Crypto's Multichain Masterplan

Mike Ippolito

The way that I view what's been happening in crypto thus far is something very akin to a commodity boom. So you hear guys from Goldman in the nineties talk about this. When commodities got financialized and you put ETF, an ETF wrapper around commodities, they boomed for over a decade. And that is basically how I view what's going on with l one. Ultimately, they're going to trend sideways, and where the value is going to accrue is in this top layer, which is the application layer that ultimately has control and leverage through the users.

And we are still a long ways away from this playing out. Hey everyone, this episode is brought to you by, say, the blazing fast parallelized blockchain which is unlocking Solana like performance for the vast ocean of ETH devs out there. Now you're going to be hearing all about, say, and their new v two upgrade. But if you take away one thing, the EvM is here to stay. There are some problems with it which we're going to get into later in the episode.

But say, and especially their v two upgrade is helping solve that. So thank you very much, say, for making this episode possible. Hey guys, big shout out to Uniswap. Uniswap is delivering the best on chain trading experience, period, bar none. They've got a bunch of cool new features coming out like Uniswap X limit orders, real time data insights.

We're going to be hearing all about those features later in the program. But for now, Uniswap, thanks for making this episode possible. We get right back to it. If you're building anything in web three, you likely need oracles and verifiable randomness. That's why Bell Curve is partnering up with Supra, which offers the fastest oracles and D VRF free for listeners of Bell Curve for twelve months.

And you can get that@supra.com blockworks the link there is in the show notes. Or stick around. We're going to be talking about them later in the program. All right, everyone, welcome back to another episode of Bell Curve. Before we jump in, quick disclaimer, the views expressed by my co host today are their personal views, and they do not represent the views of any organization with which the co hosts are associated with.

Nothing in the episode is construed or relied upon as financial, technical, tax, legal, or other advice. You know the deal. Now let's jump into the episode.

All right, everyone, welcome to the wrap up episode of this season seven, the multi chain endgame of Bell Curve. Heart, buddy. This was a really fun one. I, uh, I was almost intimidated going in, just the breadth of the subject matter that we were going to cover. But I think this has been one of my favorite seasons yet.

Hart Lambur

I mean, Mike, I'm still honored you asked me to be part of it. So, like, thank you. It's been super fun. I didn't think I'd like the podcasting as much as I do. And yeah, the breadth has been shockingly wide.

You know, just all the ZK stuff, all the pre conformation stuff. There's like all these sort of frontier techs in crypto that we touched on that I did not expect us to touch on when we went into this. So probably means we'll have to do like, this was season seven, so, like, season twelve will have to be another one of these. I agree. We should make it a.

Mike Ippolito

We could make it an update, because the whole purpose of this season was just that the tech and narratives move so quickly in crypto. And, like, even if we've been doing this season, a year ago, the ZK part of this season would have been so much, it would have been much less emphasized just because of how. How much the tech has moved and ended up being a huge influence on the season. And frankly, my thinking of how the end game is ultimately going to play out. So I can only imagine another twelve or 18 months, things are going to be super different and we're going to look very silly asking the questions and making the predictions that we're going to go ahead and try to make here.

Hart Lambur

Well, like, just on the ZK point, as a developer, as somebody building both the across and the UMA protocols, I can tell you very, in a very real way, we're going to be using ZK tech in the near future. And, like, very near future. It's ready, it's production grade, all this kind of stuff. And that just was not the case even six months ago. Yeah, that is pretty wild.

And I think that's the kind of stuff that actually should keep people pretty excited about crypto in general is like these frontier techs. Frontier tech keeps getting incorporated into our ecosystems, which is just kind of cool. I agree. So for listeners, this is how we're going to try to divide this episode. We are going to try to start with synthesizing and answering that kind of big question that we ask this season of what does that multi chain endgame going to look like?

Mike Ippolito

We're going to do the TLDR up front, start with some of our conclusions, and then we're going to just work our way through some of the highlights of the season. We had so many great guests on and we went back and skimmed a little bit and kind of came up with the highlights and want to rehash some of the interesting points that I think we've had a little bit of more time to ruminate on and think about. So maybe, Hart, just to kick this off, I could put you in the hot seat here for a second and just going to ask, ask the question, I mean, how do you see this multi chain endgame playing out? And maybe we could split that into how is the multi chain endgame look for users? So if there's a user of blockchains, hopefully there are in ten years.

How does it look differently from today? And then how have things changed for developers? Yeah, let's keep this super concise. So, users, I think, Mike, you and I will agree in the multi chain endgame, users will be clicking buttons in their wallet. They won't even really know it's a wallet, maybe, but they'll click a single button to do an action.

Hart Lambur

That action may occur on some set of blockchains. They don't know which one. That action that we could call it a transaction, maybe it's an intent, but that action gets executed very quickly and very cheaply. And they don't have to fiddle with wallet settings, with switching networks or anything else like that. To me this ends up looking like the way you would click through venmo on your phone today.

Venmo being us centric. But for the international users, your payments app, you can make a payment with one click and the underlying infrastructure is completely abstracted away. To me, I think that's the clearest endgame on what it looks like for the user. Do you agree? I agree, yeah.

For developers, I think in my head I have a much clearer view, particularly after the season, of what it looks like. Although I will admit that there are probably more paths here. So my view is intent centric. So listeners to the season will understand that we spend a lot of time talking about intents. But what I will say from a developer perspective, even if we ignore that word, adapt, developer will implement a standard which might be in the form of an SDK or some other kind of, we'll call it general programming standard.

And when they want to do an action on their app, they don't even want the suit. They'll have their own chain. They'll go to a roll up as a service provider, deploy their own chain. A lot of the time their chain is going to have incredibly cheap gas fees and be incredibly performant. And they'll implement this standard in their DAP.

That means as they'll ask a user to sign a single transaction or message, I should say, and that message will look like an intent. They'll then throw it into some infrastructure, which we're going to call this like interop intent system, and that infrastructure will just execute it so they won't have to do anything more than implement a standard and get a user to sign a message related to that standard. And then their cross chain action will just happen no matter where the user's funds are or what chain they're on or whatever else. What do you think of that? I don't know if we've actually talked about this before.

Mike Ippolito

I like that. I actually, in hearing you describe that and going back and listening to some of our previous episodes, not to criticize, but I don't think actually Polygon has nailed their narrative particularly well. But when I look at their construction now between the AG layer and their CDK and stuff like that, I'm kind of like, that feels about right. And you can go, you can look out into the world of crypto and see like the cosmos SDK sort of looks like that. What the sovereign labs folks are sort of building that.

And I agree with you on the, and I'm going to defer to you because like I said, I'm going to put my hand up and say I'm pretty divorced from the smart contract developer world. And I understand their pain points only at a relatively high level, but I agree with you there. Well, so two more seconds, because like when I was out the other week, Mike, we announced on the across side this standard for cross chain intents. We announced it with Uniswap and it's been given the ERC number, ERC 7683. And this is like, I think a very first step, like the very early step in developing a standard for what developers would implement.

Hart Lambur

But again, what I want to push the listeners who maybe don't write solidity code or whatever, the emphasis here and what Uniswap shares the vision with us in this push, I think of it like an order ticket. There's an order ticket that if you fill out the blanks in this order ticket and get the user to sign it, then the infrastructure, the quote unquote infrastructure will just execute that order ticket and it will be executed cheaply and quickly. And to me, once we have that, our multi chain endgame really accelerates in terms of how many chains we don't care about how many chains we have. It's just all the UX improvements get way better and what we propose with Uniswap doesn't get us all the way. It's only a first step bit, but it sort of is like a stepping stone in that vision, which I get kind of excited about.

Mike Ippolito

Yeah, hey, congratulations on that. And there's very no one better to do that within Uniswap. So massive props, props to across what you guys are doing there. I want to return to the point that you made about what this is going to look like from the user's perspective. And I want to try to make some more predictions because I think many people would be in the boat that, yeah, the UX of crypto is really rough today, and ultimately it's not going to be like, hey, I log into my wallet and then I bridge five times and sign various transactions and we know that's not going to scale.

Right. So ultimately that's going to end up being abstracted away. So I want to make some more declarative predictions here. I think the biggest shift, the sort of seismic shift that I see happening over the next ten years to maybe qualify your statement a little bit more, is there's going to be a shift in leverage from the base l one layer to the application layer. And this has been a design principle.

I think everyone just needs to sort of 180% reorient themselves in terms of who has the leverage and the control, because I think ultimately, whoever has the most proximity to users has the leverage and the control. And that has a lot of implications because we in crypto are very. The narrative has been fat blockchain or the fat protocol thesis. Right. Settlement network effects.

Like, you've gotten all these very supply side oriented investment arguments for crypto and where value is going to accrue. But really, I think there's going to be a fundamental shift over the next ten years to the app layer, the demand side. And I think people are going to look back now at this, something that feels like it has a lot of wisdom. Right? Like, you hear this from the bitcoin community, the ETH community, even protocols in a sense, like we're going to push complexity elsewhere.

Well, what you're. What. What I hear when people describe that is I want to become a commodity because the organizations that solve and harness complexity, like there is an enormous amount of value to doing that. And whoever ends up tackling that thorny, complex challenge is probably going to be where users end up living. I would split this future into three different layers.

I think there are going to be applications that have an enormous amount of leverage and value, and that's where most of the users are. Then I think there's going to be this middle, let's call this an aggregation, or you can just call it a middleware layer. That's this. Right now it feels like this very distinct world of bridges, AG layers, l, two s, et cetera. But think about it as the app layer is where origination happens.

Like order flow, origination, intent, origination happens. Then there's going to be this complicated layer of many different players underneath that batches, and then routes those layers down, ultimately to the l one, where basically, what the l one serves as like a timestamp. And basically it's like, hey, I did this thing and now this middle layer is very concerned with how do I batch, and cheap, as cheaply as possible, route this down to some bottom layer. And then I just need, okay, I want to be on this record that this happened. Mike, can I interrupt you on that?

Hart Lambur

Because it so fits with not only the way we've always thought about across as our protocol, but also there's a working group of chain abstraction called like the cake Working Group. I actually forget what the acronym stands for, but the c and the a are chain abstraction. Right. And in the cake, it's like three layers of the cake, which is the seam as the way we describe across two. The top layer is user order, intent, generation, whatever the user wants to do, we can call it the application.

That's the top layer of the cake. The middle layer we generally call the solver layer, solver, relayer, filler. It's the routing, how we get the user the top layer, how we get it filled. The bottom layer, I call the settlement layer of like, how do you settle this transaction so you can think of it as escrow plus, proving that the action happened. How do you prove that the user action happened before you repay the solver?

So I'm just going to point out to you that you've been thinking about this separately, but a whole working group of chain abstraction people are spot on with the same way you're stacking your cake here directly, how across is thinking about the world too. But I interrupted you. Keep going. All right, that's good to hear that I'm not on island here at insane. We all like to hear that.

Mike Ippolito

Okay, so what that, like, I want to then break apart what I think that implies, and what I think that implies is that the bottom layer is that I think that with the full, the fullness of time, it's going to prove out that the bottom layer, the l one layer, basically are, they're commodities in my view for a long time that's been forming is one. Just to make concrete predictions, I think there are going to be five to seven l one s that ultimately end up having some amount of traction and getting widely adopted. I can't remember where I've heard this quote, but there was, I remember listening to this FX podcast that really stuck with me, that of all the 180 currencies in the world or whatever, there are about six that have any real adoption and liquidity. It would be poetic to me if that same number ended up happening in crypto with a totally different set of, you know, technical architecture, architecture underneath. So I think that's what's ultimately going to end up happening.

And I think the way that I view what's been happening in crypto thus far is something very akin to a commodity boom. So you hear guys from Goldman in the nineties talk about this. When commodities got financialized and you put ETF, an ETF wrapper around commodities, they boomed for over a decade. And that is basically how I view what's going on with l one. So I think there are going to be five or six of these things.

They're going to keep running for a period of time, but then ultimately they're going to trend sideways. And where the value is going to accrue is in this top layer, which is the application layer that ultimately has control and leverage through the users. And we are still a long ways away from this playing out. But I do think that you're starting to see evidence of that. I would point to actually arguably the most successful applications in crypto, which are centralized exchanges.

And just look at, look at base, look at what base has been able to do in a relatively short period of time because they have 100 million users, 100 million accounts. I don't know how many actually daily active users they have. But that is ultimately I'll stop there because I'm conscious of going on a monologue here, but that is my view of the world and how I see things playing out going to the future. Pretty good monologue, Mike, thanks.

Hart Lambur

The bit about the commodity boom, I actually want to underscore that because that is a new thought for me as it relates to crypto, and it's super interesting just to play back for the listeners. Commodity ETF's got invented sometime in the late nineties, I think, and through the two thousands, and it did, I was at Goldman in the later part of this, did lead to this huge commodity boom where literally the amount of money that was made by the Goldman commodity desk trading the futures role, which is when the ETF sold the old futures contract and bought the next one that was like a huge moneymaker for like a ten year period just because this flow was so intense. Right? And the thought here though, that I think this is pretty insightful. And Kyle brought this up on our episode too.

Like, l one s have this weird premium associated with them right now. And in a lot of ways it doesn't make sense. It's like block space is cheap, what's the demand or whatever. But it does feel like we are in this boom where people are like, block space is the commodity that we are just trying to hoover up because we think it's valuable. Valuable.

And if block space is close to a commodity, there are some concepts that get built in some places that make it, make maybe some block space more valuable than others, but it's at least like it's still just block space. So I do think the, the application at the end state, when there are web three applications that have a billion users and they have some power to dictate where they actually store their data or where they, what block space they use, I should say then, yeah, I agree with you that that application has a lot more power. I got one other thought though, around this, it's a little bit different and I think you might have interesting comments. It's this idea of like reserve currency status. So the US dollar, right, has this reserve currency status and people, it's sort of like people use the US dollar because everybody uses the US dollar and there is some switching cost to not using the US dollar.

And that switching cost in traditional finance is relatively high. It's just, you got to get people to do FX transactions on the way in and the way out. If you wanted to abstract away, use the US dollar. And because the traditional banking system is so broken, those FX transactions are actually expensive.

In a lot of the things you talk about, about exporting the l one asset, I do think Ethereum and Solana in particular are competing to be the reserve currency that the default thing that people denominate transactions and things in, maybe alongside like USDC and USDT maybe. But I'm kind of curious what you think about that. And if, let's say ethereum does become something of a reserve currency in this crypto ecosystem, maybe it does have an unfair advantage and carry a premium relative to other block space. Okay, that, that is basically the, the devil's advocate to what I've been describing here. So let me, let me start by saying why I view l one's more as commodity like than equity like, and then address that point, because I think that has a, that has influenced my view of how I see the Pareto playing out in terms of l one adoption.

Mike Ippolito

Cause it's not like there's gonna be okay, that there are five going to be 20%, 20%, 20%. I think there's going to be a much sharper pareto than that. So the reason that I think there was a chart that actually Urian Timmer at Fidelity presented to me on a podcast three years ago that basically changed my entire view on all of this stuff. And it was a really simple chart. It was just, you look at the relative performance of cash, interest bearing cash, gold, commodities, equities over time.

It's like all the everything other than equities kind of trends like this. Gold underperformed basically everything, interest bearing back cash is pretty good. And there was like, equities way up here. Why is equities way up there? I think the reason is theres this quote from Chuck Aker, who describes what youre trying to do with a company is not just generate cash flow, its really to compound returns.

And the reason why we care about cash flows and why equity can perform so well is because when you generate a cash flow, you have this organizing body in the form of a company that can reinvest it and compound your advantage. That is what l one s do not have. It's the benefit of an l one is that it's extremely decentralized. There's no one strategic organization that's doing thing, but no one that the pro is also the con. And so this is why I've never liked the idea of people talking about the p L of Ethereum.

The reason we care about a p and l and cash flow from the standpoint of a company is a, I can either dividend it out to you, or I can reinvest this and compound whatever advantage I've built up. So when people talk about burning the base fee as revenue, you're missing the point. That's not getting returned to you. And I mean, you could make the argument that it sort of is, but you can never compound it. And that's why these things look much more commodity like to me than equity like over a long stretch of time.

The other difference, I would also say in between equities and commodities, this is going to sound a little bit high. Level and squishy. There's a long term incentive to make equities go up and a long term incentive to make commodities go down. So, for instance, if commodity prices are ripping, inflation might be picking back up. Now, not to bring back room to this, but what is the government going to do to respond?

They're going to move heaven and earth to make gasoline prices go down. No one wants gas prices going up during an election. People have to fuel their cars. There is a long term incentive if gas gets high enough to push it back down. The opposite is true for equities.

If equities do extremely poorly over a long period of time, our policymakers will move heaven and earth to make them go back up. And that is the interesting thing about that, is that I think that's a little bit reversed in crypto. And to your point, about to bring it back to what you were describing about the reserve currency, the monetary premium, et cetera. If I had to describe the virtuous cycle that kicks in on these blockchain ecosystems, the l one goes up, it creates a wealth effect, and that ends up funding development. And I actually, I've heard people describe this in terms of Ethereum.

There's a guy, I can't actually, not to call anyone out, I remember who it is. But he was describing that as the price of Solana has gone up, it made it more expensive for devs. And he was arguing this is kind of a bad thing. No, it's not, because whatever the, like the price of Solana going up, whatever additional developer cost is made back tenfold in the amount of new users and apps, et cetera, that have come onto the chain. Right?

No one. That's just not how it works. So also, every developer owns some soul, like in here too, like in their company does or something. Yeah. So there's this.

Hart Lambur

The. The commodity effect of that exists in the real world is sort of reversed in crypto, and everyone has this sort of collective incentive to pump and, you know, accrue around or like, gather around the l one. So it's sort of the opposite. And I do think ultimately that these things, hopefully, maybe bitcoin ends up getting used as some sort of money. And there just are tremendous network effects when it comes to l ones.

Mike Ippolito

Like, why are l one s realistically doing better today? Because they have the most liquidity. Anyone that is trading in size, you basically have to buy your universe of investable assets is extremely low. So people are buying l one squared. And I think that the network effect at the asset level is going to be a massive driving factor.

So this implies two things, is that, one, those network effects are probably going to stay constant. And that would align nicely with these very neat charts of bitcoin, ethereum matching the progress of bitcoin from the previous cycle, and then Solana matching Ethereum, etcetera. Because it's really less about what's going on underneath the hood in the tech. It's much more about the liquidity and network effects that are actually driving the price there. I think that's what's in the driver's seat and matching the in control.

But it also implies that the strategic imperative of the l one is to export its asset to as many hands as possible. And just said really simply, it is actually kind of self evident if you believe this thing is a currency, how is a currency successful? You got a bunch of people using it. Right? And so I think, I think that is, maybe we can get into this in that middle sort of l two organization layer.

But that is really the lens that I've started to look at. These l two s or sovereign roll ups or whatever. The objective is from at least the l one perspective, is to export a version, maybe a wrap version of the currency as far and wide as possible. So that's what I think. I mean, again, Mike, I love, it's interesting to frame this in the con, in the conversation around the multichain endgame, right.

Hart Lambur

Because in a sense, what you're doing is you're making kind of like long term price predictions for l one assets here. Yeah. And maybe to say the unpopular thing, my heretical view would be that these things basically have like another five or ten years. And then I think they basically all trade sideways like that. This is what I want to, like, kind of summarize from what you're saying.

So, and I think it's super fascinating and there's lots of new thoughts here I hadn't, haven't thought about. But like, and I find fascinating as a guy that used to be kind of a macro bond trader. Right. But you're saying, you're saying that block space is mostly commodity. Like, there's going to be some exceptions here, but it's mostly commodity like, one interesting point you made and that it's true, the quote unquote policymakers.

So we'll call it like ethereum, deep state right here. If transaction fees get too expensive, they want to whack it down. Like, you can't actually have Ethereum being too expensive because then people will stop using it. So you have this perverse incentive to make it cheap to use like make less money, which does seem very commodity like. The whole idea behind commodities is like there are inputs to something greater and you want to make your input costs as low as possible for your commodity to be far as what to be distributed far and wide.

Then your point about, okay, well, if that's true and they are more commodity like, then you're like, but we're in this commodity super cycle here. You're like, all right, so this new invention is going to be valuable for some period of time, but it can't get too expensive. And you're saying in order for that commodity to capture value in the long run, you want that commodity to be used in as many places as humanly possible. This is like exporting your l one. So to make the analogy super direct, I want to export my oil to every corner of the globe so that people use oil instead of using natural gas.

Right, right. And they build their machines around using oil, and that creates some value. And then we are further adding in this reserve currency concept too, where my commodity might have some other slight premium if it is just sort of the de facto standard unit of exchange. And that would let it be a little bit more valuable than the next equivalent or something like that. Yeah.

And then your last point, just to be clear, is you're saying in this transition, so in some five to ten year transition, where the commodities really become where block space really does become a commodity, applications then become the more equity like things that have the actual power, or increasingly grow power over which commodities they choose and use to extend the analysis. Yeah. Yep. Yeah. Pretty good thesis, man.

You know, I mean, you're probably gonna get a lot of hate on Twitter for it, but it's still a pretty good thesis. Yeah, well, that's how, you know, I was describing. I was actually talking to our managing editor the other day and he was like, we just launched this newsletter empire. And he was describing, he's like, yeah, man, I haven't gotten any hate mail on it yet. I was like, well, you just made that sound like a bad thing.

Mike Ippolito

He's like, yeah, well, if you get hate mail, you know, you're really living in people's heads. That's such an interesting perspective. Okay, so let me also, just to get a little bit more concrete around this. This doesn't sound super fuzzy, and I know people like to say the Ethereum deep state, but the. Listen to the.

There was a really great podcast that got just as a little bit of evidence that this is on people's minds. This exact line of reasoning that I'm sort of trying to angle at here is there's a great podcast, uncommon core, that John and Hasu did with Onsgar. And shoot, I'm blanking on the other person's name from the Ethereum foundation, but they had this, there's a debate right now around minimum viable issuance and targeting a certain percentage of basically capping stake at a certain percentage. And what it ultimately comes down to is do we want to preference or give preference to canonical ETH, the asset or the LST?

By the way, these are ancient arguments in bitcoin as well. Why did bitcoin care so much about keeping the block size low? Why do they care so much about having the requirements for node operators be extremely low? Is because the more dispersed the validating environment is and the simpler the actual code is, then the more money like your thing looks like. The challenge with that, and this is why we have rollups in this new modular roadmap, is then you basically can't scale beyond what one single laptop on a regular Internet connection can do.

And so in order to make the asset money like, you need very low hardware and bandwidth requirements on one layer. So then you say, well, I actually still want people to this network to be more usable, so I need to put a whole bunch of stuff on another layer, but then you need to move the canonical asset into another, onto another plane. And that's like the challenge, right? So I actually think, even though this sounds, I almost hate giving these sorts of weird predictions because it sounds so pie in the sky, but I think you can actually see it playing out. I think you can see it playing out in real time here.

So basically I think, and then just to your point about the network effects and are we building a reserve currency here? Look, I'm not smart enough to make that prediction. In 30 years, are we all going to be using bitcoin and ETH at the grocery store? I just don't know. But again, just responding to incentives.

If I was unilaterally in charge of bitcoin or ethereum, which is obviously impossible, what I would be concerned with is trying to move as much of as bitcoin or some wrap version of ETH into people's hands, that by the time the apps start wrangling a whole bunch of users and accruing value and leverage over these ecosystems, that there was such a strong network effect around my currency that people just wanted to use the currency and that the apps couldn't do much much about it.

So that's how I would look at it. Okay. The only thing I want to add to that point is I actually think the l two strategy on ethereum is then pretty brilliant, because you're having all these teams build huge amounts of infrastructure around your commodity, around ethereum. And I think before the show, Mike, you're talking about how maybe there's ways you could check. You could actually have l two s do their checkpoints on different blockchains or whatever.

Hart Lambur

But regardless, I do think that getting all of these very competent, very aggressively competitive teams building around your commodity is a brilliant way of exporting your asset into many, many people's hands. Everyone wanted to give a big shout out to today's title sponsor. Say. Now I want to talk to you guys a little bit about why I think say is cool from a design standpoint, a big problem that it solves for eco ETH devs out there and then some cool stuff that say has coming up. The reason I like say from an architecture perspective is, again, it's a very fast blockchain parallelization, all of that stuff.

Mike Ippolito

But say has essentially been custom building block space, which is for consumer apps, indexes. Now, they have some very cool features which enable that. So twin turbo consensus, optimistic parallelization, SADB, all of this stuff allows you to reduce the time to finality, make for very, very fast transactions. So if you're building a consumer app or a Dex, this is basically the blockchain for you. If you've been building the EVM, you love the EVM, but there are some restrictions about it that don't support your app.

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And if you want to nerd out about the construction, I think it's really cool. There's an RFQ based system. They farm it out to different fillers that you're getting the best execution. So finally, if you want to go check out all this stuff, which I highly recommend that you do, click the link at the bottom of the show notes so they know that I sent you. Cheers, guys.

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Click that. So I know that I sent you. Cheers, guys. Why don't we talk a little bit about. Because this is going to segue into the zero knowledge part of this discussion, but what do you think heart about.

I think there's. So you were just describing how across is actually going to use shout out. Uh, uma, you know, start using ZK proofs on a very short time horizon. And ZK is kind of is. I went into this season, and it was a little bit of a blind spot for me because it, you know, it's a little bit of moon mathy, and you.

You described it really well. It's not even the tech. Even the concepts are hard to wrap your brain around. You're like, how is this even possible? And I don't know if you had many sort of conclusions around the ZK part of this.

Even just. It was very helpful for to hear you and Uma describe how unusable it was and expensive it was even a year ago. It seems like costs on proving have come down, like, two orders of magnitude. You now have these ZK vms like, oh, gosh, I'm blanking on it. Was Spl one right?

Or what risk zero is building, and that's going to make things a lot easier. So you don't need an entire team of ZK gigabrains to build your circuits out. You can actually just express whatever computational preference, like you've written in rust or c or whatever, and that can go through a ZKVM and spit something out that's useful. But how do you view, what are the big implications, maybe from an interop standpoint that ZK is going to have the next couple of years? Yes.

Hart Lambur

First off, it's worth repeating that ZK has two properties that are useful. It has the zero knowledge bit, which is the privacy bit. Okay. And that's actually the one that's, like, it's very complicated to explain or conceptually understand how. Mike, I could prove to you I know something without telling you what I know.

That, like, really makes your head hurt. Right. But put that aside. The privacy bit is actually not what I think a lot of the current excitement around ZK tech is really leaning into. Privacy is important, but it's its whole other kind of industry, if you will.

The other property of ZK is the succinct property, and that's where Umaroy's company is literally called succinct labs, and they're focusing on the succinctness, and it means that I can very quickly prove an incredibly complicated computation. And this is where, in the episode with Chris goes, I had this conceptual unlock. I guess it's stuff I knew, but I never really thought about it this way. And he's like, look, ZK is the glue because of the succinct property. ZK is the glue between different blockchains.

And in essence, there's some nuance around this. But in essence, if you think of the entire history of bitcoin as one giant computation, which, like it is, it's a proof of work going back more than a decade. It's a huge ass computation. What the succinct property of ZK allows me to do in concept is prove that entire history of computation in one little proof that I can validate anywhere cheaply. And if you think about that, you're like, whoa, mind explosion.

That's wild. So now, given that I can prove the state of bitcoin anywhere, and there's some nuance around how you kind of, like, sync these things and all that, but just at a high level, that is a mind blowingly powerful concept of how you can use the succinct property of ZK to glue together different blockchains from an interop perspective.

Mike Ippolito

Completely agree that. And we were talking a little bit about this before the episode, but there are so many, there's so many times where I'm relistening to an episode. It's like, man, I wish I had that. I have so many follow up questions now that I wish I had asked at the time, but, okay, so I think, again, trying to knit, I think one angle that at least I just whiffed on because I didn't understand it well enough going into the season. But, you know, I still have maybe from that season that we did with Hasu, this very mev way of looking at the world.

And when I was thinking about ZK proofs within the context of interop, I was thinking, well, how can you maybe do something like Dex to Dex arbitrage, which I know is silly because it's just binance to Dex arbitrage anyway. But maybe there's this world where we move more volume on chain, and you could do proof on chain a and B and aggregate it together and then batch it down, and you could do this sort of arbitrage that people have been talking about, about forever. And I just think even if, like, the latency, it feels like even though ZK proofs have gotten much cheaper, it seems like the latency would still be a massive challenge there. Like, you would need to get that down to the order of milliseconds, which that just doesn't seem like it's going to be possible. And maybe with the economics of proofs, because there's going to be many layers of aggregating and batching.

The timing just doesn't work on something like that. Here's an angle that I just totally missed, whiffed on and wish I had poked more on. Is one, how are ZK proofs or NZK accounts the adoption of these going to impact l one s? And two, what is this going to end up doing to this, this sort of middle aggregation layer, or l two s? And I would point out on the l 1.2 interesting things that have happened recently.

Well, one thing has happened is bitcoin l two s, like many of them, are premised on ZK. So that is interesting. Right? As soon as everyone kind of wrapped their heads around this idea of zero knowledge and something was figured out with the bitVm, honestly, I'm still not an expert on this at all, but now you're actually seeing this. Probably the most impactful thing that's happened in the last twelve months is bitcoin l two s, I would say.

And then Celestia Mustafa wrote a great post that was sort of equivalent to the end game. We can link it in the show notes about the adoption of Celestia ZK accounts on Celestia. So Celestia has many bitcoin like properties in that there aren't smart contracts that are enabled on the l one. So one of the big challenges there, again, to this point of exporting tia currency, is you can't trustlessly bridge tia from Celestia up to this ecosystem of sovereign roll ups that they're trying to build. You can with a Zk account.

So you could have some proof instead of like a valid signature from a smart contract that lets you bridge through a roll up. You could have a Zk account that said, hey, basically some sort of state different proof. So there's a change to l one architecture. But then the other thing that made me think about this is what if l two s end up changing so that we talked a little about the polygon ag layer. What if right now, a neat way that this could work is that most l two s right now end up being l three s and they just batch.

There are each one of the transactions that happen on these l three s. There's a proof that's attached, then they get aggregated in one layer, which is the l two or the ag layer today. And then that just gets batched down to Ethereum. I think that would make a lot of sense, to be honest. And then the implication, sorry, just to finish the close this loop, because you were just describing the succinct property is suddenly in that proving environment, the bridge.

The bridge needs from the l one to the l two change. And so it would be pretty trivial if like, let's say optimism is like, hey, we're this great brand, we're going to change everything under the hood so that there's no more like optimism main chain. And like, the op stack thing doesn't really make sense. You're all l three s now, and you submit proofs down to this aggregation layer and then we batch it down to ethereum. It would be trivially easy for optimism to, in the same way that they could decide to checkpoint it to Ethereum, they could decide to checkpoint it to bitcoin or solana or whatever.

So I think it opens up the l two space a little bit in terms of that. Yeah, yeah. Mike, there's like 15 thoughts in there that I know. Sorry, dude, I always ask. No, it's good.

Hart Lambur

But I think listening to you, I think it's actually most useful to go to compare the Celestia, the TIA example, to how ETH is bridged to optimism right now or arbitram right now. And I don't think I'm an expert on this too, and I want to actually talk to the celestial team about this, but what I think you're saying is because Celestia and TR are trying to be ZK native here, I can have a quote unquote canonical bridge from Celestia to any sovereign roll up based on ZK tech. So my, I lock my TIA on Celestia and get a ZK proof that I could then use to bridge to any of these sovereign roll ups where I could use my TIA on that roll up and vice versa. I can go the other way, they get a ZK proof and unlock it there. And that allows me to, I'll use the word trustlessly.

We're trusting that the ZK tech is, is cracked, but it allows me to trustlessly bridge between Celestia and these sovereign roll ups. Using ZK. The time and speed to do that means I have the cost of a ZK proof and the time to generate that ZK proof. And that's not zero and it's not even that tiny a number, but it's a lot less than the seven day bridge on optimism or arbitrum right now. Agreed?

Yeah. Agreed. Yeah. So compare that to bridging from Ethereum to optimism or arbitrum, where you have like a contract on Ethereum, the bridge contract where you deposits assets to and then Ethereum achieves finality, and then you can see that on the roll up and then going the other way because of the fault proof window, you have to wait seven days to, to unlock it. And that seems very inefficient.

And I think what you're saying is like, okay, well, if I replace, well, you actually had many thoughts in what you walked through, but just replacing that canonical bridge part with a ZK bridge now means I have much faster, and if the ZK math is correct, equally trustless bridging between these chains, and we just keep it there. Now I'm going to make a plug for my worldview, my intent centric worldview here too, because I think this is actually really important without even plugging across and what I'm building. But we're saying the ZK tech will allow us to connect these blockchains and move canonical assets relatively quickly and relatively cheaply. But unless we have millisecond super cheap ZK proofs, which just seems like it's hard, like you said. Yeah, maybe five years out, I don't know.

But what we can do instead is have going back to your cake, the middle layer of solvers actually filling users incredibly quickly and incredibly cheaply with their own capital, which is how a cross works today. And then they can rebalance and get paid back quite quickly using like, the ZK tech. But they can aggregate and amortize the cost of the ZK proof over hundreds or thousands of transactions, which is exactly what across does today with optimistic tech, not ZK tech, and just gets better with ZK things. So to me, this all fits in the intense style. Bridging becomes the common UX experience, and the ZK tech becomes the glue that makes it work better and cheaper, while still allowing the user, like a near instant experience.

Mike Ippolito

Okay, so why don't we hart, if I could put you on the spot here, basically describing everything, maybe trying to knit everything together, could we, in a very futuristic scenario, like five or ten years into the future, how might transactions flow from, let's say, some sort of on chain super app? Let's say we've built some kind of on chain super app, and you can do things like borrow, lend and swapping and whatever in there, and it's originating a whole bunch of order flow and preferences from users. Let's say that the intent layer across is the Giga brain owner of the intent layer. You've won that game. And let's say there is this ZK proof and aggregation layer underneath, and then there's, I guess rollup somewhere in there, and then there's the l one.

Can we just walk through a little bit how that transaction, like, how those transactions would ultimately flow down from app to l one settlement? Okay. Yeah, Mike, this is fun. You know, we also probably should do another episode on EIP 3074, too. I know I say I haven't done one on that.

It just feels like a massive miss for not having done, but, yeah. Well, you know what we can do? Like, I'll push you on us doing a bonus episode after this. We're gonna do the wrap up, and then we can do a bonus episode because EIP 3074 kind of came out of the blue for users. This is like, it's a form of account abstraction, but just more like giving EOA superpowers came out of the blue.

Hart Lambur

I was like, up on my glacier skiing, completely out of self service, and I came back and everybody was like, the Ethereum core devs are going to include this in the next hard fork. And people were like, seemed surprised, but whatever. It's pretty interesting. So that's not the answer to your question. We're going to go through transaction like flow five years in the future.

So I'm going to make the assumption that a user has a home chain where they generally like to keep their assets. It's possible that it's like a bunch of chains that keep assets on and they have a unified view. I don't know. It's a little bit irrelevant for this, but I'm going to say I have a home chain. I'm going to call it my blockworks chain.

Okay, so blockworks is my home chain. Right? I do know we're launching a chain.

So blockworks chain I exist. That's where I want to execute from. And then there is some other chain. I don't even know it's a chain, but there's an application, we'll just call it Mike's app, that happens to have its own chain, because it just does. And I don't even know that as a user.

And Mike's chain has implemented a standard or a set of standards that allows it to execute intents for users here.

And then I click a button in my wallet that says, hey, I want to spend $5 on Mike's chain. I don't know. Mike's chain is a fun lottery app or something, and I want to, like, execute this action over on Mike's my. It's making predict. Mike's chain is making predictions on whether a theory is a commodity in ten years.

Okay, so it's a prediction market. So I sign this action, and then it gets thrown into this ecosystem of solvers that go to compete and fill this action on Mike's chain cheaply and quickly. My $5 is escrowed on the blockworks chain momentarily, and it doesn't get released to the solvers until we verify that they in fact did fill my action, fill my intent on Mike's chain.

So far, what's happened here is the user signed, clicked a single button to sign a transaction, and then this solver infrastructure very quickly competed to fill that user. And we're talking like sub 200 millisecond fill for that user on Mike's chain. The user's funds have actually been escrowed. They haven't yet been released to the solver, but the user's happy they got their action filled. It was like a web two like experience.

Okay, and now, now what we would do is using ZK tech, we would prove that the solver did in fact fill the action on Mike's chain and release their funds on the blockworks home chain to that solver. Caveats here, we might actually batch and aggregate a bunch of those solver actions so that we don't have to pay the ZK cost on that one transaction. The ZK proving cost could be aggregated over that solver doing 1000 different things. Right. That's what I was going to ask.

Mike Ippolito

My naive brain is, okay, so almost in the same way now that a lot of order flow and tradfi markets get internalized by citadel securities and sort of netted out against each other. I could imagine like one perhaps the most, well, naive sounds a little condescending, but like, the naive way that you could do this is every single transaction gets some quota, some sort of proof attached to it. But you could also just say, hey, as a market maker a and b, I'm going to end up netting out thousands or tens of thousands of transactions per day and at some sort of checkpoint, I just want to look at the state differentials in between time a and time b and whatever has changed. We set proof thats attached to that, then set that down to Del one, because my very naive understanding of this middle layer is this is all about economies of scale and minimizing cost down to because theres going to be an expensive cost of settling down to whether its ethereum or bitcoin or whatever. Preston?

Hart Lambur

Yeah. Okay. Now this is like slight chill mode for exactly how a cross looks at the world. But like the concepts here, I think should be used by everyone, where if we're living in a world where there are billions of actions happening that are in this multi chain endgame, so billions of actions happening between these chains every day. Obviously, I want the cost of those billion actions to be light, to be as lightweight as possible, and if there's things I can do to aggregate the expensive part of those billion actions, that makes a ton of sense here.

And it's an optimization problem now around. Okay, so we'll actually step back. I want those billion transactions to be really freaking fast. Like instantaneously fast, almost. So we want to make those billion things as fast and as cheap as possible, and then aggregate them in intelligent ways so that the overall costs of the system are the minimum possible thing.

You talk about like netting here, and remember, there's two things going on. So this whole cross chain intent thing, which across has done, and we're working with Uniswap on, is solvers are filling users with their own capital. They're fronting money to users with their own capital.

They need to get their capital paid back. So the first thing we need to batch, and the first expensive thing to do is how do we verify that the intent was fulfilled? Do we do that verification on a per message basis? So each single message we verify, which is how most bridges work today, they send a single message per bridge transaction, and it's expensive. Or do we batch together that verification and say, after 1000 transactions or whatever, we're going to verify all these things, and that verification cost is amortized over those thousand transactions?

The latter makes sense, and that's what cross does. And then there's a second part about rebalancing assets here, where, because as a solver, they've made loans in different places, they might actually have, like, the best case is they have balancing flow. Everyone that was bridging from arbitrum to optimism, there was an equal number of people bridging from optimism to arbitrum. Right? And then I've extended loans on both chains, but then when it comes back and I actually verify all those fills, they net out, and turns out I just don't have to, like, rebalance any assets between these chains.

So these are exactly the type of, like, financial engineering ish concepts that when people think about cross chain interop, I don't necessarily know, they think about financial engineering, but this concept of netting transactions and netting flow is core to keeping it cheap. Okay, so I'm following you on all that, and I think that leads to, again, maybe we can talk a little about the episode that we did with Brian. And again, my sort of naive understanding, much less than both you and Brian do about this, is what I heard on that episode, is to, you know, see very bright, motivated guys that were kind of operating at different layers of the stack and having a bit of a debate around which layer is ultimately going to be more, more useful or valuable. And one thing that you have asked many times this season, heart, that I've thought more deeply about is what are ultimately, this is all going to be dictated by the demands of the application and users. And what if the demands for interoperability is just much lower than we think?

Mike Ippolito

Even something a, because you add all this technical complexity to something like cross chain, borrow, lend. But, all right, here's a subtler distinction that I would also poke at you. Like, in the early days of DeFi summer, we used to talk about DeFi Legos, right? And Aave and Uniswap and Maker all came up at the same time. It's like, hey, cool.

How cool is this? Uniswap is just this decentralized exchange. And Aave is this borrow, lend, and maker is a stable coin. And by incentivizing growth on Aave, we can get adoption of Dai, etcetera. Now, we play that forward a couple of years, and essentially we're just talking about different financial services.

And maybe the market says, ooh, not all these are actually equal, and actually stable coins are a much more valuable product or feature to have. Then Aave is in this sort of weird situation where they're like, oh, wow, I don't want just the shit end of the stick here where I'm doing the commoditized borrow lend part of, I'm not saying Aave is, but you get my. Keep the analogy going, I don't want this. Like, I, you know, it turns out that I think I should actually have a stable coin as well. And now you start, you started to see all of these individual DeFi Legos vertically integrate launch other products, and kind of makes me wonder, question that whole thesis where, okay, even if every application is on the same chain, right, and interoperability isn't a challenge.

Like, yay, we've got composability. There might just be these long term incentives from a company standpoint where maybe it's not a technical challenge, maybe these things were just never going to be composable just because of incentives. What do you think about that idea? I mean, Mike, I agree. So, okay, everything goes in cycles.

Hart Lambur

Defi money, Legos. Super cool, super cool innovation, super cool concept. But if you play forward what Blackrock wants on Blackrock chain, right? And there's incredible precedents for this. They do not want you to take your blackrock assets on Blackrock chain and move them to a different chain to go and use Aave.

They don't want that. They will simply be like, oh, you want to do a collateralized borrow against blackrock assets on Blackrock chain. Here you go. Here is our version of Aave on Blackrock chain. And they vertically integrate.

The traditional finance concept is like share of wallet. Every investment advisor wants the maximum share of wallet of their client, and they want to get that as high as possible. Vanguard, right, has a whole protective, cuddly ecosystem, even though they hate on crypto and so idiotic of them. But like, Vanguard has made a whole push to own as big a share of wallet as they can, right. Every private bank, everybody else, they want to have all your money on their platform and not have it leave.

And like, look, there's a counter argument here that people would be like, okay, well, we have new technology which allows different ways to operate, and which is true, but you got to create a really strong incentive for why we would have this sort of not vertical integratedness in this future world. Because people are capitalistic and respond to their financial incentives, and they're going to make more money if they can make it relevant and easy for you to keep your assets in one spot. That does not mean there's not interop, though. Right? But here is my example, and I think this is part of the conversation I had with Brian, and you were kind of referring this as two layers.

There is some layer of generalized message passing. Generalized interop, right. And this is the layer that layer zero sits at. It's in their name, which I actually think layer zero is a pretty good name, by the way, set at the bottom level.

You and I just talked about how this might be ZK ish or heavily ZK incentivized in the future. And at any point, there will be some need for messaging between blockchains. But you and I also talked about how if there's billions of cross chain things going on, we might aggregate that down. It might make a lot of sense to aggregate that down into relatively few ZK messages that get sent between chains. And to me, this is kind of obvious, the layer on top of that.

So where you're doing the billion cross chain actions really quickly, what's actually happening there? And my core argument that I am more firm on following this season with you, is that bridging and it might be bridging plus action, but bridging is the killer app of Interop. And the billion things, 90% of those billion things that people are doing between blockchains is going to be moving money between blockchains, maybe moving money to then do an action. So moving money between Blackrock chain and vanguard chain to go and do a swap on vanguard chain, that might be the thing, but 90% of it is related to this, like, moving money concept. It's so hard for me to disagree with you on this, because, a, I agree with you.

Mike Ippolito

And it feels like the natural incentive, even that a layperson like me could follow along with is that there is a natural incentive to save money. And it's this sort of combination of bashing things and, and then trying to pay as little on the settlement cost as you possibly can. And so, yeah, it feels like there is going to be this intent sort of layer across different chains and different layers of the chain, et cetera. And then there's going to be a general message passing layer. And the question is, who ends up sort of accruing more value?

And one, it was a question that we began to ask at the very beginning of the season with Chris goes the is what do standards look like? This is really what I think Ganoma is doing. This obviously is what you and Uniswap just did. But we need, even in this world of intents and preferences that are handled by these market makers, we still need to. Your point?

Composability and interop are not the same thing. In order for there to be interop in between these different sort of trust zones, we still do need some common set of shared standards. So maybe that's already marching forward with the work that you're doing with uniswap. Or maybe a noma ends up, you know, playing a part in that as well. But this idea of standards has just been around, you know, actually a fun fact.

The first event blockworks ever did, I'm proud of the event. I'm not proud of. The name is called cryptox. The very first event we ever put on, and I knew nothing about the industry. Do you know what it was?

Interoperability and standards. And back then, it was like, seven years ago, people were like, we need standards and interop. And the analogy that we gave on this panel was all wheels on cars in the US are the same size. And the reason why that's useful is so that you can go to any auto shop and they just know roughly what to do. We just have not solved that for blockchains.

And maybe ZK plays a part in that. Maybe this intent layer plays a part in that. But even in the intent layer, it still feels like we need standards. Yeah, well, so I think the more nuanced question is, at what layer do we put the standard? Right.

Hart Lambur

Let's use your wheel analogy. Actually, the tires are different sizes and shapes. The rims are different sizes and shapes. But where the standard is, is like the hub, right, with the, like the five bolts. The five bolts, that's the same standard that every wheel has.

Okay, so then you can have different rims and different tires, and they all works differently, but we've got the hub with the five or six. I don't know what. Whatever. I think it's five. Five bolts.

That's all the same. And it wouldn't have worked if we tried to standardize rim sizes, because cars are different sizes and they different size rims. And if we try to standardize tires, it wouldn't have worked either, because cars are different sizes and different size tires. So we figured out the standard at the right spot. That made everybody's lives easier, in my view, if we believe that 90% of interop is really some form of moving assets between blockchains and then doing an action after you move the asset.

And again, I'll just be like, all the evidence, all the theory I can think through supports this, actually. And Sidebar, I actually think both Chainlink CCIP and layer zero are also going down this path. Right. Chainlink CCIP, they just put out, again while I was away, they put out transporter, which is like their bridge, to try to bridge assets, because they. I think they realized that at the message, the generalized message passing layer, there's not enough demand there.

The layers at the bridging thing. And layer zero has put a lot of effort on Stargate, because, again, layer zero de emphasized Stargate for a little bit. And I feel like they've reemphasized it a lot recently, because they've realized that the majority of their messaging volume is actually Stargate bridging volume, too. So, wait, I got distracted here. So the question is, where should.

What layer should this standard live at? Yep. And I think that the generalized message passing layer, I think it's not hard for settlement layers, settlement systems to implement many different types of message passing layer, and they can implement the one that works best, because that's kind of like a low level tech. It's like you can plug and play different types of settlement technologies there. I think the layer that makes sense is actually much closer to the user.

So whatever the user signs, that should be a standard where the user says, here's what I'm intending to do, pun on intents here. Here's what I want to do, and I don't give a shit what happens below the surface on how it gets done. That's all I care about. And then I personally think like reasoning through this. If we define what the user wants to do elegantly enough, the solvers get better, because the solvers, now there's a common standard for what it means to solve a user order.

It's like it looks like this. Figure out how to route it, and then the settlement layers talk to the solvers, and they figure out how to settle the solvers transactions. And then the settlement layers use some generalized message passing underneath, and they can figure out which generalized message passing works best too. But it's kind of like different levels of specialization along the stack. That's my take, but I'm biased here.

Mike Ippolito

That's a super interesting analogy. Honestly, this is a new concept to me, so I'm going to avoid the temptation to try to think through it, live here and just say, that's a really nuanced point. And yeah, you're absolutely right. It's silly me, I was thinking, well, yeah, all tires, yeah, of course not all tires are the same size, but you're right, the hubcap is the same size. So.

And ultimately, I think it just, the reason I think also it's going to be very interesting to see what across and Uniswap do is you guys are dominant bridging platform, dominant exchange. I think one of the things that you sort of need here is, again, the way that this works in tradfight because it's a bad thing. Or you could just say that it's inevitable is the industry leaders kind of set the standard, because otherwise everyone's just jockeying for. This should be my standard or your standard. Someone, just someone with some leverage just has to say, guys, this is the way that we do it, and that's it.

Hart Lambur

So I agree with that. I want to say actually, like, this is the cool thing about our industry too, right? So there's this whole working group that frontier research, who does very great research stuff out there too. Oh my God, Stefan's been on the podcast. Yeah.

Mike Ippolito

And I actually caught up. I don't, I sometimes, I don't know if I should mention people by name. Some of their researchers shout out Ankit. Sorry, Ankit. But Ankit is also Ankit.

Hart Lambur

Yeah, Ankit. And Stefan and their whole team are doing brilliant stuff. It's pretty cool. And they put together this working group because they just realized that chain abstraction is an issue. And so they've called it the cake framework.

It parallels our thinking. It parallels, literally your thinking and talking with them, because we previewed this standard with them, too. They're also very practical. They're like, yeah, someone's got to make a stab at what this looks like. And then you kind of, like, push it into a group and get feedback and improve the standard with that group's feedback.

And it's a little bit messy because standards are always coordinating people is messy. But what's so cool about Ethereum is you do have a lot of crypto, you do have a lot of people that just want to work together kind of genuinely. And so. Oh, my God. Yeah, it's the, it's the, there's so many, like I said, I never thought that I would find an industry that I want to work the rest of my life in.

Mike Ippolito

And I've definitely found that in crypto, it is unique in so many ways. And even though it's, it's got its challenge. It's becoming a commodity, Mike, even though. It'S becoming a, parts of the industry are becoming commoditized. And I think we've got a long way to go, so.

Well, zoning in there. I want to actually talk a little bit about that pre confirmation episode that we did as well, which I thought was a fascinating episode on a relatively technical subject. And I thought it was interesting for, let's say, three reasons. So, one, there's a question, and again, this is a little bit the Chris goes views of the world. And Chris, I'm sorry if I'm putting the incorrect words in your mouth here, but his whole thing is that we're unbundling different parts of what a blockchain historically has been.

And the execution, environment and protocol can be very separate from the security model. And maybe users would have a preference over the security model. I honestly would go one step further and say, I don't think most users are going to have a preference or understand what that is. And I think ultimately that's going to be for this sort of middle layer to decide where they're going to batch transactions down to. But can I add one nuance on that?

Hart Lambur

I think it's a conversation between the application, which might have a preference for the security. So the application developer, and like in my case, the solver network. So the applications in the solver might, they are the ones that are like, here's the security we need, and then the user is basically trusting the application, I think, to have made sensible decisions. So nuanced. Agreed.

Mike Ippolito

The other thing that I would add again, just to show my own intellectual bag from before, is it might be, it might have something to do with the security properties, but it also might have something to do again with how big the quote unquote user base of ETH or bitcoin bag holders are. Right? This is this sort of alignment question that like imagine I'm an app developer and I'm deciding, okay, do I want to use bitcoin or ethereum to settle my transactions down to like, okay, some percentage of that is going to be maybe. I think bitcoin or ethereum is just super secure. I think at a certain point most app devs are going to get divorced from the inner workings of the infra and like have much less of an opinion about that, but much more of an opinion of, hey, there's 500 billion of bitcoin wealth out there versus 200.

Hence the reason I think the network asset effects are actually, or the asset network effects are actually very critical. But the question does remain, are users going to have a preference about that security model? I would say probably not. And the reason why that's relevant today and now is in this pre confirmation era is right now, users already get pre confirmations from centralized sequencers that are run by l two teams. And there's going to be a question about whether or not they care about pre confirmations that are issued by l one proposers.

And again, the two very smart guys that we had from Primev and Chainbound, come on here. They might disagree with me. I would probably push back a little bit and say, I don't think most users are going to care about that. So maybe that matters or maybe it doesn't. But I think there's a question there.

Then I also think there's this question about how is the l two ecosystem in Ethereum going to play out today? Because from the standards question, we're sort of asking ourselves, okay, what's the incentive for everyone to play nice and integrate here? So that was a big question mark for me coming out of that episode. And then the last thing was, let's say pre confirmations do end up getting adopted and Ethereum l one proposers do end up doing more things. Does that change the role of the Ethereum l one proposal meaningfully going forward into the future.

So I apologize. I always do three things at once. It's well I don't know that I've answers or thoughts on all of them, I think. So. I think the way based proposers really catch fire, I think, is if there is efficiencies from batching them at that level, and I think there are efficiencies that exist where if you have like this l one proposer that is giving you pre confirmations across all of these different l two s, there might, it might be cheaper and more efficient for them to do that.

Hart Lambur

And some of this goes to just like, weird technical things, like, blobs are relatively large and there aren't that many of them in each block. And so, if optimism is using its own blob, but they're only using 5% of the blob size for that block, it would make sense to kind of share it with a whole bunch of other l two s and fill that blob up. Something like that. So, I'm not the expert on this, but I think that there are reasons why it could become more more efficient, and that creates a reason why this might happen. I do agree with you that from a user perspective, from a user trusting the security of a more decentralized sequencer pre conformation system, versus just trusting, like the optimism sequencer, I don't think the user cares.

It's the set truth. Agreed. Agreed with that. I guess the reason why, to Devil's advocate, my own point, the user might care, is this was an interesting takeaway from our episode with UMA, is that there are limitations to the amount of, like, true synchronous composability that even CK proofs can afford you really, in the current instantiation without, you know, to your point, uh, like single slot finality and extremely low latency proofs, you need the block proposer to be the same entity. Right?

Mike Ippolito

Yeah, on. So that's what, in theory, pre comps could get you. Like, users might not care that I'm getting an assurance from an l one block proposer versus as an l two, that just doesn't really matter that much. But at the end of the day, it would be really nice, if anything that I do on polygon or arbitrum or optimism are synchronous with one another, that would be cool. That would be cool.

Hart Lambur

But again, I think you can't. So this is where I think the political and capitalist incentives, I think you and I did agree on this. I don't think there's any incentive. I think there's actually a strong anti incentive for Polygon, arbitrum and optimism ecosystems to interrupt. Right.

Mike Ippolito

It's leakage from their perspective. Right. It's churn. Yeah. Yeah.

Hart Lambur

And it's, it's funny in some ways. It feels like, kind of sad. It's like you think of, like, little kids in the playground and you're like, why can't you all just get along and, like, play nice together? Right. But, like, they're not little kids.

These are like, sophisticated adult kids. These are big kids, and they're like, they have their own social circles and they do not overlap. Right. Or they don't want them to overlap. Right.

Or something. I think that analogy totally broke, but I just don't see them wanting to interrupt. And that's where, again, I think you go to a different layer, which is the solver layer, which is where the intense thing kind of solves this, and it's the thing that creates the interop between them. And then there's going to be, there needs to be some degree of interoperability between these ecosystems, even if it has to route through the hub of Ethereum. Right.

But if you have this solver and intent layer, it can, like, do, do quick things between these ecosystems and then batch and route the things it needs to through the expensive and slow layer, which might be the only way they're truly connected. Yes. Oh, also, to show another intellectual bag of mine for a second, the one thing that I also think is interesting is. And then we can wrap this up, because I've got this last question for you that we've been asking the others this season. The performance of the l one as well might have, has some interesting implications in terms of the l two ecosystem and in rop.

Mike Ippolito

So, for instance, like, base sequencing is very challenging in Ethereum because of how slow it is. But Solana has 400 millisecond block times. And actually, a lot of this could be really easily solved by just down to l one, up to other l two, which is interesting. And I've been saying this for a long time now, but I heard one of the sovereign labs guys say it on another podcast. I'm like, yes, not on an island here.

Just speaking this out into the wilderness. So I do think that the performance of the l one is going to be interesting. And that is why I do wonder if there's some serious limitation for the bitcoin l two s, because, I mean, man, even like a twelve second block time is sort of, our twelve second block time is kind of challenging. But ten minutes on average. Right.

Some are even longer than that is. That is roughly. Yeah, I am firmly of the opinion users need things to happen in sub 2 seconds and ideally sub 200 milliseconds. And like, there are ways on all of these systems, there are ways that I think you can get there, but it's just a matter of how hard it is. If your base system has ten minute block times, of which you need to wait for like three to six blocks for true confirmation.

Hart Lambur

So you're waiting for 30 to 60 minutes. Like that just has a knock on cost. And I think it's hard. Doesn't mean I think it's impossible. But, yeah, I think it's super interesting.

Mike Ippolito

Yeah, maybe there's. I don't know if you've ever heard this argument that you can't destroy risk, you can only transform it. This is, uh, comes from one of the volatility guys. But maybe there's some. There's some element of that with centralization and complexity as well.

And I do think base layers like bitcoin, that has. All right, so here's one of the things I feel like I've seen play out in ETH a little bit, this design philosophy being very non opinionated. At the base layer, you push all the complexity up to this other layer. But then, surprise, surprise, that's a super centralized layer. And then you start to ask, well, what are the benefits and trade offs here?

And it would be kind of an ultimate irony if bitcoin was ultra unopinionated, really basic. And then you get this ecosystem of l two s, and it's so unperforming that you need basically really centralized actors to step in and make it even a little bit remotely usable. Anyway, that would be an interesting irony for me. Or you do some crazy Frankenstein thing where, like, bitcoin, l two s are pre conformations on Solana or something like that. Like, they use Solana as their interview and then settle to bitcoin.

Hart Lambur

There's like weird Frankenstein stuff that might happen. Yeah. And again, it'd be kind of fun to see. Yeah, Hart. All right.

Mike Ippolito

I think we've done a good job here, hopefully, of monologuing through some of the takeaways for the season. I ask you this question that you and I both asked each other at the start of the season. We asked several guests. So this weird world of crypto, ten or 20 years into the future, is going to only get more complicated and weird. I think we're all going to have to question some assumptions that we've held dear for a while and things are going to change.

And that's, again, the benefits of working crypto, that's one of the coolest things about this industry that is still changing and innovating. But the question is, especially as we start to get more complicated and maybe accept some compromises, is what would a good outcome be for crypto if we're looking back at this crazy experiment we've been running, would make you say that it's been a successful or not successful experiment. I said this on our episode with Kyle. My bare case for crypto is we invent better financial plumbing, like better global financial plumbing. And I say it's my bare case because to me, and this is where I think Kyle and I, like, really agreed.

Hart Lambur

And I think you did too, Mike. But, like, it is so obvious to me that using blockchains for payments and settlement, it makes, like, all the sense in the world. And again, I'm coming from, like, Goldman circa 2013. When I left, we still had a massive back office to do a bunch of paperwork to settle trades. It's just idiotic.

And that cost ultimately just bleeds into the economy. It's just like an irrelevant cost of this back office settlement stuff. A blockchain can do that with technology in a trustless way. Makes total sense. So it's abstract, but it's also just very obvious to me.

Financial infrastructure should run on blockchains, period, full stop. And so my bear case, as a good outcome is we have better global financial infrastructure that has cheaper overhead costs. It's just cheaper to use globally accessible. So leveling the playing field and you will have cheaper access to financial products and services that, again, in a uniform way across the globe, that makes economies better because less gets wasted on kind of like friction points in financial interop. The bull case is that we invent a bunch of cool shit that we haven't yet even figured out.

On top of this, kind of in the same way that, you know, self Internet plus cell phones led to social media, which was pretty interesting and led to, like, YouTube and Twitch and TikTok. Right? So, I don't know, what do you think? Yeah, I would echo a ton of what you just said. So I think one thing that I am really personally looking forward to is this.

Mike Ippolito

Like, actually the multicore guys did a podcast back in 2017 where they called it this. Maybe it was 2018, like a new design space, like new industries. In the same way that social media was something that was just brand new. You can argue about whether it's not social media is good, whatever, but this, to go on a little bit of a tirade about this, this is why so many times in crypto, I'm just, like, much less interested in being like, oh, this company, big company, XYZ, is going to do something on chain. When social media and YouTube got invented, it wasn't.

The existing broadcasters weren't the ones who crushed it on YouTube. It wasn't like the original. The celebrities at the time that Facebook was getting rolled out like they were the big people on Facebook or Instagram, it was new people. Kim Kardashian came up at the same time as Instagram. Yep.

Pewdiepie and Mrbeast came up with YouTube. There are going to be new industries and new. New opportunities, and new people will get a bite at the apple. And that I just. I believe that for crypto, and I would hope that for crypto, and that's what would make it a success in my book.

And new industries are not perfect warts, and all in the same way that social media has warts also. I think that was a great add on, because I agree there will be warts. So net new stuff. And I'm probably in this camp of that. Technology moves, advances the wheel the archive community in, like, a positive direction.

So I would say that. And then. Techno optimist. I like it, Mike. Techno optimist, exactly.

And the other thing that I would say is, I think there is a big part of crypto which gives you cryptographic assurances, basically better assurances and transparency than whatever local jurisdiction you're went to. So right now. And I think this is part of the reason why crypto has taken so long to truly catch on in the US, because you have pretty good assurances. Yeah. You could say the legal system sucks better than every other legal system.

And if you have your assets in a bank or BNY Mellon or whatever, those are probably gonna get protected. Yep. The challenge is, though, if you're in some other legal jurisdiction and you just don't have those same. So equality of assurances, and it's by cryptography and not your legal jurisdiction. Yep.

Hart Lambur

It's. It's. It's enforcing commitments through a blockchain that doesn't care where you are. It's on a blockchain versus forcing commitments through a legal infrastructure where you need to have a physical presence to actually access that legal infrastructure. And by the way, the legal infrastructure is way more expensive to enforce, too.

This is something that. This is why I got in crypto in the first place. And I totally agree, Mike. It's like, it levels the playing field in a way that feels democratic and it feels, like, good. Yeah.

Mike Ippolito

Totally. Totally. And the last one that I'll say is something that has been happening to me recently is, I think, this whole bitcoin renaissance and, like, the return of innovation and new ideas to bitcoin has, like, made me remember why I'm a bitcoiner. Because, to be honest, I've been a little turned off for the last couple of years when it's just like, Hardo is screaming on the Internet about, you know, hard money, and if you're shitcoiner, then, you know, you're doomed. And I just started to really view it through the view of, like, religious zealots and the return of this.

And frankly, this season and thinking about network effects around assets versus protocols has reminded me that a huge part of what we're doing here is the money. It is doing the money aspect. And I. I do think it's bullshit that governments have as much leeway and unilateral, you know, decision making as they do to. To put their thumb on the scale of the money supply.

And I think a huge part of what this season reminded me is that the money, the return to this commodity, like money, this basket of commodity like monies, actually is an end in and of itself. I think that would be a net good for the world if more people moved on to these things and started using those currency. So those would be my three buckets. I love it. And I fully agree, man.

Yeah. Well, Hart, this was a. This was an absolute banger season. It's been lovely getting to know you, my friend. This has been a real treat.

And we'll do some. Well, maybe we'll get that bonus episode in and at the very least, we'll have to bring you on for a whole bunch more stuff in the future. Yeah, man. Friendship via podcasts. It's a.

Hart Lambur

It's a fun way to do it. Make friends on the Internet, you know? Great. I love it. I'm with you.

But, Mike, honestly, it's been a pleasure. Thank you for having me. Thank you for all our listeners for their thoughts and comments on Twitter and elsewhere. And, yeah, man, let's do some more episodes in the future. This has been really fun for me.

Mike Ippolito

Let's do it, partner. All right. Cheers. Thanks, sir. Hey, everyone, want to give a final shout out to this episode's title sponsor.

Say now, there are a whole bunch of really exciting reasons to be building on, say, v two. Outside of this parallelization, I want you to head over to, say IO to looking into building on their public Devnet again. Click the link at the bottom of this episode and head over to say IO start building something today.

Crypto's Multichain Masterplan | S7 E8

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1: Introduction to Multichain Concepts

2: Deep Dive into Zero-Knowledge Proofs

3: Future Predictions and Implications

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