Anatoly Yakovenko, CEO and Co-Founder of Solana: What "Sharding" Actually Means

Anatoly Yakovenko is the CEO and Co-Founder of Solana. In this conversation, Anatoly and Anthony Pompliano discuss underwater hockey, Iron Man triathlons, self-custody of identity, the current use cases for high performing Blockchains, the complexities around sharding, and where we are with staking and validating. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

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

• 0:01Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:13Anthony Pompliano?

  Anatoly Yakovenko is the co-founder of Solana. In this conversation, we discuss underwater hockey, Iron Man triathlons, self custody of identity, the current use cases for high-performance blockchains, the complexities around sharding, and where we are with staking and validating. I really enjoyed this conversation, and I hope you do as well.

• 0:38Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 1:05Anthony Pompliano?

  Alright guys, bang bang. I'm here with Anatoly. We got all kinds of cool stuff to talk about. Thank you so much for coming on and doing this.

• 1:13Speaker 02

  Yeah, thank you so much, Pomp.

• 1:15Anthony Pompliano?

  For sure. You were coming all the way to New York from San Francisco, so pretty cool. Alright, what's your background? Where you come from?

• 1:22Speaker 02

  So, born and raised in Ukraine.

• 1:25Anthony Pompliano?

  Shout out Ukraine!

• 1:28Speaker 02

  Yeah, but grew up in Chicago, went to school in Urbana-Champaign. I ended up in San Diego, working in Qualcomm. So, my buddy and I lived in Solana Beach. We would wake up, surf, bike to work, bike home, surf again.

• 1:43Anthony Pompliano?

  Horrible, like man, from the streets of Ukraine to the beaches of California.

• 1:48Speaker 02

  Yeah, but you know, those eight hours that we worked at Qualcomm, they were pretty awesome. So, we were building like, you know, cutting-edge mobile platforms. If you guys ever had these old TDM phones, Motorola Razr, they ran a operating system called Brew. I was a core kernel developer. So, basically, we built this thing from the ground up. Before there was an iPhone, there was a mobile platform that like a billion app downloads. There's still 500 million devices of these live right now.

• 2:16Anthony Pompliano?

  It's crazy. The uh, the, we, we forget the Qualcomm's of the world because Apple is so uh, so pervasive at this point, right?

• 2:24Speaker 02

  Yep.

• 2:25Anthony Pompliano?

  Yeah, it's pretty cool. Alright, so uh, you get all the way from Ukraine to the beaches of California and you do some weird shit. Right? Let's talk about this underwater hockey.

• 2:35Speaker 02

  So, you know, I was in college, uh, you know, trying to make friends.

• 2:39Anthony Pompliano?

  Do you still do this?

• 2:40Speaker 02

  Yeah.

• 2:41Anthony Pompliano?

  Yeah, okay.

• 2:41Speaker 02

  Um, so uh, it's a co-ed sport.

• 2:45Anthony Pompliano?

  Okay.

• 2:45Speaker 02

  Um, so I started playing just to meet people. Um, and I played.

• 2:49Anthony Pompliano?

  Is that code for you want to meet girls?

• 2:51Speaker 02

  Uh, yeah.

• 2:52Anthony Pompliano?

  Alright, just, just.

• 2:53Speaker 02

  Meet, meet girls. Um, uh, but it's, it's an awesome community of like, people that are like, there's for whatever reason, there were a lot of engineers in the sport, you know? Um, and I played like a little bit, but after I moved to San Diego, you know, there's, there's a club there and I had no friends, so I really got into it then. And I started um, playing like kinda a lot. I ended up on the US men's team at one point.

• 3:17Anthony Pompliano?

  Alright, hold on. What the hell is underwater hockey? Is it literally what I think it is? Like you tread water and then you like?

• 3:22Speaker 02

  You hold your breath.

• 3:23Anthony Pompliano?

  You go down under the water and play hockey and then come back up for more air?

• 3:26Speaker 02

  You hold your breath. You have like a stick that's maybe like, I don't know, a foot long and there's a puck that's got a lead core and you flick it around.

• 3:34Anthony Pompliano?

  So you hold. So, so it's on the bottom of the pool though?

• 3:37Speaker 02

  Yeah.

• 3:37Anthony Pompliano?

  Right? So it's not like, and then the puck, can it come up off the ground or is it too heavy to come up off the ground?

• 3:43Speaker 02

  You can fling it up like five, six feet. It's like kinda three dimensional.

• 3:47Anthony Pompliano?

  Interesting.

• 3:47Speaker 02

  And you hold your breath. So you're kinda, it evens out the game. So we had, you know, world's level players and like, you know, six year old guy that was playing in the same club and no matter how good you are, you run out of oxygen, you gotta come up, right?

• 4:00Anthony Pompliano?

  Yeah, yeah, yeah. And so uh, is it like in traditional hockey, right? I've, I've never played, but just watching, it's like.

• 4:07Speaker 02

  So it's like six on six.

• 4:08Anthony Pompliano?

  Being a large human who can go fast and also is agile, like skate forward, backwards. It all seems like that helps.

• 4:16Speaker 02

  Yeah, so like.

• 4:17Anthony Pompliano?

  Is there like running backwards in the pool on defense and?

• 4:20Speaker 02

  You can turn pretty quickly and like um at the higher levels, it's uh it's obviously like um split by gender. So the men's games are more like a a scrum, like a almost like a rugby match in the water.

• 4:34Anthony Pompliano?

  I was gonna ask you one of my questions, can you get like physical in terms of like?

• 4:37Speaker 02

  Basketball, if you ever played like a physical game of basketball, it's kinda like that.

• 4:43Anthony Pompliano?

  So you can't just like tackle each other, but uh it's not like you're trying to help the other person, right?

• 4:48Speaker 02

  Yeah, exactly.

• 4:50Speaker 02

  You need to help them.

• 4:51Anthony Pompliano?

  Alright, got it. And then uh six on six and is it just like a continuous game or there are halves?

• 4:57Speaker 02

  There's two halves, but continuous fifteen minute halves and it sounds short, but holding your breath for fifteen minutes and redlining it. Uh it's the year like you're really spent.

• 5:06Anthony Pompliano?

  Yeah, dude, what? So and then what happens in terms of like, do the teams coordinate like, alright, you two go up and get some air. We're gonna like push it down the the?

• 5:16Speaker 02

  Kinda, we have.

• 5:16Anthony Pompliano?

  Field or the pool?

• 5:18Speaker 02

  At the higher level, everyone is fit enough to where it's basically six, all six down at the same time. And people do come up, but like you come up for one breath and go back down.

• 5:28Anthony Pompliano?

  Really?

• 5:29Speaker 02

  Yeah.

• 5:29Anthony Pompliano?

  And how long do you think you can hold your breath for?

• 5:31Speaker 02

  Um, so since I started this company, I haven't been working out.

• 5:36Anthony Pompliano?

  No, yeah, but just like at the height, what do you think the best you ever?

• 5:39Speaker 02

  I could swim uh so with fins, I could swim three lengths of a pool underwater and it's like seventy-five yards.

• 5:44Anthony Pompliano?

  What? So you you would jump, you jump in or start?

• 5:50Speaker 02

  Start at the wall, kick off the wall, swim to the end, kick off, swim to the end, kick off, and then?

• 5:55Anthony Pompliano?

  All of that in one breath?

• 5:57Speaker 02

  Yeah.

• 5:59Anthony Pompliano?

  What, you a fish?

• 6:00Speaker 02

  You feel some, I was really like, I I was at the bottom of the team. So there are like top six players that are really talented and really fit. I was fairly fit, but I think short uh got the short end of the talent stick, but uh.

• 6:16Anthony Pompliano?

  What what uh like how much further could like let's say the top guy on the team, could he just swim farther?

• 6:22Speaker 02

  They could do it faster.

• 6:23Anthony Pompliano?

  Oh faster, so so still about three like down back down, but just do it much faster.

• 6:28Speaker 02

  Exactly, yeah.

• 6:30Anthony Pompliano?

  Uh that's uh that's crazy. Now, what do you play? Uh it's just at the end of the game from a time perspective, whoever's winning wins?

• 6:35Speaker 02

  Yeah, yeah, yeah.

• 6:36Anthony Pompliano?

  Alright, and then uh where do you shoot the puck into like a net?

• 6:40Speaker 02

  Yeah, uh there's like a little trough at each side of the pool that's in the bottom. You just try to get in there. There's no goalie, but there's like kind of three defenders, three uh three in the offense. Almost looks like soccer because it's a little, the speed is slower, but it kind of fits like in the court.

• 6:55Anthony Pompliano?

  Uh huh, but no goalie?

• 6:56Speaker 02

  No goalie. Goalie with drawn, right?

• 6:59Anthony Pompliano?

  Ah.

• 7:00Speaker 02

  So you gotta come back up and somebody rotates in, right? So you kind of like.

• 7:04Anthony Pompliano?

  Oh, man. Alright, I I might have to go try this out. Underwater hockey, ladies and gentlemen. That's what uh that's what that is. Alright, and then uh you're super into uh another insane sport, which is uh these uh triathlons, these Ironman triathlons, right?

• 7:19Speaker 02

  Before I started this company, I had time to work out and like uh so I was an Ironman, but really like a slow Ironman, so.

• 7:26Anthony Pompliano?

  What what is that? That's uh you have to swim, bike and run, right?

• 7:30Speaker 02

  It's the race that ends with a marathon, as people like to say.

• 7:33Anthony Pompliano?

  Wait, wait, hold on, hold on. How far do you swim? The Ironman is different than just any triathlon, right? It's longer, right?

• 7:39Speaker 02

  Yeah, so you swim two and a half miles and you bike a hundred and twelve.

• 7:42Anthony Pompliano?

  You just said that like that was nothing. You swim two and a half miles to start off the race.

• 7:47Speaker 02

  Yeah.

• 7:48Anthony Pompliano?

  And you said that down back down in a pool is seventy-five yards.

• 7:52Speaker 02

  But you don't have, you're not holding your breath, right?

• 7:55Anthony Pompliano?

  Yeah, but still.

• 7:56Speaker 02

  Yeah.

• 7:57Anthony Pompliano?

  Most people, if they just swim down and back, they're tired, right? Like if you're not a swimmer.

• 8:02Speaker 02

  Yeah, you get tired.

• 8:03Anthony Pompliano?

  Alright, so two and a half miles, go ahead.

• 8:05Speaker 02

  Hundred and twelve mile bike ride.

• 8:09Speaker 02

  You know, Sunday ride, stop for a cappuccino.

• 8:11Anthony Pompliano?

  Okay.

• 8:12Speaker 02

  And then you run a marathon.

• 8:15Anthony Pompliano?

  And then you run a marathon? And how long does it take?

• 8:18Speaker 02

  Uh, I am slow, so for me it takes about thirteen hours. But if you're, so top end athletes do it at eight, like, you know, eight, eight twenty.

• 8:26Anthony Pompliano?

  Eight, eight hours and twenty minutes?

• 8:28Speaker 02

  They, when they run the marathon, they're running like six minute miles. Imagine like doing all of this and then like, I'm just gonna run six minute miles, right?

• 8:36Anthony Pompliano?

  Like. I don't know if I ever told this to a podcast, but I ran a marathon, uh, recently, la- last fall. And, uh, since this fall of two thousand and eighteen, um, my beautiful and wonderful girlfriend decided that we should, uh, go and run the original marathon in, uh, Greece.

• 8:53Speaker 02

  Oh, that's awesome.

• 8:54Anthony Pompliano?

  Sounds awesome, wasn't. Let me tell you why. Because, uh, so they marketed it as the last six and a half miles are downhill. Sounds awesome. What they don't tell you is the only way that you can get downhill is you gotta go uphill in the middle.

• 9:09Speaker 02

  Oh, wow.

• 9:10Anthony Pompliano?

  So there's about twelve miles where, you know, it's not a steep hill, but you're kinda gradually running up this hill. And so, uh, I'm not necessarily a runner. I'm not necessarily a marathon runner. And so I, I did, uh, enough training to be arrogant enough to think, oh, I'll just kinda push through it, right? And so when, uh, when we started running, um, I told her, I said, the pace we're running right now, I'm running all the way through. I'm not gonna change pace, I'm not going faster, I'm not going slower, but I know I'll finish. I run this pace. And so, uh, I didn't run with a watch, I didn't, I don't want anything, right? I'm just, I'm gonna run and at some point I'll run to the finish line. And so we're running, we're running, and we're passing people and I'm like, ah, okay. I think it's a little tough, right?

• 9:53Anthony Pompliano?

  She starts yelling at me because I keep stopping, uh, to get water, but I'm not getting water to drink, I'm pouring it on my head as if that's gonna like revive me, right? And, uh, we finished the marathon and I look at her, I go, how fast did we run it? What I should've asked was, how slow did we run it? Cause I ran in about five hours and twenty minutes.

• 10:10Speaker 02

  Dude, you finished. That's all, that's all that matters.

• 10:13Anthony Pompliano?

  And so, well, the best part about this is. These uh Iron Man triathlons almost did a triathlon at the Iron Man level faster than I ran this damn marathon. So it's pretty, it's pretty cool. Uh but uh do you still compete at all or or train?

• 10:29Speaker 02

  Uh no, like no, yeah, just no time.

• 10:32Anthony Pompliano?

  Just no time, alright. Um and then uh talk to me about this uh this other idea you have. So you, so that's the craziness you do from a physical standpoint. Uh psychologically, uh this isn't as crazy of an idea, um but just like the self custody of identity. What uh what do you mean when you talk about that stuff?

• 10:49Speaker 02

  So um what I I, when this phase blew up, like what really struck me as the foundational kind of change is that it like cryptographic identity, self custody of your own keys allows us to interface with digital things without giving up your human identity. Like I have a Nest at home, but it knows my Google account, it knows who I am. Which is ridiculous. Why the hell does my thermometer need to know who I am?

• 11:15Anthony Pompliano?

  Yep.

• 11:16Speaker 02

  Right, like.

• 11:16Anthony Pompliano?

  Well, cause Google thinks that it's important.

• 11:18Speaker 02

  Yeah, and like, you know, I.

• 11:21Anthony Pompliano?

  Who's this creep? Are you think Facebook or Google or Amazon?

• 11:25Speaker 02

  Oh man, that's a good question. I think, honestly, I think these companies will transform because all they care about more is making money.

• 11:33Anthony Pompliano?

  Yep.

• 11:34Speaker 02

  And with privacy, make some money, they'll they'll transform as well.

• 11:37Anthony Pompliano?

  Alright.

• 11:38Speaker 02

  I think Facebook knows way too much about not me as a human, but like my relationships with everyone else that I know, and that is creepier.

• 11:47Anthony Pompliano?

  Yeah.

• 11:47Speaker 02

  Than than Google kind of like figuring out what ads to show me like.

• 11:51Anthony Pompliano?

  Yeah.

• 11:52Speaker 02

  Based on my searches, right? That's just really knowing like my interests, but like.

• 11:56Anthony Pompliano?

  Do you think you know more about somebody through search history or through their connections?

• 12:00Speaker 02

  I think the connections, like your network, who you interact with, that really defines you as a person.

• 12:06Anthony Pompliano?

  Yeah. Oh, I think search history for sure.

• 12:09Speaker 02

  Yeah?

• 12:10Anthony Pompliano?

  Cause I'm, uh, cause I bet people use Google search. You know, multiple times more a day than they use Facebook.

• 12:18Speaker 02

  Yeah.

• 12:18Anthony Pompliano?

  Right, so like, you could tell who the connections are, but the likelihood that, uh, the communication now, but I guess location data, right? If Facebook's getting your location and Google isn't through that or something.

• 12:29Speaker 02

  But I mean, what do they know about you? They run a podcast, right? Like, all this stuff is kind of publicly available, right? Like, they know that, Google knows I'm an engineer.

• 12:36Anthony Pompliano?

  Yeah, yeah.

• 12:37Speaker 02

  But Facebook knows who your friends are, who you're, what, how often you talk to them, like, that's a little creepy, right?

• 12:43Anthony Pompliano?

  Yeah, sure. Alright, so the idea of self custody of identity is basically just you keep your identity and then you permission people in and out?

• 12:51Speaker 02

  Yeah, I mean, the irony that a public, open public data structure, like a blockchain, is what the forcing function for us to create privacy in the internet. Right? Like, the fact that we have to build this thing such that the data has to be shared with everyone means that engineers are forced to design it firsthand. How do we keep you private? Right? So I, I think that's kind of the revolutionary part of this tech, like, what will change the world?

• 13:16Anthony Pompliano?

  For sure. And, and so, uh, as you got excited about blockchain, self custody of identity, uh, what was kind of your initial thoughts? Like, why, why, why eventually you move into this space?

• 13:28Speaker 02

  Um, it's just so new, like, uh, I, like, my brain was infected and I couldn't really think of anything.

• 13:34Anthony Pompliano?

  The virus, you got, you got infected by the virus?

• 13:37Speaker 02

  Exactly. Like, it just, you know, I'm a, I'm a sci-fi nerd. The idea that we could build a bunch of software that glues these computers together worldwide such that it'll never get shut down, right? It's almost like creating, like, uh, a life, right? It's like a, it's now a system that is running self-perpetually, and that is like mind-bogglingly awesome. Like, as an engineer, what else should I be working on besides the coolest fucking thing in the world?

• 14:04Anthony Pompliano?

  Yep, absolutely. And so as you start looking at the space and you're like, alright, I wanna go work in that space. Like, what would you wanna do? Or did you know immediately like, hey, I wanna go build something?

• 14:16Speaker 02

  So like, um, the founding story of Solana is, um, I had, I was talking to my buddy about proof of work. And like, how, you know, expensive it is energy-wise. And we're trying to figure out if there's some other physical bound that we could use instead of like dumping as much electricity as you can into the system. And the other one that popped up was time. And I had like too much coffee that day. I was up till 4am. And I had this idea hit me that you can create a data structure that represents time passing. So you can encode passage of time as data.

• 14:51Anthony Pompliano?

  What do you mean by that?

• 14:53Speaker 02

  So when you look at the Bitcoin proof-of-work structure, you can calculate how many joules of electricity spent to generate it. Right? So it represents energy, right? Like actual electrons moving through silicon. There's like a mathematical function you can run, given like the best CPU, whatever ASIC process, it takes X amount of energy to build it. So there's a physical guarantee to it. This particular data structure, uh, this technique is called verifiable delay functions.

• 15:23Anthony Pompliano?

  Verifiable delay functions?

• 15:26Speaker 02

  There's actually VDF Day tomorrow at Boston and MIT.

• 15:30Anthony Pompliano?

  Wait, wait, wait, wait. There's V-

• 15:33Speaker 02

  VDF Day.

• 15:34Anthony Pompliano?

  VDF, verifiable delay functions.

• 15:37Speaker 02

  Day, yeah.

• 15:38Anthony Pompliano?

  Jesus, I'm so dumb.

• 15:41Speaker 02

  So intuitively, you think of this as like a mathematical puzzle, like proof-of-work. But you can't run it in parallel. You have to actually do it in sequence. And because it's sequential.

• 15:54Anthony Pompliano?

  That's where the time-

• 15:55Speaker 02

  That's where the time component comes from.

• 15:57Anthony Pompliano?

  Got it. And the verifiable delay function, what is the purpose of that?

• 16:04Speaker 02

  So just like proof-of-work, you can quickly verify that it's correct. With a verifiable delay function, it takes real time to generate, like, let's say, an hour. But you can verify it in like a millisecond.

• 16:15Anthony Pompliano?

  Got it. So basically, you have you have to let the it it's almost like when you're sitting as a kid and your mom puts you in timeout. And you're sitting there and she like sets a timer.

• 16:26Speaker 02

  Exactly.

• 16:26Anthony Pompliano?

  My my mom used to say this with the microwave timer.

• 16:29Speaker 02

  Yeah.

• 16:29Anthony Pompliano?

  Right. So we knew when when we could get out of timeout.

• 16:31Speaker 02

  Yeah.

• 16:31Anthony Pompliano?

  You're sitting there and you're staring at you're ready to go, right? We just had to wait and then when it hit the thing, then you could go.

• 16:36Speaker 02

  Exactly.

• 16:37Anthony Pompliano?

  Similar thing?

• 16:37Speaker 02

  Exactly.

• 16:38Anthony Pompliano?

  Alright.

• 16:38Speaker 02

  Beautiful explanation. Yeah.

• 16:40Anthony Pompliano?

  Look, I'm not I'm not the smartest guy in the world, but I got some good analogies.

• 16:44Speaker 02

  Right. Yeah.

• 16:44Anthony Pompliano?

  Alright, and so uh if you look at it from a we're not going to expend energy, we're going to expend time, right? A good joke would be that time is more valuable than the energy, but uh huh. What is the advantage to using time? Is it just that we save the energy or are there other advantages?

• 17:02Speaker 02

  So the other advantage is like, imagine like old school radio protocols like World War One. There's like two people transmit at the same time.

• 17:10Anthony Pompliano?

  Yep.

• 17:11Speaker 02

  Over the same frequency.

• 17:12Anthony Pompliano?

  Yep.

• 17:12Speaker 02

  Uh because they're using the same frequency, you get noise, right?

• 17:16Anthony Pompliano?

  Yep.

• 17:16Speaker 02

  So what they figured out pretty quickly is let's synchronize each other's clocks and then you transmit and you know, minute one, I transmit a minute two.

• 17:23Anthony Pompliano?

  Got it.

• 17:24Speaker 02

  And that's effectively what we're doing. We're splitting up like block production. Like in Bitcoin, you have this random process. I win the block, I get to transmit it.

• 17:33Anthony Pompliano?

  Yep.

• 17:33Speaker 02

  Somebody else could win it at the same time. And that's where you get a collision, you get rollback and like things get slower. We use this verifiable delay function to have somebody wait in a timeout chair until it's their turn to produce the block. And that forces everything to to run as quickly as possible.

• 17:50Anthony Pompliano?

  Got it. And so that's where quote unquote high performance.

• 17:53Speaker 02

  Yeah.

• 17:53Anthony Pompliano?

  Blockchain is essentially the difference of what you're talking about versus other proof of work.

• 17:59Speaker 02

  Exactly.

• 17:59Anthony Pompliano?

  Uh systems. And um is in in whether it's your structure or somebody else's uh that has a similar structure.

• 18:08Anthony Pompliano?

  Are there an equivalent of the miners? And how, if there are, how are they incentivized?

• 18:14Speaker 02

  So there's validators. We're actually like, you know, effectively like every, every system that's not proof of work uses proof of stake.

• 18:22Anthony Pompliano?

  Yep.

• 18:22Speaker 02

  One way or the other. So we have a staking component.

• 18:24Anthony Pompliano?

  Okay.

• 18:25Speaker 02

  Validator stakes some capital and they verify the blockchain. And that gives the safety and security of the network.

• 18:31Anthony Pompliano?

  Got it. So basically, somebody becomes a validator through a staking mechanism.

• 18:35Speaker 02

  Yeah.

• 18:35Anthony Pompliano?

  Okay. And so let's talk a little bit about why would somebody want to use a high, you know, a high-performance blockchain, whether it's this structure or some other structure? Just what's the purpose of a high-performance blockchain?

• 18:50Speaker 02

  Well, even for like a, a simple payments, like imagine we're trying to scale Bitcoin to like cover the world for payments. You need like, you need enough capacity to handle the world, right? Like, I don't know. I, I'm a believer that this technology will actually revolutionize finance. Like it's borderless, it's fast, it's cheap. But for it to support 10 billion people, you just simply need to do it, do it faster, right? This is where I think we, we can solve that problem. So for things like payments, smart contracts, we just have a much higher capacity to, to scale those companies that are trying to, to, to build out like world-class use cases.

• 19:27Anthony Pompliano?

  Got it. And, and so, other than payments, what would be another use case? Like, is it just anything that has a high frequency of transactions?

• 19:36Speaker 02

  Yeah, like, so we're building a, a full-featured smart contracts platform. There's a, there's a very, very highly paralyzed engine that we built. We actually target.

• 19:46Anthony Pompliano?

  What does that mean?

• 19:47Speaker 02

  So virtual machines that execute contracts. We designed ours such that you can execute as many contracts in parallel as you can. So like when you, when you see a million transactions, you can find all the ones that can be executed at the same time. And you run them all on as many GPUs as you have.

• 20:05Anthony Pompliano?

  Got it. So basically, rather than sequentially, okay, transaction one, transaction two, transaction three, you look at the entire set of transactions and you, I'll call it batch them together.

• 20:16Speaker 02

  Exactly.

• 20:17Anthony Pompliano?

  Based on similarities and then execute them in what I'm assuming algorithmically determines the most efficient way to do that.

• 20:24Speaker 02

  Yep, yep.

• 20:24Anthony Pompliano?

  Got it. And what, what would be the, the detractors' argument, right? So like if I brought somebody in here who was like, you're a complete idiot, right? Like, what's their argument?

• 20:37Speaker 02

  So. Like all of these things, every system is fighting like CAP theorem and like N generals. There's no solutions to these problems.

• 20:45Anthony Pompliano?

  Okay.

• 20:45Speaker 02

  So we're like in the space that is what people call Pareto efficient. Every advantage is a disadvantage.

• 20:51Anthony Pompliano?

  Okay.

• 20:51Speaker 02

  But we're building requires beefier systems. That means that like somebody like Ethereum 2.0 or Tezos, their goal is to have like thousands, tens of thousands of validators, like people running verification and laptops. So the only way to build those systems is to shard and like basically run a little bit of the computation on each machine.

• 21:13Anthony Pompliano?

  Explain sharding for people that they don't know.

• 21:15Speaker 02

  Sharding comes from databases, but like if you're a gamer, like if you ever played Ultima Online, you would remember different worlds with different characters, you know, same copy of the game, but different characters, right? That's effectively what it is. You split the state up and now you have different instances of whatever the blockchain you're dealing with. And the real complexity there comes from trying to move money or value or state from one shard to the other. And these are open-ended computer science problems still.

• 21:46Anthony Pompliano?

  How, explain like a little bit deeper on moving money between shard or value.

• 21:53Speaker 02

  So when you have like some asset, right, some digital asset in one shard and you want to transfer it to another one, you don't have these synchronous guarantees that the other one received it or the other one acknowledged that they received it. You have to build protocols that are designed to go through some central focal point. So in Ethereum, it's the beacon chain and there's very, these complex setups around how folks rotate validators around, how like they're basically trying to randomize which group is validating with shard and how data moves between them. And all of these approaches have risks to them.

• 22:32Speaker 02

  That if a shard, a shard ultimately in proof of work in Bitcoin, you have this like mining rigs, mining pools with a big pile of hash power. If you were to shard Bitcoin, it means that you're splitting your army. So half of your hash power in one shard, half in the other. That means that each shard has a weaker security. So.

• 22:54Anthony Pompliano?

  Yeah, you're you're basically taking away components of it.

• 22:58Speaker 02

  Well, you're.

• 22:59Anthony Pompliano?

  I guess you're separating it, right? So you still have the same number, if it was an army, you still have the same number of troops. Now they're in two different groups and they can't help each other.

• 23:06Speaker 02

  Exactly. So if one shard goes down, then it's very likely that the value of your coin will drop. And now miners will switch off from your shard, or the capital is worth less, right?

• 23:18Anthony Pompliano?

  And is that a compounding problem in the sense that if you have two shards and one goes down, then you only have one left, right? But if you have twenty shards and one goes down, is that better or worse, right? Like, the more shards that you have, that.

• 23:34Speaker 02

  The the more you split your troops, right? So each one is easier to attack.

• 23:39Anthony Pompliano?

  Got it. So so there is a compounding problem. And then if one fails out of that twenty, it's likely that two, three, four, five may fail as well. Because you've already weakened yourself and then you've there's some kind of vulnerability.

• 23:51Speaker 02

  Right. So every other system is trying to work around this problem. And nobody knows what what will actually work, because all this stuff is super new. Our approach is is like just make the layer one, like single shard as fast as possible.

• 24:05Anthony Pompliano?

  Yep. And do you and do you feel like speed kills here, right? Like, speed is the most important thing?

• 24:11Speaker 02

  Yeah, like, I like, I want to build like human usable applications. So we're trying to maximize like. Our block times are right now eight hundred milliseconds. Trying to get them down to four hundred milliseconds at that point. You almost have like applications that are interactive for humans. You can build, you know, interactive games, you have instant responses, right? Like, that, I think, could be a watershed moment for the space. When humans no longer tell that they're running something on blockchain versus like AWS.

• 24:40Anthony Pompliano?

  Yeah. Is there a trade off between speed and security or no?

• 24:45Speaker 02

  The trade off that we're making is that each validator has to invest more capital into the hardware and into the infrastructure that they're running in.

• 24:53Anthony Pompliano?

  Okay, explain that more.

• 24:55Speaker 02

  So you can't like build high performance and a bunch of internet connections at people's homes on like crappy computers. It's just not gonna work. You can build really massive decentralization that way. But for something to be like fast, low latency and high performance. The folks that we're talking to, they're professional validators.

• 25:17Anthony Pompliano?

  Got it. And so I guess really, like, how does that stack up to the staking and validators of other chains? Or like, when you say professional validators, um, but what's the s- the state of staking, I guess we could say?

• 25:32Speaker 02

  So like, um, I kind of see it as like early internet, ninety-five, you know?

• 25:37Anthony Pompliano?

  Okay.

• 25:37Speaker 02

  There were like, it's not like they're professional businesses with a big pile of capital. These are people with a little bit of know-how and a little bit of capital to invest in a co-locations base, and that may cost you like ten K a year. But they have enough to do that. That's like a barrier of entry.

• 25:54Anthony Pompliano?

  Yep.

• 25:55Speaker 02

  That is enough of a barrier that you're not just, you're just not gonna do it unless you really want to. Um, and it's kind of like early day ISPs. Like, in the nineties, people would like, whatever small town they were in, they were the only one that knew how to run a, you know, internet service provider, and they would hook up that town.

• 26:11Anthony Pompliano?

  Mm-hmm. And so, when you think of this, is that better or worse, or maybe it doesn't matter, compared to, you know, so, these other staking services where somebody can, you know, five hundred bucks, a thousand dollars, uh, they just stake it right there?

• 26:28Speaker 02

  It's part of that. So those services are like, kind of are perfect validators, because they're professional, right? They're taking in cap- they're kind of like mining pools, effectively. They're taking in capital from many different people and running custody and like doing, um, like, very secure, you know, hard, custody management and, and running the validators in a high-performance environment. Those are like the, the kind of folks we want to onboard. Um, I think they're also like, interestingly, I think they're a focal point for governance, because it's, you know, these anonymous networks, it's very hard, hard for us to go and identify everybody that wants to vote on anything. But the, if you have a relationship with a validator, they become a focal point to actually give you

• 27:12Speaker 02

  enough information on what to vote on, like. People that like participate in Tezos, like, how do they know what technical direction Tezos should take? Right? You need effectively almost experts that you trust, right, that you have a relationship with to give you guidance.

• 27:30Anthony Pompliano?

  Yeah. And so where do you guys go from here, right? You guys have a product that's built and working?

• 27:36Speaker 02

  I started like sleeping about a month ago.

• 27:39Anthony Pompliano?

  Okay.

• 27:40Speaker 02

  Because everything is up and running and it's fault tolerant. Like, we've run tests like in the global lead distributed network.

• 27:47Anthony Pompliano?

  What do you mean fault tolerant? Explain that.

• 27:49Speaker 02

  Like, you can go swing a hammer in the computers and like shut down validators and crash them and the network continues running indefinitely.

• 27:57Anthony Pompliano?

  Got it, okay.

• 27:58Speaker 02

  And this is.

• 27:59Anthony Pompliano?

  So basically, it is immune to attacks on individual components of it?

• 28:04Speaker 02

  So, you know, I'm sure there's bugs there and like our next six months are really focused on polishing everything. You know, getting the tools right for developers and onboarding validators and fixing any operational issues. But all the computer science problems are done. Like, it's real.

• 28:20Anthony Pompliano?

  Got it. And then, so what are the next steps?

• 28:24Speaker 02

  So for us, I really, you know, we're focusing on launching this network, like launching a permissionless network later on. And when that happens, it really wanted to be a great environment for developers to onboard. Like, my experience, we built this first mobile platform, right, this thing that ran on phones. The only language you could code was C. Like, there was a lot of work to onboard developers and get them to build something. And now we have much better tools and we really need to make this as smooth as possible.

• 28:54Anthony Pompliano?

  How do you go about incentivizing developers to come build on something new?

• 28:59Speaker 02

  Like, we are not big enough like EOS or Tron. We can't just throw money at people. I think.

• 29:05Anthony Pompliano?

  That's basically what they do.

• 29:06Speaker 02

  Yeah, like, I mean.

• 29:10Speaker 02

  They're publishing houses from my perspective, like, and that's an interesting business play if you have the opportunity to do so. Like, I, we don't have that opportunity, but we have something that they don't have, which is performance and speed. And if we solve those problems for developers, um, they'll choose us or anyone else. Because you can't do something on Tron or EOS that you can do on our platform. So we're really looking for folks that, you know, had these big ideas, grandiose ideas, like 2016, 2017, everyone was bitching. We can do this across the world on blockchain, but the tech wasn't there, right?

• 29:45Anthony Pompliano?

  Let's see, let's see.

• 29:46Speaker 02

  Now the tech is here, go, you can go build right now. Um, so we can actually enable those folks.

• 29:52Anthony Pompliano?

  Got it. Um, before I wrap up, I always ask rapid fire questions. Uh, what do you think the most important company in crypto is?

• 30:00Speaker 02

  Who's that, like?

• 30:02Anthony Pompliano?

  Who do you, who do you think is the most important company in crypto?

• 30:05Speaker 02

  Oh, man. I would say Ethereum Foundation is such a.

• 30:10Anthony Pompliano?

  Why?

• 30:12Speaker 02

  They have.

• 30:12Anthony Pompliano?

  I'm surprised.

• 30:14Speaker 02

  I, I feel their pain. They.

• 30:16Anthony Pompliano?

  Okay.

• 30:16Speaker 02

  They were the first to market and they have this enormous developer community and enormous technical challenges that they're trying to solve.

• 30:22Anthony Pompliano?

  For sure. I agree with this.

• 30:24Speaker 02

  And, uh, I think they're very open and decentralized and like they have, they're very honest and transparent. And those properties I want to actually borrow a copy. Like I want, we're, we've been open source from day one, so go steal our code, fix our bugs. Like if we had the same success and community growth as, as the Ethereum Foundation, that would be amazing.

• 30:45Anthony Pompliano?

  Absolutely. Makes sense. What, uh, what, what regulation would you change or improve if you could?

• 30:50Speaker 02

  I think, I wish the SCC had like clear guidelines around decentralization. I honestly think that, um, they have that in their heart and they're taking their time getting there. Because I think, um, what they're worried about is fraud, right? And if you have true self custody and true decentralization, then fraud becomes almost impossible.

• 31:12Anthony Pompliano?

  Interesting. What uh, what's the most controversial thought you have in crypto? What do you believe that everyone else would disagree with you with?

• 31:19Speaker 02

  Um, I don't think that uh, proof of stake networks with large number of validators will survive.

• 31:25Anthony Pompliano?

  Really?

• 31:26Speaker 02

  Because you, you're splitting whatever rewards you are with like twenty thousand nodes.

• 31:31Anthony Pompliano?

  Interesting.

• 31:32Speaker 02

  How, how, unless it's like all hobbyists with free time and free compute, but like.

• 31:37Anthony Pompliano?

  Unlikely, yeah.

• 31:38Speaker 02

  Yeah, like that, that's my controversial thought.

• 31:41Anthony Pompliano?

  Okay, I, look, there's other people who would agree with that, right? It's, it's not that everyone would disagree with it, but there's a lot of people who would disagree. What uh, what's the most important book you've ever read?

• 31:52Speaker 02

  Um, book? Oh, man. Um, so I uh, I would love uh, like, I love the History of Rome podcast.

• 32:04Anthony Pompliano?

  The History of Rome?

• 32:05Speaker 02

  History of Rome podcast.

• 32:06Anthony Pompliano?

  Yeah. Who, who does that?

• 32:09Speaker 02

  Uh, this awesome uh, history buff. He basically went almost.

• 32:13Anthony Pompliano?

  An individual though, not a company?

• 32:14Speaker 02

  Yeah, yeah, yeah. This was, he went like year to year from the start of Rome to the last days.

• 32:20Anthony Pompliano?

  Wow.

• 32:20Speaker 02

  Like, it's like eighty episodes. When I, I had my first kid, I, you know, walked her around a lot and they'd listen to this in my AirPods. It, it was awesome. I was like enthralled with, with like history that was crazier than real life.

• 32:33Anthony Pompliano?

  Yeah, I'll have to, I'll have to check that. That does sound pretty good. Uh, I end each podcast letting the guest ask me one question. But before we do that, uh, we talk aliens. Uh, believer, non-believer, think they're real?

• 32:46Speaker 02

  Um, I think.

• 32:48Anthony Pompliano?

  Listening to Rome, so I don't know, maybe.

• 32:50Speaker 02

  Um.

• 32:51Anthony Pompliano?

  Did the aliens build Rome?

• 32:52Speaker 02

  No, I, I think there's intelligent life out there. I'm a believer.

• 32:56Anthony Pompliano?

  Okay, do you think we'll uncover it during our lifetime?

• 33:00Speaker 02

  Honestly, I wouldn't be surprised. Like I, I, I'm not like a disbeliever that, oh, this will never happen in my lifetime. I wouldn't be surprised.

• 33:06Anthony Pompliano?

  Yeah, I, I, I think that's where I am. It wouldn't surprise me, but there's low probability that it's happening.

• 33:11Speaker 02

  Exactly, yeah.

• 33:12Anthony Pompliano?

  Um, the thing that uh, I, I keep waiting for is like there's somewhere on earth, I was seeing this the other day. There's somewhere on earth that we haven't discovered yet.

• 33:21Speaker 02

  This like Navy thing that they're like, there's a, like the unidentified like events that they're reporting now.

• 33:27Anthony Pompliano?

  Wait, what is it?

• 33:28Speaker 02

  If you, if you Google like the, the Navy's adding protocols for pilots to report events they don't understand. Like more in the open.

• 33:37Anthony Pompliano?

  Yeah.

• 33:37Speaker 02

  It's just like, okay, that's kinda weird.

• 33:40Anthony Pompliano?

  Yeah, why didn't we have that before?

• 33:42Speaker 02

  Yeah, well, yeah, uh, maybe it's like, you know, people testing stealth aircraft, you know, US aircraft that's being tested that they're like keeping secret from each other, but like, or maybe not, I don't know. But I I don't think it's aliens, but I think, you know, sure, why not?

• 33:56Anthony Pompliano?

  Yeah, it it, well, to me, it's just like aliens would be really weird. I'm not even sold that necessarily there has to be aliens, but like, there's probably places on the earth that we don't know about.

• 34:06Speaker 02

  Yeah.

• 34:07Anthony Pompliano?

  Right, like, the earth is so big.

• 34:09Speaker 02

  The ocean especially, like.

• 34:11Anthony Pompliano?

  We definitely don't know a lot about the ocean. A lot, a lot of people would, uh, agree that we know more about Mars and the moon than we know about our own ocean, right? So like, whatever.

• 34:21Speaker 02

  So you're you're a sci fi nerd too?

• 34:23Anthony Pompliano?

  Uh, I I am, uh, I'm intrigued. I think is the way I would put it, right? Like, it it's interesting to me, uh, the more sci fi we get, the less interested I become.

• 34:35Speaker 02

  Yeah, yeah.

• 34:35Anthony Pompliano?

  So to me, it's like, I like the stuff where it's, uh.

• 34:40Speaker 02

  Kinda light on the craziness, right?

• 34:42Anthony Pompliano?

  It it's just, uh, it could be realistic and or become reality in the next like ten to twenty five years, right? But the things that are like five hundred years away.

• 34:52Speaker 02

  Yeah, yeah, yeah.

• 34:53Anthony Pompliano?

  I I just kinda get lost a little bit, so, you know, I like seeing the future, just not too far.

• 34:58Speaker 02

  Yeah, exactly.

• 35:00Anthony Pompliano?

  What, uh, what one question you have for me to, uh, finish this up?

• 35:03Speaker 02

  Um, man, do you, do you have a, do you have a prediction for for next year? For for like, for the, for the space?

• 35:11Anthony Pompliano?

  Prediction, um.

• 35:14Speaker 02

  Do you, do you think we'll see like the same kinda growth the internet did, like early ninety five?

• 35:18Anthony Pompliano?

  I I think we'll see way bigger over the next three years.

• 35:21Speaker 02

  Okay.

• 35:22Anthony Pompliano?

  Like, uh, uh, and it's just because we have the internet, like, we're growing on the backs of the internet, right? So I think it's way bigger, way faster, um, which also means if there are more, you know, bubbles that pop, the downsides are much bigger too, right? Um, the other thing that I would say is, um, I think, uh.

• 35:45Anthony Pompliano?

  You know, I think it was a little more than a year ago, I said I thought that Tesla or Amazon the next two years would launch a coin.

• 35:52Anthony Pompliano?

  Facebook's launching one.

• 35:53Speaker 02

  Yeah.

• 35:53Anthony Pompliano?

  So, you know, in the family, but not the two that I guessed.

• 35:58Anthony Pompliano?

  Then today I just saw that now Amazon has issued a patent for a proof of work system using cryptography to generate Merkel trees.

• 36:09Speaker 02

  Yeah.

• 36:09Anthony Pompliano?

  So like, okay, then a closer.

• 36:12Speaker 02

  Yeah.

• 36:12Anthony Pompliano?

  Right? And so to me, like, just getting these big companies in would be really interesting. And the last thing is central banks. I think that we're gonna see a central bank, a sovereign wealth fund, some sort of like government-type entity really go hard into crypto, probably Bitcoin. And if they do that, I think you're gonna see like an incredible FOMO effect.

• 36:37Speaker 02

  Yeah, that would be pretty crazy, actually.

• 36:39Anthony Pompliano?

  Yeah. Imagine if like a top 10 country was just like, yeah, by the way, we bought, you know, 5% of the Bitcoin network.

• 36:45Speaker 02

  Yeah.

• 36:46Anthony Pompliano?

  Game on.

• 36:46Speaker 02

  Yeah.

• 36:48Anthony Pompliano?

  Would be pretty epic. So, alright, man, listen, I really appreciate you doing this. I gotta go try out underwater hockey. I'm probably gonna be like dreaming about that.

• 36:57Speaker 02

  Before you do that, just check out our project. Solana, it's named after Solana Beach where.

• 37:03Anthony Pompliano?

  I figured, I picked up on that.

• 37:04Speaker 02

  Exactly.

• 37:05Anthony Pompliano?

  So it's what, S-O-L-A-N-A?

• 37:07Speaker 02

  Yeah. There's a GitHub, go steal our code, fix our bugs, or launch a validator, that's probably the most fun, and join our Discord. We're totally open, a growing community.

• 37:18Anthony Pompliano?

  Awesome, man. I appreciate you doing this, and I'll look to it again in the future.

• 37:21Speaker 02

  Yeah, thank you so much.

• 37:23Anthony Pompliano?

  Hey, everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening, and see you next time on Off the Chain.