Do Based Rollups Solve Everything? | Justin Drake
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From my perspective, like once you appreciate the sequencing and your base pill, there's no going back. I don't know a single person who has gone the other direction. It's kind of up only up to the right in terms of the convert.

Welcome the bankers where we explore the frontier of internet money and internet finance and today on bank list we explore the frontier of based rops.

Today on the show we have a theory um researcher Justin drake to give us the reason why he thinks the future of a theory um is based so what are based rolph how do they differ from Normal relpin why the authorities layer run is the best sequence CER for theory ms layer ti rolph how does the fix theory um regression in what does this all mean for either the asset there is already handful of teams publicly working on the bed roll pse future tycho puffer spire, but also just in a loose to at least a few of the them's biggest rollup already planning to go based in the not so distant future. So with this episode today, and perhaps a few more soon, we are front winning all that by getting you downadup on based rolph. So when if you're m inevitably does go based, you'll have rdc n IT coming.

I think both vid and I you'll find in this episode very bullish on the concept of waste relume because IT really solves a lot of the chAllenges that ethier is facing with its current roped tric road map. So this is the most comprehensive episode I think we've ever done on based role. Pse and Justin told the end, said that he thinks that based ropes have really reached escape philock.

I know some people listening that are like what they just came on the scene, but realized a lot of work has been going on behind the scenes to sort of like propagate the idea design architecture for based role. Pse, I think it's getting ready to take off. So this is maybe a few months in advance of front running, but twenty twenty five could be a big year for based on Steven and I wants to talk to you about all of that in the debris that we do right after this episode.

If you are a bangalore citizen, you're premium. That is an extra podcast. No commercials to got the bones content David and I put in every single week.

You have that in your feed. That's the episode that we're about to record where we give our thoughts on the episode called the debris. So go checked that out as well.

Speaking of extra content, Justin is giving a talk at the blankness summer. So if you are going to dev kon and want to hear just and talk, the bank of summer is happening the day after death con it's like ted talks for a theory um i've hand selected some of the best speakers in theory um and charge them with the responsibility of producing the most interesting talk possible I asked just in if you get league anything about his talk at the end of the episode he doesn't give me too much but he did say in a chat that it's painfully bullish so i'm excited to see what all that means so let's go head and get right into this episode all about based roles with stress drag but first a moment to talk about and these fantastic sponsors that makes the show possible, especially cracking, are prefer exchange for cyp to in twenty and twenty four.

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p. We are once again here with just and drag, which means that we are going to learn something today, just in drake. Of course, as a richer at the a theory foundation, he has taught us many things on the bank less podcast. And today we are hoping to learn about based rollers. Justin.

welcome back to bank less. Hi, David. right. thanks.

So before we get into the idea of bed roll PS, first talking about rollers generally, how would you say the role of centric road map is going the a theoria effort defined and then moved towards the role of p center growth map in twenty nineteen. So five years ago, five years later, how would you evaluate our progress, our direction in the vision that if there um set out for itself in twenty.

yeah, I think we're doing exceptionally well on the certain dimensions. One of them is that there is a lots of experimental and a lot of teams that have taken IT to build an l two or roll up vadim. Another thing that i'd say we've been successful that is dramatically reducing the fees.

And so in some sense, scaling feels like a solve problem. We have a whole road map to increase the amount of blog space. And we've in tremendous progress, wave the full proofs and with the validity proof. And so from the perspective of scaling and having a relatively secure roll libs, I feel like we're doing exception well.

What I think that we're starting to transition into is basically the interrupt phase of the roll up centric road map where we realize we acknowledge that we have a fragmentation problem, we have a cillo ism problem, and we d like to bring back some of the network effects that previously existed at leo one, and that we have lost the network effects that lao one were unsustainable because we had anti network effects, namely transaction fees, right? It's not sustainable to have a hundred dollar transaction fee, and that's something that we've solved. But now we have anti network effects, which arguably, i'd say is the centralized sequences, which prevents this optimal form of composition order, which I call synchronous composition order.

When you say that ork affects Justin, what mean by network affects more?

Are they important? So network effects is basically when you have to work, and every additional note brings in more centage es than just its raw weight. So you can think of this is just one plus one equals three.

You have positive some games. You have win win situations. And one example of network k effect would be new shared liquidity.

Every rolled up kind of adds to the liquidity pool. And now inferior as a whole can become this y hub with the best in class execution and what not. But right now, when a position where liquidity is fragmented, and so that particularly network effect has started to break down.

the Robert so gave IT as the question, like has the pent tric road map going? And do you talked about some of strength you also mentioned to the end some of witnesses, maybe short term or medium term or long term? I'm not sure what your perspective is, but could we do well a bit more on some of the, I guess, you know, tradeoffs or some of the weak pots of the areas that the theory needs to figure out? So one is fragmentation maybe and a loss of some network effect. Are there any others that pop into .

mind here associated with the the fragmentation? There's a little bit also of memetic confusion and also a lot of unity maybe at the social layer, you know competitive forces that maybe you online incentives and things like that, but nothing that fundamental cannot be solved. So I remain optimistic.

And you know international ability is a big word under which there's lots of many different constituent parts. So one of the low hanging fruit, for example, is just having basic shed standards. You, at the wallet level, the equivalent of ERC2BNA cross roll up model， the idea of having shared governance. This is something that's being experimented on, shared sequencing, shared stock aggregation, share data compression and log packing shed deposits. The idea of having shed furniture ability, all of these things are being worked on in parallel and directly, we're making tremendous progress towards fixing this fragmentation.

When you say memetic confusion at the social layer, a few things that come to mind for me, and I just want to sort of name them you like explicit to make sure we get kind of our problem statement right on the the sort of the social air side of things like one memetic confusion ary. To me, he seems to be the idea that altus are parasitic.

Well, are they parasitic like that? One area of question which didn't exist prior to the release centric red map there was like only one kind of a theory um shared state so is very obvious that every APP that deployed on the theory um was like necked good for a theory um the social area sort of hands clap, cheer on so maybe that's one area. Another area of memetic confusion, I would say, is around either thy asset and this question of OK.

What are the value of cruel mechanisms of either in this role up centric world, we've seen feet revenue go down at least in the short term. You opposed total dk charting and the deployment there. And so now there's question of what what about this ultra sound money thing? You there's not as much fee burn at the base layer for either the asset.

So these are two areas of memetics confusion that i've seen, this idea that altus are parasitic, this idea that there's no value, a cruel from a cash low statement for either the asset. Is that what you are explicit referring to when you said memetic confusion? Or if not that, what else?

So I think you summarize the perspective very well of the eve holder who's a little confused, but there's other entities that are also confused as a developer. You know, I used to, you know, have a very, very easy for me. I knew that launching on the film just meant deploying on the one, but now I have to choose across a whole ecosystem and is a little bit more confusing and similar thing as a user.

Now I need to make an explicit choice as to which ecosystem I need to put my assets on. And then you know, there's like twenty different flavors of ef a with every single deployment of a roll up. So I think when in the position of max awkwardness in the pupil phase and hopefully from now on the words it's downhill .

when out a little bit and kind of look at the progress of iterum in a sense of order Operations, we once upon a time had the very close kitt nucleus of the atheists layer one. And in two thousand and twenty, after we kind of solved plasma, which turned into roll ups with this idea of us, we had these roll up teams that extended outward from a theory like these vertical integrations, these things that would grow away from the authorities, lair, wine, optimism, arbitron politics on all of these networks that would scale away, like you would move your assets from the a theme layer one, a way to these layer tools, and this is what would create the fragmentation.

And now that you illustrate us being in the interOperability phase of the role eccentric road road map, now it's like we're filling in the space that has been created as these rolph have extended outward from the theory um and I think there's order of Operations, right? Like first we needed to create the fragmentation problem before we could actually solve the fragmentation problem. I don't know if like we could have even gone back in time in the authorities road map and tried to solve this regression problem before I was even created. Maybe you can kind of just talk about the benefits of the fact that we first created all of these different rollup and now we kind of just like filling in the gap. How do you feel about the order of Operations of how a theory progress has gone?

Yeah very much agree with you that it's a logical progression. I mean, there could have been alternative past and alternative ways for a film to tackle things. One way would have ve been to go down the taller around.

But obviously we don't want to be taking these kinds of shortcuts. Another thing that we could have done is to scale a firm lao one using basically randomly sample committees, which you can think of as shouting. And so here, the safety of each child is not done through forth proofs or for validity proofs.

It's done through native execution from committees. I guess what we did is that we took a very pure path where we said that we don't like honest majority assumptions and we know how to do these things without an on this majority assumption. And so we kind of open IT up to the Brown market to build this role.

Ups that are sometimes funding, but because they only rely on 效果 非 or you know these crypt of games， which are full proves you know reflecting on the past and you know the different strategy that we could have taken, I guess, one advantage of the shouting approach that we didn't have been we have more gently across the different roll ups, but the downside is that we would have have waited less experimental. And i'm actually quite pleased that we don't go down the shouting route because there's a new way to do execution shopping, which is so, so much more powerful. So first of all, IT uses smocks Z K roll ubs to remove the honest majority assumption said that we knew how to do, but now the technology has caught up that we have line of sight towards having data.

Lao one. But the other interesting aspect is that we can take this C K E V M and create a free compile within the E V M to programmatically deploy instances of the E V M. So with the vision that I described that we didn't go down, we would had a fix number of shots.

So know something like sixty four or thousand twenty four. And that is kind of in an awkward position to be. It's just an artificial number that we had to pick.

Was with this prepare, we can have as many as we want. And then the other aspect of programme ability is that we allow room for creativity. So we can, for example, have Z, K, V, M, with different sequences, with different governance tokens, with different fee mechanisms. Everything around the virtual machine is fully programmable. I wondering just and if .

you have an opinion on the following question, in addition to the fragmenting the theoria network, because we have all of these different world ups, we've also fragment to defy apps, right? There's many different implementations of uni swap across all these different networks. There's many different implementations of eva across all of these different networks.

And defy is something that is strictly Better when everything is kind of contained in the same environment, compose base and liquidity. Capital is just more efficient. In fact, when everything is in the same spot.

So in a future of the theory um that we're hoping for, do you see that there are fewer implementations of these always unsworth of these applications? And is that kind of something that we should be striving for or hope to be striving for? Is that like a success scenario when maybe instead of like twenty seven different implementations of uni swap across all of these different chains, there's actually just like maybe just one maybe there's just one implementation of new swap or all the the liquidity has aggregated.

Maybe there's just one major implementation of is that a goal? Is that something to aspire to? Or is that maybe something to prescriptive?

I mean, i'm personally a believer of the confuses, and I think IT IT does make sense, wants the barrier to entry to deploy and the obtained is low enough that there is one unit chain, one chain a. The issue that we have right now is that each individual, a chain, comes with overhead. So for example, if it's A Z K chain, each one of these Z K obtains need to verify A Z K proof.

And if you have a thousand Z K up change, then you need to verify a thousand proof every once. Well, and that's just very, very expensive. So we need infrastructure to, for example, aggregate the snog proof.

So you have one snag proof to verify a thousand options and is a similar thing with the blobs. The blogs are like fairly large chunks of data and is possible that a single act chain only consumes part of IT, say, one quarter. And so you want to take all of these different APP chains, and I do the blood packing together, so you have optimal utilization of resources.

A similar thing to block packing is this idea of data compression. The more data that you're compressing Better the compression ratio o and so what's happening right now is that each individual rollup is doing its own at all. The isolated compression when really what we should be doing, and this is a know in netware effect, is a win win thing where we take all of the data across all of the world, up all of the appose, and we do one soop data compression.

Just you were talking earlier about you like you're happy you're satisfied that we took the rope centric road map because Z K has made three compiles on the l one possible. So we have more potential for you like rolling out zk base like vm s and incorporating that into the layer one I want to ice like that for our conversation because I don't think that is the best rule up conversation, right? This is something that we're talking about in the medium to long term future and is something that is ten gentle to bed roll ups. And I cracked in that .

that's exactly right. IT is a fog on to base rolph and is called native rolph OK. So when you look at an l two, three different important criteria.

Criteria number one is the data aspect. Do you put data on chain? Or do you put IT off chain? The former is called the roll up. The latter is called the validation. And then the other way you can look at is the sequence later.

I 那个， how is the ordering of transactions done? And here you have based roll ups, which use the l one for sequencing, and you have non based roll ups that don't use the one for sequencing. And then the final aspect is the viral machine, the execution. If you are exactly evian equivalent, because you're using this precondition, which is basically, if firm, exposing the evm to the application layer with this free compile, then you are a native roll lap as supposed to being a custom roll up with a different virtual machine, then the exact copy of the M. I mean.

we should do an entire separate episode at some point. The future are probably on native ups because IT sounds like that is kind of the almost the final evolution of bringing some this execution back to the layer one validators. The reason were not talking about IT for the bulk of today's podcasts is because it's a more distant future.

Think of that as the medium to long term where based rule ups. My understanding, Justin, that's the here and now, like we're ready for bed roll. Pse, essentially at this moment, this is not a distant road map sort of E I P.

In the future that we're going to incorporate in some hard work, though there might be some upgrades necessary to fully optimized based role. Pse, but is that right to think of based rolph? Is maybe the next evolution of rollup in some sense, but the final evolution of rolls? I don't even know if this is then game, but maybe i'll just say the end game for roll ups is native lu p technology. Is that how you think about IT?

So the very nice thing about base l ups is they don't require a heart folk. And so you have dozens of teams now that are racing to go build all the infrastructure and deploy them to say that there like ready for prime time might be a little bit of an eagerness in the sense that we only have like one baseball up in production title and you know is a jaccard infrastructure that is being built out.

But I do agree with you that the progress in baseball APP is definitely happening. And I think twenty twenty five and twenty twenty six should be like very big years for base sequencing. As for native all ups, in order to get to that very exciting and game, we need Z K E V M S.

But not only that, we need real time approven Z K E V M. And the good news is that we're definitely getting that. We know in theory how to paralyze smock proving so that you can get the licenced down effectively as low as you want.

And historically, you know, we've had snow tiff ation of the E V M, where a single block will take multiple hours, tens of hours, and then they go down to single digit hours and then tens of minutes, single digit minutes. And now we're a point where IT takes tens of seconds to prove a layer one E V M block. And I will then be surprised if in two and twenty five we have a single digit second proving that ency for the layer one .

via or very exciting, you can expect bank lass nation like a future episode, i'm sure, on native all ups when that comes closer to fruition. But now let's get to maybe the main episode topic in the bulk of where we want to spend our time because all of what we just said is sort of a context. It's a preambles.

And maybe to your point, Justin, we are not ready for prime time for based route, but let's maybe call this the dawn of based rush because we are off zero. We have at least one deployed in production. And you think and I think we share this belief that twenty twenty five is going to be a big year for these things we call based rops.

I feel somewhat that we should start with a definition. But before we get there, I just want to say the promise of base ropes. Somebody on twitter who made the comment that if we had based roll ups when we started you rolling out the roll epson tric road map in know twenty and twenty twenty one, then we wouldn't have the fragmentation problems or value a cruel questions that you are mentioning these memetic problems in the social air.

We just started with based roll ups and almost like it's a shame we couldn't just start with based ropes to begin with because the promise of these things, as far as I understand, and this is again the moment tic narrative that will have to dig into the vue of this that IT sells fragmentation. You have shared liquidity across all of the bed rope, and indeed also with the layer one. So isn't that nice? We don't have the fragmentation problem.

And two, IT also solves the value, a cruel problem to eat, because we are using the validators as the sequences. And so we get to preserve some the security around your censorship, persistence at a deeper level, then maybe a traditional roll up. And also, e validators gets some fees from this transaction, a greater share of the fees from this transaction. So if we just say those words, IT also sounds like all based role of souls at everything. And so coming into the episode, can we titled this episode based role PS solve everything, Justin, give us a definition for bed rolph and tell us the promise here.

right? So just to set expected baseball don't serve everything they do. Try and tackle like one specifically of the stack, which is the sequencing layer.

And basically, when you build a role that you have a choice as to what is the sequencing mechanism? Who are the actors who will determine the order of transactions? Now, since the dawn of block chains in a big coin fifteen years ago, we've had essentially just one thing, which is cold base sequencing, where the l one is doing the sequencing, the validator is the consensus participants, whether it's minus, whether it's validators all doing the sequencing.

And if you look at every other block chain, you know, I know A B N B new texas xop new name is that all have been sequencing. And for the the vast majority of the existence of a firm, everything was just a sequence that is the natural, Normal, default onic way of doing sequencing. But then something happened a few years ago while we saw the emergence of these centralize sequences, specifically the context of the roll up centric road map.

And I think I attributed to real for different reasons, extremely pragmatic reasons for those different wallops. One of them is that they could launch extremely quickly. And there was a very, very straight forward as to what needs to be done.

Just spend up a server and that server is responsible for all of the sequencing. But there's other things that central sequencers provide. One of them is that they are training wheel for security.

So a lot of the viral machines of the roll ups are secured by front proof or validity proofs. And these are extremely complex pieces of code. You potentially thousands and thousands of lines of code.

And IT just takes one critical bug. To jeopardize the whole roll up. So you could imagine, like draining all of bit, one false group that would be absolutely terrible.

And so what the rolled up sequences are doing is making sure that the blocks that end up being produced are created using a default software, as opposed to software that is specifically crafted to go exploit a vulnerability, right? And so as a black hat, even if I identify a bug in, for example, of the arbitrary form, i'm not able to exploit IT because i'm not able to convince the shed sequence or to go build the block that will go export IT this bug. The other aspect you have a service, I guess you could say that centralize sequences provide is M, E, V protection for users.

So traditionally, you'd send your transaction in the the public member, you gossip and now you're exposed to front running and sandwiching. And that's a terrible user experience. With such sequences, wallets can directly connect to the central sequences is an end to end encrypted connection.

So the only entity that is able to see the transactions before they land on chain is the centralize sencer. And that entity is kind of trusted to not front run and not sandwiched uses. So that leads to a great user experience.

And then another final service that essentialize sequences provide is that of reconfirmation were extremely low latency user experience. You know, on the order of eva, two seconds for the super chain, or even much faster in the context of arbitrary and order of two hundred and fifty million seconds. And you can think of the sensual sencer as being a cheese code, as has no taking some sort of a massive shortcut, which is very strategically meaningful to do because it's very pragmatic, but it's not long term is sustainable.

And there's all sorts of reasons for that. One is that it's not credibly neutral and will talk about that. And that means that IT makes very, very difficult to convince your competitors to join forces and shed sequencing.

Like would the optimism super chain want to share a sencer with off chain labs and orbital? It's very difficult to pick one server for all of a firm. Another issue is that IT is a regulatory central point of failure.

It's also a vector for accidental liveliness fatos. This is something that we've seen in the past where rolled up just random, he go a flying for sometimes several hours. And you that is not what we want to base the future of finance on.

And then finally, there's a very, very big in a trust component to centralize sequences. We haven't seen that yet, but we could imagine, for example, a centralized sequence or getting hacked and then millions of dollars of front running happening because the centralize sequences has been compromised. And then another aspect is that because centralized sequencing, fundamental leverages trust as the technology, it's unscalable.

And so if i'm a random joe, you know sixteen year old you know programmer and my momma basement and I want to go deploy a role lap, well, I don't have any trust and so I can't go spend up my own centralized sequent. And so I think what the ecosystem has realized is that really, we want to go down this route of decently sequencing. That is I S D N game, the proper way of doing things, the long term, sustainable path.

But not only that, we also want shared sequencing. And this goes back to this idea of network effects and universal synchronise composition order. And in order to achieve this shed sequences in the affirm White capacity going above and beyond the clusters that are being formed with arbitron orc asic, we need credible neutrality. And so I think we're going to spend a lot of time in the rest of the episodes. King, about one thing, credible neutrality.

I want to keep on unpacking the sequencing thing because I think you eluted when we asked, what's the definition of a bed roll? Ub, you eluted to the fact that like based role for the same as all other roll ups, except for this one thing that's different, which is how we sequence things, that is the difference between based roll ups and like arbitrium optimism, is that is only the sequencing layer which is critically different in a bed roll up versus the roll ups that that we know today.

But I do want to put a pin on the typical values and how they sequence things, the centralized sencer, because I think in the cyp du industry we are all kind of like allergic to this word centralization and sometimes overly so d centralization. That's not a, that's not d and sometimes it's used as like a casual in ways that IT shouldn't be leaning into, like what theory um does and what a serum provides its roll ups. The whole point of the role centric road map is that we can actually have centralized layer tools because of the checks and baLances that the layer one provides its slayer tools.

So like the layer tools are in a state of can to be evil, even when they have centralized components. And that actually has been articulated in the the theory all of central growth map that that's actually strings of rolph in their current form, like arbitral m, can be allowed to have a centralized sequencer and lean into the properties of a centralize sequencer because of the checks and baLances that's provided by the a therm layer one. So even with the centralization of the sequence server, optimism, barbiton on base, whatever, there's only so much evil that can really be done here because of what the A R.

Mayor one provides. But maybe you're saying that even if that is true, we have still kind of like tapped out the juice there is to squeak on the end of the spectrum of there being centralized sequencers. So like we've lead into the benefits of centralized sequences as far as we can, and we've hit the limits of the growth of the role of centric road map, because like, you know, arbitrary santi sequence or optimism ecri sequence, that kind of the state of play here. And now, in order to get the next like tenets of scale, we need to actually kind of go to the other end of the spectrum, which is the decentralize ency, which is where we return to credible centrality and refrain mentation.

I mean, one way to phrase IT is that roll ups significantly reduced the potential downside, but we should be in the position where user funds are safe. And so security is a huge part of being a roll up. And in some sense, that is what happens first before you can think of anything else.

And if you look at the criteria of layer to beat, you know, there's the stage zero lab. Stage one, stage two, essentially is all about security. Just making sure that if I have an asset on a roll lap, we can't have some Operator that just steals these assets from me.

We can't have some sort of security committee that steals them or we can't have these assets be frozen. I always have the option to force a transaction on chain to, at the very least, withdraw my assets, and that is table stakes. But I think once we've all reached, you know, stage two, and we have like this all to secure roll laps, that's gonna be a first for more. And really, we want strong network effects like a firm wide network effects. And so yes, we have dramatically kept the downside, but we will also dramatically kept the upside.

And so just maybe illustrate felica. Here we have the centralized sequence or paradigm of the layer tools today, the one of one sequences where we get all of the scale, we get the M V protection. We've got a bunch of nice things. Would you say that based roll ups are on the opposite end of that spectrum, where you have a single central sencer on one end, but then based roll ups use the theory as a sequence, so we're going to get into that. But basis are kind of like basically on the far this other end of the same spectrum of the decentralized of sequencing?

Yes, that's exactly I in some sense, the two ends of the spectrum meet and then you can go full circle. So as I mentioned, and we started with the sequencing, that was the only thing available for ten years of block chains, and then we went down this path of centralize sequences. And I think what's going to happen is that we're gonna incrementally move towards the centralization.

And the kind of steps that are possible is one what I call a federated sencer. So you have a multi sig instead of trusting a single identity. And this is what arbitrary is looking to do fairly soon. They have a fourteen out of twenty multi sig.

And the going down this path of a federated sencer, the path of death, is basically a permissionless and dissocial sequence where anyone you know, for example, by locking some steak, can become a sequence CER at some of the store. So you have random selection across a permissionless set of consensus participants. And I believe what i'm a hundred percentile that the Z K sink is going down that path. And so I kind of skipping the federative state, going directly for decentralize and then then some role ups out that say, okay, we're going to go straight for the end game and we're going to go back to base sequencing.

Oh, interested. okay. So there's different stages of decentralizing, your sencer that you can get to the federated and then the permissionless and the way to the end will be talking about, which is based roll ups. And some are ups may just kind of like go all the way to the end.

I want to set some more context for this because every time we've said centralized sequence or decentralized a sequencing, listeners might be asking a question, okay, like refresh me again, what are we sequencing here? And what we're sequencing is the ordering of block transactions, right? So that, as we've illustrated in a many former backlist podcast, is incredibly important.

It's kind of a god like power that gives you like abilities to say, front run you same, which attack all sorts of things. That is one of the things that those that are consuming blocks space actually pay for. So the sequencing, the ordering of transactions in a given block is a very important power.

And that's why we're talking about, you know, decentralizing IT rather than keeping IT centralized. But illustrate another point. What you are saying, Justin, was none of this was sort of like roll ups wanting to be evil.

We want to get our cut. We want to know extract rent from users. Therefore, we're going to centralized the sensor. And some of that framing is out there, I would say on the memetic level that like all loops are doing this because you know greedy and evil ash les or something like this. And like what you're talking about is now actually there's incredibly good reasons for this from user experience perspective, from a security perspective, from a like latency perspective in order to be competitive and make this whole crypt of thing useful, there is a very good reasons to centralize the sequence. Cor, so you like you're kind of for putting that framing out there.

One thing that's become clear to me, I think, is clear to me, and I want to get you to verify with the like rolph s that we have today with some level of centralized sequencers, even if we get those two stage two, which, by the way, stage two does not mean decentralizing, the sequence CER and necessarily to miner standing, so you could still be stage two as a rule lip, and still have a centralized sencer. What you get from that is user protection against the cannot steal Mandate. So a roller can never just like join your asset, can't steal your assets.

They can stand back and freedom. They can't go F, T, X. They can alex machine ski. You know, all of your eat. All right, so that's great, and that's something we've preserved.

My understanding, though Justin cracked me, i'm wrong, is in a stage due roll up with a centralized a sencer. We may not have preserved another virtue that we have on the layer one, which is real time censorship resistance. So let's say you want a transaction that is incredibly neutral and so let's it's sanctioned by some third party nation state.

You want to preserve the censorship resistance of that transaction. Well, I believe some stage to roll ups have kind of a forced inclusion. We can kind of like after the fact like push that transaction in, but it's not like as real time as the authorities layer one.

And so even in a stage to roll up with a centralized sencer, if they you know black less some set of transactions, which they may have to do based on their jar diction, whatever you know regulatory regime they fall under, they may legally be obligated to do this. You kind of lose that property that inherit on the layer one, which is like more real time censorship persistence. This is something I believe i've learned over the past year a set of months and going through this as kind of a degraded capability as opposed to the layer once. So we preserve the cannot steal, but we may not have preserve the can sensor, at least in a real time fashion. Can you fact check me, is that kind of true with a stage to centralize sequence and roll up?

Yes, that is correct. So you could even imagine, like an extreme example, a wealth far go chain, which is only sequencing transactions from nine to five and is closed on the weekends and is new filtering of fact transactions. You could still have a wealth hogg chain, which is a stage two.

And really because you know there could be a very long delay between you initiating a force transaction and the first transaction actually landing on the chain, IT would be useless to you. Like if you, anna, make a payment, you know you pay for coffee. IT would take twenty four hours.

That would just not be workable. And so your only option if you are being censored or if you just happen to you want to make a transaction on the weekend and some sense is just too wave, draw and exact completely like the chain is not useful to you if you are actively being sense. And that you know is pretty good.

But I think we can do so so much Better so that we can make sure that the short term sensor persistence, the short term lively ss is as good as the affair. Um a layer one, but in practice, what I think we've observed is that the lightness is actually pretty good. And again, as you said, like the reason why this service sequences exists, not because the some sort of evil plan to the great lifeedited every time there's an accidents of life, it's accidental. IT was not intended, but really what I see decent Price sequencing as unlocked is a credibly neutral shared sequence CER, and that unlocks synergy compose base and then that on locks, network effects and brings the fear much, much closer together and ultimately yield ld, the ecosystem that is in order of magnet de more powerful.

There's something that the bed roofs to do, which I think fits into the theme that we see across the theory at large, is that based ropes learn to repurpose the a theory um layer one in a way that benefits them. And this time it's using a theory as the sequence CER.

Can we go into what that actually means technically? So as a roller, what does that actually mean to use the a thim layer one as a sencer? When we pop up in the hood, what's going on under the hood?

yes. So you're right. In some sense, a film was not designed to to provide sequencing as a surface. And you could say the same thing for data availability. So in the early days of data availability, we had call data, which was meant to be like a place where you put bites with basically inputs to function calls that you would have. And IT was kind of abuse, in some sense, by the roll ups to put like arbitrary .

user data hacked.

hacked. And then, you know, we came up with a very clean kind of custom design solution blobs that were purpose built for the role ubs. And there's a kind of a similar story, I guess, going on with sequencing, where initially the base sequent was meant to be for the late one exclusively, and the thi c kind of had this fort experiment.

What if we use the basic encor l two? And the time that he used was total unocal? Because basically you'd be in a position where all the users would submit the transactions in the metal and there would be conflicting transactions and some of the transactions would revert, be a complete mess.

And IT would not work until we had proposal build a separation. So proposal build a Operation basically says that even though the sequencing rights are given to the l one concenters consequent, the heavy lifting of building optimal blocks is done by the builders. And so what that means in practice, what does the basic ency mean is that from the perspective and l one validator, nothing changes.

I'm connected to move boost. I'm given you the most valuable block to sign and I sign IT and I don't even see the contents of that block. All I sign is the block header.

And instead, all of the heavy duty sequencing is done by specialize searches and specialized builders that will do the heavy lifting on behalf of the l one, that data. So not only are you reusing the proposing rights at the l one, but you're also reusing the full P, B S. pipeline. You're reusing builders, searchers release and you private members.

all of that stuff with the role of central role map. Anyone can deploy a roll up though, which means anyone can deploy a bed roll up, but a serum. That layer one isn't actually aware based ups IT doesn't know that there is a network elsewhere that is a bed roll up. So how do the block builders, the people that are supposed to be sequencing this roll up, how do they actually become aware and actually opt into this duty of sequencing the base roll up, if anyone can, to deploy, roll up and know, how do these things actually like integrate?

right? So one of the mental models for baseball ups is that is the same thing as a lao one contract, except that fees are hundred times cheaper. So just like anyone can go deploy a unis, wap or w whatever IT is you a film is not immediately aware, doesn't know IT, has no semantic understanding of what uniform is, is just bite code and instructions that are being blindly run, and ultimately, what is the mechanism to get these transactions on chain? Have the executed, this transaction fees, its incentives, and so users are willing to pay transaction fees, and that is an incentive for them to get picked up by the searchers and by the builders, and ultimately go on china, the exact same situation with base rule ups users paid transaction is the best rollup.

Mental, the same thing as the a theory. Laer one mental, or is there a separate mental?

This is an implementation detail. You can use whatever you want. One of the trends that we're seeing is that the public metal is dying.

What's happening is that a lot of the top wallets, like metal mask and rubber wallet, have their own private metal, where instead of gossiping transactions to the public, they have private deals with builders and they privately share IT with the builders. And so that has one great advantage is that because you're relying on the trust of the builders, there's no more front running. And what we're seeing is that this wallet actually incentivized to Operate these private members because they can extract the background ning.

So it's kind of this ethical way in some sense, to make money from the older flow that you have, all while improving the U. S. For your users.

And this is the kind of infrastructure that you know is very, very much reusable for base sequences. So one of the things that I said initially is that centralized sequences provide as a service M V protection. But what we're seeing is that not any protection is done. One layout closer to the edge by the centralized wallet Operators. And because of that is much easier, is one less thing that you have to worry about if you want to decentralize sequence .

just in this mental model of a based role. Being like A A smart contract on the a theme layer, one except smart contract where gas fees are, you know, hundred dex cheaper is really interesting. And I think a lot falls out from that idea.

Can we go over what the main benefits or of you like a based roller, maybe from the different stakeholders involved. So let's talk about from a user perspective, let's talk about from a developer perspective, let's talk about a theory um as a whole. I don't know where you want to start with this, but when we contrast based roll ups from traditional roll ups with centralized customers, what are the core advantages here?

IT sounds a little strange, but the core advantage is to not degrade the network effects that we have with layer one is just preserving what we already had with lao one. Remember, however, said that we had these amazing network effects, and that brought, you know, if the asset to half a trillion dollars. And now we thought we all go to the moon.

And then there was this big anti netware ork effects, which was the transaction fees. We had a world. We couldn't grow these network k effects anymore. And then we go and down the path of role lept to scale. But then that introduced a different kind of more subtle type anti network k effects, which is the breakdown of composition order.

And so what i'm hoping can happen is that we really should use the ability for any obtain, any contract to call any other obtain synchy ously. So that means at well within a single block. So one canonico example here is you vy when IT makes the liquidation, is in a single block or even a single transaction, will liquidate its position to unis wap.

But what wanna do is go up one level attraction and have every chain, all you know, in one single block. Liquidating its positions on uni chain or synergy sly. If it's two separate chains that don't share a sencer and don't have real time proving and real time settle on, you can't do this kind of liquidation. And so the network effects that we have there, one just break down and summary, all i'm trying to do is just preserve the network effects of the one while removing the fees as the main blocker that we've seen historical. okay.

And then just emphasize, those network effects are basically synergy composition order, tomic composition order, where you feel like you're the same chain is how users will feel and shared liquidity. So there's not this kind of fragmentation of like all this chain is Better liquidity for this based pair versus that chain. I got to go navigate and bridge my way and you know figure out watching to beyond.

It's basically one single unified shared state, but we do have that additional really trip transaction fee capability that has been at the core and the the entire purpose of the reliability tric road map. So it'll all feel like one chain, one shared the qudsi pool except these these will be incredibly cheap. I mean, earlier in episode, uni said, hey, you based rops, you solve everything and you said, well, now hold on, IT doesn't solve everything, but like what I just said, feels like IT solves a lot, everything a lot I mean, IT feels like IT selves a lot. Let's just say that. But you know, is this a realistic possibility here if all of these roll ups become based rolph?

I think IT is. And you know, we can talk about incentive aligned. We can talk about like the technology that we need to go build.

We can talk about some of the downside of baseball leaps and how we patch them. But fundamentally, in order to have the luxurious kind of first class composition order that the l one enjoys, we need two key fundamental ingredients. Ingredient number one, shed sequencing.

Ingredient number two is real time proving. Real time proving is just an engineering problem, and smocks are getting so, so good that we should have them relatively soon. And then the other interesting thing with real time proving is that we have a training we all call t tea, are capable of providing real time proving today.

And so this is an opportunity for someone who wants to build, design ency composer roll ups to use teas as a training. But then the other much more difficult problem, in my opinion, is this trillion dollar dance, this coordination problem, this social layer problem, around which sequence, or are we gonna decide upon to be the onic? If I M wide shed sencer.

One question I have just is kind of how this might change, like user behavior in a based all up world. Like right now, I have, like most of my activity, consolidated to like a single layer to like the layer two that I prefer and know my assets are there, most of my transactions are there, and I use the apps that are deployed on that layer to the most.

How does that change? How does my relationship as a user change with the network i'm on in a based roll up world? Because some of the benefits of based rops is that, well, maybe there's an application on the a year layer one that I to use, but the assets that I want to use in that there are one are on this based roll up or maybe they are on a different based role. P, how does my relationship with the network on change if everything is based?

So there's a couple things here. Like one of them is that, to a very large extent, the detail, based or not based, is relevant to developers. There's been a lot of networks that have tried to go down the ascent route, the Cosmos pork ot, the internet computer, their antony network.

And every time it's kind of a similar story, like when you have a synchro inferred, you can have like massive, massive scalability. But the downside is that the developer experience becomes telex harder. And so developers want simplicity. And we'll just the rave ago with you know solana and polk, dot or Cosmos. And really what we're trying to do here is like read the needle extremely delicately so that we can have the synchrony that the developers want, while also preserving all of the values and requirements that the F M L one has imposed itself.

We had the role centric road map, the first things and the dominant things that have come out of that are these very big generalized layer tooth optimisim made that arbitron base. These are very big generalized layer tools.

Does a based world lean more towards the APP chain model of things where in the world there's more chains, but they're more application? They are created to specific applications rather than they are being generalized based rops. There's actually just applications that are based rops. You think in a based paradigm that we lean more towards APP chains rather than generalized .

later too well in the world where we've perfectly into ability and that includes many other things, be above and beyond, just share sequencing. So I mentioned this barrier to entry, to becoming an option. We need to have optimus in prof aggregation, optimal data packing.

Then I think, yes, the action model makes a lot of sense because IT removes the dependency of having to obtain to someone else's governance. right? Why would uni swap, for example, want to opt into arbitrium? You know, governance. The two different things have its own sovereign, independent governance. And so IT makes more sense for IT to launch as a separate unit chain.

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fascinating here because I think what you're describing, Justin, is a theory is trying to attract both types of developers, maybe so helpers through which, you know, a synchronous composition service is fine, but still have the existing layer tools with centralized sensors. But developers who want, you know, synching ness compose base in that device.

Well, now a theory will have this other thing called kind of the bed roll up type of infrastructure, and they could know, just deploy there. I want to ask the question because you mention sort of two things that were imperative for this vision, foundational for this vision, coming about. One is shared sequences, and the second is real time proving.

So when you say shared sequencers, i'm not sure it's clear to bank listeners the difference between a shared sencer and a based roll up. So my understanding of the based roll up is that that's where we're using the theory validators as our sencer. So of course, it's shared is like definitely shared across kind of like you know all of the validators.

And you're saying that maybe becomes the shelling point because that is the most credibly neutral of cohorts of sequencers that you could do. why? Because you're basically using the l 1 validators。 But I think by implying you're using the phrase a shared sequences, maybe you're implying there's also a step before that.

So is IT possible for an existing roll up with a centralized sencer, say, base? Or will take them as an example, the base of centralized sequencer OK, they're going to continue doing their thing because why there's all of the other benefits we just talked about with central experience, and they never want to give those up you like too early, right? They're building kind of incrementally.

They want to preserve those things. Then there's going to be this other cohorts of straight all the way to the end game of base row ups. You know, the time goes of the world, despise the world. They're building all of these based roll up APP chains on that side of things.

Is IT possible for those two worlds to connect via route of this interview? You a set of shared sequencer? Or maybe just more generally, what's the difference between a shared sequence or and the end state of a bed roller?

Great question. So base sequencing is a special type of shed sequencing, but not all shared sequences are based sequences. So what expect will happen, as you said, is that there's going to be an intermediate step and there is something that we are already seeing.

No, you can call IT cluster sequencing, where within individual ecosystem, whether that's orbital m orbit or the elastic chain or the super chain, there will be a shed sequences which is considered to be credibly neutral within the ecosystem. So you can imagine, for example, Z K sink, to use the Z K token to come up with a decentralized sencer. And, you know, within the context of the echo system, which is new Z K sank era, and like all of the friends of the casing, then, yes, that is a great place to have shed sequencing and therefore sync possibility.

And the great thing here is that we're gone to see experimental and we're gonna see the value of synchro and share sequencing come up. We're onna see, for example, you know, this data compression that I talked about, the blog packing, we're gona see flash loans just like we see on l one kind of do like crazy. Can you move in order to to squeak as much as you be as you can and get the best execution we're going to see late and see go down dramatically? Because right now, lets say you have two chains within the Z K.

syc. ecosystem. And in order for your application to work is kind of shadows, both chains.

And so you need to do a transaction on chain one, and then you need to wait for the sequencer to pick up the next move and another transaction on chain to. And so that is a multis lot process which increases latency. IT also removes free certainly.

So as a user today, if I want to make a transaction on no one, I know exactly what i'm paying. But if I have to split my transaction into multiple, I in in the sub transactions that I know how much i'm paining for the first one, but I don't know how much i'm paying for the next ones because the gas Prices are always moving. And this is where you can end up with stock transaction.

So for example, you just haven't provided enough gas and there's a fee bike. And then now your transaction never executes all like for some like where a reason the full transaction is unable to complete. So one example here would be that you have some funds on chain a.

You wanna go buy an N F, T on chain d, you initiate a transfer of funds from a to b and then someone buys the N F T before you. You no longer in a position to buy IT. And so now you know, in some sense, you have a partially execute of transaction that you need to go revert and things become quite complicated.

And so again, like no single asynchronistic system has lived in the past. And the reason is that is this long tail of benefits that crony gives us. And as you said, the key to achieving, if firm wide shared sequencing is credible 的， true, the key to going above and beyond this cluster shared sequencing.

I think we've kind of just stated without explaining how based ropes provide syndicated. I don't think we've actually to find the head on. Maybe we could take a moment and actually illustrate how do you based ropes actually provide full synchro across a theory?

Um so any time you have shed sequencing, whether or not its based, you have an opportunity for synchronicity sbility. If you also have the second ingredient, which is real time proving.

So imagine that you have units wap on unit chain, which is trying to liquidate a position on average in you can have within a single block a first transaction that is going to go from every chain to read the Price on aver chain and tell unit chain exactly what the Price is. And because you have the real time proving, this is an instant message that can happen within a single block. And then if the liquidation Prices favorable than you can have a unit chain, please send assets that need to be liquidated.

You have withdraw, which happens within a single blocks. You don't have to wait seven days. In the case of an optimistic, you don't have to wait several minutes.

In the case of two days, you k IT just happens within a single block I set to go from every chain to unit chain. They get liquidated. And then the proceeds of the sale, in a very similar way, get immediately withdrawn within a single block and go back to average.

I think the key point here is everything is happening inside of a single theoria lyone block, that is, the sequence CER of these transactions that are being made across these based roll ups in the generalized roll up world that we can live in today. If I optimism and I want to do something on arbitrium, I take like a bridge, a cross I take across, I take some sort of bridge aggregator. And IT hopes me over the layer one from chain to chain.

And that's where a lot of the fragmentation happens is because the layer one isn't really aware of what i'm doing until later. And so I think the base reps, the important key factor here is that it's actually the layer one that is doing the bridging of states or the bridging of transactions across the base roll ups. It's a later one is doing the sequencing of both, you know base chain a and base chain b. At the same time, rather than routing my order above the A M, layer one across two roles above the in layer one is actually going down into the lair one, and the layer one is able to process that logic.

Yes, that's exactly right. So today we have bridges, and the way that bridges are built is that you have the two pillars, and then you have a deck that connect the two pillars. What the real time proving does is that IT brings the decks, you know, IT makes IT, you know, infinite, like extremely small.

And then what shred sequencing does is that IT collapse is the two pillar into a single pillar. And so now you've taking your whole bridge and you should just collapse IT. And everything can happen within a single block.

So in a world of bed roll ups, there are many, many, many pillars, but they're all like touching each other. And they're touching each other incorporated by the therm layer one. And so there's many vertical chains going out from a theoria, but the facades of each are all touching one another. And it's just like one d fragmented system because they're all completely touching each other.

That's exactly right, yes. And no one of the initial critics of shared sequences is that people will say this is an unscalable model. And the reason is that you can't have every piece of state touch.

Every other piece of state you know, you have too much looking, just doesn't scale. But the answer to that is that synonomous compose base is Better. Fourth of as optional option signers composition order, the vast majority of transactions will stay within a single execution zone.

They will only touch one, roll lap one up chain. But then that's gonna a be like a few like super valuable transactions where IT makes sense for them to be touching three or four or five or as many as necessary, different obtains. And they will be willing to pay the cost of basically locking the state for that period of time when the touching the state.

it's fasting. Just use that term execution zones, you know, another term that David i've been thinking of and just observing how IT seems like the rule up union of chains as kind of evolving is this term economic zones.

And I would asked the question of how practically you think we go from a more fragmented world of different roll ups to a more unified set of rollers, from a composition order perspective, from a shared liquidity and shared state perspective. And one observation that we've made us were starting to see these economic zones almost congeal together at kind of the hyper chain or super chain type of level. I mean, you see, you know the super chain, which is like the op stack, and you have bed now, you have a unchain, you have sora.

And they're talking about shared compose base, shared liquidity, shared interrup ability between all of those chains inside of their economic union. If the same thing going on with the z case stack and the elastic chain, they have the case in chronos lens eglah and the polygon ecosystem, doing the same set of things mutable their role in on there you have arbitrary and doing their orbits thing. And so there seem to be these economic unions of chains kind of forming that are composer within their sort of economic unions.

But you like they have loose bridges to the other unions and then you also see kind of a growing and the dawn of the based chain economic union. Which of courses sort of the theory um layer one, plus whatever tyco does, plus whatever in the future spire does, plus whatever puffer does. This base chains leave all of these economic unions that are starting to congeal.

And what we want to get to eventually is where we have the right secret composition order. And all of these unions kind of become one super union superstructure. So we have shared like compose base across all of them.

Anyway, we're starting to see hints of there being enough advantage, comparative advantage in kind of like creating mini superchain style economic unions. And i'm just wondering if you can kind of extrapolate how all of this might happen because now we're not just dealing with technology, we're dealing with incentives, we're dealing with like economies. We're dealing with you like all sorts of coordination factors that happens socially.

So how do you see this really evolving once we are in a based roll up air, once this technology, this and you structure is available generally? Will some of these rulers can convert to based ropes? Will all of the different economic unions eventually migrate and become based rolph s as well?

I think you put IT very well that there's these different unions that are happening. And the based union is in of itself an important. And what I think will happen is that in the early days is gonna a few pioneers, a few visionaries who can kind of see the longer term future and are willing to make a bet and make a name for themselves with this space sequencing union.

But you're right, as soon as the network effects become bigger and bigger, like one by one, what I expect will happen is that these cluster sequences will convert, and that will have to do, as you said, with incentives. So one of the, I guess, observations is that some applications won't have any choice but deploying from that one as leveraging the base sequences. And that has to deal with neutrality.

So I think a great potential case study here is e right? E N S is not like unus wap, where IT can be deployed in many different places at the same time. IT has to be deployed or in one place.

There's like one root of trust for E N S. And you know, E N S is the switzerland of domain names. You know, I joke that the n in E N S stands for neutrality.

And so we can go, you deploy on top of optimism or deploy on top of arbitrary that would break the ality. And so IT essentially has two options as as yet. Option number one is that there is an E N S specific decent light sequencer, so they could use the E N S token as the basis for a new proof steak.

And that is going to be a decent shy sequence that would power, 你 know， E N S V two or option two is that they use a sequencing. Now I personally don't see any advantages for them to go down. The first related strictly more complex and IT doesn't buy them anything like two of the stated reasons, uh you know for having you know your own customer sencer is that you can have shorter spot times and tours that you can capture M V for yourself.

But E N S does not generate any M E V. E N S makes fees through like substance and E N S doesn't need like super shows for at times if IT takes twelve seconds or one second to register, domain doesn't make any difference. And so I think you obtains like E N S make sense to be deployed leveraging the base encor.

I guess something similar could be said for fine art and like no credibly neutral N F, T, things like critter punk. So let's say that you want to build crypto punk two point o. What is the same concept instead of.

Ten thousand punks. You want ten million punks. And so there's no way that you can deploy on our one. You have to deploy as an up chain. And the only thing that makes sense that you deploy IT as a based up chain.

Now if we go back to the incentives, at least in the knife, set up a knife face sequencing as a role APP, i'm giving away my M, V. To the sequences. And that could be seen as A A bad thing and a disincentive to become a bed roll up.

But the counter argument to this is that the shed a sequencing will increase your oval footfall and traffic and increase your execution feed that you go collect. And so the question becomes, are I gaining more in execution fees then? I am losing an M.

V. Now my personal fees, and this is a bit of a extreme in character, is that M E V is going to zero. The amount of M E V is relative to execution fees going to a convert to zero.

That's for two reasons. Reason number one is that we have the wallet protecting users from front running and sandwiching. And we also going to have Better applications that are designed so that M E V doesn't lead to the sequence CER in the first place.

It's recaptcha. And so really from a fundamental perspective, I think each role lap needs to focus on execution fees. What are execution fees is basically a toll for the right to use the virtual machine. Any visual machine has a limit in terms of how much football I can process.

You know, there is the famous gas limit, which is dian gas on the serum and the way that we charge for execution is we have mechanism like EP1550 and every role APP today or the top roll up s they have equivalent of IP one， five, five, nine. And they making money through 有 congestion and execution that way。 And that is what they should be focusing on.

Now one of the things that you said previously, ryan, is that one of the big reasons to be excited about base sequencing is a value of cruel, right? Because M V goes to the validators. I actually think that's not the case um partly because M E V is going to zero and and so it's surrounding error. But also if it's not zero, this is a bad thing because IT becomes a disincentive for the roll lapse to up to a shared sequence.

And with the applications capturing the MV, this is something that we're starting to see out of the world of sarelli. And also uni, I A N U N I H I E just got announce. So we have kind of our first big application specific grow up.

And then several labs is working on this thing called application specific sequencing, which explicit gives applications the ordering of their own internal transactions more or less with the intent to do exactly what you said, which is allow the uni swap application to retain the MV that IT creates in order to give that back to L, P. S. And traders.

So this isn't just theory. We're trying to actually see this played out. And so the business model then, if this logic continues, is that MV does drop to zero because just we get more efficient applications can retain IT.

And m, if he doesn't go to the underlying chain and goes to the application, will the value here is really kind of the GDP of a theory um like what total aggregate transaction volume can we produce? And I think we have in the idea of bed roll ups, sharing your apps, sharing your businesses, sharing the things that generate value across other chains is probably the most logical way for where where like the value of one base roller does actually create more value for other bed roll ups. And this kind of gets back into the whole idea of just network effects when the value of one application on one base rule up increases the GDP of a different based relay of the nigher based rop. That is, what network affects are that kind of the vision that .

I see as that will you see? Yep, that's exactly right. So if you have no a BBS unit in, like every time you have another based APP chain that requires unit chain, that is additional football.

So AV is an example. You know, make up my union example. And you know a significant part of uni swap foot for today comes from these all one interaction. And so one of the barrier takes, I guess, on unit chain being non based is that for the most part, I will capture the flow from unspoken x basically from the u swap labs front end.

So if you go on uni swap dot g then yes, your flow might be routed to unit chain, but like the flow from avia and all of the other echo system players that will continue going to l one. And so I could totally see, in addition to the unit chain has been deployed with an application specific sequence CER to also have a base version of unit chain. What I could also see is actually a hybrid and emerging of the two.

So really, what the unit train is trying to enforce is, first of all, that there is no censorship. So anyone who wants to do orbit rash can do arbitrage. And number two, that the transactions are all the decreasing by priority fee. And what you could imagine is an application of a chain like unit chain basically saying, i'm willing to be based, but I want these two contracts to hold. So you can imagine, for example, a suave kind of network of ties that are gona sign off on a set of uniform transactions that have to be included and have to be included in this order.

But the base sencer is allowed to insert additional transaction and kind of think of IT like a constraint, even more constrained inclusion list, where you the relative ordering needs to be preserved, but you allow to insert transactions and the fact that the shadow concert is allowed to insert transactions, this is what creates the sydney. This is what creates, you know, the is allows you to fulfill the coincidence of once and kind of extract the network effects that otherwise impossible. If the unit chain says this is the of transactions and of story, no sense is possible.

Have I gonna ask the question? You know, just if your personal take, if you think the unit chain would have been Better off as a based rolph or IT would be in the future Better off as a based roll up rather than the architecture selected. But that's still maybe a valid question.

But maybe the more general question is like, you know, get into the real tactics year, how do you think that this could happen? So a dreams scenario for what you're talking about is basically the entire superchain. Let's just pick on of the op stack and you have some pretty large change there. You have based and you have made net.

You have you like unit chain and apology other dozens of chains that i've left out in this, but they're all on the super chain and they kind of fix interOperability amongst each other others and then they sort of opt into some sort of shared sequence CER or are on the path to making their entire super chain based, or at least having that option so that chains inside of their network could flip that off or on and preferably on for the good of kind of like the network, for the good of shared liquidity, for the good of fixing fragmentation. Do you think that's like realistic? I mean, and night of podcasting ers like, hey like why can we just do that was just like convert the super chain into a bed super chain and all of the chains within them, you know are hooked into all of the shared liquidity of the l one.

Is that that simple or other? I mean, imagine there's some other designs here that might like kind of like bring the best of all worlds in the play. How do you think something like this happens for unit chain or the broader super chain?

So I know various conversations with various founders, and like various degrees of being based pilled, I think you hidden, you understands the value share sequences and understands the value of face sequences. I don't want to put more than his mouth, but I do think IT is applausive future.

The unit chain becomes this base roll up where you have your additional constraints, which make sure that M V, you know, ultimately goes back to the users and doesn't link to the sencer. I think one likely way forward is that does this bottoms APP grass root movement of the base cluster just incremental, grows bigger and bigger every year? But there is also a possibility for your income ants to one day from another, just flip a switch and become base. And I don't anna leak like too much alpha, but basically two of the top roll ups by T, V, L. Have founded that are base billed .

is either arbitrium optimism in my base.

I don't know if there's more than that.

more than the I want to bring in the version of the im layer. What kind of capacity does the item there one need to have in order to kind of fulfill this based role up vision because the layer one execution is no meaningly constrained. But I think if entire change are going to use the layer one as a sencer, we have to start to talk about what kind of execution powers the layer one has in order to actually manage of that. How does this impact the role of the a thim layer one in terms of just like its capability here.

right? So the F, M, L one consumption in terms of execution doesn't really change. We don't need to go above and beyond the thirty Megan gas like the E V M as IT is, is sufficient to verify the four proofs and the snake proofs.

And that's fine as is. What is a much more important factor is the slot duration. So right now, we have the twelve second slot time.

One of the discussions during twenty twenty four has been do we need to or can we reduce the slot times? And I think my opinion as of today is that there is a lot of low hanging fruit that could allow us to significantly reduce the slot time, for example, to four seconds, all while preserving the desensitization requirements that we have, namely, that you can be a validator on the home in the connection and a rusby pie. And so this basically used to, in the future, for improving baseball laps in that way.

But there's another kind of trick that has been developed in twenty, tony, for which is this notion of reconfirmation trustless reconfirmation. Because today we have based Price confirmation where the century sequence are just, you know, pinky promise that the transactions that they have sequence of chain will be indeed settled on chain in the way that they've been promised of chain. And the idea of your trustless collateral based reconfirmation is that the alwan proposals put forward collector and whenever they make a promise, which is nothing more than a signed message saying, you know, your transaction will be included, position x and will.

Execute in such, in such a way. And if you doing a new opposite, you know, you know, this is the the Price of getting. These are the fee paying, you know, everything I front.

And if this promise is not held, is reject, then you stand to lose the collateral that you put forward. And what this allows us to do is basically, from the U. S.

Perspective, mimic one hundred mida seconds at times, one hundred minutes, seconds, many seconds, because that's the amount of time IT takes for information to travel on the internet. That's internet lencs at paint times. And so what we're gone to see is baseless ups like tco experiment very, very soon with these three confirmations on main net. And then if this can be deployed to main net and be really robust, then what is the advantage of being a non based centralized sencer? Because even the two second slot time, which is what the super chain has, that would be twenty times slower than reconfirmation.

That's fascine you brought up there in the conversation. Use this analogue to date availability. So in the early days of the epson tric road map, you said a theme really as a network wasn't built for roll up data availability.

Know there's kind of like this hat ish way that helps were using kind of the call data function, just like stuffing their data inside of that. And so the therm road map kind of adaptation said, no, we're going to make this fast lane for rolls so they could put all of their data in one place. Will all these blogs will make them super efficient, will have a path for scaling them.

So the fast lane increases in terms of capacity and we have a home for like overlapped for you, their data availability. Is there an analogue to because he also said the current a theory network is not really built for shared sequencing, right? So we have you know twelve second slot times, you know we need to get our slot times down that sort of thing.

You're also talking about trustless free confirmations. Not clear to me whether that's kind of extra outside of the theory, an road map outside of the protocol l or whether that could be in body. But like I can maybe just the general question of do we need a kind of A A proto shared sequencing, you know, road map item to get us to any IP where we deploy this? And now now a serum is meant for is built for you based roll ups and share sequencing. What sort of changes might we need to make to the road map in or to facilities that our prioritization? Would you recommend if this indeed is the future?

yes. So the answer is yes. We do have such a road map item and is called A P, S, A pose, a separation. And the idea of A P S is that, as a validator, my main responsibility is to attest to the correctness of the chain and to produce inclusion lists. But the ultimate proposing of an execution block, which involves, you know, a lot of sophistication through the block building process, but also sophistication in the reconfirmation process that would be uploaded to the broader market.

Because right now, what we're trying to do and is kind of awkward, is that we're trying to shoe horn 有 sophisticated reconfirmation to l one validators running on the home in the connection on the rusby pie。 And so the solution that has been proposed in the short and medium term is the equivalent of release, but for reconfirmation, and we call them gateways. So as one proposal, I will delegate my sequencing rights to a gateway and the gateway, all of the heavy lifting on my behalf. And just like we have entrance, P, B, S, you know, that promises to remove the need for release, A P, S, I test the proposal separation also promises to remove the need for these gateways. And so that is the cleaners and most aligned path forward in the roadmap to really make a film custom design for reconfirmation OK.

And just a good question of when on that. Like are we talking about way in the distant future?

Is the short medium term I say medium term.

I say years, but less than A F A decade just in. How does a based al paradise? How would that impact the economics of ethiopia?

If IT does IT all, I think any impact would be indirect. Basically, we would have you a very competitive, very strong metal effect. And that would give more credence to the notion that know if there is money and is a powerful money for the international value, what do I think we potentially stand to lose if we go down this a synchronous road, is basically lose to a competitor that has decided to fully embrace symphony.

And, you know here, so that comes to mind. And so the optimistic take care is that we can have the U. X.

And the defects of solana with shorter latency. So instead of a hundred Miller second stop times, we have this one hundred middle second reconfirmation. And we have a strong decentralizing because validators can be on home interconnections running on rusby pies.

I think in recent times, there's been a debate about the role of central map, right? Like is the role of central map rights like all of these kinds of like debates, especially with the rise of salona kind of like shifting the over ten window of the conversation here, I think a part of the framing of that debate could be illustrated as where does def I live? And the theme later, one with twelve second block times and kind of constrained block space, has been losing ground in like with the home of defy its lost ground to its own layer tools.

Arbitron um and base have a crude a lot of defi value. Ali has crude some defi value. And I think really the more accurate way to illustrate this is like where is the home of def I going to be? Because D I kind of the golden goose that has the most valuable transaction that has the demand for very low latency transactions in a based roll up world where many chains are all based roll ups.

How do you think about the question of where does defy live? Where does the home of defy? How does that even work in world of based role PS?

right? So in the world where based rolph win, all of the T, V, I would be under the umbrella of the base sequence, or, but there would still be a migration process from l, one, where the gas uses extremely high, to a system like l tu, where the execution is done off chain, and so you can afford to have a hundred times less gas.

So going back to the idea of network effects and medcath law right now, the path that we've gone down is that roughly ten fifteen percent call IT of the l van T V L has migrated to alto. And that's like a relatively small hit to network effects. But the l one is still strong and driving.

But the more we go down this path, the more we're carving out a network effects and weakening them. And so the Better plan, in my opinion, is to have a migration of this T V, L that preserves network effects. So we want to go to depth.

Are you up from apps to up chains? And that is going to save on gas. But we don't want to move from base sequencing to central sequencing because that breaks and network effects. And so there's a little bit of path dependence here, which is like how quickly can we put the train on track to being in the direction we don't? You systematically break down network effects and instead we can preserve them under the umbrella of the sequencing.

How does a based world impact the users choosing of the chain that there? Like right now, I got to go to a drop down menu. I select arbitrary and I select optimize M, I select E, K, think. And there's all these like choices that come with that. Like I got kick the tires of these chains that i'm using. I have to know what chains that i'm using when we have always assumed in the cyp the world that eventually changed this could be completely attracted, but we kind of like eluded to that north star without really knowing the path there. When IT comes to actually being on a chain or choosing a chain, would that look like in a base world?

right? So from the perspective of U. X, the number one thing that we can do is have shared fungibility. And IT turns out that fungibility is not foggy al thing to sequencing.

So what we d like is something like ad layer, or, you know, many different ecosystems are working on the equivalence of aglae, where there's a shared deposit contract, where all the different role ups basically deposit the assets there, and you get two benefits. One is that this is a homogenization layer whereby you can always go from one, roll up to another. And because you're going through this deposit contract, the assets of fundable.

But there's also another massive benefit, which is that if you want to go from an l two to another layer two, you don't have to withdraw back to the r one, and you don't have to pay the extremely high l one gas costs. And so it's a direct l two to l two withdraw process. And that is gonna remove the drop down.

And this is why hadden was talking about in his episodes, where once you have fungibility, you can have struck away which chain the asset lives on. The bigger impact of the sequencing is around devex. As a development like today, I have to choose the stems.

If I can just launch as my own independent based up chain, then I don't have to make a choice. That is the natural move for me. And I can still get all of the benefits of being proximate to other applications because the boundaries between these exchanges, as you said, the touching, the kissing.

there's no space in between, by the way, just friend up day and kind of that shared funder able layer for l two to l two kind of communication. We've done episodes on eglamour IT. Sounds like there are some in a technologies that would facilitate that.

That is also or dog and to everything we've been talking about today on based. But how's that progressive? Are you optimistic that twenty twenty five will see some real progress? And that's best of a and aggregated layer for l two, l two inOperability fund gerbils between kind of like tokens hundred percent.

I am extremely optimistic and I believe that pretty much every echo system is working on the shed deposit system, whether that's polygon or the super chain or others as well. And the good news is that we're gonna see experimented with these short deposit contracts and we're gonna be able to extract the best practices. And eventually i'm hoping that we gonna see a standard like E, L, C.

2。 But for shed depot now, the tRicky thing is that in order to achieve credible and neutrality for shed deposits, we need to completely remove governance. IT needs to be a dumb pipe, you know, small contract. But in order to achieve that and to do is in a safe way, we're going to need multiple redundant implementations of smock verifiers because like this you know amazing you know shed deposit infrastructure depends on smokes and smocks, you know are extremely complex and bugging. And so I think the ideal outcome is that you have three different, you know, echo systems, each come up with their own implementation and then they all agree together to deploy a shed deposit contract where theyve all contributed. One of the three verifies.

So it's that idea back to will have these economic zones their own shared layer, basically. And then hopefully we get in economic like super zone where you know it's gall pull together in the future or two. I want to return as we get to a close here just into the question of eth value, a cruel that David was asking.

And so I think they're almost like two camps actually. Let me broaden this and just say as long as i've been in cyp deu, there's always been this Bonnie al question of like, okay, but like how do we Price? How do we value layer one assets, right? And the bitcoin community is a very like noted take on this, which is like as money as a store value.

It's digital gold, stupid. That's the whole purpose, right? Other ecosystems, I mean alternative layer ones, let's call them with this song is np toast and two is of the world.

They're not as bull. They do not think that they are layer one asset, at least that unique. The organizers of this, they don't think they are layer one asset money.

They think that is kind of a capital asset it's going to throw off cash loss from execution. Visor M A Z. I have come full circle to the idea.

And like I guess this has been the genesis, the back less podcast too, that the big corners were right. okay? If a layer one asset is going to have value, it's going to be primarily as a monetary asset.

And I know just and you've been a purply ent of the memetic idea of eat as money, but more specifically in ultrasound money, which implies that they're some sort of cash flow burn on the asset that supply goes down over time. We've also called, within a thean eat, a programme of money. There are also, like other terms, mates of roll up money.

Maybe it's a money for the ones e economy. It's all sorts of prefixes you might put to kind of like the idea of eat as money. But IT comes back to, at least for me, what is either or how do you value IT as a monetary unit, as a store of value with some sort of a productive yield? I want to ask you're take on this.

So being kind of an architect partially of the ultrasound money, ef mean, how do you think ef is valued? Is is still money? What is kind of the memetic narrative that you're taking going into twenty.

twenty five and beyond? right? So I do you agree with you that the value across story for if is mostly money.

And one way to frame the ultrasound money meme is as a shelling point to achieve this. Money is right. It's about scarcity, right? If bitcoin has the one million bitcoin meme, we have an even more powerful me.

And you know, we have more economic security. And so surely like these are two most important shotting points, security and city. And so surely we should be able to win the memetic warfare with a coin. Having said that, I am still very optimistic on the idea that the firm will I crew extremely significant flows on the order of billions of dollars per day. And that sounds completely insane.

For in by that you mean you're talking about burn, yes, basically.

or ital ital in the form of data availability. And you know right now we're in this kind of depression phase where like this ability just accuse almost nothing because we went from no zero to something. You're pretty big.

And that is not enough demand. What expect will happen is that very, very soon in the matter of months, we're gonna see this fee market to develop end. You know, I do agree with David take, which is that, you know, we don't want to be like too aggressive and celebrates too early.

We want to grow the number of loves as quickly as we can so that we basically have this grow face of a film before we start accurate value. Basically the M, S, on strategy, right, grow to be like the a world, like tighten. And then that ultimately makes you a very, very valuable company.

But there's basically two stories to the flows. There's supply and demand. Let's look at supply first. A firm is constraining itself to home internet connections. Now what full and shopping gives us is, roughly speaking, a hundred x over a single vi data.

So from a supply perspective, we have the equivalent of a hundred home internet connections for the whole world for like the whole internet, all the finance, just one hundred internet connections. Now in terms of demand, what are the network effects of data availability? And I see three of them.

The first one is this notion of shared security. When you deploy an action, you can either deploy as a volusia or as a roll up. But if you want to really tap into this network effects, you want to be a credible money lego.

You want to be a money lego that other applications feel comfortable you know calling into and can know that you know, in one hundred years, they'll be working just as well as they are working today. And so if you're building, you know, a uni swap, for example, unit, there's no way that unis swap. Can you B A money lego as a village? M IT.

Has to be overall up. The second aspect actually has to do with synchronous impossibility. If you have an external data available provider, for example, select well selector introduces its own sencer, but selector is a block chain with blocks coming one after the other.

And now you've lost the single sencer that has molecular power over everything so that they can extract all of the synergy. And then there is a third network effect, which is something that I only have realized late, but I think it's an extremely powerful one, and that has to do with the native roll lapse. So remember how I said that we can z 5， E, V, M, and we can expose a precompiling D V M so that rollup can become native.

Now IT turns out that this precompiling super technical reasons only works for roll ups. IT does not work for validation. And so if you want to have all of the benefits that come from native four lips, you have no choice.

You have to be a roll up. And if you want the quick kind of technical explanation, the reason is that the snog proofs are generated off chain and gossip of chain. And in order for anyone to be able to produce these proofs, the underlying data, the so called witness data, needs to be made available.

All of this is technical, or dragon, but the long story short is that if you want to be a native role, APP, and not have to worry about bugs in your E, V. M. Implementation, and not have to worry about governance to stay E V M equivalent.

Every time the E V M changes l 1， you have to be a roll up. And so here we are. We have a hundred home interconnections for the whole world.

And then what I expect happens, this can be a massive demand from all of these rolph that want shared security, synchro, compose base and also be native. And the rough back of the envelope e calculation is that we can scale to ten million transactions per second. This is this crazy thing where you started with a hundred transactions per second, which is just a film.

L one, you get a hundred x from roll up scaling, you get another hundred x from bank shooting, and then you get hundred decks from nelle son's law, which is the expansion, al, growth of bandwidth, a period of ten years, and that gives you your time and transaction to second. And once you have that, the sufficient capacity for everyone in the world, many, many transactions per day per human. And even if every transaction charges a tiny amount, let's say, a tenth of a cent, that still a billion dollars per day of income.

So what i'm seeing, what I think is a plausible future is that we basically grow the block spaces aggressively as we can. And then in the period of ten years, we have this organ and network effect. And because we're fundamentally limited, we only have a hundred home internet connections.

The fee market is naturally going to do this thing. And even if we're talking about absolutely dust per transaction on an aggregated basis, because so many transaction that are being process, we're talking about billions of dollars per day of income. And the reason why I mentioned that flows are important is because they're a way for us to rationalize ze the monetary premium.

And I think the best mental model that I have is gold. Gold is this eighteen three hundred dollar asset. And some cept of that, you know the number is usually quote at this ten percent.

So about one point eight trillion of the whole gold market cap comes from its use as an industrial metal. And that's something that we can understand fly well, just by looking at flows is understood science, right? We understand, for example, and the cost of mining gold from the ground that we understand how much gold is being lost to electronics every year.

There's this crazy statistics that tens of billions of dollars of gold is lost every year in dumps, right? Because you have your piece of electronics, has a few whatever IT is micrograms of gold and then you just throw IT in the dump and that's effectively a burn. It's a burn.

You're drinking the goal. And so you can do these flows analysis and you can look at you know other metals and you know you would have a market cup of roughly ten percent of what that is. And then the rest is the monitary premium that comes from the slow money where you lock up the money involved and you want to look at the ray show that is locked.

And so if ninety percent of older gold is locked and you'd expect a one divided by one minus ninety percent, just text one divided by ten percent. And then I think we can be in a similar situation with if of the asset where ninety percent of the supply is basically locked in these virtual votes and either in the form of staking or in the form of smt contracts that basically provide the economic bandwidth, stable coins or whatever IT is. And then only ten percent of the economy is really circulating and that ten percent is itself your valuable based on flows alone .

just in drake. That and a statement is definitely worth the Price of admission for this entire podcast, very comprehensive. My prime questions has been well is a thorium. D, A, A commodity can to be replaced with some other D, A, A from another ecosystem that I gotto say is kind of the best argument for why A R M, D, A is not a commodity anyways, just so much there. So thank you for that.

I guess as we close this out and end IT, I anticipate that because we've been through the book chain road map, you like cycle many times as you create a new solution for a category problems and then you also spend in other set of problems that you have to then go chase down and solve. And so my final question, we now have time for a comprehensive answer, but i'm sure there will be some who listens episode and will say, but wait, this one thing about based ups, you didn't acknowledge, you know, this set of tradeoffs roughly before coming to this, I saw a tweet from torgul from school. He said this based PS do not inherent real time censorship, persistence and live ess guarantees from the theory.

Um there's a lot of myths. He's gna write a article to spelling them. I know you haven't read that article, you know? So i'm sure you can there's also takes that i've heard that based role will increase block builder centralization, and that's feel like a new chAllenge problem for a serum in general. What do you think that the traders are the problems that might flow out of a max based roll up you know, a theory um what are the next dragons we have to go slay after this?

So one of the things that i've for space sequencing is that there's a new reason why doesn't work like every month. And so it's a game of waco where, you know we just have to go for them one by one by one. And I think the best way to prove that this thing actually works is to just stop talking about that that actually deployed its in production.

And you know we could you know have a conversation or debate and go through all of these technical points one by one as IT stands. Like I haven't seen a really solid criticism from someone who's really, really gone down the rapid hole and taken the time to go through all the fifteen within cent calls and preconcerted tion calls that we've had from my perspective. Like once you appreciate the sequencing and your base pill, there's no going back.

I don't know a single person who has gone the other direction. It's kind of up only up to the right in terms of the convert. Now IT is possible that the unknown, unknown and that we end up like hitting road blocks.

My personal fees is that a lot of the problems that we will encounter or actually universal to any decentralize sequencer and any share sequencer. And so really bad sequences, cy, is just the final day of the year at the very end. It's just A A small detail.

Is that a dissertation or like this rise reply or this ever entity that's doing the work? But ultimately, it's very much the same kind of technology. And so i'm not at all worried from a technology standpoint, and I would love to have these technical discussions with talk role and others, if I may, just ending this episode.

I prepared a little at me and I wanted to see how IT lands and its relevant to be sequencing the me goes as followed. If bitcoin is digital gold, then a thorium is digital switzerland, a credibly neutral jurisdiction that can be the basis for internet finance. Now I would like an affery settle ment to the swiss legal system.

IT is the final, an authoritative Albert of truth. And I would also like an ever the asset, to the face fact, a credibly neutral unit of account to dominate financial contracts. And this is where a firm sequencing comes in.

A firm sequencing is like swiss democracy. IT is this credibly neutral layer of mediation that can unlock energies and network effects that would otherwise be trapped by competitive and adversarial extensions. And so I think we shouldn't be focusing so much on the technical details of the sequences, because those are to a very largest tent, shared with decency, experience. And but we should be focusing on what makes the sequencing special, which is, in my opinion, credible news. Well.

maybe a theory can be switzerland, but with america's military, something like that. But you want some security there for sure as well.

Hundred billion dollars of economics. Security just, i've learned to quite .

a lot in this epo. This has been great. We have you speaking at the bank of summer at the day after dev con, november sixteen th.

Now you have described you talk that you are producing as painfully bullish. Now I don't only want to give anything away. I also don't know anything. Is there anything that we've covered here on this episode today that's gona be related to or overlapping with your content, your talk at the banker 下面？ Or is that all novel material, a novel talk that you're giving at the bank summer?

I think it's mostly going to be novel stuff, and I think I will be reusing some of the material, but not much. Just as a teaser in twenty twenty four, I have spent you know most of my time focused on sequencing and IT is you know a true pleasure for me to say that I think base sequences and reconfirmation has reached escape velocity in the sense that might help as a researcher and coordinator is largely done.

There's now in the dozens of teams, very, very strong teams, that are building all this infrastructure. I think at this points, hopefully an unstoppable force. And so that means that in twenty and twenty five I can start working on new, new and exciting stuff. And I have all sorts of plans that will be disclosed in the your time theory stuff just, oh yeah, if you so amazing.

cannot wait to one of the dates of the bank of summer. That's the day after dev con, right? We'll probably include link to that in the shown.

but give us the date again, november 10 vem fifth on day。 The bank summer is the day after november sixteenth. Unofficially ally the east is money conference, just to make sure that death on there's enough content around either the asset in its in the world.

Please inject some that painfully english material straight, my veins. That's gonna an exciting stead of talks. Bank less nation. This has been just in drag. Weve talked about based roll ups here today. We've also talked about the fun out there about a them's future and very bullish episode here, Justin, and thank you so much for joining us.

absolutely.

You guys gotten, let you know, of course, rod, up to risky. So as crypto, you lose what you put in. But we are headed west.

This is the frontier. It's not for everyone. But look, lad, are with us on the banker's journey.

Thanks a lot.