the revenue model don't

play37:30

actually matter for the valuation of the

play37:32

token but I think it's CBD if that will

play37:36

continue in

play37:37

perpetuity yeah so you kind of ascribed

play37:41

to the economic security is a meme

play37:44

category I wouldn't say I wouldn't put

play37:46

it that strongly but I think it is

play37:50

overrated yeah I think and also like as

play37:52

you can tell toally goes way out of his

play37:53

way to troll about this right like with

play37:54

the Chihuahua chain stuff like he goes I

play37:56

mean he's like like it's like

play37:58

performance art you know it's crafty but

play38:00

it also does like it certainly does make

play38:04

it it definitely makes you think let's

play38:05

put that way uh okay I think the main

play38:08

point the main point that he has is the

play38:10

honest minority can always Fork out and

play38:13

yeah it's going to be extremely costly

play38:15

but if you have a dishonest majority

play38:16

that's the only thing you can do and

play38:18

yeah definitely if you're if like that's

play38:20

part of the

play38:23

uh the plan against some

play38:28

yeah very large actor that accumulates a

play38:30

ton of stake then yeah I think Economic

play38:32

Security matters a lot less

play38:35

than than most people in crypto think

play38:38

yeah 100% agree and also like the thing

play38:40

is like the part of the part of the

play38:44

premise of proof of stake is that you

play38:46

can Fork out you know malicious actors

play38:49

and so like ascribing some not like um

play38:53

amount that can be denominated as

play38:54

economic security is like somewhat of a

play38:56

frivolous Endeavor because like the end

play38:58

of the day like it's the it's the notion

play39:00

that their state could be forked out

play39:02

that should in theory deter any

play39:05

dishonest actors like at least at least

play39:07

in the model so like I do kind of wonder

play39:09

about that myself but anyways um okay I

play39:12

want to like zoom out now or I don't

play39:13

know zoom out but just like take this a

play39:15

slightly different direction um we can

play39:17

start with like okay so in five years F

play39:21

okay you can start with 5 years and then

play39:23

after that I'm going to push you to 15

play39:25

years what are we using Phoenix for what

play39:28

are we trading um like give me the give

play39:32

me like the hyper bullish outcome not

play39:34

like for investment reason just give me

play39:36

the hyper bullish outcome

play39:38

on trading on chain uh with Phoenix

play39:41

specifically and then we'll move to like

play39:42

def5 as a whole but like what what where

play39:44

where is Phoenix headed and like what is

play39:45

your hope for what you're building in

play39:48

five years we should be able to get to a

play39:50

point where trading on

play39:52

chain

play39:54

is as good or maybe even a significantly

play39:57

better experience in trading on a

play39:59

centralized crypto exchange and

play40:01

concretely what that means is the

play40:03

product experience is better the

play40:04

liquidity is as good or better uh plus

play40:07

you have these guarantees

play40:10

around auditability

play40:12

transparency permissionless access

play40:14

permissionless Innovation on top of it

play40:16

which don't exist with centralized

play40:18

exchanges or at least don't

play40:21

today 15

play40:24

years on boarding of

play40:28

a significant chunk of non-digital

play40:31

assets onto this um onto these crypto

play40:35

rails I don't know what those I don't

play40:36

know what those um onboarding mechanisms

play40:40

are going to look like but by that point

play40:44

I think if we haven't been able to build

play40:46

a system that is you know defy as a

play40:49

whole better than trafi I would view

play40:52

that as a pretty significant failure

play40:55

yeah so like in 15 years are we Trading

play40:58

apple and Amazon

play40:59

shares on Phoenix

play41:02

specifically no but just on

play41:04

chain I think so okay that's quite

play41:07

optimistic uh all right so then like

play41:09

sort

play41:11

of adjacent to this question uh what is

play41:15

like just your overall view on Defi and

play41:17

maybe blockchain as a whole like what is

play41:19

it very useful for like so you seem to

play41:20

think that it can be very useful for

play41:22

trading obviously building a trading

play41:23

application what else is like what is

play41:27

the future for this industry and like

play41:30

what is this stuff really good for and

play41:32

I'm GNA press you so be prepared yeah so

play41:34

I don't think about the philosophy of

play41:37

crypto all too much I'm really really

play41:39

focused on the defi side I'm not super

play41:42

imaginative when it comes to uh what the

play41:45

future of nfts or crypto gaming might

play41:47

look like where those applications are

play41:51

uh I

play41:53

think there is like sober realiz ation

play41:57

that needs to be had which is that not

play41:59

everything belongs on chain you have to

play42:01

think about what are the costs and what

play42:04

are the benefits of putting something on

play42:05

chain so the costs are extremely high

play42:07

where just any application you put on

play42:09

chain uh is going to be from like a

play42:12

developer perspective much less

play42:14

ergonomic much more expensive much more

play42:17

expensive from the user point of view

play42:19

because you're eating this overhead of

play42:21

you know thousands of nodes coming to

play42:23

consensus uh and sharing the state

play42:25

rather than a single copy

play42:28

in

play42:30

AWS um in Virginia or something like

play42:33

that and then the benefits are

play42:38

around permissionless access or

play42:40

sensorship resistance they're

play42:43

around composability and permissionless

play42:47

Innovation and this is why like Finance

play42:50

I think makes a ton of sense for crypto

play42:53

where you have this massive Trad F

play42:55

system which I think is like mostly been

play42:56

built by well-meaning

play42:59

actors um or at the very least like

play43:02

profit seeking actors um but it's been

play43:06

built iteratively over like a hundred

play43:08

years right and that means there's like

play43:11

a lot of crft in the system there's a

play43:13

lot of entrenched actors is very

play43:15

difficult to

play43:16

innovate and I don't think Finance isn't

play43:18

is in a completed State I don't think

play43:19

it's near a completed

play43:21

State and so crypto specifically with

play43:26

its permissionless Innovation and

play43:28

access is perfect for disrupting the

play43:31

traditional Financial system and not to

play43:33

just like build some shitcoin because

play43:34

you know on the side but actually to

play43:37

build a financial delivers better

play43:39

outcomes to the end users which are like

play43:40

real people and real companies real

play43:42

businesses as opposed to again

play43:45

uh like pure shitcoin nihilism when you

play43:49

look at ethereum right now and like the

play43:51

we sort of touched on this but now like

play43:53

zooming out just talking about like I

play43:55

guess defi as a whole like are you what

play43:59

do you

play43:59

see the future of rollups um cross chain

play44:05

interoperability all of this stuff like

play44:07

you you mentioned the fragmentation like

play44:09

this is something that's discussed like

play44:10

at infin itm right and like uh it seems

play44:13

like this stuff can be well I don't know

play44:15

honestly I don't write code so I don't

play44:17

know if this stuff can be like solved so

play44:18

easily um some of it is more intuitive

play44:21

some of it's like I'm not quite sure

play44:22

about but uh it is annoying like to it

play44:26

it is annoying when you have like your

play44:28

metamask and you have to switch between

play44:30

eight chains like it's like there's no

play44:32

denying that right um and I think that

play44:34

salana has stepped up like Solana saw

play44:36

like the benefits of like just sticking

play44:38

this all in one layer and like running

play44:40

with it and like we'll fix problems like

play44:41

you know move fast break things and like

play44:43

things break like um so is ethereum

play44:47

still innovating in your mind and what

play44:50

do you think about rollups as a whole

play44:53

like is this the direction that should

play44:54

be taken I think it's a very reason

play44:57

reable approach to take I guess to

play44:58

answer the first question ethereum is

play44:59

definitely still innovating ethereum is

play45:01

on the Forefront uh specifically on the

play45:03

research side of so much that relates to

play45:06

blockchain I think salana owes a ton to

play45:09

ethereum uh for Paving the way and

play45:12

sewing some of the initial Vision even

play45:14

if uh you know salana is opinionated in

play45:17

ways that might disagree with some of

play45:19

the ethereum core

play45:21

philosophies or core values let's

play45:24

say on rollups specifically yeah of

play45:28

course the interop is a huge problem

play45:30

today I think there's a bunch of

play45:32

different narratives floating around

play45:33

here the rollup companies or the L2

play45:36

developers will tell

play45:39

you well the big ones will tell you they

play45:42

want everything to happen on their own

play45:45

on like their own L2 so uh you know

play45:49

believe in this vision of one true L2

play45:51

and you just have to Duke it out to

play45:52

figure out who's going to win and then

play45:55

some of the infro companies

play45:58

are like pedaling this narrative around

play46:00

oh you can just like solve the interupt

play46:02

problem and I think today we just

play46:04

haven't seen a good solution there and

play46:07

it depends on what you mean by interupt

play46:09

so there's a bunch of different forms

play46:11

like uh for example synchronous

play46:14

composability versus asynchronous

play46:16

composability can I like touch multiple

play46:19

applications across multiple layer twos

play46:22

or multiple chains in like the single

play46:24

Atomic action which uh you know

play46:26

synchronous composability and

play46:29

this almost certainly requires um some

play46:33

sort of shared some some notion of

play46:35

shared validity which is like sharing

play46:37

the same sequence or set

play46:39

and having one Chain's validity depend

play46:42

on anothers and this sort of just looks

play46:45

like one Mega rollup you just called it

play46:48

n different rollups so you get n tokens

play46:51

plus a sequence or token so maybe there

play46:54

is some product Market fit for that but

play46:55

from a architectural standpoint I think

play46:57

doesn't make too much sense uh I call

play47:00

that the salon at home where you have

play47:02

this uh multiple you know single

play47:05

threaded machines that sometimes

play47:07

interact with each other which actually

play47:09

looks very similar to a massive uh

play47:11

single state machine

play47:14

where you have a locking mechanism on

play47:17

different pieces of state which is how

play47:19

salana is

play47:22

built

play47:24

um but again not everything needs to be

play47:28

composable with each other in the same

play47:30

way that you know we use tons of

play47:32

different internet applications today

play47:34

but my slack doesn't need to know

play47:37

everything that is going on on my Gmail

play47:39

it's actually okay if one of them runs

play47:41

on like AWS and one of them runs on on

play47:43

gcp it's just like not a problem

play47:45

whatsoever and again like yeah your

play47:47

crypto gaming might just happen

play47:48

somewhere else from your Defi and I

play47:50

think that's that's totally fine yeah

play47:52

what criticisms of salana that ether

play47:58

Community wages do you think are

play48:01

legitimate and which ones do you think

play48:03

are

play48:05

illegitimate I think most of them really

play48:07

just come down to differences in values

play48:10

and so that will affect if you think

play48:11

it's like legitimate or illegitimate for

play48:14

example ethereum really has this value

play48:17

of anyone should be able to run a node

play48:19

from home anyone should be able to

play48:20

participate in consensus from like a

play48:22

home internet connection and uh

play48:25

relatively small

play48:27

hardware and the reason for that is for

play48:30

censorship resistance and some notion of

play48:33

like World War III robustness and this

play48:36

is just not really something that salana

play48:39

prioritizes that highly and that's just

play48:42

a values

play48:43

difference um I think maybe where I

play48:46

would disagree with Sana is

play48:49

more on the research side and how

play48:52

important some of these you know getting

play48:55

some of these core mechanisms right

play48:56

rather than slapping a bandaid on here

play48:58

or there which is uh you know like an

play49:01

engineering team where everything is on

play49:03

fire that's what you're going to

play49:05

do one example is around the fees where

play49:10

yeah just like the fee model on Sal does

play49:11

not make sense has not made sense for a

play49:12

very long time sort of comes from a

play49:14

point of view where supply of block

play49:17

space is just always going to be greater

play49:19

than demand for Block space which

play49:20

actually is like quite a pessimistic

play49:21

view um and I don't think is expressed

play49:24

explicitly but kind of comes out in the

play49:26

an engineering decisions or

play49:27

prioritization and you know we see some

play49:30

of the effects of that today where yeah

play49:33

you just like don't know how much you

play49:34

need to bid to land your transaction and

play49:36

so there's massive inefficiency in the

play49:38

bidding it affects the ux etc etc yeah

play49:42

that makes sense um all right well I was

play49:45

gonna I want to

play49:46

ask yeah maybe one like one last

play49:49

question just you're looking at some of

play49:51

these other chains that are cropping up

play49:55

like maybe less so on the L2 front

play49:58

but some of these high performance

play50:00

chains like for example U manad is

play50:02

coming out soon it's like a paralyzed

play50:06

parallelized evm um I want so I'm just

play50:10

using this as an example I want to hear

play50:14

and I'm not sure exactly what I'm asking

play50:15

here but I want to hear like is the

play50:19

vision in your mind for these chains to

play50:22

just continue to innovate and that

play50:24

sounds like um that sounds like it may

play50:27

be obvious or may not be obvious

play50:28

depending on like what chain you sort of

play50:30

ascribe to but what in your mind like

play50:33

will make salana different from the next

play50:37

chain that comes out that's also

play50:38

extremely fast and after that like

play50:41

technological innovation versus maybe

play50:44

some of like value sets inscribed um

play50:48

because I think that like I guess what

play50:49

I'm getting at here is that salana I

play50:51

think was Saul okay so this is my

play50:54

opinion right like this isn't I don't

play50:55

think what anybody else say but this is

play50:56

my opinion right like Shana said okay

play50:59

Finance should go really fast actually

play51:00

Finance should go really fast and what I

play51:03

think happened actually is that a lot of

play51:06

what was occurring on ethereum was not

play51:08

like people maximizing for

play51:11

decentralization or like maximizing for

play51:13

like some like of these values now the

play51:15

chain May in theory be designed in such

play51:17

a capacity but that's not what people

play51:19

were really using it for and so I think

play51:21

like when like a lot of what salana has

play51:23

seen recently it's just people

play51:25

maximizing for more degeneracy over here

play51:28

and so I want to know like is this

play51:30

something where we just continue to hop

play51:33

from chain to chain to chain and like

play51:36

just continue to follow technological

play51:37

advancements or is there a way that like

play51:40

salonic continues to stay a breast of

play51:43

technology and can ensure like some of

play51:46

these ideals of decentralization I don't

play51:49

know maybe this wasn't such an

play51:50

articulate question but like hopefully

play51:51

you start philosophizing for me well