Super Scaling with StarkWare | Uri Kolodny & Eli Ben-Sasson

Ethereum is scaling. With a recent $50 million raise at a valuation of $2 billion, StarkWare is pioneering zkRollups across the Ethereum ecosystem. As it powers dYdX, arguably the most liquid market in the world, StarkWare is continuing to move into new territory, with StarkNet imminently deploying on Ethereum Mainnet. The goal of StarkWare is simple: 'bring massive scalability to Ethereum while preserving L1 security, permissionless interactions, and decentralization.' The ecosystem is growing at an astounding rate, so tune in as core members Uri Kolodny and Eli Ben-Sasson walk us through how StarkWare is bringing Super Scaling to Ethereum. ------ 📣 OPOLIS | YOUR CRYPTO CAREER https://bankless.cc/Opolis ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🍵 MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha 🔐 LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger 🧙‍♀️ ALCHEMIX | SELF-PAYING LOANS http://bankless.cc/Alchemix ------ TOPICS COVERED: 0:00 Intro 5:00 Eli and Uri of StarkWare 9:02 StarkEx vs StarkNet 16:37 StarkEx is Scaling Today 24:35 Latency & Data Tradeoffs 32:50 Scaling with Math & Cryptography 38:21 StarkEx to StarkNet 43:35 Ahead of Schedule 47:56 StarkNet Launch 54:48 StarkWare Roadmap 1:00:40 Modular & Privacy 1:04:39 Business Model 1:11:33 Values & Code 1:16:15 Closing & Disclaimers ------ RESOURCES: Uri on Twitter: https://twitter.com/ukolodny?s=20 Eli on Twitter: https://twitter.com/EliBenSasson?s=20 StarkWare on Twitter: https://twitter.com/StarkWareLtd?s=20 StarkWare Discord: https://discord.gg/uJ9HZTUk2Y StarkNet Alpha: https://medium.com/starkware/starknet-alpha-is-coming-to-mainnet-b825829eaf32 ----- 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://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:05Ryan Sean Adams?

  Hey Bankless Nation, it is time for another state of the nation. Super excited about today's episode. This is super scaling with Starkware. We have two, the two Starkware co-founders on, we have Ellie and Yuri of Starkware. We're going to get to that conversation in just a minute, but David, this is the time to bring on Starkware. I mean, this is ZK rollups, rollups in general, are, are starting to really take off, I think, in a big way. Starkware is rolling out some crucial tech. Why is now the time to have Starkware on to tell us about the scalability strategy for Ethereum and blockchains in general?

• 0:41David Hoffman?

  Yeah, I recently tweeted out that Layer 2 is here. It's just not evenly distributed yet, and some components about Ethereum are super scalable. DoIDX is doing more volume than Coinbase. Immutable just released its gaming powered, gaming focused NFT platform, and it's already like throwing out the, the transaction throughputs. The scalability that we all want to see on Ethereum is being built in these different corners, yet that is the first version of Starkware's products. Stark X, Stark Net is also coming soon. All of these conversations are happening all at once, and definitely in the moment of where like crypto Twitter just absolutely blew up over Ethereum scalability. It's a fantastic time to bring on Starkware to talk about how scalable ZK

• 1:25David Hoffman?

  rollups can actually be when put on top of a decentralized permissionless settlement layer that is Ethereum.

• 1:31Ryan Sean Adams?

  Yeah, I feel like the, the knowledge isn't evenly distributed either, right? It's like, we're doing our part, but a lot of this technology is, is, is hard to understand. And so part of what Bankless is trying to do is break this down into mental models. We put together the, the modular blockchain podcast, and you wrote an article about that, David, would refer listeners to that if you want to get a high level overview, but we're now on a journey towards like unpacking these ZK scalability type solutions, and Starkware is definitely one of the leading ones, one of the ones we are most excited about in the space. So it's gonna be a fascinating conversation. Stay tuned for that. Also, some quick announcements. We dropped a podcast with Visa. Visa is going all in on crypto in the crypto space. Other fintechs are following. That was an episode

• 2:16Ryan Sean Adams?

  we just dropped on Monday. David, any sneak peek on that app?

• 2:19David Hoffman?

  Not only Visa, but also Anchorage, which is really the emblem of the DeFi mullet. You got Visa in the front, you got Anchorage in the back. What is it like to completely redefine what it means to have fintech? Fintech based on crypto rails, not central banking rails. So all of that and more in the podcast that came out yesterday on Bankless.

• 2:39Ryan Sean Adams?

  There you go, DeFi mullet thesis, right? So mental models just keep flowing out of Bankless, guys. This is crucial stuff for you. Also, we need to give a shout out to Opless. They're doing some cool stuff these days. They are sponsoring this message. I tell you, David, I haven't, I've heard, I've heard this so often, like, somebody telling me, "I'd quit my corporate job, my boring corporate job in a heartbeat, but I can't because I'd lose my healthcare." This is, of course, in the US. I know other countries don't have these problems, but this is how they keep you, a wage slave. This is how they keep you a member of the corporations, right? You might want to go where your heart is, go towards a DAO, go where the opportunity is, but you lose benefits. Opless is an organization that services DAOs that helps solve this.

• 3:24Ryan Sean Adams?

  They do payroll and they do benefits for DAOs and for self-sovereign workers. We think the future is moving from the gig economy to the ownership economy towards self-sovereign workers and Opless provides benefits for those. Anything else you want to say about Opless, David?

• 3:41David Hoffman?

  Yeah, this is really the infrastructure that we need to go fully sovereign. And not only when you sign up for Opless, can you start to have healthcare with your other DAO workers, right? These are all the same healthcare. Opless is like a co-op. You guys all get to like choose your healthcare together. We all get to be insured together and also rates go down as the organization grows up, gets larger. But if you sign up for Opless, you get 1,000 work tokens and 1,000 bank tokens if you sign up by the end of this year. And so the work tokens is the tokens of the Opless network. Again, it's just, just like every other DAO, if you use it, you become an owner in it. And so Opless, making sure that all of the infrastructure needed to be workers in the

• 4:22David Hoffman?

  DAO decentralized world are there so that we can actually sustain this ecosystem going forward.

• 4:27Ryan Sean Adams?

  Guys, there's a link in the show notes if you want to get plugged into that, banklist.cc/opless. David, I want to start with the question I ask you in every state of the nation. What is the state of the nation today, sir?

• 4:36David Hoffman?

  I've done this one before, but I'm doing it again. Today, we are building, and the Starkware team has been super hard at work building out ZK Tech for everyone on Ethereum to use. As we go through a weekend of drama and FUD, the only answer to really any of that shenanigans is to just keep on building, and that is exactly what we are doing here on the state of the nation. We are building today.

• 5:00Ryan Sean Adams?

  I want to find out from the Starkware team if they are abandoning Ethereum. My guess is their answer is no, but we will get into that in just a minute. Before we do, we want to thank the sponsors that made this episode possible.

• 5:11David Hoffman?

  Arbitrum is an Ethereum scaling solution that's going to completely change how we use DeFi, and now it's live with over 100 projects deployed. Gas fees on the Ethereum L1 sucks. Too many people want to use Ethereum, and it doesn't have enough capacity for all of us. And that's why teams like Arbitrum have been hard at work developing Layer 2 solutions that makes transactions on Ethereum cheap and instant. Arbitrum increases Ethereum's throughput by orders of magnitude at a fraction of the cost of what we are used to paying. When interacting with Arbitrum, you can get the performance of a centralized exchange while tapping into Ethereum's level of security and decentralization. That's why people are calling this Ethereum's broadband moment, where we get to add performance onto decentralization and security. If you're a

• 5:54David Hoffman?

  developer and you want to save on gas costs and overall make a better experience for your users, go to developer offchainlabs.com to get started building on Arbitrum. If you're a user, keep an eye out for your favorite DeFi apps building on Arbitrum. Many DeFi applications that are on the Ethereum Layer 1 are migrating over to Layer 2s like Arbitrum, and some are even skipping over Layer 1s and deploying directly on Layer 2s. There are so many apps coming online to Arbitrum, so go to bridge.abitrum.io and start bridging over your Ether or any of the tokens listed, and start having a DeFi experience that you've always wanted. Living a bankless life requires taking control over your own private keys. Not your keys, not your crypto. That's why so many in the bankless nation already have their Ledger hardware wallet, Which makes proper private key management a breeze.

• 6:39David Hoffman?

  But the Ledger ecosystem is much more than just a secure hardware wallet. Ledger is the combination of the Ledger hardware wallet and the Ledger Live app. And if you're used to seeing all of your crypto services and favorite DeFi apps all in one spot, Ledger Live is where you want to be. Not only does Ledger let you buy your crypto assets straight from the app, but it also hooks into all of the DeFi apps and services that you're used to. Using Ledger Live, you can stake your Ethan Lido, swap on DEXs like Paris swap, or display your NFTs with Rainbow. You can also use Wallet Connect inside of Ledger Live to connect to all the other DeFi apps that keep coming online. DeFi never stops growing, and the Ledger Live app grows alongside with it. So click the link in the show notes to see all of the DeFi apps that Ledger Live has,

• 7:24David Hoffman?

  and stay tuned as more apps come online. And if you don't have a Ledger hardware wallet, what are you even waiting for? Go to ledger.com, grab a Ledger, download Ledger Live, and get all of your DeFi apps all in one space.

• 7:38Ryan Sean Adams?

  Guys, we are back with the Starkware team. Pleased to introduce you to Ellie from Starkware, co-founder of Starkware, also Yuri, co-founder of Starkware. Gentlemen, great to have you on Bagless. How are you doing today?

• 7:50Speaker 02

  Hi, guys. Thanks for having us.

• 7:53Ryan Sean Adams?

  Well, we are super excited to dig into everything that Starkware is doing in this space. And we're excited because this is really, this is really kind of the scalability answer, I think, to crypto and to blockchains. And you guys are really delivering it and ramping up the delivery of it. So we're going to talk about StarkX, Starknet, everything that you're delivering. But first, we want to congratulate you on this massive Series C fundraiser. So it's a $50 million fundraiser, a $2 billion valuation. Congrats on that. How does it feel to be on the other side of this fundraiser?

• 8:30Speaker 02

  Well, it's, you know, it's, the Series C was done with Sequoia. They've been our investors and close collaborators since our Series A going back to 2018. So we've known Mike and the Sequoia team well. And that made for a very simple and easy process. So regardless, we're happy to have this sort of milestone behind us.

• 8:56Speaker 03

  I want to say that it's better to be on this side than on the side for the...

• 9:01David Hoffman?

  Of course, of course. You guys, there are so many different things that we want to dive into with everything with Starkware. But first, you guys have a lot of things that are named Stark something. And so at the start of this podcast, we want to go in and actually label and define these things because we're going to be referring to them more and more throughout the rest of the podcast. So there's Starkware, there's StarkX, there's StarkNet. Can you guys define and delineate between these three things for us?

• 9:28Speaker 02

  Sure. So first of all, Starks were co-invented by two of my co-founders. Michael Biautsev, who's our chief architect and got his PhD under Eli before co-founding Starkware with us and with Alessandro Chiesas. They're co-inventors of Starks. That's the Zero Knowledge Protocol that we're using in our software stack. StarkX was our first product, and this is a permissioned standalone customizable scaling engine that runs over Ethereum. And this powers Immutable X and Sorare and DYDX and Diversify and Soonable Power Seller as well.

• 10:13Speaker 02

  And StarkNet is our permissionless decentralized ZK rollup. And the alpha has been live on a public testnet since mid-June and is going live on mainnet Ethereum before the end of this month.

• 10:28David Hoffman?

  So just to reiterate that, Stark X are these multiple scaling chains that are app-specific, right? So DYDX is using an app-specific ZK Technologies platform, which we call Stark X. And also Diversify is also using this, and SoRare is also using this, and Immutable. But then Stark Net is maybe a little bit more what users might be familiar with when it comes to like Optimism or Arbitrum One, where there's one canonical chain that is permissionless to build on and everyone can build on that. That is not let yet live, but has been in alpha since early June, and maybe we have some announcements coming soon about its release date, maybe? Is all of that correct?

• 11:12Speaker 02

  Yeah, yeah. Yeah, yeah. So as I mentioned, it's been on a public testnet since mid-June. It's coming to the main of Ethereum before the end of this month. I should just, just one minor correction. The Stark X instances are not chains. They are essentially applications, services, scaling services powered by the Stark X Cloud Service running over Ethereum.

• 11:38David Hoffman?

  Okay, let's unpack that a little bit. They're not a blockchain. So where does it, how does it, why is it not a blockchain? Where the differences lie? And how does it actually achieve scale?

• 11:53Speaker 02

  Eli, do you want to?

• 11:55Speaker 03

  Okay. So I think what defines a blockchain, I mean, there are several things. There's no formal definition, but it's sort of this, it's very permissionless, it's very, you know, everyone can come submit transactions and, you know, it's something that basically the public sort of runs and uses. And Stark X is, as you said, a line of products that each one of them is sort of a backend that services one particular customer, that is another business that is customer-facing. So DYDX, it's an exchange that faces customers and it uses it to

• 12:37Speaker 03

  Technology stack that is Stark X. It basically uses the ZK Stark technology in order to compress computation and achieve computational integrity without any trust but for trust in math and trust in in the blockchain. So it's sort of an interface and a settlement layer. It's very specific to a customer. That's Stark X. So I think it would be a stretch to call it a blockchain. It is more an interface and a settlement layer and sort of something that boosts up the capacity of some other blockchain. And in all of these cases, it's Ethereum.

• 13:13Speaker 02

  A compression service, if you will.

• 13:16David Hoffman?

  All right, that's okay. A compression service, right. So you guys talked about, so the word cloud. Who is actually operating the compression service? Is that you guys?

• 13:27Speaker 03

  Yes.

• 13:27Speaker 02

  For Stark X, it is Cracks.

• 13:30David Hoffman?

  Okay.

• 13:30Speaker 02

  For Stark Net, it will eventually be a fully decentralized network where anyone could function as a sequencer and prover on the network.

• 13:38David Hoffman?

  Okay.

• 13:38Speaker 03

  Hopefully including you and Ryan.

• 13:41David Hoffman?

  So Stark X is this technology that you guys have in your guys' own cloud that that you guys run and you guys allow people like DYDX or SoRare or Immutable to tap into that service?

• 13:56Speaker 03

  Yes.

• 13:57David Hoffman?

  And then Stark Net is that same sort of service, but more

• 14:03David Hoffman?

  streamlined and just made more available for everyone. And rather than have it being on one single cloud, it's is Stark Net an actual blockchain?

• 14:13Speaker 03

  It's closer to it. And there's another distinction. So Stark X is sort of crafted towards a very small number of special purpose use cases that are extremely important. For instance, dealing with a massive amount of payments, you know, very high TPS, like for a payment processor. Another example is a massive amount of trades or perpetual swaps and positions or minting of NFTs. So it caters to things where you have very high demand, but for very specific functionalities. Now Starknet, in addition to being permissionless, it is also a platform that is Turing complete and universal, very much like Ethereum.

• 14:57Speaker 03

  So it means that instead of us saying, okay, you can either, you know, you can do one of four or five things that our customers really want, like, you know, minting, trading, transferring, blah, blah, blah. Basically, it says, okay, anyone can write any kind of logic for any purpose they want. It could be generative art, it could be, you know, compressing many votes, it could be some game design, it could be a whole number of things that we don't actually know what they are. We basically, you know, invented and then designed and offered tooling for writing any smart contract, deploying it, submitting transactions to it. So instead of limited functionality for these things that are in high demand, it is this general purpose

• 15:40Speaker 03

  framework. So it's closer to a blockchain. It's not quite a blockchain because it's a layer two, right? So I think blockchains are more layer one. So just like optimism and Arbitrum, I don't think they're described as blockchains. They are layer twos. We are also a proud layer two.

• 15:58Speaker 02

  I wanted to add to that a very important feature that Stark has had for a while and will have on mainnet by the end of this month is composability. And this is something that a lot of DApp developers care deeply for. This allows for, you know, for this money Lego or NFT Lego or smart contract Lego to thrive and have this amazingly accelerated and open development framework that developers enjoy so much.

• 16:26Ryan Sean Adams?

  This is super cool. And I'm surprised as we're going through these names that Tony Stark, you know, wasn't involved somehow because this is super advanced tech. But I'm sure you get that joke all the time. Can we talk a little bit about the Stark X first? Because I want to just cover that. Scalability now really with Starkware is kind of the conversation. Then I definitely want to spend the bulk of the conversation talking about Starknet because that is the next thing that is coming. As you said, you're releasing to mainnet at the end of this month, so we're Close to the end of this month, we are breathless with anticipation here. But let's talk about StarkX first because there is this impression in the space. And we just saw it last weekend, okay, literally last weekend. I don't know if you guys hang out on Twitter at all,

• 17:11Ryan Sean Adams?

  but the Twitter world was abuzz with this idea that Ethereum is not scaling today, that there is no scalability on Ethereum today, hence the need for all of these other alternative Layer 1 solutions. And there were a lot of things I wanted to say. But one of the things I wanted to say was, of course, it's scaling today, right? Look at what StarkX is doing. Look at what DYDX is doing. Look at what Diversify is doing. Look at what SoRare is doing, Immutable X, scaling using this compression layer, this layer 2 on Ethereum today. Now, app-specific for now, but later, this can be more generalized in something like a StarkNet. But can you talk about that a little bit?

• 17:56Ryan Sean Adams?

  Because I don't think people understand or appreciate the numbers here and what's actually being done across, say, the big four StarkX applications today. DYDX, Diversify, SoRare, Immutable. Do you guys have any numbers here or any sort of metrics on what's happening, how this is scaling so far? Yuri, why don't you start?

• 18:18Speaker 02

  Sure. DYDX would be, I think, one sort of remarkable case study that we could point to. The transactions that DYDX used to do on Layer 1, each transaction proposing of two trades, a couple of markets only, those were around 250,000 gas, maybe 280,000 gas per transaction. The transactions they're doing today on StarkX touch many more assets. They have the ability now. You can put up collateral against many more positions. And so it's a far more complicated transaction. We estimate that equivalent transaction on Layer 1,

• 19:01Speaker 02

  it will have consumed about 600,000 gas per transaction.

• 19:07Speaker 02

  Those transactions today in production on StarkX consume sub 500 gas, not 500,000 gas, sub 500 gas per transaction.

• 19:18Ryan Sean Adams?

  Wow.

• 19:18Speaker 02

  Now, we're talking about, this, this isn't a demo and this isn't like a nice sort of case study that we ran for an hour and then brought down. This is day in, day out, the past 24 hours were at 10 billion, I believe, trading volume for DYDX at the end of, of another one of their fabulous epochs. Cumulative to date, over 230 billion BZBOY dollars settled on Ethereum. StarkX in total, over 55 million transactions, DYDX is probably around half that in total. So a very, very dramatic scaling today already on Ethereum. I, we, our estimate at 600,000

• 20:03Speaker 02

  gas, that's about 300,000 gas per trade. That's roughly 3 TPS would have consumed all of Ethereum's layer one capacity. Okay. We're doing on a very regular basis, 15 times that on, on, on StarkX.

• 20:22Speaker 03

  Yeah. This is just to show what we're talking about. So this is the TPS, the effective TPS that we're seeing. I hope you see my screen share. This is the effective TPS over the past 24 hours. So you see, it's like on average, I'd say on the DYDX system. So this is like, I'd say on average, a TPS of seven with peaks at, you know, 13 TPS. And again, as we just mentioned, the effective TPS, if all of Ethereum would have been consumed for just settling these, these trades, Ethereum wouldn't, wouldn't be able to, to settle this many. It can handle a TPS of, I guess, one.

• 21:03Speaker 02

  Of three.

• 21:04Speaker 03

  Yeah.

• 21:05Ryan Sean Adams?

  So I, I mean, at its peak, basically DYDX is another Ethereum.

• 21:10Speaker 02

  Right. Oh, no, it's, it's multiple, it's multiple Ethereum's.

• 21:13Ryan Sean Adams?

  Wow. Wow.

• 21:14Speaker 03

  That's just one. So that's just one of our systems and it's consuming on a regular basis. You know, over the past 24 hours, we haven't looked at the numbers, but it's going to be less than 1% of Ethereum's gas while doing something like five to 10, sorry, 5X or whatever, two to 5X, the capacity of all of Ethereum and consuming 1% of the gas.

• 21:37Ryan Sean Adams?

  Yes. And I want to get to so rare and immutable in a second, too. It's like, but, but, but what we just said, I mean, that is scalability, right? This is why I feel like there's such a narrative mismatch in, in, in the market and in crypto Twitter these days, and it's, uh, it's a very bizarre world we're in right now.

• 21:51David Hoffman?

  Just to, just to recap, there are multiple Ethereum's, perhaps two to five Ethereum's worth of capacity that is being settled on Ethereum by DYDX. And what you guys said is less than 1% of Ethereum's capacity. So two to five Ethereum's being compressed down to just 1% of Ethereum's capacity.

• 22:11Speaker 03

  On one of our systems. If you take.

• 22:13Speaker 02

  On one of our systems, but I, I want to emphasize that we're not supporting two to five, because that's what we can support. We're supporting two to five, because that's the demand.

• 22:22David Hoffman?

  Right, right.

• 22:23Speaker 02

  We can support substantially, substantially more multiples of that easily today.

• 22:28David Hoffman?

  And so when I said, uh, that's.

• 22:31Speaker 03

  That would probably be another, I don't know how many, but like another five to 10 Ethereum's, you know, we minted, I forgot how many million NFTs over the past half year, probably again, that would have consumed.

• 22:43Speaker 02

  I think about, about 25 million NFTs.

• 22:46Ryan Sean Adams?

  Wait, is this, is this, are we talking about so rare or immutable now, or both of them?

• 22:50Speaker 02

  Both of them, both of them.

• 22:51Ryan Sean Adams?

  Cross both of them. Okay, give us those stats again, so we don't miss them.

• 22:55Speaker 02

  About, about, I think 24, 25 million NFTs minted to date.

• 23:00David Hoffman?

  Wow.

• 23:00Speaker 03

  Take a few million here.

• 23:02David Hoffman?

  That's a few million.

• 23:03Ryan Sean Adams?

  So we're not. The start of the show.

• 23:05David Hoffman?

  When I said that at the beginning of the show, that scalability is here is just not evenly distributed yet, this is what I'm talking about. DYDX hyperscale ability. It's just, uh, people are expecting like this thing to be happening like everywhere equally across the board, but no, that we are getting a hyperscale ability at like, you know, sub one penny transactions, uh, in very specific, uh, examples. And these are the.

• 23:29Ryan Sean Adams?

  Applications.

• 23:29David Hoffman?

  Applications, yeah. And these are what StarkX is bringing.

• 23:32Speaker 02

  Well, I want to stress this, these are production systems. So both severe and immutable are working in, uh, validity mode where they chose to have an off-chain data solution. StarkX employed as a start, uh, off-chain data solution, uh, because they wanted reasonable gas, uh, cost per, per mint. We are minting batches of 600,000 NFTs at sub 10 gas per mint. Once again, 10 gas, not 10,000 gas.

• 24:01Ryan Sean Adams?

  Wow, that's incredible. Yeah, and I think Bankless listeners will be familiar with what a volition is, because we've talked about that. We did an episode on modular blockchains that kind of talked about and touched on all of these differences. But it's basically modular blockchain, if you kind of break it up consensus, data, and then execution, right? You're talking about a volition uses not Ethereum for its data layer, uses Ethereum for its consensus layer, but it uses something else for its data layer. And a volition, of course, is when a chain had kind of has the choice, an application has the choice.

• 24:35Speaker 03

  Exactly.

• 24:36Ryan Sean Adams?

  I want to ask about this, because this, so this is a question. Incredible, extreme scalability, super scalability, as we said, is happening right now. Are there any trade-offs here? Refresh us on this with, we're still camping on StarkX right now. But what are the trade-offs here with StarkX from a decentralization perspective, Ellie? What would you say?

• 24:57Speaker 03

  Yeah, there are actually many, many trade-offs that are behind the scenes. I'll just mention a few of them. So if you want latency to be smaller, meaning, so what would entail? So right now, we're basically taking a very large number of transactions, and you need a very long time for them to accumulate. And then you're producing one single proof for that. So you need also a lot of computation to get that thing. So what you get is you're increasing latency, which is bad, but you're decreasing and minimizing amortized gas cost per transaction. Because the larger the batch, that's basically what the magic of Starks give you.

• 25:39Speaker 03

  The larger the batch, the lower the amortized cost per transaction will be. Okay, so one very clear trade-off is that as we grow the batch sizes, all things considered, latency grows, but amortized gas cost goes down. Another thing is that as you...

• 26:04Speaker 03

  Yeah, I think that's probably the most important trade off. There are other internal trade offs in our system. For instance, if we wanted to keep, if you kept the same batch size and latency and everything, but you actually wanted the on-chain proof to be smaller, you would pay with off-chain computation because there are various mathematical parameters you can play with there. And that's another trade off that we have at our disposal, you know, buy a bigger machine, have even more latency, and even for a fixed batch size, you can decrease that.

• 26:41Speaker 02

  There's an obvious trade off in the context of data availability. If you want to operate in roll up mode, your data is on-chain. It is no doubt more secure. It is no doubt more expensive.

• 26:56Speaker 02

  The beauty of the volition solution, which is coming online in a matter of weeks, is that this will, this decision will be handed off from the app to the user. And so the user can decide on a transaction by transaction basis, if they care enough for security to pay that premium of on-chain data.

• 27:18David Hoffman?

  Will it literally just be like a dropdown menu where it says, here's my transaction. I want it stored on-chain or I want it stored off-chain. It'll be just that simple?

• 27:27Ryan Sean Adams?

  And here are the costs.

• 27:28David Hoffman?

  Right. And it'll have two different costs associated with that?

• 27:30Speaker 02

  Yeah.

• 27:31David Hoffman?

  That's pretty, that's pretty fantastic.

• 27:33Speaker 02

  Indeed.

• 27:34Ryan Sean Adams?

  Ellie, can we go over that latency trade off again? So it's like, I kind of understand that, but like, what is the trade off that an individual user is making with latency? Right? It's like, if I have, if there's higher latency, how does that affect the, I guess, security position for an individual user? Does that just mean things get settled to Ethereum less frequently? So there's a longer window of time where they're potentially vulnerable?

• 28:01Speaker 03

  That's a terrific question. So currently on Stark X, this is very much abstracted away. And the risk of this window is taken by our customers, you know, DYDX, diversify, mutable, and so on. Now, what does it mean? It means that you as a user, and I'm assuming that many of your listeners have used some of these systems, DYDX. So they probably noticed that they have instant finality. And even if they want to basically go, you know, retrieve all their funds on chain, they get it very, very quickly. Now, this does not mean that the relevant Stark proofs happen with the same finality. But what is happening is something like this.

• 28:44Speaker 03

  DYDX, which gets these orders and settles them and matches them and calculates the positions, knows that once it settles something or did something, it basically now goes into this stack or queue, which is controlled by DYDX. And, you know, it will take some time for a batch to reach enough size for it to be convenient to put in a proof. And then for the proof to be generated and accepted on-chain. And currently for DYDX, for instance, with its very large proofs, this is a number of hours. But the user doesn't experience any of that. What's happening is that DYDX is essentially assuming whatever risks are associated with that.

• 29:28Speaker 03

  And I think they made a wise choice. The risks are relatively small because they know that, you know, that something that has been settled will appear in a proof, and that a proof will be accepted on-chain. And basically, they know what the next state of the... So it's a little bit like, I think, in traditional trading, a lot of, you know, settlement is T plus three. But a lot of exchanges will sort of assume the risk for three days. With a case of DYDX and other customers, it's a small number of hours. And again, it's in their control. For instance, DYDX could decide that it wants to close a batch every, whatever, two minutes. And then the proof would probably be much quicker to generate and would go on-chain much quicker.

• 30:13Speaker 03

  So maybe the latency from DYDX's side would not be hours, but minutes.

• 30:20Speaker 03

  But then the cost would be that the amortized gas cost per transaction would be higher because the amortization is over a smaller number. So most of our customers have chosen to basically crank the knob to maximal batch size, minimal amortized gas cost, but also maximal latency, which is a wise choice, we think.

• 30:42David Hoffman?

  But when you, when a bunch of more users come and deploy more transactions at a higher rate, you guys can actually increase the rate at which they settle to Ethereum without also increasing the per user gas costs, is that correct?

• 30:55Speaker 02

  For sure, and we can do that thanks to a remarkable technology called SHARP, which is, which stands for Shared Prover. And this is a technology that's in production today, serving at the moment, so rare and immutable and diversified. And hopefully, DYDX will be added soon to this system. And SHARP basically relies on the fact that all of these systems run on Cairo, or Zero Knowledge Proof programming language. And a Cairo program can describe any logic, any application logic that one wants to implement. It can also implement a sequence of application logic.

• 31:38Speaker 02

  And that sequence can be immutable's logic, followed by secure logic, followed by diversified's, and so on and so forth. So you can bundle all these transactions and all these completely disparate applications into a single proof, okay? And now this proof can be verified once on Ethereum, meaning all these applications can amortize their gas verification cost across sort of the Cairo ecosystem. Now imagine if Ryan is launching a new game, okay? And it has just a few users, he's just started out, not terribly sort of. Big yet. From day one, he's benefiting from the marginal cost of the entire Cairo ecosystem,

• 32:20Speaker 02

  the entire Sharp ecosystem. And so that that is a huge cost saver for low bandwidth applications.

• 32:26Ryan Sean Adams?

  That's fascinating because that creates such a virtuous cycle because now here I am with my, my, my small game here and like I'm incented to bring David's game in too, because I want him to share in the costs of the whole thing. And it also breeds some network effects too, I would assume, where everyone wants to kind of camp out in the, in the same location to spread these costs.

• 32:47Speaker 02

  We, we would assume for sure.

• 32:49Ryan Sean Adams?

  Yeah. So, okay. Can I just zoom out for a minute? Because I feel like part of, part of the narrative around the theorem about scaling these other things is like, let's talk a little bit about your approach to scalability, because I think this is fundamental for people to understand. It's, it's, it's very math heavy. Okay. We, we call this a, you know, a compression technology. And we did an episode with Justin Drake called Moon Math Cryptography. And basically, the, the whole thesis of the, the episode was, hey, these blockchains are, are trust machines. And the way to scale them up to get a, you know, a giant leap from one generation of the computer to the next is, is actually,

• 33:31Ryan Sean Adams?

  it's not just creating bigger blocks and, you know, bigger block sizes. It's actually cryptography. Right? That's the technology that scales these trust machines. Right? And so to me, it seems like, you know, stark and zero knowledge, this is a big ad advance in terms of cryptography technology and the key to all of these unlocks that you're talking about. So not asking you to get into the, you know, the moon math or the specifics, that would be probably definitely beyond David and I and beyond many in the audience. But can you just talk about this philosophy? Because this is a different path to scalability than I think we're seeing with a lot of alternative chains, which are increasing blockchain size,

• 34:13Ryan Sean Adams?

  like creating more complexity and difficulty in running validators. You guys are scaling, scaling with math and cryptography. Can you talk about that for a minute? Ellie, what would you say about that?

• 34:25Speaker 03

  Yeah, so um, um, I completely agree with Justin that blockchains are about being a trust machine. And I would add to that, that the reason we trust them currently is that

• 34:40Speaker 03

  everyone and anyone can be participate in validating that all transactions are good. And they can do so using very simple, off-the-shelf computational means. So just, just here's, here's a bad way to scale. What if we just 10x, whatever, the gas, you know, the gas limit of a block on Ethereum, or increase the block size on Bitcoin? So what would happen is that there are machines that could process 10x more, but it's probably not going to be my laptop, the one that I'm using to talk to you. And very quickly, you'll just

• 35:21Speaker 03

  have a very small system of very big computers that process at very high TPS. Some so-called blockchains are already doing that. And you know, whether they are decentralized and trustworthy is open to debate. Certainly, the conventional normie world has been doing this for a very long time. I'm sure that banks and you know, credit card companies have very big data centers. But blockchains don't want to do that. They want to continue and maintain inclusive accountability that allows each and every one of us to use our laptop to check that everything's okay. So what are we going to do? Well, there's this amazing math that

• 36:01Speaker 03

  started in the 1980s. And we're not going to describe how it works. But to quote from one of the very earliest papers in this field, I'm probably misquoting the exact thing. I can find it later. But it says that using that this technology, again, that was invented already in the 1980s, even a single week, a computer can monitor and track the computation done by a herd of supercomputing computers, even if they are run on faulty hardware by malicious parties. So it's a very cryptography is this amazing, powerful technology that allows even the weakest of computational devices to monitor and know with very high

• 36:46Speaker 03

  certainty that a huge computer run by an evil government even.

• 36:53Speaker 03

  Has been executing with integrity. And this is completely mind boggling. You know, the, the little man can basically check and know that some huge corporation monopoly or government is operating correctly because of the power of cryptography. Now, this was already known, some parts of it were known in the 1980s. What was not known was how to make this like really efficient and tractable. And that's, I think, where a lot of the inventions coming from, from Starkware really helped. And first of all, making it practical on today's computers. And more recently, making it available to programmers. I just read today someone that wrote, uh, you know, here's my experience of working on Starknet.

• 37:38Speaker 03

  And the very first sentence is, you do not need to know anything about the math of, of Starks. It's all been abstracted away. You just have a programming language and you write your code and you automate, you know, you press a button and so you just program as a developer, no math, no nothing. And you get this, uh, very low gas cost, uh, and the integrity offered by some magic that is behind the scenes.

• 38:05Ryan Sean Adams?

  Incredible. And it got, by the way, I just got to say, it's like cryptography is just what a gift to humanity, right? Of all of the technologies that we can unlock at this, um, juncture in humanity, we get this freedom technology that we've just unlocked. What a gift to humanity.

• 38:20Speaker 03

  It is.

• 38:21David Hoffman?

  So one part before we get into the conversation of Starknet, which we definitely want to go to next, next, um, it's, it's really fantastic that you guys have abstracted away all of this complex technology and just allowed people to build on with this coding language and, and APIs. The other side of that spectrum is like, well, if you guys are just making it super easy, you guys are centralizing all of the development onto your guys' cloud server. So there's this one cloud server that's doing all of this central processing for these many, many systems. So what happens in the case where the police force of the United, of the, of the world come and knock on your door and says, well, unplug the server. What happened, what happens in that case?

• 39:01Speaker 03

  Well, if it's

• 39:01Speaker 02

  Of course.

• 39:03Speaker 03

  If it happens before we decentralize, which will be in a small number of months, then yes, you know, maybe we'll just release everything before we go out with the police to some undisclosed location. But the the plan and the hope in our, you know, we certainly believe this will be the case, is that within a very small number of months, it won't be Starkware operating these things. The code will be available and many, many operators, including you and Ryan, will be running it, just like with Ethereum.

• 39:34David Hoffman?

  So kind of in that way where we talked about having the dropdown menu of where you deploy your data, might you have a dropdown menus like, oh, I want Starkware to run my server, or I want to run my server? Like, you guys probably will do both?

• 39:47Speaker 03

  Well, like Ethereum, like, you know, you don't get to choose your miner. There's some consensus thing that pick the next. So something like that. You will send it to some network, peer-to-peer network, and there'll be some some mechanisms by which a decentralized network of approvers and sequencers will pick it up and it will be accepted. You don't choose which one, but that's, I think that's probably even better.

• 40:08Speaker 02

  You're not you're not burdened with that. You just send your transactions to the network. Ethereum's fine.

• 40:13David Hoffman?

  Wait, so is this now what you guys are talking about right now? Is that StarkNet? Or is that something to? Okay, so we've actually gotten into the StarkNet. Okay, can you guys talk about the evolution from StarkX into StarkNet? How is that transition going to happen?

• 40:26Ryan Sean Adams?

  Yeah, and I'm actually, as you're speaking, I'm actually going to bring up this this diagram that I've seen in a lot of your documents that kind of illustrates it. And yeah, so for for people who can't see this on the podcast, there's three steps. And over the top, there's 2021 and 2022. And this is kind of the this Starkware roadmap, as I see it, and the StarkNet roadmap, to be more specific. The first step is planets. That's a single operators, single app rollups. The second step is constellations, single operators, multi-app rollups. These two steps are both in 2021. And then the third step in 2022 is

• 41:07Ryan Sean Adams?

  the universe, which is decentralized operators, moving from single operators to decentralized and multi-app rollups as well. So with that with that context, too, yeah, to David's question.

• 41:20Speaker 02

  So you know, Planets is essentially StarkX, right? These are single operators. So Rare, Immutable X, Diversify, DYDX. They're each running a single app rollup. Okay, and that's been in production. Three of these systems went live in April. The numbers we quoted earlier, you know, exceeding 50 million transactions, et cetera. This is across all these systems. Constellations is essentially what's coming in a few days' time. And that is a single operator in the context of the StarkNet system initially, much like the optimistic rollup playbook, Optimism, Arbitrum, we're following in the footsteps of our very talented colleagues in the rollup space,

• 42:04Speaker 02

  starting with a single node operated by us. It will be a multi-app rollup. This goes back to the composability point that I made earlier. So folks would be able to deploy their smart contracts on this, invoke one another's smart contracts, and you would have a single rollup with all these applications running on top of it. And Universe, which is coming next year, is the fully decentralized vision, where the operator, namely the sequencer improver functions, are fully decentralized, and all this bliss is shared across multiple applications, sharing estates, invoking one another, et cetera.

• 42:40David Hoffman?

  So on the step two, the Constellations, is this where Immutable and DYDX will actually find themselves on the same rollup?

• 42:49Speaker 02

  So that is a separate question of if and when the StarkX instances currently running choose to port and move over and run over StarkNet. Okay, but for Constellations, we're talking about, for example, teams like ZigZag, which is building a decentralized exchange that announced that they're going to be launching in a matter of days on StarkNet, and Influence.Earth, a wonderfully talented team building a game. These will all deploy on StarkNet and coexist there and be able to invoke one another.

• 43:33David Hoffman?

  So guys. Go ahead, David. Okay. So the conversation that we've been having in the space, the space has been having, and I know a number of people that are confused by this point. The ZK rollup bulls think that ZK rollup, EVM powered ZK rollups are going to be here in six months. The optimistic rollup bulls think that the development and like infrastructure needed to make ZK EVM rollups isn't going to be here for three to five years. What's going on? Like, what's true?

• 44:03Speaker 02

  So unfortunately, Vitalik published a post in early 2021 this year announcing that D K rollups are the long-term solution. They're coming in three to five years as we apologized already a few weeks ago. We're sort of ahead of schedule. So this tooling is here now. In fact, it's been on a public testnet since the middle of June. Supports general computation, supports composability. There's still a ton of work to be to be done. And it's being done as we speak. If folks hop on the Starknet Discord, they'll see a very thriving ecosystem

• 44:42Speaker 02

  of tooling and infrastructure that's being built in a decentralized fashion by dozens of developers outside of Starkware. Of course, Starkware itself is contributing a significant amount of talent and resources into this. But all this tooling is being built on a week-by-week basis and making tremendous progress in that respect. So we are able today to support essentially any application that wishes to build on top of Starknet. And in fact, what we're already seeing is people doing stuff that is just completely out of bounds on layer one. So to give a couple of examples, Gilte Giosa, just a brilliant programmer who's doing all these sort of physics simulations on Starknet.

• 45:25Speaker 02

  Now, some people said, you know, what is that good for? I think that's a sort of almost a silly question in the sense that the question is not what is it good for? The question is.

• 45:37Speaker 03

  Why aren't people registering the fact that any computation, any computation that one chooses to do is now suddenly within the breach of blockchain developers, whereas when we were limited to layer one, it was a very resource constrained environment?

• 45:55Ryan Sean Adams?

  So Yuri, I just want to just highlight the answer to that question is like, you're saying it's here now. You're saying general purpose ZK rollups are here now ahead of schedule. And that last phrase, ahead of schedule? It's like, that's not something we hear very often in crypto.

• 46:17Speaker 03

  Well, I, yeah, okay. Folks making those statements, consult with us. Now that's fine. But like, I mean, you know, making, it's well known that making predictions about the future is very hard. And if you're trying to predict something about a field of expertise, it would be prudent to go and ask some of the experts what they think. So, you know, you have two of the experts. It's not a prediction. You know, we have, how many? Four systems running, many of them for more than a year. We just saw the numbers. Now, with general computation on Ethereum, scaling it, as you mentioned, you know, two or three Ethereum's,

• 47:01Speaker 03

  each one of them today, not three to five years, not six months. This is something that happened in the past. Now, next week sometime, Starknet Alpha, it's already in testnet, but general computation, same sort of scale, available to everyone. Next time you want to make predictions about ZK rollups, you know, you can know, you know where to find us, DM us, check with us before making the prediction and.

• 47:33Speaker 03

  Yeah.

• 47:33Ryan Sean Adams?

  This is great. Look, this is incredible. You won't find a single person listening who will be disappointed that you just said that. Okay, we've just been, we feel like with crypto in terms of scalability, we've been disappointed too many times. Right. Which is like when, when, when teams talk about dates and the shipping, it always seems to slip, slip by. Now you guys are shipping. Yeah. So you guys are shipping. You have it. So can we talk about what then is shipping next week? Right? Like what exactly? So understand it's a general purpose version of StarkNet. Are there any applications that are launching? Is it going to be permissionless at launch? So can any team decide to start building on top of this?

• 48:16Ryan Sean Adams?

  Or is there going to be a phased rollout, some sort of whitelist? Yeah. Give us some more details on what's shipping next week.

• 48:24Speaker 03

  Sure. We'll link a post with a lot of disclaimers on like what is not in there. So there's a lot of things that were very

• 48:36Speaker 03

  meticulous in pointing out, you know, we don't want to make false statements. So we'll share, there's a lot that will be missing initially next week. Account abstraction won't be there. There should be RC20 tokens. There won't be any, it will be very hard to deal with fees. A lot of things will be missing. But there will be applications and in terms of deploying, anyone can submit a contract. Initially for computational purposes, so that, you know, the system might be buggy and not running as well as we want.

• 49:13Speaker 03

  We will do a whitelisting process, just like Arbitrum and Optimism and other L2s to ensure that, you know, our system is not crashing. And this will be removed later on.

• 49:28Speaker 03

  I'll find the link.

• 49:28Speaker 02

  I, I, I just, I want to just mention some of the, of the folks who are building and, and some of these will launch with the alpha, some in the, uh, weeks following the Starknet alpha launch. I want to reiterate what Ellie said. This is called alpha for a reason. Uh, and we, we strongly urge everyone to proceed with caution that, you know, when our training wheels are on, uh, we're all sort of figuring this out together. Uh, so I know we, we, we want sort of people to fully appreciate that fact. Uh, but some of these, sort of the ecosystem that's being built around Starknet. So we have the Nethermind team who are building the Warp

• 50:11Speaker 02

  Transphiler and the Voyager Block Explorer. Open Zeppelin, we're defining the standard contracts, uh, for Starknet. Last time they defined that, that was for this blockchain called Ethereum. The Aragon and Equilibrium teams who are building full nodes. Figma who are building API services. Argent, who are building, uh, tooling in a wallet, the tourist wallet. Ledger, who are building an application to go live soon. Uh, the Shard Labs team building tooling. The Yuki, uh, front end team, multiple.

• 50:49Speaker 02

  A whole bunch of applications, a whole bunch of applications. So just to name a few. Snapshot announced, uh, recently that Starkvote, we're building Starkvote together. Uh, so this is to make voting for DAOs, uh, once again to have opened to the general public and, uh, an exercise for the wealthy whales. Uh, there are multiple games being built. First and foremost, there is sort of the wonderful Parama, who was really one of the very first folks to start building on Starknet, building Dope Wars and another surprise, uh, sort of a game that will be announced very soon. The Proof of Humanity team, Guilty Gills, who

• 51:29Speaker 02

  we mentioned, the Influence team who are built, moving their, uh, wonderfully, uh, interesting game from the Layer One Ethereum. Rix, our clan.

• 51:42Speaker 03

  The Starknet.js framework by Sean Hanks Exchange, we mentioned the QSR team Maker has a core unit moving sort of Maker to deploy Maker on Starknet and hopefully one day Summiting die on Starknet. And rumor has it, just following crypto Twitter, that some core devs of AVE are looking into building an AVE version on Starknet. So as you can see, there is an awful lot going on. So I can't sort of give you exact dates of each one of these things, but we're talking weeks here for all these things to start blowing out.

• 52:19Ryan Sean Adams?

  This is fantastic. And I'm wondering if you could kind of project forward six months for us, right? It's like getting into a user's head, right? So all of those apps sound wonderful if they're deployed on Starknet, that would be fantastic. Also, other things that are important is wallet support, right? It's like, you know, the meta mass of the world, you mentioned Argent, which is fantastic. Layer two, sorry, Fiat on ramps as well are going to be super important. So if you project this forward, you know, six months to maybe even like nine months to 12 months, do you think all of those things will be in place? Like this will feel like basically a fast Ethereum type of experience? Or do you think it's going to realistically take a little bit longer?

• 53:00Speaker 03

  I'm an optimist. I think in six and definitely 12 months, all of that and much more. The main thing that look back and be surprised at is like, you know, some new classes of applications that cannot live on L1s because of the gas crunch there. And suddenly there's some new class of stuff that, you know, we can't predict right now. It's going to be there. The main thing that will happen within the next six months and certainly nine months and 12 months is a lot of standardization and a lot of ecosystem growth will be a whole bunch of standards for various things, you know, account abstraction,

• 53:42Speaker 03

  fee abstraction, interactions, bridges, ERC20s, ERC721s and so on. And people will be using them, but much more. Importantly, will be either past the decentralization point at Universe, where there will be multiple provers running permissionlessly.

• 54:02Speaker 03

  And we'll probably also have decentralized validity for data availability and volition. Initially, we'll start in rollup mode and will probably already be en route to various decentralized governance mechanisms and all they entail. So all of that will be, basically, our goal is, you know, Starkware currently is, you know, a company that is running all the Stark provers for these production systems. And within six, nine to 12 months, you'll see that dramatically changing. And we will not be running the majority of the provers and sequencers and data availability providers.

• 54:48David Hoffman?

  Well, Eli, that gets right into the part of the conversation I want to go next, which is that long-term horizon for what Starkware is as it relates to the rest of the ecosystem. And ZK Tech is actually a platform agnostic tech. And so we actually can talk about this tech outside of Ethereum. Those are the conversations I want to get to next. But first, we have to talk about some of these fantastic sponsors that make this show possible. Matcha, everyone's favorite DEX aggregator, has just launched an open beta for gasless trading. So if you're trading more than $5,000 in common ETH and wrapped Bitcoin pairs, then your gas fees on Matcha are free, and that's why you should be using Matcha. Matcha routes your orders across all the various DeFi exchanges on Ethereum,

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• 57:20David Hoffman?

  All right, guys, we are back with the Starkware team coming into the second half of the show, just tying off some loose ends with some of the things that are not yet talked about on the show. And the first one I want to talk about is the long-term prospects for Starkware, the company, because you guys are trying to decentralize your own products, which kind of means you're trying to decentralize yourselves. So what's the long-term future for you guys? What's the long-term future for Starkware?

• 57:44Speaker 03

  I want to take a swing of that.

• 57:45Speaker 02

  First of all, I would mention that we've decentralized successfully with our kids so far.

• 57:53Speaker 03

  I wanted to say that the number one objective is to keep on having as much fun and meaningful fun and keep on expanding this amazingly talented and capable team that will grow into an ecosystem. That's objective number one. But as David correctly pointed before the break, ZK Stark technology is much bigger than just a solution for scaling Ethereum. Initially, of course, it can and will be adopted by, we think, pretty much all blockchains that require scale.

• 58:37Speaker 03

  It's sort of just like... All over the world, you know, you'll see fiber optics everywhere because they, you know, scale bandwidth really well. And you'll see, uh, you know, cell, right, cellular phone technology everywhere because it's like scales, you know, communication or makes it easier. You will see ZK STARKS on all blockchains that still exist. And, and we Starkware would like to help that happen. Once we can put our focus, right? You can only do one thing at a time. Uh, but beyond that, we think that this technology that allows even, let's go back to the cryptography that allows even simple citizens to sort of hold and check

• 59:17Speaker 03

  the strongest of monopolies and governments. This is something that we all need, uh, today. So we think it will permeate from that into the larger world. Now, that's about the technology. So there'll be a whole bunch, there is already a whole bunch of other teams that are driving this forward with STARKS. And we're very proud to see them and help them. You know, there's the Winterfell and, and Midan effort that is, is now incorporated into Polygon. And we very much support this effort. There are some other teams that we know are dabbling with STARKS but have not gone, you know, public with that information. And we support

• 59:58Speaker 03

  them as well. Uh, so this will be, there will be multiple ones. Now, for Starkware, we hope like, you know, what are we going to do after this decentralization? So like two very possible routes after like, let's say decentralizing. One is, it's very plausible that some of those, uh, conventional, um, institutions and corporations and so on might want something that is their standalone version of, of Stark technology. And we can help with that. And the second thing is hardware. Uh, as more and more approvers and more scale is demanded, uh, we might, uh, want to try and help with that. So there's at least two opportunities.

• 1:00:39Ryan Sean Adams?

  Well, Ellie, I want to ask you a question here about decentralization. So, so some other, I guess, uh, la- layer two's answer to this partially, uh, and even layer one's is about, you know, community ownership as well, right? Some sort of like tokenization, some sort of form of community ownership, you know, whether that takes the form of a governance token or something like that. How important is, is community ownership to your, uh, roadmap to decentralization? What would you say about that?

• 1:01:09Speaker 03

  Very important, but on the specific question of token, we hold to our position of no comment.

• 1:01:17Ryan Sean Adams?

  Gotcha. That makes sense. Can you talk a little bit about, like you mentioned this with Ethereum, right? So, and you also mentioned that the, this technology is agnostic as well. But it seems like, as David and I have talked about this, it seems like those chains that have embraced this more modular design, this modular thesis, rather than, you know, maybe the contrast is a monolithic, where you're doing execution and consensus and data availability, all on the same platform. The more modular chains will be probably first to pick up this technology. Ethereum is definitely with a rollup centric roadmap, definitely adopted that. Near is maybe another one. Tezos is maybe a third.

• 1:01:59Ryan Sean Adams?

  Do you think that the, the more modular chains will be first to adopt this sort of technology? And I guess, do you have any thoughts or comments on where this might leave the rest of the blockchain space? Like the more monolithic designs, do you think they eventually capitulate and sort of become rollup centric? And more modular design oriented? Any longer term thoughts here?

• 1:02:24Speaker 03

  I, it's, it's, this is something that's hard for me to predict for two reasons. One is that we, our focus is just very limited on this one thing and Starknet. So it's very hard to, I mean, we did get approached a bunch of times by various L1s, you know, asking if we want to deploy. And we gave the same, we need to focus answer. And then I would say, if I, if I had to give an answer, I would say, just like I said, with like fiber optics or cellular technology, STARKs are going to be, anything that still lives in, you know, five years in its blockchain, will, will want to use, just like, you know, any communication network in a modern country today probably has some fiber optics.

• 1:03:09Speaker 03

  So I would say, any blockchain that is massively used would also want to use ZK STARKs, because they, they just offer you this asymmetry, right? Having one huge computer do a whole lot of work and everyone else trusting the outcome, even if that node doesn't have to be trusted. That's a very powerful technology that, that I think all blockchains are going to want.

• 1:03:33Ryan Sean Adams?

  One subject we haven't touched upon yet is is privacy. Are there any privacy ties in terms of what you guys are doing?

• 1:03:42Speaker 03

  Well, I mean, we we are Starkware and all of it is like Stark and we're sort of omitting the ZK, which is part of, you know, the whole line of stuff that we invented.

• 1:03:53Ryan Sean Adams?

  Right.

• 1:03:55Speaker 03

  And we even did a little bit, there's some open source stuff that is already, you know, there's a signature, post quantum secure signature that we developed. It's also open source. And so, yes, for sure, at some point, we will add privacy and ZK to, that's another thing about focusing, right? We, we, there's probably demand for that. We just can't, you know, defocus right now. So, but yeah, there's tremendous opportunity and demand there. The scale with the privacy is, you're right. We sort of neglected it recently, just for focusing purposes.

• 1:04:37Ryan Sean Adams?

  Hey, David, you're muted.

• 1:04:38David Hoffman?

  Thank you. One thing I want to ask about is the economic sustainability of Starkware, the business. Like, what's the actual business model there? How do you guys make money?

• 1:04:48Speaker 02

  Sure. So at the moment, StarkX, these are commercial agreements that we have with our customers that generate revenue. In StarkNet, we hope to be one of the participants in this open network and provide services to the network and hopefully generate revenue by doing so. As I mentioned, there are other venues to consider beyond that. For example, hardware, we're building applications for the many normies we expect will show up and want to benefit from this beautiful decentralized, trustless world. So, you know, those are all directions that we're actively exploring and and working on.

• 1:05:29David Hoffman?

  Right. So with the the commercial agreements with the StarkX chains, like Immutable, DYDX, you're, if you're making money off these things, it must be coming off of the transaction fees of the network, right? I don't understand how it would be anything else. How, how, how are these agreements made with things like teams like DYDX and Immutable? And how does, can you just illustrate the the value flow from the people that transact on these things to how it actually becomes economically sustainable for Starkware?

• 1:06:00Speaker 02

  Sure. So as you know, as just going to say, going back to the D Y D X numbers, if a D Y D X transaction on layer one, if such a layer one existed that could support their their existing throughput, if that's at 600,000 gas and and on our system, they end up spending less than 500 gas, well, there's a huge pie here. Uh, and and you know, everyone could be made exceedingly happy. The customer, D Y D X, Starkware. So, um, you know, there's, there's a lot of value to be had.

• 1:06:35David Hoffman?

  Is it just as simple as, uh, say I'm in, uh, an immutable user, I'm on immutable or D Y D X and then uh, I make a transaction, the system charges me a dollar to transact on that, uh, on that layer two and then that's split up between you and D Y D X or you and immutable?

• 1:06:54Speaker 02

  I'll give an example. DeFi pooling is this beautiful service that Seller is going live with powered by Starkex. And DeFi pooling caters to the long tail of DeFi participants who are priced out of the market on Ethereum layer one today. Okay. They want to transact on Aave, on Compound, whatever it is. Layer one transactions are absurdly expensive. Okay. We're talking about people who want to put a few hundred or a few thousand dollars to work and end up spending tens, maybe hundreds of dollars in transaction fees per transaction. DeFi pooling basically allows them to move their assets to layer two, pull them together like carpooling services. And those carpool services then initiate transactions, single layer one transactions

• 1:07:38Speaker 02

  that go from that layer two system onto layer one. So they pool together 100 users or 1,000 users that all go combined in a trustless fashion, say to an, uh, initiate an Aave transaction. So a single layer one transaction now is split across.

• 1:07:59Speaker 02

  So they can pay this service. They spend far less on gas. Ethereum is far less burdened with all these transactions. Aave is getting all this action that would have been sort of just, you know, left out of the market. Seller is making money. Hopefully Starkware is making money. Everyone is better off or the market is more efficient, right? The pie is bigger. The pie is actually bigger.

• 1:08:25David Hoffman?

  Right. Yeah, absolutely. The cool thing about all these rollups, it adds just economic activity to the greater pie, right? Growing the pie. So the idea for Starkware is that, you know, if we can 2X the pie, you take like a 5% of the extra growth or something like that. That's the business model?

• 1:08:45Speaker 02

  Oh, well, 2KX the pie, but yeah.

• 1:08:48David Hoffman?

  Yeah. Is there an actual like percentage that you guys charge or how do you guys actually structure your fees?

• 1:08:56Speaker 02

  The fees are sort of a commercial agreements that would be put in place with our customers and that handles sort of the revenue side of things, yeah.

• 1:09:08David Hoffman?

  Is there each individual agreement with each individual chain is its own agreement? Or are they kind of just like similar agreements, similar structures?

• 1:09:14Speaker 02

  No, no, they're actually very similar in structure. It's not identical, actually.

• 1:09:19David Hoffman?

  Okay.

• 1:09:20Speaker 03

  I want to say something about actually like a potential, you know, business model just around fees on Starknet for, and now not for Starkware, just for anyone running operators. So the argument goes like this. You know, currently, take DOIDX as an example, right? We are consuming much less than 1% of the network, but offering scale that is like roughly 5X or 10X more than that. So there's like a 1,000X factor or 1,000X reduction in cost between doing a transaction on L1 and doing it on our L2.

• 1:09:59Speaker 03

  So now, what if the fee charged by such an L2 would be, let's say, 1/10th the fee of an L2? So if you run the numbers, first of all, users will be extremely happy because they're paying just one tenth. But this leaves huge profit margins for the network, right? And if you take into account that, for instance, on Ethereum today, the daily fees are around like sixty million dollars. And you're taking the, you know, you're consuming one percent of the network. But you're charging, let's say, in total, ten X that while doing a thousand X more.

• 1:10:41Speaker 03

  Everyone's happy and the actual, you know, revenue per day for the operators is something around. If I got the numbers right, like six million dollars per day just in fees and most of it will be profit and the users are happy. Now, I'm not saying this will be the main or only business model and it's not something, you know, we, we, we explored in depth. But I'm saying just by the fact that there's this huge amount of fees being spent today on Ethereum. Along with the amazing, you know, thousand X scale factor that, that our L two will bring starting next week. There's a very lucrative business model that sits just even there.

• 1:11:24David Hoffman?

  Fantastic. That's a, that's fantastic color. And guys, I want to thank you for your time in helping us unpack. What is this really, really complicated technology in very easily to digestible ways? I want to zoom all the way back out for this last question and something that really just fascinates me personally is like the, the relationships between humans and code, right? There's a, there's a, there's a link here and crypto, as me and Ryan often say, crypto is a political revolution. It's not left or right, but it is anti authoritarian, right? And so when you guys are looking at Starkware and looking at the code that you build. Do you see any sort of like values alignment? Like what, how does Starkware, what you guys are building at Starkware align with the values that you guys have?

• 1:12:08Speaker 02

  So I, yeah, I can, I can share my personal perspective. So I. You know, so looking back over the past few decades, technology is just technology, right? It can do all sorts of things, good, good things and bad things. And often the same technology can be put to good use and malicious use. I think that a lot of the things that we're building are inherently for the better in the sense that they are inherently supportive of shifting the power of balance away from centralized entities into the hands of individuals in all sorts of very meaningful ways that Eli alluded to earlier. And, uh, and that is something we care for deeply.

• 1:12:49Speaker 02

  And I, and I think it's something that a lot of people all over the world are concerned about. We know with these past few years and they should be concerned about. And having the technology that can support those values and do so at scale, meaning not as a thought experiment, not as a little sort of exercise in independence, but something that can actually serve their daily needs, yet protect those rights and, uh, and privileges is something we care for deeply.

• 1:13:20Speaker 03

  I want to add two, two different thoughts. One, I think, um, the values that we have at Stark where I think the first things that jump to mind that I think distinguishes us are like, uh, meritocracy and, uh, excellence, um, you know, we have like audit teams looking at our code and saying, you know, we haven't seen many code bases that are, you mentioned code, like that are as professional and clean, even though this is like very, very, uh, moon math stuff and very easy to get wrong. So I think we have, um, I mean, our whole team, right?

• 1:13:59Speaker 03

  It's, it's, uh, um, yeah, both Uli and I don't really code, but, uh,

• 1:14:06Speaker 02

  Fortunately for all of you guys.

• 1:14:10Speaker 03

  I don't think the audits would have looked the same way had we dabbled in that. But, um, like this very, uh, we're very proud of this, um, you know, excellence, professionalism and meritocracy when it comes to code, but also, you know, to math and science and innovation. The second thing I would say is that, uh, we do, we are having fun, but we do recognize that through this, um, You know, opportunity offered by inventing a technology that we believe will transform the world. We understand that there's immense responsibility on our collective shoulders.

• 1:14:51Speaker 03

  We can try to get it right for humanity and we could mess it up. And I think so far, we've really, really tried to focus on making decisions that are correct, not only for our own personal, you know, short-term goals. For instance, I'll give one example. We founded the company in 2017. Everyone was ICO-ing. Everyone said, guys, you know, just do an ICO. At the time, we raised 6 million. People were raising, you know, 10x and 100x on that with technology or with promises that were not as, you know, impressive as ours.

• 1:15:34Speaker 03

  So we didn't do that because we said it's not right for, uh, for, you know, the state of the technology. And we went first for building very specific applications, handcrafted, like StarkX is very limited. It does like a few things. Um, so we're like treading with a lot of responsibility and recognition that we are lucky to have this power to, uh, you know, unleash this technological revolution. And we hope we'll, uh, make decisions that are good for all of humanity. But, uh, you know, who knows?

• 1:16:15Ryan Sean Adams?

  Eli Yuri, it's been an absolute pleasure. I think that's the perfect way to end it. Tremendous amount of responsibility on our shoulders being early to this movement. We completely agree. It's part of the, the Bankless Nation. It's part of the Bankless Journey. We appreciate so much what you guys are doing in the scalability space and we are massively excited about StarkNet and, uh, what you're delivering both next week and in the weeks to come. So thanks for joining us today.

• 1:16:42Speaker 02

  Thank you guys.

• 1:16:43Speaker 03

  It'll be a fun ride.

• 1:16:44Ryan Sean Adams?

  Absolutely. Bankless listeners, I hope you enjoyed this. I hope you learned a bit more about one of the Premier Layer 2 technologies coming. I certainly learned it was even, I knew it was close, but it was even closer than I thought at the end of this podcast. So, once again, another Bankless podcast. I am bullish. Some action items for you. If you are a builder, if you're interested in developing on Starknet and this technology, make sure you check out the show notes. Join the Starkware Discord service where you'll find a lot of information about this and fellow builders who you can build alongside with. Also, we'll include a link to the post that was mentioned earlier about the Starknet Alpha release, and I expect to see some posts next week about the mainnet release too.

• 1:17:29Ryan Sean Adams?

  Very excited about that. Risks and disclaimers, of course. None of this has been financial advice. Maybe this is scalability advice, though. ETH is risky. DeFi is risky. Crypto is risky. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:17:48David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our Alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where

• 1:18:32David Hoffman?

  we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless nation.