198 - SUAVE Explained with Phil Daian & Andrew Miller

Phil Daian is a crypto-economic researcher! Phil is the lead author behind the landmark paper, “Flash Boys 2.0,” which introduced and defined the MEV problem in the Ethereum landscape, over 4 years ago. He is the cofounder of FlashBots, which is a research and dev organization with the mission of mitigating the negative externalities of MEV. Andrew Miller is an Associate Professor at the University of Illinois, SGX Bull, and visiting researcher at Flashbots, and big believer in cypherpunk values through crypto-economic mechanisms. ------ ✨ DEBRIEF | Ryan & David unpacking the episode: https://www.bankless.com/debrief-suave Have you ever heard of Flashbots? Flashbots is the silent protector of Ethereum, a shield against the forces of centralization that silently sneak into our cryptosystems and turn them into TradFi. It’s one of the unsung heroes of crypto. The guests we have on today are from Flashbots, Phil Daian, and Andrew Miller. They believe the biggest centralization threats in crypto still lie ahead. And they’ve got a new platform that’s being built to defend against them. It’s called “Suave”, and we’ve been hearing a lot about it recently - “Solving MEV” - “Decentralizing block building” - but going into this episode, we weren’t sure exactly what it was. We found out during this episode. ----- 🏹 Airdrop Hunter is HERE, join your first HUNT today https://bankless.cc/JoinYourFirstHUNT ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE ⁠https://k.xyz/bankless-pod-q2 ⁠ 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING ⁠https://bankless.cc/MetaMask ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum ⁠ 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 👾GMX | V2 IS NOW LIVE https://bankless.cc/GMX 💲 USDV | NATIVE OMNICHAIN STABLECOIN https://bankless.cc/usdv ------ TIMESTAMPS 0:00 Intro 8:20 History of Flashbots & MEV 15:35 MEV Boost 19:25 Andrew’s Journey 23:20 What’s at Stake? 25:00 Solving MEV 33:44 What’s Suave? 41:13 Intents 45:25 Suavechain? 54:53 Decentralized Block Building 1:02:27 Privacy of Suave 1:08:02 Suave’s Importance & Goal 1:12:40 L2s 1:15:18 Alt-L1s 1:18:00 MEV Naiveness 1:21:31 Benefits of Suave 1:30:36 Suave Roadmap 1:32:23 Why the World Needs Suave 1:38:25 Closing & Disclaimers ------ RESOURCES How to get Started Building on Suave https://collective.flashbots.net/t/suave-wiki/2018 Learn about MEV Crypto’s Existential Threat https://www.youtube.com/watch?v=rOVz7dOrGyY Flashbots Saves Crypto https://www.youtube.com/watch?v=xex9WVmVfbg Learn about Blockchain Supply Chains Ethereum’s Hidden Power Structures https://www.youtube.com/watch?v=rQxuPBy8tJg Learn about Moloch Slaying Moloch https://www.youtube.com/watch?v=903tHM4RA9k Why we can’t have nice things? https://www.youtube.com/watch?v=YeQ2_ep0Cg4 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Bankless Nation, have you guys ever heard of Flashbots? If not, you certainly should have. Flashbots is the silent protector of Ethereum. It's a shield against the forces of centralization that silently sneak into our crypto systems and turn them more into banking systems, more like TradFi. And we think Flashbots is one of the unsung heroes of crypto. The guests we have on today are from Flashbots. Phil Dian is a co-founder. Andrew Miller is also a researcher at Flashbots. And they believe the biggest threats to centralization in crypto still lie ahead. And they've got

• 0:46Ryan Sean Adams?

  a new platform that's being built to defend against it. It's maybe their most ambitious platform yet. It's called Suave, and David and I have been hearing a lot about it recently in the context of this is how we solve MEV and decentralized block building and things like this. But honestly, going to this episode, we weren't exactly sure what Suave was. So we find out during this episode. This is us open source live streaming our exploration of this MEV technology called Suave. A few things we talk about. Number one, the Flashbots doomer thesis. Why crypto is doomed in a world without Suave or something like it. Number two, why crypto needs Suave. What it actually is, how it works, and what the wins are for the various stakeholders. And then finally, number three, and this was

• 1:28Ryan Sean Adams?

  maybe a personal favorite part of the episode for me, why the rest of the world needs Suave too, not just crypto. David, why was this episode significant to you?

• 1:38David Hoffman?

  First, this episode requires a bunch of prerequisite knowledge. So if you go and listen to this episode and you don't know what MEV is, or searchers, or block builders, or proposer builder separation, you're lucky you kind of still be able to catch a vibe. If you don't know what these things are, there are historical episodes that we've produced with Phil and with others in the MEV research space. So you can kind of catch up to the frontier of MEV, which is where we are in this episode. The frontier of the arc of what is this progression. Of understanding and harnessing MEV. And that is more or less synonymous with the arc of Flashbots and also the arc of Phil, Diane, one of the two guests here.

• 2:20David Hoffman?

  There's, there's this research arc of like first identifying MEV, then figuring out what to do about it. And there's been slow incremental progress in actually harnessing the power that is MEV and making sure that it doesn't corrupt and destabilize our systems. Now we have arrived at this new frontier of Suave, which is an evolution beyond what was this most previous frontier, which was MEV Boost, also produced by Flashbots. One of the questions I asked Phil is, is this the end? Is this the conclusion of MEV research? Is this the final meta? And his answer was like, perhaps it is. So I thought that was pretty interesting. There's one thing that we will define going into this episode, something that we haven't

• 3:04David Hoffman?

  talked about on Bankless before, and that is SGX. SGX is a part of a broader term called Trusted Execution Environments. SGX specifically is Software Guard Extensions, which is a product out of Intel. It's a computational security technology. It creates an isolated and protective enclave inside of Intel processors that allows for verifiable computation to occur. So SGX encrypts data within enclaves to prevent unauthorized access and ensures code integrity by only allowing authorized code to execute within it. It's basically a way to have trustless computation from your own computer so that even you, the person running the computation, cannot tamper with it.

• 3:46David Hoffman?

  And also you can prove that you haven't tampered it with it to the rest of the world. It's a pretty cool corner of innovation that's going on in parallel to crypto. It's highly conducive to some of the goals that we have in crypto. And it's also a component that is pretty critical to Suave. So you'll hear Andrew talk about SGX. So just wanted to define those terms.

• 4:05Ryan Sean Adams?

  All right, guys, let's get right to the conversation with Phil and Andrew. But before we do, we want to thank the sponsors that made this possible, including our number one recommended crypto exchange. That's Kraken. If you don't have an account, go set one up right now.

• 4:20David Hoffman?

  Kraken knows crypto. Kraken's been in the crypto game for over a decade. And as one of the largest and most trusted exchanges in the industry, Kraken is on the journey with all of us to see what crypto can be. Human history is a story of progress. It's part of us, hardwired. We're designed to seek change everywhere, to improve, to strive. And if anything can be improved, why not finance? Crypto is a financial system designed with the modern world in mind. Instant, permissionless, and 24/7. It's not perfect, and nothing ever will be perfect. But crypto is a world-changing technology at a time when the world needs it the most. That's the Kraken mission: to accelerate the global adoption of cryptocurrency, so that you and the rest of the world can achieve financial freedom and inclusion. Head on over to kraken.com/bankless to see what crypto can be.

• 5:05David Hoffman?

  Not investment advice. Crypto trading involves risk of loss. Cryptocurrency services are provided to US and US territory customers by Payward Ventures EK. PVI, doing business as Kraken. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world. And now, something big is happening. Introducing the Cello Layer 2. It's a game-changing proposal that's going to bring Cello's rapidly-growing ecosystem home to Ethereum. Vitalik has shared its excitement for the Cello Layer 2 on the Cello forum, so has Ben Jones from Optimism. But why? The Cello Layer 2 will bring huge advantages, like a decentralized sequencer, off-chain data availability, and one-block finality. What does all that mean? Rock-solid security, a trustless bridge to Ethereum, and more real-world use cases for Ethereum without compromise. And real-world adoption is happening. Active addresses on Cello have grown over 500% in the last six months.

• 5:50David Hoffman?

  With the Cello Layer 2, gas fees will stay low, and you can even pay for gas using ERC20 tokens. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forum. Follow @celloorg on Twitter and visit cello.org to shape the future of Ethereum. Arbitrum is the leading Ethereum scaling solution that is home to hundreds of decentralized applications. Arbitrum's technology allows you to interact with Ethereum at scale with low fees and faster transactions. Arbitrum has the leading DeFi ecosystem, strong infrastructure options, flourishing NFTs, and is quickly becoming the Web3 gaming hub. Explore the ecosystem at portal. arbitrum.io. Are you looking to permissionlessly launch your own Arbitrum Orbit chain? Arbitrum Orbit

• 6:34David Hoffman?

  allows anyone to utilize Arbitrum's secure scaling technology to build your own orbit chain, giving you access to interoperable, customizable permissions with dedicated throughput. Whether you're a developer, an enterprise, or a user, Arbitrum Orbit lets you take your project to new heights. All of these technologies leverage the security and decentralization of Ethereum. Experience Web3 development the way it was always meant to be. Secure, fast, cheap, and friction free. Visit arbitrum.io and get your journey started in one of the largest Ethereum communities. Bankless Nation, I would love to introduce you to Phil Dian, a crypto economic researcher. Phil is the lead author behind the landmark paper Flashboys 2.0, where he introduced and defined the MEV problem in

• 7:16David Hoffman?

  the Ethereum landscape over four years ago. He introduced MEV. That's kind of a big deal. He's also the co-founder of Flashbots, which is a research and dev organization with the mission of mitigating the negative externalities of MEV. Phil, welcome back to Bankless. Thank you so much for having me. And new to Bankless, we have Andrew Miller, an associate professor at the University of Illinois, SGX Bull, and visiting researcher at Flashbots, and also a big believer in cypherpunk values through crypto economic mechanisms. Andrew, welcome to Bankless.

• 7:47Speaker 02

  Hey, great to be here.

• 7:49David Hoffman?

  So there's this thing going around in the crypto world called Suave. If anyone who's paying attention to MEV knows this thing that is Suave. Suave to me is this confusing concentration of a bunch of nebulous ideas all instantiated into one single place. So here on this episode today, we're going to try and parse out exactly what is Suave, what Suave wants to bring to crypto, and also what Suave wants to bring to the world. Phil, Andrew, you guys think that we can get that done this episode? Let's do it.

• 8:21Speaker 02

  Easy.

• 8:22David Hoffman?

  So I think in order to really understand Suave, we actually kind of have to go back in time and kind of run through the idea maze that I think is Flashbots. Flashbots has this crazy awesome arc to it. And it's been one of the cooler stories that I've been following since my early days in crypto. And so Phil, I think in order to really justify why we, why the world needs Suave, why we need to bring Suave into existence, we actually kind of have to run through the history of Flashbots and the history of MEV in order to showcase the decisions that were made that will ultimately bring us to Suave. So I'm wondering if you can kind of run us through the history, the speed run us through the history of MEV and Flashbots.

• 8:58Speaker 03

  Yeah, so I think my particular journey through MEV, everyone has their own, took many, many different directions. But the TLDR is about four or five years ago. I noticed that there was kind of a common problem that was coming up in different things I was researching. At the time, I was a PhD student thinking about the question of what does it mean for a smart contract or a blockchain to be secure? What is different about securing these systems than securing things we've seen before in maybe traditional software? And this problem kept coming up, that there was essentially this breakage in the abstraction that people kind of held canon, which was of the blockchain as a bulletin board, kind of secured by these

• 9:40Speaker 03

  rational actors. And actually, if people were purely rational actors, there were many ways in which properties people took for granted about this blockchain or bulletin board as they were thinking about it, this public channel, kind of breakdown, potentially leading to the collapse of the entire system. So as I started investigating this more and more, I was kind of more and more convinced that like this is what the math says, and this is the inevitable outcome of what we're building. And Flashboys 2.0 was kind of my attempt to summarize all of my knowledge and write a position paper to kind of get people in the community thinking more seriously. Because I think there are a lot of deep questions

• 10:21Speaker 03

  here about balance of power inside the system, about robustness, censorship resistance, regulations, et cetera, et cetera, that I thought were like super understudied. So this was me and my co-authors' attempt to kind of put a flag in the ground and say, look, this is not just a theoretical issue, there's huge consequences, and here's some numbers to show you how important it was. I think once people are aware of the problem, the next question is, what do we actually do about it? How do we solve this? How do Fulfill the ideals of crypto. I think for me decentralization is super important. I'm a decentralization maxi. Hopefully that will come out in this episode.

• 11:02Speaker 03

  And I think for me, I saw MEV and the concentration of power through MEV as kind of the way decentralization dies in some ways. And I think for me, humanity at least deserved a chance to explore and try to integrate these decentralized approaches into various places where today we have trust kind of to fulfill what we were talking about earlier about the kind of original ideals that bring, for example, Andrew here of this movement. So I think decentralization is super important. And to me, the question is, how do we get there from here? I think since then, there have been a number of steps. The founding of Flashbots is one of them.

• 11:46Speaker 03

  A number of products we've released to kind of try to nudge the MEV ecosystem into what we think is a direction that thinks about these problems and handles them as kind of first-class priorities. And yeah, happy to talk about any of the steps on that journey, but I think Suave is the next one.

• 12:04Ryan Sean Adams?

  I'm wondering, Phil, if you could kind of describe the problem that you saw that people at the time didn't. So people thinking about blockchain as a bulletin board and you're seeing it in a different way. And you are a decentralization maxi, self-described. So you know, I'm taking that to mean you saw the decentralized properties of the system under threat from this particular class of problems. Can you describe the problem? Like, what is the problem of MEV? And I mean, the easiest way to understand for a crypto native, for a crypto listener, what is the class of problems that you are, you saw then and you're still on a quest to solve?

• 12:45Speaker 03

  Well, I think the fundamental problem is that what blockchains try to and need to do for them to work is to come up with an order of events of transactions that they're processing and kind of communicate to everyone that this is the order that we all accept for these events or these transactions. I think People hadn't maybe taken into account how much discretionary power there is in the mechanism that actually comes up with this order. So in terms of reordering transactions, or inserting your own transactions, or censoring transactions, these are all options that essentially the infrastructure providers of these networks have the option to do from a technical perspective. And there's nothing in the economics that prohibits them from doing these things.

• 13:28Speaker 03

  But they're very much not the expected behavior, and they lead to this very complicated problem of, okay, if I'm one of these infrastructure providers, what is the most profitable thing I can do in the system? The core problem there is this creates basically an asymmetry. So people who are more sophisticated in being able to leverage these powers, being able to reorder transactions, to insert their own, and to censor, have an advantage in the system over ones who don't, because they get paid more per action, basically. And if you're a game theorist, what that means is when you play the game many times, basically these are the set that will play the game, because they're the ones that are profiting more than the other ones. They can afford to drive the other players essentially out of the system.

• 14:11Speaker 03

  If you look at the act of actually building a block and what it entails when it comes to most of these transactions being DEX transactions, being financial transactions, the players and the entities that have the most sophistication in actually maximizing their own revenue against this kind of optimization problem of how do I actually process these transactions? How do I build a block? The players that have an advantage in that game are essentially hedge funds, proprietary traders, and people who have maybe other reasons to be trading on the blockchain other than purely providing infrastructure, things like arbitrage. And so my fear was essentially that our system was enshrining a concentration of power on

• 14:54Speaker 03

  the infrastructure level to these players, essentially the more they could kind of play these games and do so in a way that was allowed, essentially, that was more sophisticated than other parties. So I think that's one problem, and it could potentially, at least at the time, one of the big concerns was... You can concentrate the validator set of ETH this way, where if you're doing a proof of stake analysis, this was before we moved to proof of stake, you're relying on having many parties with many incentives to kind of come to this robust consensus. If those incentives aren't as clear or clean as what you're putting on paper, then your consensus maybe won't

• 15:35Speaker 03

  actually come to fruition. So that's kind of how the system could ultimately break as a result.

• 15:41David Hoffman?

  One of the reasons why I think many people who are in crypto for the tech come to crypto is they see the equitable foundations on which these platforms like Ethereum, like Bitcoin, provide to the world. I think, Phil, what you identified in MEV is like, oh, we do have this equitable foundation, but MEV can tilt it into the balance of, tilt power into the balance of parties that already have it, right? People that are already well capitalized to market make, right? Like technical MEV bot coders who have this power and they can capture that value. And that can be expressed in an increasing concentration of ETH stake at a faster rate than the non-technical people. And so, you know, being a decentralized maxi, I think this is perhaps like one of the arcs of Flashbots. It's like, how do

• 16:25David Hoffman?

  we preserve the equitable foundations of these platforms? One of the big flagship products out of Flashbots was this thing called MEV Boost. Can you talk about MEV Boost and how it produces and like helps maintain the equitable foundations of Ethereum?

• 16:42Speaker 03

  Yeah, so MEV Boost came out of a line of research called PBS or Proposer Builder Separation. Highly recommend reading up on that if you're not familiar with it. This was, you know, many people's kind of memes spearheaded mainly by Vitalik, I would say, but with many kind of contributors in the community. And this is the idea of basically separating this sophisticated activity of optimizing blocks from the activity of proposing blocks on the network. So the actual proof of stake protocol that was being designed. The reason for this was we had a system called MEVGET, which worked on proof of work. It was a very different auction. And all we were trying to do there is basically show

• 17:24Speaker 03

  people, one, ordering matters, and two, in a permissionless auction for ordering, you basically get more value for all parties if that auction is permissionless and competitive than you do in a proprietary or like side deal style auction.

• 17:41Speaker 03

  When proof of stake came, the question was, okay, what's different here? I think one big thing was the desire to allow solo stakers, so parties that were not as sophisticated, to participate. And MEV Boost and PBS was basically a way to try to contain the specialization to this layer and this role that was called the builder, that would essentially make these complex trade-off decisions in an auction that was competitive. The idea being that if you were a validator, even if you were not sophisticated and you were just proposing blocks and validating Ethereum, you could still make as much money as the sophisticated parties by essentially receiving bids from those parties for your action space. And if you make that competitive, it's kind of better for the system than having it be

• 18:26Speaker 03

  side deals or opaque. So that was kind of the background with MEV Boost. Of course, there's problems with it. A key among them is it relies on centralized trusted parties to achieve a lot of its guarantees. And I think that's really what we're trying to move away from in the next phase.

• 18:44Ryan Sean Adams?

  The relayers, right, being one of those trusted parties. And I believe it's 90 to 95% of validators are now using MEV Boost at this point in time. So you guys have been pretty effective with this. And one of my favorite parts of this story, Phil, is not only were you and the Flashbot team responsible for making the entire crypto community and the crypto industry available, aware, I should say, of the power of block ordering, which we were previously unaware of, you guys actually put together a solution. So it's kind of rare to have like somebody surface the problem and then also architect the solution to that problem. And whenever that happens, it's just a fantastic thing.

• 19:27Ryan Sean Adams?

  Before we get too suave, because I think we're now almost caught up in history to where we are right now, we've got this thing called MEV Boost. It is helping to corral and mitigate some of the MEV in all sorts of ways. I just want to bring Andrew into this conversation. So the problem set that Phil teed up, Andrew, what about that world is appealing to you? Like, how did you find yourself being sucked into the rabbit hole that is solving these weird MEV crypto coordination problems? Because you're an associate professor, aren't you, Andrew?

• 20:00Speaker 02

  Yeah, that's right. Well, I come from this from a different perspective, starting from privacy technologies. I've kind of spent the most time doing research on I mean, the whole stack of things like zero knowledge proofs and multi-party computation and so on. And I've spent the most time working with Zcash and they're, I mean, to me, my perception of MEV was just it's something that has nothing to do with privacy. It's something that's very financial and that Phil has it under control. So it's just something that I, you know, I was aware of kind of during the past, you know, several years, but not on, you know, hadn't piqued my interest so much because I didn't see that, you know, that connection to it. But the path that I've been going down has been basically realizing kind of where the limits of zero

• 20:41Speaker 02

  knowledge proofs are and kind of making this kind of observation that most of the interesting applications have some kind of shared private state that's needed. And so you really can't just do everything with zero knowledge proofs. You have to use one of these kind of alternative techniques. And so I spent the most time working in multi-party computation and in trusted hardware enclaves like SGX kind of recently. And so, I mean, from my perspective, like we wrote this research paper called EKIDAN in 2018, and that kind of became the basis for Oasis later. And it basically has the same design, you know, structure as secret network, which then I followed that really closely, basically in terms of identifying what are the differences between what we wrote in the EKIDAN paper and what they actually implemented. That went down this

• 21:25Speaker 02

  kind of interesting rabbit hole on of its own, but a really relevant one of like what it takes to build, you know, a credibly decentralized system that relies on untrusted hardware for its shared private state. And so that all kind of came together at the moment that I heard about the Suave proposal and suddenly a whole bunch of things kind of clicked. So first of all, the need for privacy, not in the long-term user privacy, like protect dissidents, you know, user privacy view for MEV, there's this very obvious but short-term kind of privacy need. So you care about pre-trade privacy. And then that's actually really important, not just for users' own sake. The big challenge in working in privacy tech is that users won't pay for privacy. They don't understand it very well. So it's, you know, very challenging to get on,

• 22:10Speaker 02

  you know, adoption of good privacy technology. And so this is a setting where you really need the privacy. It's really well motivated. It's well motivated in a way that you can see and understand the consequences of it a lot better. And so

• 22:24Speaker 02

  And it just became clear that this was going to be on a really great way of approaching that problem, combining these two technologies. And then it fits the kind of other goal that I've had, which is to basically, you know, elevate the quality of systems built using trusted hardware enclaves. So I'm not an SGX bull per se, but I do think that this is technology that's kind of misunderstood and underrated and, you know, gets a negative sentiment for misunderstandings as much as for, you know, real reasons that deserve it and so on. So I have to me as an opportunity to basically, you know, do this the right way for a perfect problem, you know, while everyone's watching and the incentives to get it right are really clear. And yeah, that's my path to it.

• 23:02Ryan Sean Adams?

  So Andrew, safe to say, Phil doesn't have it all figured out with respect to MEV. He needs some help, particularly on the, on the privacy side. He needs a team around him to actually help him achieve some of these objectives.

• 23:15Speaker 02

  Yeah, that's the case. You can't just like stare at Phil and wait for the entire problem to be solved.

• 23:19Ryan Sean Adams?

  That's what I've been doing. That's what we've been doing.

• 23:21Speaker 02

  I'm stunned that MEV is still an open problem at all, but yeah.

• 23:26Ryan Sean Adams?

  But now, now we're, we're kind of staring at both you guys. And I'm wondering, Andrew, if you share this intuition that, that Phil stated earlier, that, you know, if we don't solve the MEV problem, right? You're talking about crypto values and kind of libertarian values and, you know, identifying with a cypherpunk manifesto. But if we don't solve this problem, it could potentially lead to the collapse of the entire system. Do you think that's what's at stake here? Do you share that intuition?

• 23:51Speaker 02

  Um, yeah, I mean, I've heard this described as the Flashbot's Doomer thesis. I find it fairly compelling. I think, I mean, all credit to Phil for, you know, like you said, you know, accurately prophesizing a problem just in time to see, you know, actually take place and then be able to, you know, kind of identify paths towards solutions of it. You know, that doesn't come around so often. So that's like a really cool thing to foresee. And specifically foreseeing when things will become huge trends towards decentralization. I think that's a really great thing to try to identify and then try to mitigate. Um, so I mean, whether it leads to just a suboptimal outcome where there's more centralization than, than needed, um, or whether it, you know, ends the entire experiment, um, regardless

• 24:33Speaker 02

  of whether you take the soft Doomer thesis or the full on one, um, it's a really important and worthwhile goal. So I do think that these are areas where, um,

• 24:43Speaker 02

  Auctions in general, all of these things that are like order flow auctions, all sorts of components in the MEV, you know, supply chain, they implicitly rely on privacy that comes right now only at the expense, through the mechanism of just trust. And that is fundamentally a centralizing force. And so trying to build something that avoids that is hugely important.

• 25:04David Hoffman?

  We've been setting the stage, what I think is going to be a good place to bring up Suave here. We have the history of Flashbots and MEV Boost and the mechanism designed that has created to contain some of the MEV. Then Andrew, we're bringing in some privacy and some further mechanism design tools to add into the mix of what it takes to fully solve this problem. Phil, I want to give you my take about like this, this arc that is Flashbots and the Phil arc and really just the harnessing of MEV arc where, you know, it starts with identifying it with the Flashboys 2.0 paper. Then MEV Boost starts to actually contain it, like puts a wrapper around it and it pushes

• 25:45David Hoffman?

  it away from the centralizing forces, the big, you know, jump cryptos of the world, the big market makers of the world. And it actually harnesses it and pushes it into ETH staking, actually, which is a more distributed set of people. But it's actually not doing the thing that I think Suave wants to do, which is nipping it in the bud in the first place. And I think that's kind of the big golden solution that we are looking for, that Flashbots is looking for is it's great that we were able to harness MEV through MEV Boost and instead of giving it to just one centralized, very expert, very well capitalized parties that are, you know, MEV bots and market makers, instead pushing it towards a very wide distributed

• 26:30David Hoffman?

  set of people in the ETH holders, the ETH stakers. That's an improvement, but it's still not what is the golden standard, which is just like not having MEV extraction at all. And I think that is where this arc is pointing towards and what Suave is trying to do. That's my understanding. How does that vibe with you?

• 26:48Speaker 03

  I mean, I think the distinction between solving and harnessing MEV is actually very small. Like, I think ultimately, you know, MEV is basically about what is the power distribution in your system, how is information propagated, and who profits off that. I think you can always very easily solve it through centralization, essentially. Like, this is actually what, when I first, even years before Flashboys 2.0, when I first discovered this in the context of DEX design, this was before Uniswap launched on-chain back in the Ether Delta days. When Uniswap asked me, like, "Hey, what do you think of this design?" I was like, "Well, you should really have like a centralized order book that you all run in a permissioned way and like, don't cheat, because otherwise, there's no protection",

• 27:33Speaker 03

  you know? So I think there are solutions right now, but there are also limitations to those solutions. It's this kind of, like, devilish problem, where like, because it's about power balance and arbitrage and these complex information asymmetries, it's not clear we like even know how to like solve it, or what that means. Like, there may be one structure that one set of people consider a solution, because it has less of like some type of toxicity that they subscribe to, than another set of people totally don't even want to use, because they consider it so unfair. I think this is like the trillion-dollar, you know, like, divide, basically. So, that's all to kind of troll you into saying, like,

• 28:13Speaker 03

  "I get the impulse to solve MEV, but to me, the only solution is to like, have a fair, decentralized, permissionless way to harness it." And you want to, yes, be thoughtful, basically not to be needlessly sending too much to the validators, or sending too much to jump crypto, or anything like that, in your market structure. But, uh, yeah, it's a very complex problem with many knobs. I think what Suave is trying to do is to add decentralization to as many of those systems as possible. Just provide a new trade-off point, that's more decentralized from an infrastructure point of view. And to me, this is like both the solution and the minimization of MEV, because then users will be able to

• 28:56Speaker 03

  harness it, because they have a permissionless competitive environment. They don't have to be kind of at the power mercy of whoever controls the pipes, the way they are in TradFi, for example.

• 29:08Ryan Sean Adams?

  So as we get into what is Suave and we asked that question, I'm not gonna ask it yet. I just want to want to set this up with one other question, which is what outstanding MEV problems still exist that Suave is really teed up to solve? Like, give us the problem set here. Andrew said earlier, "Oh, I think Phil's got the MEV problem." Well, it turns out he doesn't, and there's more work to be done. What is that work?

• 29:32Speaker 03

  Yeah, so I absolutely don't have the MEV problem, which is actually why I wrote the paper. Like, for two or three years before the paper, I tried to solve it by myself and with a few collaborators on the whiteboards. And I went down all sorts of different directions, including social choice theory, fair ordering, auction theory, block space futures. These are all like papers that I had half of and then decided it didn't work. And like, we threw it out. So I don't actually know the solution. I think the whole, you know, at least for me, the like crafting of Flash Boys 2.0 was how to make the problem simple enough that people are convinced that it's that they can just solve it. But actually, it's like devilishly difficult.

• 30:12Speaker 03

  It touches on things in like law, economics, market microstructure, you know, protocol politics in terms of distribution to holders, validators, et cetera, consensus research, distributed system security, you know, economic mechanism design using settings that we haven't even seen yet in academia in terms of complexity. So there's many, many verticals. I think every person who kind of approaches this easy problem finds some path to start walking, and it's a journey. And to me, that's like one of the most interesting things because every, every person has a different set of unsolved problems. I'm curious, Andrew, to hear yours also.

• 30:54Speaker 03

  I think, at least for me, my biggest thing that keeps me up at night is like, can we come up with a power distribution that doesn't collapse to centralization? Can we maintain permissionlessness? What are the best economic mechanisms to kind of encourage that competitiveness and distribution versus like, you know, more predatory rent extraction, or zero-sum games, or smiting, or something more socially wasteful? So that, to me, is the big question. But we don't know how to do that in TradFi, so I don't know. It's hard to do in crypto also.

• 31:28Speaker 02

  So much of that kind of space about where this, you know, what you can do with Suave, any system connect with, you know, open problems in market structure, that that's all I think open even in the TradFi world. And so, um, yeah, and I don't have so much insight on kind of those. So I mean, I have a kind of simplified mental model of, you know, what a sufficient number of problems are in MEV for which there's already like not a good solution, you know, except for something like Suave. So to me, it's like you can already see a kind of the the critical effects of like sandwich attacks and lost arbitrage opportunities, even in just like a little toy model with like a couple of AMMs and some kind of fragmentation of liquidity. Suddenly then the ordering, you know, matters

• 32:09Speaker 02

  and then, you know, all the relevant phenomena kind of show up. So to me, I imagine the problem that is still open, but that Suave is addressing in the simplest form of this problem, even before getting to, you know, all the other more open ended ones. But um, it's really just, you know, how to do a, you know, incredibly decentralized job of, you know, applying some sort of sound auction mechanism to all of these bids coming in from users. It's the same thing as finding, you know, an ordering for trades against an AMM. And, um, you know, the ways to do that, that give any sort of, you know, guarantee of, uh, quality for users or satisfy any sort of, you know, fairness objective that you could come up with. Pretty much they all rely on, um, you know, privacy in some

• 32:50Speaker 02

  way. And so, uh, without Suave, there isn't a good alternative way of addressing all of those and especially not in a generalizable way. And so the idea that, um, and to me, one of the things that clarifies the scope of Suave quite a lot is to say, and now actually I didn't know that that story, the way that Phil put it, but kind of clarifies a lot. So after, you know, banging your head against the wall, trying to solve MEV through doing the mechanism design yourself, different perspective is to say, you know, this is going to be a game that continues through meta game phases and shifts, the meta shifts over time. There isn't going to be one mechanism that wins them all. So it's necessary to come up with more of a platform view. So a platform for building MEV relevant mechanisms. All the interesting ones are going to need privacy. So that's kind of, you know, the

• 33:34Speaker 02

  key feature credible, you know, execution accuracy as well. Um, so then those are kind of the things that the platform has to provide. Um, but yeah, to me, that's, you know, basically what frames the problem that Suave solves.

• 33:47David Hoffman?

  I think we've done a pretty good job actually defining the spirit of Suave and the goals of Suave, the contours of Suave, but I think it's about time now to actually approach this conversation head on. So Phil, what's Suave?

• 34:02Speaker 03

  Suave, Suave is the single unifying auction for value expression. So it's a platform, it's a set of tools and also systems that are deployed, including distributed systems, including nodes and things like that, to basically allow you to write applications that have several properties. Number one, they're privacy enabled in a very decentralized way. Number two, they're able to be distributed across like different infrastructure providers and different node operators essentially. And number three, that there is some credibility to these computations. So like you want your computation to be up, you want to often

• 34:45Speaker 03

  know that it's censorship resistant and you have like a robust channel to express your messages and things like that. So it's basically a platform for building these apps. The first set of which that we're focusing on will basically be MEV time applications. So apps that run while a block is being created on Ethereum in like the 15 seconds between protocol making a decision. So it's kind of a tailored set of privacy and infrastructure solutions to build those apps.

• 35:15David Hoffman?

  Okay, so it is a platform and tool and a set of tools for solving MEV problems in its more, its most generalized form. Is that correct?

• 35:24Speaker 03

  Yeah, you could also use it to possibly solve problems outside of MEV, although when you get to the edges, there's a question of is this MEV or not, because it depends how you define like the world and things like that. So for example, ad auctions is another one. I'd say in the most general is like, it's a platform for building apps that require decentralized coordination. And maybe without Suave, we only know how to build these in a centralized trust model. And where trust is very important. So high profile auctions that are often manipulated could be one example. Maybe you consider that MEV, maybe you don't, depending on whether you take like a blockchain purist view of MEV or not.

• 36:03David Hoffman?

  So would MEV Boost be an example of an app on top of Suave? Or is MEV Boost something separate?

• 36:10Speaker 03

  Yeah, I mean, I think the MEV Boost, it can interact with Suave in many ways. So certainly, you could build like a credible MEV Boost validator on Suave, where the validator essentially commits to taking the highest bid in MEV Boost. You can also build various components. So MEV Boost itself is like an overarching name for the protocol, but there's many subcomponents, and any of those components can be built on Suave. One big example is the relay in MEV Boost. Right now, it's responsible for two things: making sure blocks that go to a validator are accurate and valid, and they're not spamming the validator, and basically ensuring payments/protecting the validator from getting slashed,

• 36:52Speaker 03

  and also providing privacy to the searchers from malicious validators that may want to see the contents early. So these modules, you could just write as essentially apps on Suave, where instead of having this relay that validates your blocks and attests to the payment and maintains the privacy, this is done by many nodes that are running all over the world in a joint computation. And in that way, you have a relay that doesn't really look like a classic centralized relay. But you could also do this for the builder, which is another component, MEV Boost. Distributed decentralized builder is one of our main projects. And you can also do it for the validator interface.

• 37:31David Hoffman?

  I think we're about to enter this phase in this conversation where it's a bunch of blind men feeling the elephant, and we're like, is Suave like this? Is Suave like that? Yep. So I'll throw this next one at you. Suave kind of feels like a mempool of sorts, where like currently, what do I do? I write my Uniswap trade and I broadcast it everywhere, and then I just cross my fingers that I didn't get bitten by some MEV bot too badly, but I probably did. Instead, I could submit a transaction to Suave, and that would be a pre-mempool layer. Instead of going to the broad mempool, I would just submit it to Suave, and there's some amount of like protections in the order of operations that go in with my transaction that preserve my capital the best.

• 38:16David Hoffman?

  I kind of perceive it as like a mempool, an alternative mempool with user protections. How is that definition standing up?

• 38:23Speaker 03

  Yeah, I want to hear also Andrew's take on what Suave is because he's a professor and he's more eloquent than I am in this kind of stuff. But I, I think, yes, that is one way you could use Suave. So like going back to Suave being a platform, I think an encrypted mempool is certainly one set of apps we want to build and like encourage on Suave. Specifically, I think the winners in the private, privacy preserving mempool space are ones that like do handle the MEV intelligently and let the user control basically the value of their information, but also leverage it in that block production process to get the best price, to get the best outcomes, to get the best execution for that trade. I think you really need privacy to do a lot of these things.

• 39:07Speaker 03

  So yeah, I think that is for sure. One of the apps that we will build on Suave is like a programmably encrypted mempool. And we also encourage others to kind of reach out and collaborate there.

• 39:19David Hoffman?

  Andrew, how do you define Suave?

• 39:22Speaker 02

  Let me first just answer the, um, uh, yeah, that, that last question about, uh, the, you know, definition as a mempool. I guess I'm trying to come up with, you know, things that Suave can do that, you know, aren't captured by having like a protected mempool in that case. So it's definitely at least, you know, able to do an encrypted mempool. That's like the, uh, a motivating application. But other things that make sense that don't fit into that are being able to, you know, generate transactions that were generated from running a function on private bids that had been submitted. So that's not captured in just a mempool that can only reorder transactions, um, you know, privately without, without getting to see them.

• 40:02Speaker 02

  So that's a little bit more, anything that involves like persistent private state also, like if you have a bid like, uh, that, you know, the, the value of the bid is sort of moving over time according to a pre-programmed rule, you know, that's something that only kind of shows up over, you know, as time goes on, as multiple blocks go on maybe. So, um, that's also not necessarily just captured in, um, you know, a private mempool. But otherwise it's, yeah, that's a really, I think, really good analogy for what it does. And then, um, to give an answer as to, you know, what is Suave to me? So my simplistic way of thinking of it, Suave is a layer two blockchain. It runs smart contracts. The smart contracts offer credible computation and privacy because they run in trusted hardware enclaves.

• 40:46Speaker 02

  And then the smart contract environment is called MEVUM. So it's EVM, except modified with precompiles that are helpful for the task of building blocks and other MEV time applications.

• 40:57David Hoffman?

  Okay, so there's computation that can run on top of SWAP. So not only is a SWAP a place for you to deposit transactions into, but it's a place where people can run computations on top of those transactions as well.

• 41:12Speaker 02

  Yeah, that's necessary for most of the interesting applications, like complex auctions to work.

• 41:17David Hoffman?

  So we've recently been exploring this world of like intents, right, on on bankless. And kind of the way that I understand one of the power of intents is that intents can be matched prior to settlement and in a more efficient way where less people are using gas, there's less slippage. And to me, SWAP is perhaps like a meeting place with the necessary computation to understand the optimization of matching, where all these intents and also just vanilla Ethereum transactions and other types of transactions can all kind of like be canceled out against each other before some final output is produced. And that is an optimization that reduces, can reduce MEV, does reduce gas,

• 42:00David Hoffman?

  and also, I think, just makes a much more overall dense transaction bundle that will perhaps one day, at one moment, be uploaded into some block and embedded into Ethereum. Am I on target here?

• 42:15Speaker 02

  Sounds right to me.

• 42:16Speaker 03

  Yeah, I mean, I think that's correct. I think one of the underappreciated factors is like, where does MEV actually come from? One place it comes from is conflict. So fundamentally, like, I want to include my transaction that's worth money for for me. You don't want me to include my transaction because it gives you a worse price. I want to win this arb, you want to win this arb. Like, there are ultimately preferences that the world has and all of these actors in the system. And as great as it would be for everyone to get like their number one choice on everything, that's not how the world or the blockchain works. I think anyone who's used the blockchain kind of knows that. So then the question is, how do we coordinate like an actually useful outcome that balances all of these different preferences and resolves these conflicts

• 43:01Speaker 03

  in like a sane way? And unfortunately, the only answer we've seen in the past in crypto is add centralization. So I think what Suave is trying to do is provide a way to do this without centralization. One way to view intense in that model is it's people just expressing their preferences. And now the actual outcome of how do these preferences get matched against each other, turn into transactions, turn into a block, that basically involves conflict resolution and making choices basically in like conflicting preferences. So I think even in many intense systems, we've seen like one of two things. Either you do this

• 43:43Speaker 03

  in public and you can use a lot of the tools that we have on like vanilla blockchains. I think the limitations there essentially are that you create MEV from the public nature of these intents and you create a whole separate game on extracting value from these public intents. Or you can use some sort of privacy solution to try to match these in secret or somehow internalize the value of this privacy. But there's no technically perfect private solution. So what can you do? You can have a centralized server, you can have a key, and you can sign with the key, possibly with some staking on top, or you can have a committee of keys. And so Suave, I guess, is intended to add one option to like, how do you match these intents? What is the most efficient way to both maintain

• 44:25Speaker 03

  and like value this privacy, but also get the execution you want?

• 44:29Speaker 02

  I take issue with the notion of matching intents. I basically think it's, you know, not sufficient to kind of understand what's going on. So I mean, intents kind of have two components. I think of, I mean, I'm on the intense or kind of glorified limit order side. So that terminology is, you know, the simplest, but there's two parts, right? A limit order has your reserve price. And like in auction terms, that's like the, you know, bottom line deal that you would accept, like the worst possible deal that's still like break even or better for you. And you can match two people's intents if their limit orders, you know, are compatible, you match them, but you have to do something with the spread. And people want execution quality, which is no one wants just their worst possible price that they'd accept. They want and usually can achieve something better. And so you can

• 45:11Speaker 02

  specify your kind of bound condition and enforce that on-chain, like my intent will not be applied at all. None of my assets will move unless at least my reserve price is met. But you usually want some kind of execution quality guarantee as well. And so to do that is when privacy ends up being much more useful and important.

• 45:29Ryan Sean Adams?

  Okay, so we're beginning to get the shape of the elephant here, right? But just like, we're still feeling it around. So we've got this private mempool that is maybe programmable. Phil, I've heard you say elsewhere that is maybe MEV-aware, and it's not inside a specific blockchain. So it's like a pre-mempool mempool. It's outside of Ethereum. It's outside of all the existing blockchains. And it's where intents can meet. It's where transactions can meet. It's where all sorts of things can meet. And we've got this set of tools within Suave that is able to create apps. And I guess maybe this sort of mempool type

• 46:09Ryan Sean Adams?

  of apparatus is an app. Andrew used a couple of terms there. One, he used the term blockchain, the B-word, to describe this thing. And I want to probe into that because people have a mental model for what a blockchain is. It's not quite what you described with Suave, but maybe it is in some ways. I want to do the takes and puts of that. And then you also called it a layer two, which implies there would be some sort of bridge to maybe Ethereum or something else, at least when you were describing it. So Andrew, can you talk about that? What about this word blockchain? Would you describe Suave as a blockchain? Or is it something else? And also, layer two, how does that definition fall into your description of Suave?

• 46:51Speaker 02

  I mean, Phil probably has a better answer here, but I mean, those both seem kind of simple. So yeah, I mean, Suave will have a Suave chain that's able to do consensus, maybe faster with some different trade-offs than Ethel one consensus. But being able to have some notion of coordination and consensus is kind of... Necessary for coordinating these. And the way I described it is like these things are written on smart contracts. Where does smart contract lives on a blockchain? Not all Suave contracts will be on Ethel one. So where are they on? They'll be on Suave chain. And yeah, I mean, exactly what kind of L two, you know, it would be like a function of maybe how much it's basically putting to,

• 47:31Speaker 02

  you know, Ethel one for its own management or doing more of it on Suave chain or even off of Suave chain, you know, maybe to be determined. But yeah, I would at least be able to bridge to, you know, at least Ethereum. So it's in that sense that I mean, it's an L two. So we can probably do a better job here.

• 47:47Speaker 03

  Yeah, no, I mean, I think I agree with everything Andrew said. I think the most broad view is like Suave is this platform. The same way, you know, there's a question of like, what is Ethereum is optimism Ethereum like kind of, kind of not. You know, it's like, it depends where you draw, draw the line. I think, yes, a blockchain is ultimately just a data structure where Suave probably differs from at least what immediately comes up for people. When they think blockchain is kind of what Andrew said, that it's specialized for a very different set of use cases. So we're trying to build MEV time applications. We're trying to let users leverage their private information to get best execution.

• 48:29Speaker 03

  These basically give you a lot of requirements on like the performance of the system, the ways it can interact with blockchains that already exist and L twos that already exists and kind of require you to tailor very much the consensus to be specialized for that. So I do think it will be a blockchain in that, yeah, it will have shared state and some sort of contracts and possibly ability to deposit funds. I don't think it's aimed at the same set of use cases other blockchains are in terms of, let's say, having a long running, like large contracts or mechanisms occurring versus like a more coordination style specialization. I think that means a lot of the tech stack has to be a little bit different. But also the abstraction is very useful.

• 49:14Speaker 03

  Maybe the only other point there is I think we want to be very flexible in what use case people have and like what the requirements are. So I think many of the Suave apps we're envisioning like either minimally would use any such blockchain or maybe possibly not at all. Like a lot of this stuff you can possibly even do purely off-chain. And the blockchain is there basically to lend economic weight to certain actions or messages that require this this weight in a trustworthy way. So, you know, your Suave app deployment kind of depends on whether you need this or not for your use case. And if you do need it, whether Suave's kind of data structures are the best way or whether

• 49:59Speaker 03

  you have a strong incentive to use something else. You can kind of mix and match in that you can kind of have your contracts on Ethel1, your funds on Optimism and your apps in the TEE. But there may also be advantages of using the Suave chain because it's kind of purpose-built for a lot of this stuff.

• 50:14Ryan Sean Adams?

  So there is a Suave chain. It is a blockchain, but that term can also be misleading because people's existing mental models for blockchain are generally something like Bitcoin or Ethereum. And a primary use case for these blockchains is storing your value across time. It's, you know, very much like 10 years from now, I want to, you know, my, uh, my assets better be in my ETH address, right? Or something has gone disastrously wrong with this, you know, property rights or value system that I have. Whereas it sounds like Suave is kind of a different use case, which is more about like coordinating the present. It's more about kind of the the present state. Would you say that's true?

• 50:54Speaker 03

  Yeah, I think that's largely true, especially for the first wave of applications. And especially because blockchains do such a great job on like long-term secure storage. And there's no reason not to leverage their their validator set and et cetera there. I think what's missing is this kind of other way. One interesting maybe discussion that's downstream of that is like, do you use SGX for privacy? And I think if you look at Some of the projects Andrew mentioned earlier, like Akden and Oasis and things like that. It's a very different setting. They're trying to accomplish a different privacy guarantee, which is stronger than necessarily what Suave needs. That doesn't mean that's not also a useful thing to have in Suave.

• 51:37Speaker 03

  It just means that like the nuances of like your parameters and stuff may be, maybe a little bit more flexible. So for example, in Suave, you may be able to accept a certain type of attack. Uh, because it only means you lose like uptime, like 0.1% of the time. Whereas in other systems, maybe you're not willing to accept that because even if it only happens 0.1% of the time, people's privacy gets compromised in ways where they get, you know, prosecuted or, or funds stolen or something really major happens to them. Um, so for me, yes, all of these things are very much in the nuance of like, what problems are we trying to solve? Which here is MEV time problems. Um, and you know, what is the right security for the actual

• 52:20Speaker 03

  level of security you need for that particular privacy blob?

• 52:24David Hoffman?

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• 53:08David Hoffman?

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• 53:51David Hoffman?

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• 54:33David Hoffman?

  This works thanks to a breakthrough technology called Colortrace from Layer Zero. Without it, it was impossible to attribute users of a token with a specific issuer, but now we can. USDV is live on Ethereum, Optimism, Arbitrum and other chains and is already available on over 20 exchanges such as Curve, Bitget, Velodrome and Stargate. Start participating in the yield from Treasury backed stablecoins at bankless.com/USDV. I want to take a new lens for viewing Suave and that's through the lens of being a decentralized block builder. Phil, can you talk about how Suave is a decentralized block builder and where those blocks actually go and what that even means? Can you just explain that process?

• 55:13Speaker 03

  Yeah, so the idea of decentralized block building is essentially, once you have privacy, you can decompose what happens inside a block builder into different kind of processes and different parts. And there's really nothing fundamental that says that these processes need to occur on a centralized server or in one place. So one example is you can look at the ecosystem today or Flashbots, for example. What do we do? We receive bundles. From many searchers and and other builders, potentially and users and whoever wants to send bundles. From our own Mevshare product also sends bundles. And then we try to combine these bundles into kind of the best package of non conflicting bundles.

• 55:57Speaker 03

  That offers the most value to the the network. Now, we do a lot of this stuff literally on. A set of servers. We say, OK, run these combinations like. If this combination looks good, try these other things, etc. There's no reason why that process has to all happen on Flashbot servers. So if you had instead like. The set of rules that govern that process basically encoded as a mechanism or a smart contract. It's like, OK, what are the rules here? Basically. The amount of profit offered to the validator is the change in their Coinbase balance after simulating this like attempt of bundles. The information that the builder has is this set of information and they use it in this way in their algorithm.

• 56:41Speaker 03

  The idea of Suave is basically to let you write those rules as a smart contract. Where, let's say Flashbots merges a bunch of bundles and let's say instead, you know. You you have a better set of bundles, right? Or you have one bundle that can merge into these. There's no reason why you shouldn't be able to directly participate in that process in the same way. Any decentralized system lets you participate. And so that's kind of the idea is how do we split block building up into many modular activities? And and maximize participation in these activities, especially when it doesn't need to be mutually exclusive. Like, there's nothing really fundamental that says that.

• 57:23Speaker 03

  Us Flashbots should be deciding every single order we simulate on our builder. And it's probably actually an efficiency loss that we have this. But we're not able to create an alternative without kind of more decentralized tools.

• 57:36David Hoffman?

  You've been using this idea of like apps on Suave. Is this like, are apps on Suave kind of a way of putting all of these MEV searcher bots? And then also larger bundlers into applications that are actually instantiated in Suave? And so instead of like people running their little MEV searchers on their computer, parsing the mempool and trying to eke out some arbitrage, they can actually just code up an app and deploy it on Suave and have that run. And that just now, now Suave has that logic embedded in it persistently over time. And, and then, but also that's a private app because I don't want to disclose my strategy to others. I get to keep the strategy of that bot for myself and then any profits that come out of that bot myself.

• 58:21David Hoffman?

  Correct? This is how this works?

• 58:23Speaker 03

  Yeah, I mean, I think for searchers, you have options. So like the easier or the less lift would be basically look at the activity you're doing, saying like arbitraging, let's say a centralized exchange and a decentralized exchange. Are there modules you can port into this decentralized world that offer you some benefits? So for example, if you had privacy, maybe you could say, okay, here is my real strategy, assuming this is the price. This is like the program I would run to generate the Ethereum transaction, given my knowledge of the Binance price. And then maybe that part you can put more into the decentralized logic, but you still maintain some centralized component that like in a trusted way, gets the Binance price or something like that. So there may be kind of iterative decentralization steps you can take.

• 59:08Speaker 03

  Ultimately, yeah, the strongest is to basically have a searcher where the entire searcher or solver in like a CowSoft style system is a smart contract, is a mechanism, is run by many people, running many off-chain components that somehow interact with this to create like the right game and the right output. I think there's super interesting applications there. One of the fun ones is you can have passive-active LPs. So the whole passive-active LP is like kind of an arbitrary distinction that comes because passive LPs can't actually update their preferences quickly enough on the blockchain.

• 59:47Speaker 03

  While maintaining the level of decentralization that like, let's say, something like Uniswap offers them. But these lines kind of disappear once you have like maybe DAOs or multi-sigs or other complex bots running in like more private domains.

• 1:00:01David Hoffman?

  The world of block building competes on order flow. So whichever block builders have the most amount of order flow, the most amount of transactions flowing through their system that they have and no one else has. That block builder is going to be able to produce a more valuable block and become more profitable of an organization. Why would Suave be a better alternative for order flow versus a centralized builder? Like, why will orders aggregate towards Suave?

• 1:00:29Speaker 03

  Yeah, I mean, I think fundamentally, my thesis is that the value of decentralization and the amount of surplus that unlocks in the economy is like far higher than the technical overhead of decentralization. Again, I think that's dependent on the use case very much. Like, we see USDT, Amtron being very popular and like not very decentralized. And maybe for some use cases, that's like totally, you know, okay. But there is certainly some value to decentralization. So the ability to have meta properties people care about, like censorship resistance or robustness or not being subject to any single regulatory regime because you're located within the bounds of a jurisdiction.

• 1:01:13Speaker 03

  That unlocks a lot of value that we see in crypto today. So I think the question is like, in terms of the things that Suave lets you do, that you can only do because they're decentralized. How valuable are those?

• 1:01:28Speaker 03

  And my thesis is like fairly valuable, even if you just look at a decentralized builder or a decentralized relay in MethBoost and you look at relays versus builders today and the real constraints centralization imposes. I think those outweigh kind of people's first impulse, which is like, oh, the latency is very high, etc. I think actually, you know, the latency may be even far lower than they imagine. And so, but there is obviously always some communication overhead to decentralization. So does it outweigh the value? That's the question.

• 1:02:05David Hoffman?

  And just to tie a bow on this block building section, what does a block builder do? A block builder builds blocks. It produces blocks. And if Suave is a decentralized block builder, the ultimate output of Suave is a block. And then some Ethereum proposer, some Ethereum validator is like, oh, thank you, Suave, for the block. I choose you. And then they take the block and then it becomes part of Ethereum. This is, this is how the process works, correct?

• 1:02:30Speaker 02

  Yes.

• 1:02:32Ryan Sean Adams?

  So during this entire time, when we've been talking about Suave, we've, we've used the term private many, many times. And Andrew, I know you have a particular interest in that space. In fact, that's maybe part of the reason you've, you've decided to, to team up with flashbots and fill in the team over here. Tell me, why is privacy of Suave so important? And what, what tech have you chosen for that and why?

• 1:02:54Speaker 02

  Well, I mean, privacy here relates to trust in the same way. If you say you're trusting a block builder, what are you trusting them not to do? And, you know, it's probably sufficient just to say, what do you need privacy for? To avoid getting front run and sandwich attacked. So whoever has your data and is computing on it, so like a builder or a relay in the MEV supply chain today, they get to see your data, they're computing on it, you trust them not to abuse that privilege, but that's just how it goes. You have to trust them. So I'm, you know, privacy and guaranteeing that you do what you claim, that you follow your own stated policy with the sensitive data. Those are one in the same in these kind of applications. And then, um, you know, what tech is chosen?

• 1:03:36Speaker 02

  So to start out, we are using trusted hardware enclaves and in particular Intel SGX. So these are, you know, this mode supported on a bunch of different Intel processors and, you know, it used to be on all sorts of laptops as well, but now it's like on Zeons going forward. And they have like an isolated execution environment where even the host of the computer, even if you have kernel access, even if you have hypervisor access, you still can't tamper with or inspect the contents of computing while the processor is computing on that process. So it's basically a, you know, way of letting the, you know, computation happen on data

• 1:04:16Speaker 02

  without revealing it to even the person, you know, who's, uh, you know, got root access on that machine.

• 1:04:24Ryan Sean Adams?

  Andrew, people sometimes I've heard say SGX has backdoors, it's not secure enough, this type of thing. What do you say to those criticisms? Why is it the right technology for Suave?

• 1:04:39Speaker 02

  So it's the right technology just because there's no other viable alternative right now. And I think that with the right system design around it, it's just good enough to be useful for this kind of credible computation. So I mean, it's earned its reputation as kind of a train wreck. Like it's had like on a pace of maybe once per year or so for six years now or something going, like a catastrophic vulnerability in the SGX microcode that requires them to have unusually long embargo time as far as security disclosures go, like often a whole year from private disclosure to intel by the side channels and microarchitectural security researchers who find these. And to when they patch it,

• 1:05:23Speaker 02

  because to patch it requires sending motherboard updates, BIOS updates to every compatible thing, coordinating with cloud vendors and so on. So it's a huge mess. They have a process for upgrading, updating to patch processors called TCB recovery. But it's only through design errors and implementation errors from intel in these processors that these vulnerabilities occur. And then systems based on them have to basically appropriately rotate keys and service for old data that now can no longer be guaranteed. The nice thing about situations in these MEV time applications is especially the ones that are like short-lived. A breach

• 1:06:05Speaker 02

  is maybe going to be like limited in impact in between the duration that who's ever trying to exploit this can try to exploit it. And from when it's patched. And then when the recovery process, which is basically like key rotation and expiring old data takes place, there can be a fairly short time window when this is kind of relevant. So that's something that kind of is better for the MEV applications than things that inherently require this full-on, long-term data storage forever.

• 1:06:33Ryan Sean Adams?

  Well, but so basically, it's like because we're just we're coordinating the present, right? And these things are sort of short-lived. It's a it's a fine technology for something like that. But it might not be SGX, for instance, for blockchain, for like a Zcash, for instance, or for for an Ethereum, you know, SGX might not be the right technology for, you know, a layer one stack.

• 1:06:53Speaker 02

  Well, I mean, I think it is for those two. So the problem is that SGX should not be, you know, SGX should be used when there's really no other alternative. And so this is kind of fundamentally when there is shared private state that you need. So if all you're doing is token transfers, you should just use Zcash in a shielded pool. So I don't think that there's any reason that you know, you should build an SGX-based, you know, privacy token, because you can achieve that just using zero knowledge proofs. So you shouldn't use T's for that. On the other hand, if you want to do something where you actually need shared private state, then what else are you going to do? You either have to like pick a sequencer or something to share this kind of, you know, state with, or you can try to do something like a threshold sequencer, but then that ends up not being

• 1:07:34Speaker 02

  really much different than, you know, this kind of proposal, like there's the risk of then, okay, now you've got a quorum of nodes, but together they could collude and decrypt all of the transactions that are supposed to be private. So even if you did that, you would want to use SGX on top of that as well as like, you know, deterrent or, you know, an obstacle to collusion in that case, anyway. So if you if you want to be able to access shared private state, then there's not really a better alternative. And I think you should use zero knowledge proofs, basically, you know, for absolutely everything else.

• 1:08:05Ryan Sean Adams?

  Good thoughts there. Okay, so we've got this Suave as this private programmable MEV-aware mempool that that produces this thing of great value, which is, you know, one of the apps is decentralized block building. Phil, could we just really quick rattle off the wins here from various stakeholders? So if I'm Ethereum, and Suave is kind of in existence, and it is providing decentralized block building, what's the win for Ethereum? It will go on like, how about other chains, other layer twos, or maybe alternative layer ones? What do they win if Suave is fully realized? How about users themselves? What do they win? Could you go through this from like a stakeholder perspective?

• 1:08:50Ryan Sean Adams?

  Because we've got a lot of different listeners, all of which are in crypto in some way. And they're all kind of probably listening up to this point and they're like, okay, now we understand what this elephant looks like, at least the contours of it, the shape of it. But what do we get out of this? What's in it for us? Why is this such a good thing?

• 1:09:08Speaker 03

  Yeah, well, I think for chains, what it's really giving you is the option to mitigate a lot of centralization pressure in your chain through these apps. So things that would normally make your chain more centralized, give certain incentives to the biggest validators. You get some options to design solutions that basically reduce this without needing to necessarily build all the infrastructure yourself. So in ETH, very specifically, like our hope is that the MEV market remains kind of competitive, permissionless and fair. And there are certainly many forces that like are incentivized to make that not happen. And so the more tools the protocol has, kind of the better a chance it has at like maintaining its decentralization.

• 1:09:53Speaker 03

  Ultimately, I think that matters in many downstream ways. Probably the most extreme one is regulation. Like I wouldn't expect like a chain that was located entirely in one data center or jurisdiction to like, I would expect that to basically become a TradFi product in the long run because it's not decentralized and like, you know, wouldn't make sense to treat it as really anything different. You know, regardless of my opinions on that, just from the world, basically. So I think that's a big value add for being a chain. It's just the ability to maintain your existing plans for decentralization, which if you don't have, then I guess there's little reason to use Suave. You can just.

• 1:10:36Speaker 03

  Have a centralized flashbox builder, the way we run it today, but just run it with whoever's running your sequencer and like call it a day.

• 1:10:43Ryan Sean Adams?

  So let's just, let's just underline that for a second. The value for a chain, maybe we'll take Ethereum. The value for Ethereum, the Suave in existence is greater decentralization. And after all, isn't that the purpose of blockchain and crypto decentralization? So that we can preserve these things like censorship resistance and, you know, diffusion of our validator set and all of these things and the checks and balances that are inherent in the system. Like, that's the entire point. And you're saying you kind of provide a shield for an existing chain like Ethereum to like bolster that and to resist the forces of centralization that are attacking it. That's, that's what Suave is doing for Ethereum.

• 1:11:23Speaker 03

  Yeah, I mean, I don't think it's always the goal of every chain, but I agree. Like as a community, yes, that should be and is our goal. I think like for things like BNB or like some specific optimism L2, that's maybe more centralized for whatever reason.

• 1:11:37Ryan Sean Adams?

  Or you mentioned Tron with USDT.

• 1:11:39Speaker 03

  Tron with USDT, yeah. Yeah, so anyway, I think the incentive is less from that bolstering decentralization point of view. There still is some incentive of like accessing the value of that decentralization. So if in that decentralized pool of preferences, there's like valuable preferences on your domain, you, you maybe want to tap into that somehow to be able to like leverage its value. So like if there's cross domain preferences between, let's say.

• 1:12:04Ryan Sean Adams?

  When you say preferences, is that the same as an intent, Phil, by the way?

• 1:12:08Speaker 03

  You can, you can, you can read it the same way, yeah.

• 1:12:10Ryan Sean Adams?

  Okay.

• 1:12:10Speaker 03

  Call it an intent. So, so if you have like a cross domain, let's say intent in like that case, right? You want to be able to access that on like, you want to be able to leverage that as much as possible, which may require if it's protected by this like decentralized private block builder, actually engaging in that or interfacing somehow. So I think though, that those are the two values to an L1. Number one is like maintain your decentralization. And number two is access the network effect of the, the kind of auction that's also fueled by other people who are trying to maintain their, their decentralization.

• 1:12:45Ryan Sean Adams?

  Which could be huge. That could be huge. Okay, so how about a layer two? What benefit do you get from that, from Suave?

• 1:12:51Speaker 03

  Yeah, so a Layer 2, I think it basically is roughly the same thing. Like, I think a lot of Layer 2s are in a very hard place right now, looking at what to do with their sequencer. There's several choices. They can essentially run a centralized sequencer, which is what all the major ones are currently doing. Oftentimes, then you have to choose a policy that's like regulatorily palatable to your lawyers. So like, for example, Optimism centralized sequencer would be hard for me to imagine it extracting MEV on shitcoins just because of its infrastructure position as like a product, you know? And so there's a lot you just can't do with a centralized sequencer. So clearly, also for that, plus being consistent with their values, a lot of these L2s want to decentralize the sequencer.

• 1:13:37Speaker 03

  But then you get into thorny questions of MEV, basically, depending on what design you choose. So maybe for those parties, it can provide kind of like a reference implementation almost of like, here is what a decentralized stack could look like for you, where you can like also maintain control to kind of customize this however you want, you know? And you can integrate with it or not. And like, the other carrot is kind of the network effect with all of the other domains that it's executing intense on. I think the other thing it provides essentially, so the third choice you have as an L2, is to essentially become a based rollup and kind of give your sequencing to the ETH L1. I think that's also an interesting choice.

• 1:14:22Speaker 03

  It's kind of taking all of these hard MEV decentralization problems and kicking them back to L1 and saying like, please, like, let me use your validator set.

• 1:14:30Ryan Sean Adams?

  Would this be like Eigenlayer restaking type of scenario? Are you thinking that?

• 1:14:34Speaker 03

  For example, for example, yeah.

• 1:14:38Speaker 03

  Or, you know, I think there are some research proposals out to even extend L1 to like offer some of this. As like a service essentially. So I mean, I think the choice there is like, I think that is an interesting trade off point. I expect it will be explored. I think probably what Suave lets you do there that you can't do with Ethel one is like customize things much more. So if you want certain distributions on your MEV, if you want a mechanism that's different than what Ethel one has, if you want your iteration process for your sequencer not to be basically lobbying Ethel one politics to try to get changes in, if you need that control, then I think Suave becomes attractive because Ethel one is certainly also decentralized.

• 1:15:22Ryan Sean Adams?

  How about alternative layer one ecosystems? So some of these very high throughput, you know, non-ethereal chains like Solana comes to mind, or like Aptos or Sui, often from the outside looking in a little bit, I often feel like these ecosystems just like haven't really addressed the MEV problem. And I worry a little bit with, you know, naive assumptions going into that when you have like, let's say, for instance, a Jump Capital who is, you know, building one of your clients. I just, I wonder if that could have any downstream effects. Are there any wins for the high throughput Solanas of the world for Suave as well?

• 1:16:00Speaker 03

  I think there will, there will be. I think that's been our focus, given our limited resources in the last, like, let's say, six months. But it's for sure part of the design, like, the, the single part means like, we need to support those use cases. I think there are like fundamental limits, given your system design on like, how much you can decentralize. So to give you an extreme example, like, if I always say, like, okay, in my consensus protocol, if you're more than one millisecond away from me, you just can't sign a block, because in two milliseconds, I'm going to sign another one and fork you out. We can, we can take a look at that and say, okay, how can we plug Suave in to decentralize this more? And there are many ways, like, you could have essentially Suave native colocation with those nodes where like, what's

• 1:16:44Speaker 03

  actually being co-located is governed by this like private infrastructure and like the strategies that represents are kind of being protected there. That being said, there's, you're still going to run into like limits of what you can do versus like, let's say, if you have a 15 second. So yeah, I think we're thinking about it. Curious if you have any thoughts on that also, Andrew, on like low latency swaps. But it's in the design, but it's, it's also like, we'll do our best, but we're working within like the constraints of the protocol ultimately.

• 1:17:15Speaker 02

  Yeah, I have less thoughts on the low latency applications. I mean, to me, the benefits and execution quality that you get come from batching often. So I mean, you can build a slightly higher application, higher latency application on Solana if you want. I don't think that there has to be an inherent overhead associated with doing the private computing as to an alternative. But anything done in a decentralized way will add some kind of latency. So I think somehow that's inherent. But I think this is basically providing like a different trade off, right? You don't maybe have to trade off as much as you might expect. And so this allows users to pick something that does provide private execution. Even if that's okay with a small amount of latency trade off, then great.

• 1:17:59Ryan Sean Adams?

  I want to get to the users, which is the last stakeholder and the benefits they gain. But just a quick, because I'm tempted here, just a quick side quest for you guys. Do you share my intuition that many crypto ecosystems just are naive with respect to kind of like MEV assumptions right now? And that will come back to kind of bite them in some way. And so, I mean, I think we could certainly have pointed the finger at Ethereum, you know, four or five years ago when we were getting started, right? And everyone was sort of naive to that. I think Ethereum has woken up and this may be doing better, thanks to, in no small part to what you guys are doing. But I'm wondering, sometimes I see these very high throughput, like a Solana for an example. And I just, I'm worried that they're not addressing the MEV problem.

• 1:18:44Ryan Sean Adams?

  But then I also wonder, well, is that just an ETH bias? What do you think about that in general? Do you think that there are many ecosystems that are kind of naive to the problems of MEV? And what is the net effect of that? How could that come back to bite them?

• 1:18:58Speaker 03

  Yeah, I think this is actually super interesting. It's maybe a special case of something we see more generally in blockchains and like the broader meta game of making a new chain. Like oftentimes, sustainability is actually not what matters for like new projects. I think gas fees to me are like the clearest example of this. Like, it's very easy to spin up a new L1 10x the ETH block space because you have no historical state to worry about. Have basically zero fees, crank down the block time and say like, "Look how much faster and cheaper our chain is. We've done like so much innovation. Please come, "play over here." And you kind of ignore the fact that like the reason that ETH hasn't gone to those parameters is because there's like

• 1:19:41Speaker 03

  sustainability analyses that show that they're not sustainable. Uh, same thing with like state storage and like how much does it cost to write to the blockchain state is like maybe another weird economic parameter I've researched way too much. So I think MEV is kind of the same where like you're almost incentivized not to solve it in the beginning because it's hard. It requires a lot of research and like work. And it doesn't really kick in in terms of kicking you in the teeth until you really achieve adoption. And so with those problems, it's very easy to say like, okay, our problem is achieving adoption. And once we do that, we'll worry about all those other things because we'll have already been successful and like it'll be great. I think this is like a common mentality in in software. So yeah, I agree, but I think it's also like a broader instance of this where like

• 1:20:27Speaker 03

  the incentive to solve MEV, if you have like $2 million a year of DEX volume on your system is fairly low because it won't probably collapse your whole thing immediately. That being said, it's worth working on it early because otherwise you get blindsided. I've had several fun experiences there. I think one is with ETH itself, right? Kind of beating this drum for a long time and then people ignoring it and saying, eh, it's not an issue. It's a small volume. Like this is not real. And then, you know, suddenly they wake up overnight and like 99% of their hash rate is like behaving in a way they considered adversarial before. And suddenly like it's it's a thing they're all paying attention to. I think that'll, that's what you'll probably see with every other L1.

• 1:21:10Speaker 03

  Even another interesting example is is Uniswap. So like I was trying to shill MEV to Uniswap for a long time, you know, and it was like very difficult. But now today, I think they are actually thinking about these things and like building new products around it. So at some point, like, once you actually get adoption, you don't really have a choice anymore because this is like what people will start complaining about. But before that, it's like, it's a tough sell to work on it.

• 1:21:35Ryan Sean Adams?

  Yeah, that's a great point. Thank you. Thank you for indulging that side quest. All right. So the last set of stakeholders is is users. Can we talk about user welfare? In a world where Suave exists, how do they stand to benefit?

• 1:21:46Speaker 03

  Yeah, so I mean, my thesis is is pretty simple, which is like you will not internalize the value of your data of your transaction as a user unless you have privacy. There's just no market structure in which you efficiently do that. Why? Because like, what are your choices? You can sell it to someone, but then you have to negotiate a price under information asymmetry. And when they go to actually execute that or or or or serve your auction, there's now a principal agent conflict between you and them where they're incentivized to screw you as much as possible. And there's no recourse for you. There's no falsifiability, and there's no competition keeping them honest either. It's kind of what you see in TradFi.

• 1:22:27Speaker 03

  It's why, you know, PFOF negotiation in bulk is like so profitable for the people that that do that. On the other hand, I think as a user, what you want is you want your order and your information, anything you're selling. You want competition and you want basically leverage over like the competition. And I think that's what privacy provides you. It's the ability to kind of play strategically without putting all your cards on the table. And and if that can still lead to kind of an outcome in the computation, for you, it will be a better outcome because you're not giving away the actual value of your thing upfront. If you're if you're auctioning off, let's say, Uniswap X order, you have to give the

• 1:23:10Speaker 03

  parameters of the order upfront in order for people to to price it. And at that point, it's lost a lot of its value because there's not really competition on the information anymore. The information is is available. So anyway, that's my rant. I think there is, if you want the best price as a user and you actually start designing these mechanisms, if you don't have privacy, you will end up with privacy somewhere and it will be centralized. It's what we see with Uniswap X. There's no privacy, but there's a centralized server that like. Permission gates who has access to the information and also generates fake information on your behalf that they know is fake, but no one else knows. So you end up with kind of trust in the system in that way, and that's centralizing.

• 1:23:53Ryan Sean Adams?

  Can I just summarize maybe all of this, all of the wins for stakeholders? I wonder if it just is as simple as this. If we want a system that is different than TradFi, Suave helps make that possible. Suave helps enable that, or it's a shield to prevent our system from becoming more like the TradFi banking system we just left. Is that the summary here?

• 1:24:19Speaker 03

  I think that's part of the, yeah, I think that's accurate for MEV. I think the obvious thing to do from here is to just redesign TradFi. I think in doing so, we'll lose a lot of what's made crypto valuable and special and interesting to a lot of people. And I think we deserve alternatives. So the role of Suave is to maybe provide alternatives there.

• 1:24:42David Hoffman?

  One thing that property about Suave that I find interesting is it's very meta, like being pre-blockchain, being in the mempool, or even pre-mempool layer is a very meta place to be. One of the problems that I'm seeing being solved in 10,000 small ways is the fragmentation of Ethereum scalability roadmap. You know, 50 new rollups show up every single week and all of a sudden there's 50 different places to find scale. And I saw when I learned about Intense, I was like, oh, this is a way to abstract away all of these different chains away from users. And all of a sudden, the choices about like where to find liquidity

• 1:25:24David Hoffman?

  and how to bridge and which assets to route through and ultimately what chain to be on could in theory be abstracted. I'm wondering, Phil, if you just have any thoughts about how Suave might help abstract all of the many, many, many different layers that are being built on Ethereum?

• 1:25:43Speaker 03

  Yeah, definitely. I mean, I think there's many different types of centralization, and it's important to kind of think about which one you mean. So one type of centralization that's actually very useful and helpful to other types of decentralization is logical centralization. So this is kind of what the EVM provides. It's like one standardized, centralized way to write your financial application. And it's not centralized from the point of view that like one person is running it, but it's centralized from the point of view of there is one language. And I think that's like the EU ambition of Suave is to provide the language and the platform and the logical centralization without introducing kind of architectural or infrastructure centralization, which is the obvious way

• 1:26:27Speaker 03

  to kind of logically centralize things is to just also centralize everything else. So I think, yes, that common abstraction, that logical centralization, that unification is for sure one of the things that lets people decentralize because it then lets them kind of specialize in how they're executing it. I think the MEVM is a big part of this. This is partially your meme, Andrew, so curious about the vision, I guess, for pre-compiles because I think it also fits into this, like having some set of logically centralized things.

• 1:27:01Ryan Sean Adams?

  That's the meme here, MEVM?

• 1:27:03Speaker 03

  Yes.

• 1:27:04Speaker 02

  Is it the machine for MEV or the MEV machine or MEVM?

• 1:27:10Speaker 03

  The MEV Ethereum virtual machine, maybe? I don't know.

• 1:27:16Ryan Sean Adams?

  You gotta workshop that.

• 1:27:19Speaker 02

  Yeah, but I don't know, I was trying to that. So, I mean, the abstraction is basically, there's now this abstraction of a MEV time application that you can write like as a smart contract application. So what's happened is, I thought of it as a separating thing, but it'll be a unifying thing here as an abstraction, but it's a separating of kind of what's now, you know, a block builder is both, you know, running their own hardware. Providing this compute work, they're also defining their own policy and their own implementation of it and promising to stick to it. So to me, the simplest way of viewing what's different here is that we're now separating the roles of actually carrying out the computation, providing these untrusted compute resources, and defining applications, which can now just be writing smart contracts.

• 1:28:01Speaker 02

  You don't have to run a trusted data center that you've pictured yourself by trust. So that separation of tasks means that the now unified notion is writing a MFT application and having a smart contract way to do that, to me, is the thing that really opens up kind of a new abstraction.

• 1:28:19Ryan Sean Adams?

  Almost like a solidity for block builders, then?

• 1:28:21Speaker 02

  Exactly.

• 1:28:22David Hoffman?

  One property that I learned that was interesting, going back to like this abstraction of Ethereum's layer twos, is that it actually works equally well with other layer ones. It's like having token A on the Ethereum layer one and desiring token B on like an Ethereum layer two. An intent can get you there, a market maker can help fulfill that order, but if liquidity is on Solana for this one token, it's what Suave, something that Suave can do is that, well, you can swap from token A to token B on Ethereum layer one to Ethereum layer two, and a market maker can tap into liquidity on Solana in order to achieve that goal. And so it's just like this generalized abstraction layer that can do quite a lot, which I don't

• 1:29:05David Hoffman?

  really have a question here, but I think just the power of that is.

• 1:29:08Ryan Sean Adams?

  I know, I just almost feel like emphasizing on the, is the left curve like take on this? This is going to fix crypto UX. You know, is that true? Is there something to that?

• 1:29:17Speaker 03

  I think possibly, I mean, I think it depends how many people build and integrate on top of it and like the quality of the UX work we do, because crypto UX tends to be like a history of us shooting ourselves in the foot over and over again. So hopefully we don't, hopefully we don't repeat that, you know, process. But yeah, I mean, I think it gives you a lot of new tools for building new types of crypto UX, like much more abstracted products in general. Like I think you could even have products that like somehow interact with Suave and give you some guarantees about blockchain state, but maybe the blockchain somehow is even more abstracted from this than just like process, which token is being processed on, maybe.

• 1:30:00Speaker 03

  I think one fascinating direction eventually is like, okay, do you want like LLMs on the blockchain? How do you want to interface with these? You know, like that kind of brings up these these questions of like, how do you actually do that in a in a decentralized way? So yeah, I think there's a lot of new UX things you can do. And hopefully people build like the nice front ends to go along with it in a decentralized sphere. I do think we're going to have in for sure in like a few years way more options for like building abstracted crypto apps. And maybe that's like a lot of what's been missing in crypto. Yeah.

• 1:30:40David Hoffman?

  So let's get into the final details here, which is when does this become a reality? So what's the what's the roadmap for Suave? What are the the big obstacles that are left to to get over? And when can we start to see? Is mainnet the appropriate word here? Like when Suave mainnet?

• 1:30:56Speaker 02

  I mean, you could have a Suave testnet that produced real Ethereum L1 blocks with that count.

• 1:31:01David Hoffman?

  Yeah, sure. When does it? When do I get that?

• 1:31:05Speaker 03

  Yeah, I mean, I think it's a it's a great question. I think our current, you know, timeline, which is which is subject to the usual, you know, engineering constraints is like, I think we we are building kind of modular pieces towards this vision that are that are almost very separate, but will come together into one system, including things like infrastructures for the chain and commitments, pre-compiles for MEV, privacy modules that are secure against like various attacks. I think you will see for sure much more by the end of the year and into Q1. I think we plan to have more public docs about where we're at.

• 1:31:46Speaker 03

  Our loose target is having some sort of testnet to for people to play with sometime in Q1. So, you know, but before that, there will be components released. Like our bar for really having that completed product includes having some sort of privacy solution and things like that. You may see much sooner like parts of the system that are already kind of. In internal testing. So yeah, stay tuned. I would say Q1 is like the big one, but definitely there will be, you know, as we, as we go there, things along the road that will be interesting if you care about building on Suave.

• 1:32:27David Hoffman?

  So this episode was really about shining a light on the different parts of the elephant, trying to show a picture to the listeners of what could be. Andrew, are there any parts that we've left unilluminated? Any stones that we've left unturned that?

• 1:32:41Ryan Sean Adams?

  Is there a trunk somewhere we haven't felt around?

• 1:32:43David Hoffman?

  Yeah. Well, if you just want a rabbit hole to go down, where should they go?

• 1:32:49Speaker 02

  No, I think this has been a pretty good conversation that's covered a bunch of it. I'm really interested in kind of how it turns out that the developer experience goes. You mentioned kind of UX. We've talked a bunch about architecture things, something that to me is kind of, you know, really essential to the choice of, you know, using solidity and something based on EVM to start is really like an aim at kind of making something that's, you know, good for smart contract innovators. I really want to see like smart contract innovators, innovators being able to wield privacy tools kind of in general. So this is a good fit for that. I think that there's a lot to be excited about of kind of, I mean, to me, playing around with this, like this is an amazing programming model and it's full of like inspiration and ideas that I can't even, you know, see yet. So I think that there will be a lot of surprising ideas for applications that are hard to anticipate. So that's kind

• 1:33:34Speaker 02

  of what I'm the most looking forward to.

• 1:33:36David Hoffman?

  I was going to say, if you want to, if you want to drop some alpha along that vein, one fun one is like sneakers or concert tickets on Suave, anyone? Those auctions are pretty bad in the real world. Wow. So can we, can we start to export some of this stuff to the outside world?

• 1:33:52Ryan Sean Adams?

  I actually think it's a, it's a funny conversation, actually. And this is maybe where we could kind of end things, Phil, which is like, do you know like the, the Taylor Swift, the problems of Taylor Swift, you know, conference tickets being front run? That went before Congress.

• 1:34:08David Hoffman?

  Yes.

• 1:34:10Speaker 03

  We talk about Taylor Swift internally more than we would ever want to imagine.

• 1:34:13Ryan Sean Adams?

  I couldn't believe it. We had senators and congressmen trying to figure out how do we regulate this better so that the average American can get access to a Taylor Swift concert, which is maybe where we want to close because we've been talking about this entire episode.

• 1:34:28David Hoffman?

  That's why we're here.

• 1:34:29Ryan Sean Adams?

  Yeah, well, to solve concert ticket sales, to help people see Taylor Swift.

• 1:34:33David Hoffman?

  So I can go to see Taylor Swift.

• 1:34:35Ryan Sean Adams?

  Why? So we've been talking the whole time about why crypto needs Suave. And it's almost very obvious to us, like four or five years in, like MEV, front running, all of these things are massive problems. So all of crypto knows that we need it. And if you don't know, it's just because your blockchain hasn't gotten enough usage for these problems to crop up. So you're gonna find, you're gonna find out, okay? So this is why crypto needs Suave. That's already been established. But at some level, I feel like crypto, our industry, and we do lots of crazy things, of course, but one of the areas we are really pioneering in is solving coordination failure problems, seeing these better economic mechanisms that can, that can create like

• 1:35:15Ryan Sean Adams?

  better cooperative games and better outcomes. And I think we are front running that. We are ahead of the rest of the world with respect to that. But it is a problem set and domain that spans outside of crypto to Taylor Swift concert tickets, to obviously TradFi, which we talked about so much, to like, how do we solve the AI alignment problems? Like, it's all, it's all kind of there. And I'm wondering, maybe this is a meta question on which to end crypto, Phil and Andrew, is we've talked about why crypto needs Suave. Why does the world need Suave? How can we then take this and export this to the rest of the world? Because I think your ambition maybe doesn't stop with solving coordination failure problems

• 1:35:59Ryan Sean Adams?

  within crypto. I think you probably see, once you see it, you see the world is full of these coordination problems, and this can be actually something we export to the world. How does that happen?

• 1:36:09Speaker 03

  Yeah, maybe I'll take the first stab and let Andrew have the last word on this in his cyberpunk, cypherpunk, sorry, framework.

• 1:36:18Speaker 03

  So I totally agree. I think these coordination problems are like rife. The world is rife with these and like they're very much parasites on our efficient coordination and execution and ultimately happiness. You mentioned some great examples, TradFi, Taylor Swift tickets. Even the existence of Ticketmaster as a whole is like, it's a symptom of a coordination failure caused by like a breakdown of trust in like the market. You look at like even like the cars market or something, right? There are seminal papers about like, how do we solve trust in these markets? And the best things we've come up with so far are like, okay, have a warranty and an inspection

• 1:36:58Speaker 03

  body that like keeps some records in like this centralized way that everyone pays like $100 a month to subscribe to. Google Ads, another, you know, interesting one, like in front of the DOJ right now being sued because they were allegedly manipulating their own auction. And because the rules of that auction are so complicated, it's not even clear whether they were or not like de facto, like yes, that was the outcome, but it's not even clear whether that was the intent because there's so much trust placed in them and it's such a Rube Goldberg and it's so hard to like unpack. So yeah, I don't know. I think in all of these verticals, like these things are costing us, they're costing people money in terms of like rent on top of their transactions. And they're costing us social surplus in terms of like,

• 1:37:42Speaker 03

  what businesses can we create? What structures do we have? You know, many Molocs, as we would say in crypto. So yeah, I'll let Andrew have the last word, but that's my rant. I do think we can go far beyond crypto. This is, I think, what crypto is trying to do, but I think we can't do it if we don't solve MEV. So they go hand in hand for me.

• 1:38:04Speaker 02

  Yeah, it was like perfectly put. I mean, decentralized systems, Web 3, blockchains. I think these all have, you know, no limit to their ambition of trying to do reinvent institutions, coordinations, everything, kind of, you know, support human coordination more broadly. Those are all, I think, the right goals. I think this kind of technology, you know, trying to make and swap is addressing some of the obstacles to that and will be necessary to, you know, reach that vision. But yeah.

• 1:38:29Ryan Sean Adams?

  Well, guys, we are, we are cheering you on. And now we know at the, the end of this episode, we don't have to worry about MEV because Phil and Andrew, they got it covered, right?

• 1:38:38Speaker 03

  You have to, you have to, you and everyone else, whether it's like an app developer, L1 user, whatever, competitor of Flashbots, please help us build a decentralized future.

• 1:38:48Ryan Sean Adams?

  Shout out, where do you need the most help, Phil? I'm serious about that. Like, yes, your team deserves a lot of help and needs a lot of help. You want people to, you know, what's the shout out for help?

• 1:38:58Speaker 03

  Build swaps, brainstorm swaps in various contexts. Think about decentralization. Engage in our research conversations around privacy. And we have like many, many research topics that are active. We're constantly putting out papers. So whatever you're interested in, like, come engage. But ultimately, really, my ask is like, build the decentralized future. Like, think about it really critically. Like, what do we need for decentralization? Is this the right way or not? And let's like, work together, rather than like, us solving it and telling everyone how to do it. I don't think that will be decentralized. So like, that's why we need your help to really make it decentralized.

• 1:39:35Ryan Sean Adams?

  There you go. We will leave some links in the show notes for references to building swaps and getting started with, with everything Flashbots and swap. Phil and Andrew, thank you so much for joining us today.

• 1:39:46Speaker 02

  And thank you for doing what you do.

• 1:39:48Ryan Sean Adams?

  Yeah, for real.

• 1:39:49Speaker 03

  Thank you for having us.

• 1:39:50Ryan Sean Adams?

  We appreciate this.

• 1:39:52Speaker 02

  Yeah, that was fun. Great conversation.

• 1:39:53Ryan Sean Adams?

  Some action items, Bankless Nation. I'll include a link to those things in the show notes. Also, original episode that we did with Phil, it must have been over two years ago, crypto's existential threat. It's in there if you want some more background on MEV. We've also thrown, since we manifested the name Moloch, if you don't know what that means, we've got a few episodes on slaying Moloch. We'll include that in the show notes as well. Recent disclaimers, of course, none of this has been financial advice. I don't think we dispelled any advice that could even resemble financial advice on today's episode. Gotta let you know crypto is risky. You could lose what you put in, though. We are headed west. This is a frontier. It's not for everyone, but we're glad you're with us on the bankless journey. As always, thanks a lot.