208 - Fixing Fragmentation with Justin Drake

✨ DEBRIEF | Ryan and David unpacking the episode: https://bankless.com/debrief-fragmentation ------ The Ethereum Ecosystem is going through Fragmentation, can we make it more Composable? We brought on Ethereum researcher Justin Drake to explore this question in detail. We cover deep topics like Universal Synchronous Composability, Shared Sequencing and Based Rollups. Justin explores the solution for which might be Ethereum’s Hardest Challenge and its roadmap. ------ Listen On Your Favorite Podcast Player: https://bankless.cc/Podcast ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo https://bankless.com/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 💸 CRYPTO TAX CALCULATOR | USE CODE BANK30 https://bankless.cc/CTC ------ TIMESTAMPS 00:00 Intro 6:55 Ethereum’s Fragmentation Problem 10:00 The Solution 17:14 Composability Spectrum 23:57 Universal Synchronous Composability 30:32 Composability Features 36:25 Why Composability Matters 43:07 The Roadmap 46:52 What is Shared Sequencing? 1:03:38 A Shared Sequencing Paradigm 1:19:55 Shared Sequencing Solutions 1:30:25 Rollup Design 1:40:15 Based Rollup Roadmap 1:47:02 What’s Next 1:50:51 Timeline 1:53:10 Accessory Technologies 1:58:18 The Role of Blockspace 2:05:28 Outro ------ RESOURCES Justin Drake https://twitter.com/drakefjustin Justin Drake Episodes https://www.youtube.com/watch?v=X-4Jn8p2Oeo https://www.youtube.com/watch?v=azjpYTB7PVE https://www.youtube.com/watch?v=ycK3AUTdl1w ------ Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. 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.

• 0:00Ryan Sean Adams?

  Welcome to debrief after our episode, Justin Drake, fixing fragmentation. What an episode, David.

• 0:06David Hoffman?

  Yeah.

• 0:06Ryan Sean Adams?

  I loved it. I personally loved it.

• 0:08David Hoffman?

  There's so many, there's so many things to talk about. I think maybe, maybe I'll just start here for whatever the hell reason, but just like, I think many Ethereum people, you and I, whatever category I'm talking about, the you, me, Anthony, Sazano, the highly convicted Ethereum people, where there was like the rise of Solana and a lot of people were like, you know what? The monolithic blockchain architecture was correct. I'm going to be a come a Solana. I'm now a Solana person.

• 0:37Ryan Sean Adams?

  They started fading modular.

• 0:39David Hoffman?

  Fading the modular thesis, fading Ethereum, right? Fading the roll up, roll up centric roadmap. And they became like Solana people, right? For whatever tribal.

• 0:48Ryan Sean Adams?

  Not just tribal, user, user experience. You know, I don't think it has to be tribal. I think that the, the boots on the ground are that in many ways, Solana feels like one unified chain and in a many ways, Ethereum's roll up ecosystem doesn't. It's like bridge, bridge this, bridge that.

• 1:05David Hoffman?

  Not to say that that's not, not reality, right? But just like, yeah, you know, people are like, I sold my ETH for Sol. I'm, here's my like Solana NFT for all, for the, for the perspective, for the perceived nature of these things.

• 1:15Ryan Sean Adams?

  ETH is dead, kind of stuff like that.

• 1:17David Hoffman?

  ETH is dead, Solana is, Solana is the new king. Yeah.

• 1:20Ryan Sean Adams?

  Sure.

• 1:20David Hoffman?

  Yeah. And then there's a lot of people like you, me, Anthony, Anthony Sazano is like, eh, no, like that. And maybe we can't articulate why we don't feel like this is a threat or feel like this is a problem because we're not Justin Drake and I can't tell you about the nuances of shared sequencing. But a lot of us are just like, eh, it's a problem. Sure. We'll solve it. Like what, present us problem. Eventually Ethereum will present you with solution. I don't know when, I don't know how, but we will. And that's just a, some amount of conviction on just like the Ethereum developer mind share. The mad scientists of Ethereum that Georgios called us, called them the developers. And just like, yeah, like, okay, sure. If it's a problem, then we'll fix it.

• 2:04David Hoffman?

  But just like the, the solutions aggregate to the network.

• 2:07Ryan Sean Adams?

  And also say it's not, it's also not blind. Faith. I mean, there are hints of many solutions already, like,

• 2:13David Hoffman?

  Yes.

• 2:13Ryan Sean Adams?

  You know, Intense is is kind of one category of solution. I I am aware and have been aware of shared sequencers and and their role have not gone in depth. But like, that's an emerging field. And like, just in general, like, there's all of these hints of of solutions. And the Internet itself being kind of like a case study in asynchronous composability can also work. Now, now, I will say with the Internet, though, it wasn't competing against an Internet that was had full synchronous composability. Right? It was just like, it's asynchronous composability, and you got no other options, right? Because everyone's already adopted.

• 2:54David Hoffman?

  Started asynchronous, yeah.

• 2:55Ryan Sean Adams?

  So so maybe there's some different market dynamics there. So, yes, I just wanted to add that in addition to it being blind faith, because Ethereum has like, fixed all of the problems that have like, like, don't bet against Ethereum as they added, right? Like, in addition to that is also, there are all of these hints that we can't fully articulate something like Justin Drake can. But that might seemed like we were making progress on solutions. This, for me, this episode was like, oh, the progress could happen much faster than I thought. And also, the insight was Ethereum main chain would have a role to play as a shared sequencer, which is kind of like.

• 3:38David Hoffman?

  Well, I wouldn't even say that that as a prerequisite for universal shared composability, like, a single shared sequencer like Espresso without using the Ethereum layer one still could produce that outcome. He, Justin, was just like, oh, yeah, all these, all these shared sequencers are realizing that it's the it's the base chain. It's the layer one chain that's going to be able to actually do this to the greatest network.

• 3:58Ryan Sean Adams?

  I don't think I fully understood what a based rollup actually was, like, before, like, I don't know, the last month or so.

• 4:04David Hoffman?

  It's a it's a rollup that is following the protocol sync thesis.

• 4:07Ryan Sean Adams?

  Yeah. And then.

• 4:08David Hoffman?

  I think.

• 4:09Ryan Sean Adams?

  Basically, all rollups can become based rollups if they use a shared sequencer that uses Ethereum validators for shared sequencing as well.

• 4:18David Hoffman?

  On that note of having like hints of solutions kind of spread around the Ethereum verse, that's also what I felt like we're in a phase in the market in which everyone listening to that episode has been in crypto for like at least one year, if not three plus. And so they probably heard the phrase shared sequencing before. So like shared sequencing, it's not new. Express has been around since like 2020, 2021. And so like, there's a lot, nothing is really new here. I think really the new like insight is a little bit more about the order of operations. Like I was going around and I was asking like a few people on different like roll up teams and Georgios and like Torgal about like, hey, how is Ethereum going to fix this fragmentation? And I got, I

• 4:59David Hoffman?

  got like a fragmented set of answers. And so I ended up at the conclusion of just like, oh, Ethereum will solve this fragmentation problem.

• 5:07Ryan Sean Adams?

  Kind of thing, like.

• 5:08David Hoffman?

  With market forces, the fragmentation of a layer twos will die a thousand cuts.

• 5:12Ryan Sean Adams?

  Yeah.

• 5:12David Hoffman?

  Like, there's not going to be a silver bullet. It's just, we're just eventually going to figure it out. And I kind of did come to the conclusion of just like, yo, it's still going to be asynchronous. But if you begin asynchronicity inside of two seconds, then you can have like UX tricks take you the rest of the way. That was like my previous understanding. The, as a result of this episode, my, I think my understanding is just a little bit more ordered. And I think that's what Justin Drake did for me in this episode where he was like, yes, it will die a thousand cuts and first shared sequencing. And that opens up the door towards the proper ordering of other synchronous technologies. And I think really that's kind of the main insight here is like first shared sequencing. And even Georgios on our last podcast that I had with him, he was like, yeah,

• 5:57David Hoffman?

  shared sequencing gets you some composability benefits. It's not universal composability, but it gets you some. And then Justin Drake on this is like, yeah, it also gets you some, but it is the platform for the rest of them. And that's kind of the new insight that I've had.

• 6:12Ryan Sean Adams?

  Yeah, I think that makes sense. I, you know, one interesting thing was him calling asynchronous composability cope. That was like that, you know, and it is if you can have synchronous composability, that is, everything can kind of like immediately interact with everything else in the same sort of superstate, then like, isn't that better? And the answer is quite obviously yes. I think, you know, that is what alternative monolithic chains have kind of pointed out, right? They very much called Ethereum's fragmentation and rollups cope, right? And, you know, they not entirely wrong. Like, we, I think the, in defense

• 6:56Ryan Sean Adams?

  of the modular thesis, that the argument would be like, well, but it's worth it, right? That you like trade off to remain decentralized and kind of like, you know, low validator requirements is a key for that. That's what how Ethereum defines decentralization. Well, maybe we don't get full synchronous composability, but it's worth it. But Justin Drake, once again, coming to the episode, being like, no, we can have everything. We can have it all. And I like, here's a path to to kind of get us there. Yeah, it's a, it's cool from that perspective. Let me, let me ask you, how long do you think it'll take to sort of achieve this? Do you think like Justin Drake's one to three years?

• 7:37David Hoffman?

  The thing is, I don't think it's binary. I don't think it's gonna be like, oh, here's the day. It's just Ethereum's just gonna become a little bit more synchronous day by day by day. Maybe there are some like big events that happen. So there's like, oh, Arbitrum mainnet and Optimism mainnet, they're on the same sequencer. Oh, man, here's going down. And so like, maybe there'll be like days like that. Like, right, right now, we're watching, like, I think this will happen a bunch. Like, right now, we're watching OP stack rollups, like some of the newer OP stack rollups pivot to Celestia for data availability. Like, Lyra was the first to go. AVO is being announced sometime soon. And then we're like the long tail of OP stack rollups are all going to pivot to Celestia because they're paying like, you know, somewhere between 10 and 50 ETH.

• 8:22David Hoffman?

  A month for publishing empty blocks to Ethereum.

• 8:25Ryan Sean Adams?

  Yeah.

• 8:25David Hoffman?

  So they're pivoting to Celestia to get point five. And point five ETH per block per month is their cost. Makes sense. There's, that's just what we're going to see. And it's going to be something like that where like, we're going to see. And it's going to be more, there's going to be an accelerating number of these things as they all do this up to some particular point where like.

• 8:42Ryan Sean Adams?

  That's how it'll happen.

• 8:42David Hoffman?

  Some of the big chains like Optimism and Arbitrum and they're like, yeah, we're not going to Celestia. We're staying a roll up. And it'll be something like this for like adopting a shared sequencer is like somebody adopts a shared sequencer. And then somebody else was like, oh, I'd like to tap like, I'd like to tap into to that and like, oh, I'd also like to tap into that. Oh, these guys are tapping into that benefits like, oh, I'm also going to do that. And then it'll just like, you know, that, that's that video of the guy dancing in the middle of the field. And then everyone else, just the one, he's like dancing solo for like.

• 9:12Ryan Sean Adams?

  Everyone.

• 9:13David Hoffman?

  Three minutes and he's weird. And then somebody else joins him and then somebody else joins him and then, you know, a minute later, like there's a whole crowd of people. It's going to be like that.

• 9:20Ryan Sean Adams?

  My, my favorite, I think one of my favorite things about this is it's a realization of the dream of the United Chains of Ethereum. Because I'll tell you where I also felt this, you know, like you could talk about UX, you could talk about liquidity fragmentation. You could, you talk about having to change from network to network in your wallet. I feel like a lot of that could be changed by like the market, right? Better wallet design, right? If you use the Rabbi wallet, you just don't even feel it and intent, intents, right? Well, like with intense, you're not feeling the liquidity pain so much.

• 9:57Ryan Sean Adams?

  And so the market was, was solving that, but what it wasn't solving for was kind of the memetic layer and the kind of the narrative layer and the social layer of it. It still very much feels like. Layer twos are competing hard against one another. Like they're not, or it has felt increasingly like that, let me say, the, the, the last 18 months. It hasn't felt like. United Chains of Ethereum, if that makes sense, like there was not, as I remember in 2019, 2020. Ethereum had a very clear kind of shared identity of like, if you're an Ethereum user, if you like are building an Ethereum, you have a defined set of Ethereum values.

• 10:40Ryan Sean Adams?

  Like things that you kind of believe and we're all in sort of the same team. Well, in the rollup world where we got is a bit of fracturing of that. And it's like, no, there's a polygon people and there's like optimism and arbitrary people.

• 10:54David Hoffman?

  Team purple, team blue, team red.

• 10:55Ryan Sean Adams?

  Yeah. Yeah. And like, there's an element of that where it's healthy. But then there's an element where you all want to come together as one like network state, as one digital nation, if you will. And we lost some of that. And I think the reason we've lost it, we've lost some of that is because of the architecture, because there was this lose type of, you know, lose, lose, or like I take from you from liquidity perspective and you adding, you bringing your chain to the Ethereum economy, that's not necessarily going to add to my chain. You're just going to like, you might add a little bit, but you might take more from me. And so I'm hostile to you and my tribe is like, this gets rid of a lot of that.

• 11:38Ryan Sean Adams?

  I'm not saying there's still going to be healthy competition for execution, for users, but like not as much competition for liquidity. And if you can come join the network and add your liquidity and bring on a new tranche of, of users, will you benefit the entire superstructure? That to me is like, one of my favorite things about this because I love the network effect type game. I love the win, win, win. Like we all kind of grow together feeling that we had when Ethereum was just one global synchronous like state. And let's keep in mind, that's what it was in 2019 and 2020.

• 12:19Ryan Sean Adams?

  And every app that added like AVE and Compound, very excited to have Uniswap be maximally successful. Why? Because it benefits, it benefits their protocol, right? I want that again. And this is a path to getting that again. And I love that.

• 12:34David Hoffman?

  Mm hmm. Now we have like chain Legos. So like we had money Legos on the Ethereum layer one where Maker and Uniswap and AVE and like, you know, 0X and like, I don't know. And you know, pick your, pick your layer one app. They were all money Legos. And there was, I remember that old article I wrote, I called it something about like the Ethereum superstructure, but it was, it was about DeFi money Legos inside of the layer one. Because I wrote that in like 2019 before like even any rollups were like alive. And so now, now this is like the next dimension of that whole entire idea, that concept, which is just like, now I have a chain superstructure. Being built on Ethereum. And I think the reason why I like this the most, one of the reasons,

• 13:17David Hoffman?

  one of the many reasons is that like, that whole Peloton metaphor, whereas this is complete alignment with open source ethos, whereas as something gets more useful, it gets more developer activity, it gets more traction, it becomes even more useful. So it goes back to Andrea Santanopoulos's Festival of the Commons, where like, right now, we have a tragedy of the commons between layer two chains, like the space between layer twos is neglected. But with this vision, universal composability, it's the opposite. It flips, it inverts, like adding more chains to Ethereum increases its total unified TPS. It increases its total users, it increases its total utility and liquidity, etc. And so like, there's literally no cost to adding more chains to Ethereum.

• 14:02David Hoffman?

  And when that becomes true, when it's not just about lowering the cost, but inverting the cost structure, when that becomes true, just like Ethereum is going to grow so incredibly large, and it's going to be the open, completely like permissionless financial platform that we've all envisioned for ourselves here.

• 14:19Ryan Sean Adams?

  There are a few things I want to ask you that I didn't fully understand with Drake. We just didn't have time to get caught on like, kind of like very small details, because we're trying to express the full idea. I think we could have gone on for another hour. But like, this conversation about preconfirmations, you kept bringing that up. Why is that important? Like, do you know, like, why are preconfirmations so important?

• 14:41David Hoffman?

  Well, that's, that's a kind of like a UX trick, but it's actually more than a trick. Like, a UX trick, I'll define as like, the front end just tells you your transaction went through, even though they don't actually know that it went through.

• 14:54Ryan Sean Adams?

  Instantaneously, you could tell a user, hey, transactions through, but like, in the background, it's really different.

• 14:58David Hoffman?

  Yeah, you're Gucci. Yeah, and the background is still processing, right? And so that's like a UX trick. A precomp is like a UX trick with assurances. So like, it's not in the system, but you have an assurance that it's going to get in. And this can be used in a variety of different contexts. I think like, Hart from Across Protocol from UMA is using precomp on, or can in the future version of those like intents and cross-chain bridges, which is just like... I'm going, I'm going to tell you your transaction finalized. I'm going to let your UX update as if it is finalized. It's not actually finalized. But if it doesn't finalize, I get slashed by Eigenlayer or restaking.

• 15:42David Hoffman?

  And so there are, there are systems like this where it looks like you can get a cryptographic assurance that like, yes, this is going to go in. And there are just different ways to provide those assurances.

• 15:52Ryan Sean Adams?

  Okay. And then there was this other thing he was talking about, shared sequencing, which we like, we defined that, but like also real time settlement. And then later in the conversation, we didn't spend a lot of time on real time settlement. But later in the conversation, he talked about a block that could form, like a special interest kind of block of ZK EVMs versus optimistic EVMs. And he was drawing some kind of parallel or difference there and linking that to real time settlement. And I think maybe his point was like, real time settlement might be like finality, right? Whereas optimistic rollups have kind of a seven day fraud proof type window.

• 16:33Ryan Sean Adams?

  So you don't get kind of like finality at settlement finality immediately. Like the confirmation could be like subject to dispute during that seven day window. Of course, with ZK EVMs, you don't have that. And I think maybe he was saying that that is a reason why ZK EVMs will be, could be faster to adopt shared sequencing because they are losing, right now they're losing in the footrace. I mean, it's still super early, so it's just like, it's kind of whatever. But they're using, losing in the traction footrace by some dimensions to optimistic rollups. And therefore they might adopt shared sequencing sooner. Was that the point he was making? I wasn't really clear on how these things tied together. I don't know if you were.

• 17:19David Hoffman?

  No, I'll have to go back and listen to that part. I think part of that answer just goes, because like optimistic rollups and ZK rollups are such a different language. Like ZK rollups inside of the same circuit, right? Like so ZK sync, hyperchains are one circuit, polygon supernets are one circuit. They all get the benefits of being ZK and get, getting very, very like near instant finality. And so I think they are, their needs about shared sequencing are different. They're of a different quality, but I can't see too much more. I don't know.

• 17:52Ryan Sean Adams?

  There's so much that this would change. I think about Ethereum ecosystem and its actors. Like as this comes about, and again, it's not going to happen overnight. It's not a switch that's going to flip. It's not even a hard fork. It's kind of like market forces and other incentives will kind of like push this along as it needs to. But it's going to change so much about existing players and where like the attractive investment opportunities are. So like if Justin Drake is right, and this is why we do these types of episodes. It's because we're trying to figure out what's going to happen and like where we should place our bets, right? But like if Drake is right, then what does this mean for bridges? They kind of become less important.

• 18:36David Hoffman?

  Yeah.

• 18:36Ryan Sean Adams?

  He also implied-

• 18:37David Hoffman?

  Well, no, it depends on the type of bridge. So let's parse that part apart, right? So there are lock and mint bridges, which I totally think you're right. Those are like, those are going away. But across bridges are like intent-based bridges. So across isn't even a bridge. It's like an intent system on one side, an intent system on the other. And then market makers go between those two ports. So like it's like a port. So across is like multiple ports of different-

• 19:03Ryan Sean Adams?

  Market makers, all these, the swarms of MEV bots kind of like in between.

• 19:06David Hoffman?

  Yeah.

• 19:07Ryan Sean Adams?

  Yeah.

• 19:08David Hoffman?

  Yeah. Across was an intent filler before we had the word intent. This is why I actually really-

• 19:13Ryan Sean Adams?

  I don't, I kind of don't class that as a bridge, but like I suppose it's like a sub-bridge. But yeah, when I was more-

• 19:18David Hoffman?

  It's a bridge from the perception of the user.

• 19:20Ryan Sean Adams?

  I was more talking about bridges. I was more talking about like the typical, you know, mint type of bridge and all of kind of the-

• 19:28David Hoffman?

  Lock and mint bridges are boo-boo. Those are fundamentally boo-boo. Those are going away.

• 19:31Ryan Sean Adams?

  Yeah. But like even the kind of the super bridges that are out there.

• 19:37David Hoffman?

  What's a super bridge?

• 19:38Ryan Sean Adams?

  Uh, well, like, you know, the bridges that basically become kind of development platforms. Trying to think of an example off the top of my head where-

• 19:45David Hoffman?

  Oh, like Layer Zero?

• 19:47Ryan Sean Adams?

  Yeah, like a Layer Zero. What happens to a Layer Zero in this world?

• 19:50David Hoffman?

  Messaging bridge? Oh, Layer Zero, I think has always been meant for-

• 19:54Ryan Sean Adams?

  More messaging and less- So basically, the asset bridges are going to have like the pure asset transfer bridges are going to maybe have a hard time. But the message passing intense based bridges, maybe not.

• 20:06David Hoffman?

  Lock and mint bridges going away. Yeah. Generalized messaging like layer zero is a generalized messaging bridge.

• 20:13Ryan Sean Adams?

  But even.

• 20:14David Hoffman?

  I don't know if it's highly optimized for being an intent.

• 20:17Ryan Sean Adams?

  How does it change also market dynamics when you have a secretus composability? You don't have to have, sorry, synchronous composability and you don't have to approach every single like chain and say, like from a biz dev perspective and be like, hey, do you want this? We've got this like new like, and there's an agreement, you know, Drake talked about backroom deals, right? He's the example of chain link, but there's tons of this like, you know, when we're doing due diligence for somebody who's kind of entering. They've got this new service that they want to provide, you know, chains and the question is always go to market. Well, how are you going to convince these chains to adopt your product, go through the work effort or pay the cost, right?

• 21:00Ryan Sean Adams?

  When you dissolve the borders, then pretty immediately, like you could have an oracle service that is in use across all of the chains. Couldn't you? And by decreasing that barrier to entry and go to market business development costs. How do you change the competitive landscape? Does chain link suddenly have a whole bunch of competitors that can start to do something like with, you know, with, you know, and you can spin up other Oracle services. I'm just saying like, yeah, the board, the borders, when you dissolve borders, things happen and landscapes change. And I don't, I can't necessarily predict how they'll change.

• 21:40Ryan Sean Adams?

  I just think if Drake is right, it has some pretty big implications for a good, a good kind of change and a good kind of chaos in this space. I would say.

• 21:50David Hoffman?

  Yeah, I definitely think that's right. I think there's a general shift towards a demonopolizing of the layer two space. And so like the chair, the chain link, for example, like has a monopoly on oracles and DeFi oracles. Like you need, if you're going to be a layer two chain and DeFi layer two chain, you need training oracles. But if everyone can just tap into layer one chain link oracles on their layer two, then that monopoly is kind of like broken. It's like easier to be a new player in the field.

• 22:19David Hoffman?

  What was I gonna say? I was gonna say something.

• 22:22Ryan Sean Adams?

  Well, I got something else I've been thinking about it. While you're thinking about that, so like, what's your take on incentives for chains to adopt shared sequencing now? So, we talked about that with Drake. That's, you know, some people have said that's a reason why chains want, and it's basically the reasons we talked about is they don't want to give up their MEV, that's revenue. And when you think about that, it's not like a greedy Arbitrum, you know, optimism labs, like centralized entity. It's also the token holders. If you hold some arb token, you're just like, "Yeah, but how does this accrue value?" And like, "You're gonna give away my rights to potential MEV fees?" Like, "No, don't do that. Don't do that."

• 23:05Ryan Sean Adams?

  And so, there's some, maybe some forces that would inhibit their incentive to put decentralized sequencers in place. But Drake says, "Well, but like, if everybody does it, and like, if there's so much liquidity benefit and composability benefit that you can make up for that loss of revenue." And by the way, MEV is gonna kind of go away anyway. This is, um, yeah, what's your take on that?

• 23:30David Hoffman?

  Yeah, I could spit out a bunch of those like gut takes, but they would be pretty unfounded.

• 23:37David Hoffman?

  The vibe that he was giving was that like, especially with that one innovation that he named from Espresso, which is just like, "Yo, Espresso is gonna be able to segment rewards, and so Arbitrum is gonna retain its share of the pie." And like, you know, all chains are going to pro-rata, be able to retain their share of the pie. And then also, he was saying just like, well, that was always one of my understandings that I've heard from other people say is like, "Why would anyone adopt a shared sequencer when sequencer is where they get their money?" And then his answer is like, "It's actually not where they get their money. It's actually just MEV."

• 24:07David Hoffman?

  Yeah, I don't know. I think that's going to be a very big topic of discussion, because like, all of this ultimately boils down to economics. Like, we're talking about trade between chains, like, trade between economic zones, trade between states. And all the states are gonna, we're trying to make trade deals, right? And like, imagine, that's gonna take a while. That's gonna be the thing that probably slows us down the most, I'd say.

• 24:29Ryan Sean Adams?

  I think I really appreciated his, when, almost in the same breath where he was talking about cope asynchronous composability, it was kind of cope. He was also, just I think a little earlier, talking about just thank you to other chain ecosystems, particularly he named Solana for pushing Ethereum in this direction, right? I can think of the competition that Solana has recently given Ethereum has kind of woken the Ethereum community up to two things, two big innovations I think were important and previously underlooked. One is like paralyzed virtual machines. Somewhere along the roadmap Ethereum forgot that that's important, didn't like innovate

• 25:14Ryan Sean Adams?

  very much.

• 25:15David Hoffman?

  Never, never really accounted for in the first place.

• 25:16Ryan Sean Adams?

  Right? I mean, well, do you remember, yeah, it just didn't do any innovation on its EVM and didn't really.

• 25:24David Hoffman?

  The EVM has never been touted as like a highly advanced piece of software.

• 25:27Ryan Sean Adams?

  No, and do you remember there were, at one time, like 2018 or so, 19, there was EF initiatives to do like Ewasm. And like, this wasn't paralyzed EVM, but this was the EF doing something.

• 25:42David Hoffman?

  It was still advancing the EVM.

• 25:44Ryan Sean Adams?

  Right, so, so that, and like, we talked about that almost at length on Bankless, I feel like, recently, and Ethereum kind of was pushed into that by a competitor. But then also, solving fragmentation and not settling for asynchronous composability, but going full synchronous composability. And Solana has like pushed the Ethereum roadmap in that direction as well. So, like, he was saying kind of like, you know, thank you, Solana? Yeah, like, what's your take on that? And where does, where do the monolithic chains end up if everything Drake says comes to fruition?

• 26:18David Hoffman?

  So, one thing I think that I think is happening, is my gut take, my intuition, is that when every single Layer 2 chain joins together in the unified synchronous composability, like Layer 2 mesh network that is being built on top of Ethereum, like, yeah, the EVM is single-threaded, sure. And so every single Layer 2 chain is a single-threaded chain because they're, if they're using the EVM, then it's a single thread. Every, every Layer 2 is a thread. And so if we have 100 Layer 2s, shared sequencing with each other, we have 100 threads being computed against by market makers, by intent fillers, by shared sequencers, by

• 27:01David Hoffman?

  the Ethereum Layer 1 validators. And so we actually have like a 100-threaded CPU Layer 2 on top of Ethereum, being collapsed down into a packet that goes down onto the Ethereum Layer 1. And so like, like, we can talk about like, yeah, so like, you know, the EVM is single-threaded, it's so low performance. But like, what is Ethereum supposed to be? It's supposed to be a world, global virtual computer. And so like, a chain is the thread. A single chain is a single thread.

• 27:31Ryan Sean Adams?

  Yeah, sure. But what you can do is get like quadratic threading, like where you have the...

• 27:35David Hoffman?

  Where you can have multi-threaded Layer 2s.

• 27:37Ryan Sean Adams?

  Yeah, the single thread that you're talking about then is a multi-thread, single-thread chain. You know what I mean?

• 27:43David Hoffman?

  Right. For sure. But it's just like anything that's a modular blockchain is like, oh, we're multi-threaded and you don't need Layer 2s because we have multi-threading. It's like, well, yeah, but like, go zoom out one more order of magnitude, zoom out, go out one more dimension. And yeah, you have like, you have different chains, which all represent their different throughputs, all represent their different order flows, their different traffic. And really, it's just like a shared sequencer. Isn't a sequencer a part of a computer? Isn't that like a technical component, like a sequencing, the traffic of like flops or whatever, bits? I don't know. I need to brush up on my...

• 28:20Ryan Sean Adams?

  Like a, like a service bus or something?

• 28:22David Hoffman?

  Yeah, bus. Yeah, serial bus.

• 28:24Ryan Sean Adams?

  Yeah, serial bus.

• 28:25David Hoffman?

  Yeah, isn't there something like this?

• 28:26Ryan Sean Adams?

  Yeah. I don't know what it does anymore.

• 28:29David Hoffman?

  You see, you see the metaphor I'm trying to make happen, right?

• 28:31Ryan Sean Adams?

  Yeah, I definitely see that. I mean, this goes back to kind of like, I think Mike from Blockworks, who's talked about all of these chains sort of are starting to collapse on the same design. I think there's elements of that that are right. But like, I kind of wonder if you're a monolithic chain, I guess more my, my idea, my thesis is, at some point, if you're, say, Solana, and you're building this excellence in terms of execution, right? Like, I know I've said this here recently, but I think, I think it's a very... Yeah, a realistic possibility. You should build up all of this state, this excellence, and you're incredible execution. And then you're just like, I want, I'm just going to join this network. Sounds great. I get to keep all my state. I get to keep all my users.

• 29:13Ryan Sean Adams?

  And then I get to tap into this massive liquidity source, which is the entire Ethereum economy and share sequence that. And then you effectively become some version of an Ethereum layer two. You may not be a roll up because you're not necessarily doing DA on Ethereum. You might like do that somewhere else, but you definitely become connected. So I just, I think all of the other alternative layer ones will also be like gravitationally pulled into this super network as well. And I don't even know that that fragmentation will like, will, will persist. Like, we might be, we might be able to get this. So

• 29:54Ryan Sean Adams?

  we're completely borderless or very close to that, even across other chain ecosystems. I don't know. What's your take on that?

• 30:02David Hoffman?

  I think we will see the writing on the wall for that to happen when we see ghost chain layer twos join into a shared sequencer set. And the ghost chain layer two actually starts to get more activity just because it's proximate to the activity. Right? Like, one of the reasons why, like, building in crypto, building in Ethereum specifically is so fast is because you build an app on the Ethereum layer one, and you are just so proximate to a bajillion users and like billions of dollars. And so you actually, it's actually relatively easy to get user acquisition in TVL, just because you're so close to everyone. And so if we start to see ghost chain layer twos that are not part of a shared sequencer set, and then they say like, all right, we're going to join

• 30:44David Hoffman?

  in on the Peloton, let me like, just bike over here and join in the herd. And all of a sudden, you get more users and you get more TVL and you get you more economic activity. That's, that's just, you're gonna, that's the evidence, the market provided.

• 30:55Ryan Sean Adams?

  Sure. But I mean, the interesting thing about what you're saying is you have to be a ghost chain, right? You have to be kind of desperate in order to do that, right? If you're doing well on your own, you're not a ghost chain, you have users and your token price is going up. You're probably not going to do that.

• 31:09David Hoffman?

  I mean, a ghost chain by comparatively to the Peloton, right?

• 31:12Ryan Sean Adams?

  Yeah.

• 31:13David Hoffman?

  Yeah.

• 31:15Ryan Sean Adams?

  Anything else from that episode stick out for you?

• 31:17David Hoffman?

  No. I mean, I'm, let me, I'll tell you after go back and re-listen to it.

• 31:21Ryan Sean Adams?

  Yeah, same here. It's, it's one I'm gonna have to re-listen to. All right, guys. Thank you for being citizens. This has been the debrief.