Special: Solana (with CEO Anatoly Yakovenko)

We sit down with the hottest new protocol layer in crypto today: Solana, and its cofounder Anatoly Yakovenko, who is the CEO of Solana Labs. If you listened to our Ethereum episode or follow crypto even at a cursory level, you've likely heard of Solana and its ability to scale transactions thousands of times higher than Ethereum. And, unlike other so-called "ETH killers", Solana is doing so in production today with large and real applications. We dive into the project's history coming out of the 2017-18 crypto winter, how it works and what's ahead now that they've recently raised $314m (yes that is Pi $million) from a16z and Polychain Capital, with their native SOL tokens currently trading at a market cap around $10B (!). Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Topics covered: Anatoly's background as a wireless engineer at Qualcomm, and how it led to a fundamental discovery of how to improve crypto system scalabilitySolana's role in the crypto protocol ecosystem and why there's a need for it (and why it can and will exist) alongside Ethereum versus "killing" itStarting Solana during the 2017-18 crypto winter, and how it forced them to focus just on building and shipping versus raising and posturingBootstrapping adoption with the mining community (Solana's "true believers") and the early and ardent support they providedWhere Solana falls on the Vitalik "Scalability - Security - Decentralization" trilemma, and why Solana's superpower of maintaining composability is so attractiveLinks: Solana: https://solana.com https://solana.com/Solana on Twitter: https://twitter.com/solanaSolana Hackathon submissions: https://airtable.com/shriNT26cAZeDJagn/tbl5fZ4E1BBbVAttWFTX: https://ftx.us https://ftx.us/Audius: https://audius.co https://audius.co/ Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

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

• 0:03David Rosenthal?

  Yeah. Should we do it? Just dive in? Yeah, let's do it.

• 0:25Ben Gilbert?

  Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

• 0:40David Rosenthal?

  And I'm David Rosenthal, and I am an angel investor based in San Francisco.

• 0:45Ben Gilbert?

  And we are your hosts. All right, David, on our last episode, we covered the history of Ethereum, what it is, and of course, we speculated on its future. But a big outstanding point at the end of the episode was with all this excitement around DeFi and NFTs and decentralized apps, and I mean, this decentralized world computer has gotten really slow and really expensive.

• 1:11David Rosenthal?

  It's really slow.

• 1:12Ben Gilbert?

  Yeah.

• 1:13David Rosenthal?

  Yes, it is.

• 1:15Ben Gilbert?

  Sure, the Ethereum community has plans for how they're going to fix this. But listeners, as many of you heard, there are other credible blockchains out there to build applications on top of.

• 1:26David Rosenthal?

  I was trying to do some DeFi stuff the other day, no joke, and like, gas fees were 50, 60 bucks. It was crazy.

• 1:34Ben Gilbert?

  Brutal. That's like, close to an all time high. It's wild. Well, one credible alternative blockchain that David and I have been particularly interested in is Solana. So on today's episode, we are joined by Anatoly Yakovenko, the founder and CEO of Solana Labs. Solana Labs is the company that spearheads the development of the Solana blockchain. And just to set some context, they recently raised $314 million, led by Andreessen Horowitz and Poly Chain Capital. Yes, that is Pi 100 million dollars, and they have a market cap of all their coins right now, right around $10 billion.

• 2:13David Rosenthal?

  Both so fun and so crazy. Couple of years ago, if you were gonna say, like, make a joke, "Oh, we're raising Pi million dollars," you'd raise like $3.14 million, or maybe $31.4 million. Wow, just the scale of all this is incredible.

• 2:26Ben Gilbert?

  Yeah, it's wild. Well, if you are new here, you should join us in the Acquired Slack. And if you like this episode, you will love the community discussing crypto in our digital assets channel. You can join at acquired.fm/slash/Slack. And thank you to listener and community member Austin Fedra, not only for setting up that channel and curating that community and keeping it awesome, but for his work at Solana and introducing us to Anatoly to make this episode happen. So thanks so much to Austin.

• 2:55David Rosenthal?

  Huge shout out.

• 2:57Ben Gilbert?

  All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI-first world, that doesn't hold up anymore.

• 3:16David Rosenthal?

  Yep. Your risk surface changes every week now. A vendor turns on an AI feature or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote "shadow AI" running with no security review at all.

• 3:37Ben Gilbert?

  Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 3:59David Rosenthal?

  In half, which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 4:17Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off. And just tell them that Ben and David sent you. Well, listeners, as you know, this is not investment advice. We may hold, I think we even will talk about on the interview with Anatoly, that we do hold Solana. And yeah, you should make your own independent research decisions before buying anything, whether

• 5:00Ben Gilbert?

  it's a cryptocurrency or a stock or anything like that. And the show is for entertainment and informational purposes only. Now onto our conversation with Anatoly Yakovenko, the founder and CEO of Solana.

• 5:13David Rosenthal?

  Okay, welcome Anatoly. We are so excited to have you here with us for so many reasons. We've been following Solana for a little bit now. Thanks mostly to Austin Federer in the Acquired Community, founder of the Digital Assets channel in the Acquired Slack, which is a wonderful and vibrant community in its own right that's developing. And Austin, of course, works with you guys at Solana now. You had some huge news last week where you raised pie hundred million dollars from Entrees and Horowitz and Polychain Capital, which we definitely want to get the story behind that. And I'm excited to tell your whole story here to the Acquired Community.

• 5:59David Rosenthal?

  Awesome. Yeah, great to be here. Before we get into what Solana is, why it exists, what problems it's solving, why there's a need for other layer one sort of base layer protocols out there in crypto besides Ethereum, maybe to start, this round is obviously enormous. Lots of demand. You guys are doing wonderfully well. You know, you said that your path is not quite like a lot of other crypto projects who raise tons and tons of money out of the gate. Maybe can you rewind and tell us a little bit about how you ended up sort of shipping first and what it was like when you first tried to raise capital and why you decided to take this path?

• 6:42Speaker 02

  Well, I wish it was like just active decisions versus just trying to survive. The project was started kind of end of 2017, started 2018. And that was really like that right peak of that last boom cycle. But the crash that followed was really fast and brutal. And this is right when we were trying to raise. And at that time, like the funds that were committed to us like blew up in front of our eyes. And like, sorry, guys, we can't, we can't fund this.

• 7:13David Rosenthal?

  With these dedicated crypto funds?

• 7:16Speaker 02

  Yeah, yeah. And not, nothing to like, you know, like not, not to blame the people involved or anything like that. It was just such a volatile time in the crypto industry. The things went from like extremely promising, like everything's going to be magic and crypto in the span of a year to, oh, my God, the world is falling apart. So yeah, we were born out of that fire. And we had enough funds to get a ridiculously amazing team together. I was able to pull a lot of like kind of principal engineer level folks, senior directors at a Qualcomm that were just itching to go build the next big thing.

• 7:57Speaker 02

  The true builders there that, that were like super experienced and it worked with me for over a decade. Like all jumped ship. That was really surprising to me, too. They're like, as soon as I asked, they're like, yeah, where do I sign up?

• 8:08David Rosenthal?

  You were like Eric Yuan, uh, building Zoom, uh, out of WebEx.

• 8:11Speaker 02

  Yeah, exactly. Yeah, it, it, that was, that was really awesome and a huge kind of like, a huge confidence boost in, in the design of what we're doing was right because there was a huge amount of technical risk. Right? I came up with this idea, proof of history. Nobody else was working on it. There were a few academics defining verifiable delay functions, but it was really like out there. You know, everybody else in the industry was going a totally different direction. So that made it hard for us to get a lot of commitments too, from investors who were more, much more readily eager to invest in somebody with like huge pedigree out of a, you know, MIT or whatever, like an Ivy League.

• 8:53Ben Gilbert?

  And Anatoly, I want to put a pin as we dive deeper down the crypto rabbit hole here. We have a lot of sort of non crypto native audience of sort of startup native audience. So I want to highlight, you just used the term proof of history. We're going to put a pin in that and come back to it later because it's one of the things that makes a lot of special. But I'm going to do the work of highlighting a, hey, I'm going to force you to define that here at some point because a lot of us are very new to this.

• 9:17Speaker 02

  Yeah, totally. So we got the team together and we had like decent runway, like I think around two years. And we thought, oh, this is going to be done in a year. This is easy. We'll just ship it. It actually took a little longer, like two and a half years to do it and cost more. We had to hire more folks than we expected. And we did a couple of raises after that, but we're always a little bit starving. Under two years, under 18 months of runway at any given time, bear market, trying to ship this thing as fast as we could. So we could get to the next stage, which is let's get users, let's build the use case they're always dreaming of. Let's actually get to the adoption stage.

• 9:57David Rosenthal?

  Yeah, it feels like when you were first starting, it sounds like you're in this window, right? Where like the crypto native investors, either their funds blew up or they just were focused on other technical paradigms. And then the non crypto native investors were probably like, this stuff is radioactive. We're not touching crypto at all right now, right?

• 10:17Speaker 02

  For the most part, except for the few amazing folks like Foundation, like Slow Ventures, like MultiCoin, that that actually backed us and stuck with us through every raise. And we also in that process discovered this amazing community of validators, like the people actually that are running the nodes that are crypto AGs that have been doing mining, involved in Cosmos and every other network. And it became clear like in a span of a year that like every round, these guys always came in first without asking any questions. They're like, yeah, let's do this. Like you guys need more funding, let's do this. And that was just awesome.

• 10:54David Rosenthal?

  Because they were validators on the Ethereum network and seeing the problems there.

• 10:59Speaker 02

  It's just folks that are like super deep in the space at a technical level. And a lot of them would just run every network, every cool piece of tech that anybody would try to ship. They're just kind of true believers. And we found that community to be immensely supportive and really kind of like helping us out financially and really being our first customers. These are the first folks that we shipped software to that ran it. They saw how the sausage is made, that failed. They dealt with every failure and so they saw it. So that was really amazing to having built that part.

• 11:34David Rosenthal?

  That's cool. Okay, maybe so now with this kind of level set and also the level set, just so our listeners get a sense as we're talking, the total market cap of the Solana Protocol is about $10 billion. So you have come a long way from those days. Let's rewind. How did you get into crypto and blockchains? I get the sense that you weren't, you know, 2009, 2010, running your own nodes, true believer from back then. Or maybe I'm wrong.

• 12:01Speaker 02

  I mean, I heard of Bitcoin right around that time during the, you know, 2008 crash. Definitely is what kind of opened me up to it. And I mined it a little bit on the CPU, lost those keys. I thought about like.

• 12:17Ben Gilbert?

  Like everyone.

• 12:17Speaker 02

  Yeah, like what if I like wrote a GPU miner? Somebody shipped that like as I was thinking about it. I was like, well, maybe I can do FPGAs. That came out like a month later. And then I remember this was my first true crypto experience. There was a company that was building ASICs, like CPU dedicated ASICs, like dedicated semiconductors that they designed solely for crypto mining. And I wanted to buy some, but they built them and delayed the actual shipping them to customers for six months. So they could mine with them first.

• 12:51David Rosenthal?

  Wow, talk about front running your customers.

• 12:54Speaker 02

  It was beautiful example of what crypto is, which is it's totally Wild West peer to peer system where anything goes like true to its internet core. And you have to like, understand that.

• 13:10Speaker 02

  But who who is on the other side of this conversation on the internet, right? Like if you can't verify their keys, right? If it's not software that you can verify, then you can't assume or trust anything. So Anatoly, you were at Qualcomm, though, right through all this, which is going to become very important here in a minute. Yeah. What what were you working on there? At that time, 2008, shoot, I was still working on Brew, which is this flip phone operating system that ran like, you know, that was the first mobile app store. And if you're a programmer, this was written in C with C++ compatible virtual tables that we wrote out by hand.

• 13:52Speaker 02

  So you literally like typed, I built the sophisticated macro language to generate these. It like really made me an engineer, like that period of like working on these like dinky 16 bit ARM chips with like barely any memory. Like you had to like really think about every optimization, everything that you're doing as like close to the hardware as you could. That's great.

• 14:19Ben Gilbert?

  You teed up exactly the question that I want to ask when you called out scalability. And so in a pre Solana world, what are the problems? Why is it that all the existing energy and heat, and I'm using those metaphorically in this sense, and attention with the existing systems, you know, Bitcoin, Ethereum, a lot of the altcoins that were being developed in the mid 2010s? Like, what are the real problems?

• 14:46Speaker 02

  At the technical level?

• 14:47Ben Gilbert?

  Yeah, well, let's let's zoom in on scalability and cost.

• 14:50Speaker 02

  Yeah, so systems based on proof of work have this wonderful property that when you receive all of the data, you can verify its thermodynamic security from its starting point to its final point. And you can do so in this black box without talking to anyone else. And this objective, objectively measurable kind of security is something that is really unique to proof of work. And That's what gives Bitcoin its kind of claim on store value. You know, it's still not proven yet, but that that's really the strong argument there. Can you have store value? You need some objective way to measure this. If you think about gold, I can literally verify that this is the gold element and then

• 15:32Speaker 02

  measure how much, how much of it exists and then compute that I have X amount of it out of the known universe. So these systems depend on this property that I can get the entire data set and verify it from scratch. And if you put that limit on it, it means that the underlying chain just can't grow that quickly. It has to be somewhat limited in terms of the amount of data that gets put into the system. And aggressively, maybe you can double that size every two years, but people are very cautious about that because they're now sitting in a $1 trillion asset and they're afraid that if we do increase the throughput of Bitcoin or something like that, or the gas

• 16:14Speaker 02

  capacity of Ethereum, that it's going to grow so quickly that it will become unusable from, from that perspective and lose its kind of magic power.

• 16:24Ben Gilbert?

  Magic being the like really hardcore verifiability of all of the energy that it took to create the blockchain so far.

• 16:31Speaker 02

  Yeah, not just the energy, but also that the energy went into something that is consistent from its root point from day zero, that there was no invalid state transitions and nobody monkeyed with the, with the amount of ETH or Bitcoin in existence. So that, that piece of it, I think is really interesting. It's like a meme, it's a phenomenon, a religion, right?

• 16:54David Rosenthal?

  These are like what you're talking about for folks who aren't as deep in the crypto community, these are like religious concepts.

• 17:00Speaker 02

  Yeah, yeah. So proof of stake is something that Vitalik kind of started publishing about like pretty early on, I think almost at this right after Ethereum, super early on, right? So this is not a new concept, but the idea with proof of stake is that instead of using a thermodynamic energy, you have a bunch of keys that represent some value in the native token itself. And based on that way. Rating of that, those keys, you can then verify the consistency of the chain. But because that token, right, is monopoly money, right? It's virtually manufactured inside this computer, right? It's not real. It doesn't have the thermodynamic weight to it. So it's something that you have to establish this first trust.

• 17:45Speaker 02

  I have to find its first root of trust, kind of like my browser has VeriSign as its root of trust. And then everything's derived from that. And that first establishing a trust is this hard problem of me asking the world, hey, am I talking to the right network? Am I in the right network? And that, that first thing is, is not strongly objective. It's weakly subjective. And once you kind of bite that like apple of weak subjectivity.

• 18:14David Rosenthal?

  You might as well go all the way and

• 18:16Speaker 02

  Right, so.

• 18:17David Rosenthal?

  Start farming the orchard.

• 18:18Speaker 02

  Exactly. So Solana, our design is like, to me, this was obvious. Okay, VeriSign root certificate, this is how the internet is built. Trust and first use is a standard security model. You verify once, then once you establish the session, it just continues running. If you go all in, then you can just start optimizing this thing to the limit. And this is kind of our philosophy is that like, break away from all of these like chains of proof of work. This idea that you need this like full objective verification and just kind of go all in. Make the fastest possible communications network. And then what we're thinking about isn't so much about like store of value or global money.

• 19:03Speaker 02

  It's more, do we have the most censorship resistant messaging network? This way of passing information throughout the world that guarantees that any two parties connecting to this network will always receive their messages, they can always synchronize, they can always have fair access, that nobody can get ahead of them. And that's more of a. Financial system, it's more of a marketplace. It's literally what NASDAQ provides you when you like jump through all the hoops and get your machine set up in the same room, server room as NASDAQ runs their markets. They literally give you an ethernet cable that's exactly the same length as everyone else's. So your information gets to the markets at the same speed as everyone else. That's censorship resistant.

• 19:47Speaker 02

  So we kind of like bought into this idea, and this is probably because Qualcomm is a communication company. I always kind of think of these like old school terms of radio, Shannon Hartley Ethereum. Like, how do we, like, this is just information passing between people, right?

• 20:03David Rosenthal?

  I was gonna say it's the same thing when, you know, I dial Ben on my, on my cellphone and like, I'm pretty sure I'm gonna get connected to Ben, no matter how many people are around me.

• 20:12Speaker 02

  Right, exactly.

• 20:14Ben Gilbert?

  All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part.

• 20:28David Rosenthal?

  Yeah, the hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like, the risks are real.

• 20:42Ben Gilbert?

  Exactly, and the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI Control Tower.

• 20:52David Rosenthal?

  Yep, AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible and secure in one place.

• 21:10Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 21:26David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 21:43Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 21:52David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you.

• 22:03Ben Gilbert?

  Anatoly, can I ask you to define a couple of terms? I've heard these terms settlement layer and execution layer. Can you go into that concept a little bit and explain where Solana could fit in?

• 22:13Speaker 02

  Yeah, so settlement, I can't name you a single company in the world of the settlement. They were briefly in the spotlight during this like GameStox thing. But basically this is what like is the final state of the trade is when they look at like the list of who owns what and they change the values around. And this is what Bitcoin does, right? I send you Bitcoin, an hour later, everyone in the world considers that settled.

• 22:36Ben Gilbert?

  It's slow, it's official, it's like the very bottom layer.

• 22:40Speaker 02

  Exactly, but it needs to be extremely secure. And that security in the traditional world has been commoditized to the level that the company that does it, there's only one of them and they make some small percentage of like the things that they settle. But all the fun stuff, derivatives, options, spot markets, futures, perpetuals, whatever sophisticated financial thing that you can imagine, that runs at an exchange, which does execution and clearing. Some of them do clearing, but just think of it as like one layer, not to make it too complicated. And this is where we're talking about physics limits of speed of light and Shannon Hartley theorem of how much information can we observe in the world,

• 23:23Speaker 02

  compress it into a price for a particular asset and then throw that price into a market and have that be information that's then propagated to the rest of the world that can then like work in this feedback loop. And those limits are like, there's theoretical speed of light limits on how fast this thing could do, like how big of a marketplace can we build for the entire world? And that's in itself a really interesting hard problem that has nothing to do with settlement.

• 23:52Ben Gilbert?

  Right, right. And so would it be accurate to say that like Ethereum is sort of supposed to be or could be this interesting execution layer, but actually it's really slow because it's still proof of work based?

• 24:07Speaker 02

  Exactly. So Ethereum is like.

• 24:11Speaker 02

  Bitcoin is fully like, we don't want anything to do with anything that even potentially touches the store of value thermodynamic energy security. We want to be the simplest thing that's easy to verify, easy for an engineer like in college to build a client for. That's cool, right? Like, that's the simplest form of money, maybe. That's really what they're going for. Ethereum is trying to be in the middle where you can do some of that, at least in its current version, in the ETH one. You have proof of work, you have an execution environment which is secure but slow, and you can do like kind of sophisticated contracts, constant function market makers. Those constraints in Ethereum have driven a ton of innovation. Like AMMs

• 24:54Speaker 02

  just didn't exist until Ethereum really popularized them.

• 24:58David Rosenthal?

  What's an AMM?

• 24:59Speaker 02

  Automatic Market Maker, so Uniswap.

• 25:01David Rosenthal?

  Yep.

• 25:02Speaker 02

  It's a beautiful piece of math that allows people to passively create markets with capital in like a passive way with just a single cryptographic signature. All of a sudden there's a market and anybody can trade with it.

• 25:16David Rosenthal?

  It's literally the New York Stock Exchange in code.

• 25:20Speaker 02

  Yeah, and in like 100 lines of code.

• 25:22David Rosenthal?

  Yeah, it's amazing.

• 25:23Speaker 02

  But that has its own inefficiencies because it's not maximizing the amount of information that the world is synchronizing on.

• 25:32David Rosenthal?

  Yeah, for a sense of scale, the whole Ethereum network, the global Ethereum network, is limited to what 65 transactions a second. Is that right?

• 25:44Speaker 02

  Uh, something like that. So it depends on the gas limits and how complex the operations are. Some measurements go as low as 11, some go as high as 65. From what the last numbers I checked, the Uniswap does about 100,000 to 200,000 transactions per day.

• 26:00David Rosenthal?

  So right there, that's a huge portion of the capacity of the whole Ethereum network.

• 26:06Speaker 02

  And Serum, which is a central limit order book style exchange that runs on Solana, same kind of design as NASDAQ, that does 20 million transactions per day, but for much smaller amount of capital and volume. So if you think about like users, there's way more users than Uniswap. There's more capital in Uniswap. It's much more transaction efficient. But the synchronization of information on

• 26:33Speaker 02

  The central limit order book exchange on Solana is just much tighter, much more message heavy and like I would consider it's closer to real prices, like it's much closer to the real market.

• 26:46Ben Gilbert?

  Yeah, so this is a great transition to like, tell us, what is Solana and how does it actually solve these problems? And maybe just to like, anchor it, one more time, give us the transaction limit that exists today for Ethereum, for Bitcoin, because these are astonishingly low numbers. Because this thing is in the public consciousness, everyone assumes that, oh, they must, there must be tons of transactions, but like, it is incredibly limited in the way that these networks work today until something like Solana.

• 27:14Speaker 02

  So what's cool is that seven transactions per second is what the Bitcoin theoretical limit is. It's actually quite a lot. Humans don't do that much stuff per day. If everybody was using it for payments, it would kind of fall over. But if we're talking about global settlement layer for this like world's reserve thermodynamic money, it's actually pretty good, right?

• 27:40Ben Gilbert?

  Yep. There's a heck of a lot more than seven credit card swipes globally per second, but in terms of settlement layer, yeah.

• 27:46Speaker 02

  What we're talking about is like, almost like the wire level. When you send like an international wire, how many of those per second occur? Bitcoin could probably handle that. And maybe that's fine. Ethereum is trying to do something more sophisticated where you have tokens, you have governance, you have these communities and they need to trade and move money between them. A lot of this activity occurs on centralized exchanges. People deposit their tokens there, they trade at a high frequency, and then they move them back to Ethereum. But also a bunch of it occurs on Uniswap and these automatic markets. And that's really like the cornerstone of DeFi is that trading bit on Uniswap.

• 28:27Speaker 02

  My understanding of what Ethereum is today, depending on gas costs, is somewhere around 11 to maybe 20 transactions per second. And I think when we were seeing fees over 40 bucks a transaction, Ethereum was doing 1.6 million transactions per day. Now that fees have dropped to under a dollar per transaction, I think today it's under a dollar and it's doing about 1.2 million transactions per day.

• 28:56Ben Gilbert?

  So we're talking, it's like same order of magnitude as Bitcoin, way more complex transactions because there are smart contracts that are executing. And there's just a lot more interesting use cases of this decentralized computer, but still relatively the same speed as Bitcoin.

• 29:12Speaker 02

  I would say that it's twice as much. That's enough to do a ton of really cool stuff. That's enough for governance, for a bunch of communities to form. So like the growth that you're seeing in Ethereum is real, right? There's real people using the network just for what it was designed for, and that's really cool. But it really needs this like change from either ETH1 to a sharded system or ETH1 to a bunch of rollups or layer twos, or whoever you want to design that to really take on like a billion users. That's just not going to happen there.

• 29:48Speaker 02

  And what we set out to build with Solana was, I think we just never thought of Solana as replacing digital gold, sovereign money, or anything like that. To store a value necessarily. It was, how do we build a Byzantine fault tolerant system that can synchronize information globally as fast as it can? And this is really kind of thinking of these systems in a very old school way. Like, like a morbid analogy is you have a bunch of sensors detecting a nuclear strike. How do you make sure that they act correctly? Is you need a high degree of independent verifiable sensors that is necessary to corrupt for the system to go wrong.

• 30:34Speaker 02

  Balaji described this as the Nakamoto coefficient. So it's the minimum set of independent participants that if they all colluded would break the network.

• 30:44Speaker 02

  So right, like I have my, I have my sensor array to detect a nuclear strike. How do I know that it's working? I need to maximize that minimum set that would collude against me. And to do that, to really scale that to a very large number, 20,000, 30,000, you need to make a system that just handles a lot of messages per second, does a lot more cryptography per second, uses a lot more bandwidth, requires more hardware. And I honestly thought that everyone else is going to do the same thing because to me, this was the obvious. Kind of like, that's the harder, that's the hardest problem. We got to solve that. If we don't solve that, everything else is BS.

• 31:23Ben Gilbert?

  Yeah, so how do you solve that? And just because we're storytellers here on acquired, like, how does that stem out of the things that were known to be true at Qualcomm? It seems like it sort of comes out of the TDMA philosophy.

• 31:36Speaker 02

  There's this, if you remember physics, I mean, this literally like these problems went back to like Cold War, how do we detect a nuclear strike reliably?

• 31:46Ben Gilbert?

  Yeah.

• 31:46Speaker 02

  And, and building the first radio towers. If you have two radio towers that go up and they transmit over at the same time or the same frequency, those electromagnetic waves interfere and you get noise. So the first optimization that anyone's ever tried is why don't we give each tower a very synchronized clock and have them alternate? So you have, you have a bunch of towers. If all the clocks are very well synchronized, that they never overrun each other and they can all transmit information. And you get this like, you know, information passes through. And this problem exists in Bitcoin and proof of work because these systems have these agents called block producers. And proof of work is this puzzle that you solve to be allowed to produce a block, right?

• 32:31Speaker 02

  Once you, once you've proven that you found the puzzle for this particular challenge, you can construct a block that's signed along with this proof of this puzzle and you transmit that. And Nakamoto consensus encourages everyone else to build on top of your chain, like on top of your block. But if there's two blocks that occur at the same time, there's now two forks because the participants don't know which block to build on next, right? They now have two options.

• 33:01Ben Gilbert?

  And in the classic Bitcoin world, it would be like, well, which one's longer? I'll go with that one, right?

• 33:07Speaker 02

  But if two blocks are produced at the same time, then both are longer. Both are exactly the same.

• 33:12Ben Gilbert?

  Ah, I see.

• 33:12Speaker 02

  Right, both have exactly the same weight, and that's the noisy state. So somebody else has to pick one, right? The next block producer basically picks one at random, or the one with the best fees, or something like that. And that noisy state is a delay in the network that requires resolution. Same problem as radio. So I had two coffees and a beer, and I was up till 4:00 AM. And I had this like kind of eureka moment that puzzled similar to proof of work using the same Shutter 56 preimage resistant hash function. Instead of running it in this like massively parallel, use as much electricity as you can to find this answer as quickly as you can.

• 33:54Speaker 02

  You actually make that thing slow and recursive and force it to be running in a single core, on a single thread, the computer. You can force it to prove that it's taking certain amount of time, that there's a forced delay before you do an action. So I knew that I had this like arrow of time.

• 34:16Ben Gilbert?

  So then you can start timing and assigning time blocks to

• 34:19Speaker 02

  Exactly.

• 34:20Ben Gilbert?

  transactions.

• 34:21Speaker 02

  And this was like, I don't know, I was manic for like a week because

• 34:27Ben Gilbert?

  You were at Dropbox at the time, right?

• 34:29Speaker 02

  Yeah, this idea was like this high level idea of like, there is a way to construct an arrow of time. And it was so cool to me because there is no mathematical version of arrow of time. There's nothing that guarantees times for forwards or backwards in Einstein's equations, right? And digital systems are math systems. So this is like a way that ties, is cryptography even possible in this universe, right? Like this, this is an open question, or will all cryptographic systems be broken? If they are possible, right? If there's some proof that if we can get to a point where we can prove that cryptography is guaranteed to be secure, then we can construct an arrow of time, right?

• 35:12Speaker 02

  There is a way to move like things forward. And it was so cool to me that it's possible today with these very simple digital systems to do that.

• 35:23Ben Gilbert?

  And so can I maybe try and pare it back my understanding in a very simplified way here? And you can tell me if I'm right. You sort of turned this method of propagating the true correct ledger around all the other nodes from a like real time game to a turn based game where nobody by being able to, you know, in the gaming world, hit keys faster or in the blockchain world, throw more cores at it and more energy at it. That's not going to gain you an advantage. You have one set sort of turn on this single threaded, single core thing that you're constrained to, to accomplish your thing.

• 36:03Speaker 02

  Yeah, I would, I would take it one step further. It went from like even a turn based game to a scheduled game that you have a certain amount of time to take your turn. And if you don't take it, it's passed to somebody else. You're on the clock. It's like chess. You're, exactly. And that difference between going from turn based to the scheduled system is why Solana is faster than Tendermint or all the other proof of stake networks is that those classical BFT systems, they are like Ben takes a turn to speak and everybody else checks. Did Ben speak? Did he not?

• 36:40Ben Gilbert?

  Hmm.

• 36:41Speaker 02

  And then David gets a turn to speak after those checks go through. In the scheduled system, we literally just had like a button that passed between all the windows in our Zoom. And if I don't speak during that moment, I can't speak. We need Zoom to ship that feature. Yeah, exactly.

• 36:57Ben Gilbert?

  I see. So Solana effectively preschedules all the moments where I get my, my turn to speak.

• 37:02Speaker 02

  Exactly. And that reduces all this overhead of synchronization and every step and every block. And that is more of a real time system where like, it's like voice. This is how voice works in, in like cellular networks. This is how most radio networks, I can kind of the base layer of radio networks is this TDMA. Oh, that's so cool. So is it then the, the proof of history?

• 37:25David Rosenthal?

  Is tied to that, right?

• 37:27Speaker 02

  Yep. And like that, like later, more complex realization of how to tie this high level idea of an arrow of time to this TDMA construct, like that took months to develop and like working with the folks we hired at Qualcomm, that that's really when that took root. But initially I was like, holy shit, I have a mathematical arrow of time. I know that that's good enough for something in

• 37:54David Rosenthal?

  So this is amazing. Okay. So with this, what's the throughput of the Solana network today?

• 38:00Speaker 02

  So we've benchmarked this at about 50,000 TPS with like peaks over 65.

• 38:06David Rosenthal?

  Wow. So that's a, that's like what Visa is basically.

• 38:09Speaker 02

  Yeah, but there's a lot of caveats there because benchmarking is like, I worked at a hardware company, benchmarking is a game.

• 38:20Speaker 02

  So you can think of it as when TSMC claims three nanometer process, that's the smallest unit that they can make. So when we benchmark, you flood the system with as many non-overlapping, easy paralyzed transactions as you can. And you can kind of see, okay, under these ideal conditions, that we can, in theory, get this much throughput through. When something like Serum runs, it's a central limit order book. Each one of those markets, right now, I think is implemented as like a one megabyte buffer. So each order requires this one megabyte read, one megabyte write. Those are more complicated transactions that require kind of like more work in the system, but they're still parallelizable. And it's not that like, there's limits there that

• 39:05Speaker 02

  can't exceed 65,000 TPS. It's just if we start hitting those limits, then we go optimize. And then we see what the hardware limits are and the like, this is where benchmarking is hard because. You know, you're dealing with like problems in software that if somebody actually needs them solving, it's like three to four weeks of work to do it versus like everything's optimized to the theoretical limit of the hardware itself. And if you backtrack from the hardware specs, like if you actually start like, like we did a Qualcomm, we look at a chip, we're like, okay, this is what this DSP can do. That means we can support 64 frames per second at 4K resolution to do post-processing.

• 39:48Speaker 02

  You start like, that's the limit, and then you write the software until the client is happy. But you can tell them the best we can do is 4K video at 64 frames per second. And maybe you ship at V0 24 frames and they're like, that's good enough, right? Don't work on something else for now. If you start at the hardware level itself, one gigabit networks is really the bottleneck is like the bandwidth. You need one gigabit of input and output per validator on this global network. And that can in theory support 700,000 transactions per second.

• 40:25Ben Gilbert?

  So does that mean that this network requires pretty great internet connections in order to be Solana based versus operating a Bitcoin node?

• 40:32Speaker 02

  Exactly. And that's because this is maximizing the amount of information that anybody can synchronize on over as many parallel kind of like bits as we can. So if all of these events are parallelizable, right? If it, these are like different markets, right? There's 700,000 different markets, they all want to do one event per second, we can schedule all of them. Right? That, that, that's kind of how you can think about it. And like that capacity is all over a single giant kind of like table of state that you can execute over. And as bandwidth gets cheaper and as hardware gets better, you know, like AMD doubles the

• 41:14Speaker 02

  number of cores, Nvidia doubles the number of GPU like lanes per GPU, PCI buses go from like PCIe4, it's like one terabit to two terabit in the next version or whatever. That means that we can then ingress, like inject more data at these data centers with like bandwidth that right now goes to 20 gigabit and process it and then synchronize it around the world. So at the kind of the base hardware layer. If you're just looking at the hardware specs, I think you can do tens of millions of transactions per second. But this is going to be kind of blood, sweat and tears to get the software to get to use all of those.

• 41:57David Rosenthal?

  But I mean, that's like, that's just such an order of magnitude higher than the current state of the Ethereum network. I mean, you could imagine why if you're building Uniswap now or the next Uniswap or the next whatever, we should do, we should talk about what all this enables. There's just kind of no question where you're going to run most of your transactions.

• 42:16Ben Gilbert?

  And it seems like, so you mentioned 700,000 is sort of this like theoretical high watermark at this point, transactions per second. Like if you wanted to be Visa, you want to be a credit card network, like a super high traffic, high frequency. What's their processing limit per second?

• 42:31Speaker 02

  So their capacity, I think they've published that they measured it up to 60,000, but probably they handle around like 5,000 at most per second, like a steady state. So all of Twitter is 5,000 messages per second.

• 42:45David Rosenthal?

  Wow.

• 42:46Speaker 02

  Humans are just really bad at doing like anything interesting.

• 42:51Speaker 02

  NASDAQ does maybe 200, 300 trades per second. Now there's 30 times more orders per trade and there's 30 times more cancels per order.

• 43:03David Rosenthal?

  Yeah.

• 43:03Speaker 02

  Because bots are just flooding the system with like, no, change the state.

• 43:07David Rosenthal?

  That's the thing. This is really about machines. This is not about humans.

• 43:10Speaker 02

  Exactly.

• 43:11Ben Gilbert?

  Wow. So we're, Solana is already from a throughput perspective, past the point where it could ever, like you would never need anything more out of a network of humans pretty much doing anything in the world.

• 43:24Speaker 02

  But the interesting part is here, like if we're building a financial system, the value creators right in this thing are like the machines that synthesize other world's information, they look at all this arbitrary data and then pick a price for a particular asset and throw that information, right? That's value creation. That's a machine that's doing that as fast as it can. And we need that thing to be at the same network as the other value creators that are building products that humans want, right? They actually onboard humans. That's value creation. It's really hard to get humans to do anything. So if there's no intermediaries between those two, that's like the perfect financial system, right?

• 44:06Speaker 02

  That means that we've kind of like eliminated all of this gunk. There's nobody taking 30 bips on every different, like every time some paper changes hands, everybody takes a little bit off the top. Like that's, that's really what the stuff is all about. Like, how do we eliminate all of that? And it's pervasive to the point that what I consider like a totally unfair market is Google and Facebook where I go to a website, they steal my data, right? And feed me information I don't want and charge 0.2 cents to somebody that's right, trying to advertise to me. But 60% of what they're paying for is fraud, right? Like click fraud.

• 44:44David Rosenthal?

  Yeah.

• 44:45Speaker 02

  Like F that, like F all of that.

• 44:50David Rosenthal?

  Amen.

• 44:52Ben Gilbert?

  All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 45:06David Rosenthal?

  Yep. It's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 45:22Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 45:37David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 46:01Ben Gilbert?

  And they recently launched Legora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 46:20David Rosenthal?

  And Legora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Legora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 46:50Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at legora.com/acquired and just tell them that Ben and David sent you.

• 47:15David Rosenthal?

  One of the, I just think, super cool use cases that I know people are building on Solana, obviously, there's tons of DeFi stuff, but Audius, which is a decentralized Spotify and managing streams on the Solana blockchain. What, either talk about that, or maybe are there other projects that you're seeing out there that are just like, this is super cool stuff that could not exist?

• 47:37Speaker 02

  Yeah, so Audius, I think, is also one of my favorites. And a lot of that comes from Ray Neal himself. Like, he's just an awesome founder. You guys should totally talk to him. What I love about it is that it is trying to like get away from traditional web two business models of let's steal your data, shove you like stuff you don't want, undercharge our artists. It's really like, here's a platform to connect artists to fans directly, like without any intermediaries. And the metadata that it's collecting, the plays, the fan relationships between users and their artists, it's all done kind of in the open and on a decentralized platform. So it doesn't need to have this web two model at all.

• 48:22Speaker 02

  Like, it can just kind of run off of its token. And this stuff is really hard to imagine, like, what's going to take off, right? What's actually going to replace web two, right? It's hard to imagine that. But music has always been like at the forefront of new tech, right? And I'm excited to see like them having like ridiculous traction, four million users like using the stuff with like traction within a small.

• 48:47David Rosenthal?

  This is Audius. Yeah, there are four million people using Audius. It's amazing.

• 48:50Speaker 02

  And this is, and this is just like a single kind of like niche of like EDM artists. That's like who they went after. They had like all the best people kind of jump in this and love them from the start because music is like such a financially predatory environment for artists, right?

• 49:06David Rosenthal?

  Well, shoot, I mean, rewind, like, every, every generation of the internet, music has kind of led the way, like, there's Napster, right? Like, no Napster, no Skype, no crypto. Like, you know, it's just like, it's all a lineage back to, you know, it's the ultimate peer-to-peer file sharing.

• 49:25Speaker 02

  But I think a lot of that comes from the fact that like the music industry itself is like predatory on like every financial part of like the ecosystem from the artists to the fans, like, it's just really trying to squeeze everybody and bring them out.

• 49:41Ben Gilbert?

  So what's the value proposition here? I always want to just keep playing this. I have this voice in the back of my head all the time. That's like. Cool. You made the same thing, but you put it on the blockchain. And in the old world, it's like, well, it's worse because it's slower and it takes more energy. In a Solana world, you're like, okay, now at least it's as fast as a centralized world and doesn't use up a bunch of energy. But what's the reason that it's like better to be a decentralized version of Spotify than Spotify?

• 50:05Speaker 02

  So it's peer to peer, right? Like that, that's kind of the cool thing about it. You're not really using Audius. You are directly connecting to like Boys Noise or Dead Mouse. And it's their private key cryptography that's signing those assets in Audius. It's your private key cryptography that's connecting to them directly. It's a direct line.

• 50:27David Rosenthal?

  So they know how many streams they're getting, from whom, and they're getting paid directly.

• 50:31Speaker 02

  Exactly.

• 50:33Ben Gilbert?

  Yeah, it's this fascinating concept where in the abstract, if you were to tell me about the internet in 1985, I would believe that the natural way the internet would end up would be decentralized. Like, wow, it's this thing where anyone can connect to anyone else and anybody can start a business and anybody can put up their own website and author their own HTML. And it's this sort of surprising thing that happened that it led to centralization, where 1985 me would be shocked that there are five big companies. Like, how, what? That's not what the technology does. And it's quite remarkable that with this next evolution, moving from web two to web three of the blockchain, that like now we actually do have a chance for 1985 me to be like, oh yeah, okay,

• 51:16Ben Gilbert?

  that actually makes sense on how I would have guessed it ended up.

• 51:20Speaker 02

  And this is why we don't even care about this like sovereign money narrative, right? Like, if you think about like what we're solving for Audius, it's this piece of artists with a cryptographic key, a bunch of fans with cryptographic key, and we're guaranteeing that they can talk to each other. We're guaranteeing that what you just described, that anybody can self-publish, do whatever the hell they want, that there's no interference there. That's it, right? Like, the token itself is just there to prevent spam in this super connected world.

• 51:51Ben Gilbert?

  So Solana doesn't have a dog in this fight of, of, you know, should some country adopt this as their currency or change what fiat money is being used?

• 52:01Speaker 02

  I think like, thinking it from like a information system only, kinda, I think it's actually more interesting to think of it. If we had a super connected world. You know, that's equivalent to like, if we all had like neutrino based lasers that could not be like interfered with, that we could all talk to each other at any moment. That's kind of a science fiction thing that we're building, right? In itself.

• 52:25David Rosenthal?

  It's like, I'm reading The City and the Stars by Arthur C. Clarke right now, and that's literally like the, that is the city.

• 52:32Speaker 02

  Like, let's do that. That's a cool enough thought, like cool enough thought experiment that if that exists and it's a truly super connected world, what's possible in that world? Like, that to me is like an interesting question in many more ways, more interesting to me than what is store value? What is gold? What is money?

• 52:51Ben Gilbert?

  Right. Well, and it's like, so in that vein, I mean, there is a cryptocurrency called Sol. You know, people can buy it all over the place. I think on FTX is where I've bought it in the past. Like, how does that factor into this? Like, how does that work in the network that you've created?

• 53:08Speaker 02

  Yeah. So going back to that, like morbid example of nuclear strike, what we're really trying to do is guarantee that there isn't any central authority that can issue, who are these like set of nodes that can guard the network? And if we were the root certificate and we like issued a thousand nodes, and we could issue more at any time, then that effectively makes us the point of failure, right? That censorship resistance piece is not good enough for prevent nuclear strikes, right? So if you like, think of it from like-

• 53:43David Rosenthal?

  I mean, I trust you, but I don't know that I trust you that much.

• 53:46Speaker 02

  So to eliminate this like central certificate root, you limit the number of certificates that could be issued, issue all of them, and let them decide who owns what, which is effectively like what this token represents is a weight in the network in terms of how much vote you have, how much power to censor you have. And maximizing that minimum set of nodes that can censor the network, you kind of need this thing to be freely transferable and freely reassignable. So it's just naturally how it evolves, right? If we were actually to try to keep some form of control over it, but we did a good job with everything else, then the network could decide to remove us from control at any point anyways.

• 54:28Ben Gilbert?

  So it's sort of like the people who have the most soul, or they're sort of like, so you distributed all this soul among a group of people. And that group is sort of like the VeriSign of this network in a distributed way. And people sort of vote ratably on whether something is valid or not.

• 54:48Speaker 02

  Right. And the goal is to grow that set as large as possible, right? And like make that minimum set that at up to 33% as large as possible. And that's our religion. Like if we're talking about store of value or something like us being the Bitcoin religion, the religion and like our little community is maximize censorship resistance. You gotta like, that's the number one focus everybody's working on.

• 55:13Ben Gilbert?

  And that's how this is proof of stake based. When we talked about proof of work, it's like proof of work in the Bitcoin sense is how much thermodynamic energy did you use up in the past? Everyone collectively to prove that this thing is real. Proof of stake, if I'm understanding correctly, is more like, well, you've got a bunch of soul. And so you and all the other people who have the most of it, have the most authority in deciding this. Basically certifying the or verifying that this is the person you think it is.

• 55:40Speaker 02

  Correct.

• 55:40Ben Gilbert?

  Cool.

• 55:41Speaker 02

  We want to grow that set to be as large as possible. Again, thinking from this like nuclear strike detection.

• 55:46Ben Gilbert?

  Censorship resistance. Yeah.

• 55:49David Rosenthal?

  Okay. So this is a good transition to the last big topic we wanted to cover with you guys. Like all this is awesome. The innovation, the technology, just the like, it just makes me smile thinking of like technology and liberal arts, you know, you're marrying different concepts from different fields, bringing them together here. None of that matters if you don't get adoption of the network, right? Like you can have the most beautiful thing, but you gotta have people using this. How did you, especially because you started in the like the crypto winter? How did you get, I don't know, anything? How did you start like getting people involved in this?

• 56:26Speaker 02

  So like the validators were really like the first group of customers or users. And they're like just super positive people that just want to play around with cool tech. And this idea of maximizing censorship resistance, it's just cool. People like kind of think it's cool, it's go try it, right? How cool it'd be if it works, right? So we kind of got like a really good community of builders that were willing to do whatever we asked them to do, which is like call up a data center, go install a machine there. Like this is not just like running systems at home. You actually need to like, understand what you're doing. And that process really taught us that it's not about like reducing friction for users or devs.

• 57:09Speaker 02

  It's about giving them something that they don't have like anywhere else. Like giving them like something so interesting and so cool that they're willing to do the hard work to build and like deploy. And the use case that we thought would be really interesting was what if we like ran NASDAQ on this thing? Like this thing that Serum runs, like price time queue, central limit order book. And through the winter, a lot of people were telling us that DEXs are dead, that we shouldn't even bother.

• 57:37David Rosenthal?

  Wow.

• 57:38Ben Gilbert?

  Dex being a decentralized exchange?

• 57:40Speaker 02

  Yeah, but I fundamentally believe that if the system is possible, if we can be a world's price discovery engine, then that's like the Google will be the world's information library, like kind of style of like dream, like that's like the world changing thing that we need to build for.

• 58:00David Rosenthal?

  And you guys never had any ambition to build a Dex yourself, right? Or did you?

• 58:06Speaker 02

  We would have done it on our own. We had plans to do so, but then, um, right after we launched. So we briefly talked to FTX like nine months before we launched. And we were like, hey, what if you guys, you guys are cool, you're building cool products, up and coming exchange. What if we like did options or something like something interesting on chain? And they're like, is it live or like, if we think in about six months, like, okay.

• 58:29David Rosenthal?

  Two weeks, two weeks.

• 58:30Speaker 02

  Yeah, they're like, just, just, yeah, good. We don't have time for this, right? We gotta ship stuff like tomorrow.

• 58:38Speaker 02

  So six months later, we actually go live and we built this little demo called break like break.solana.com where you smash your keys and you see transactions fire off. And then you see them all clear, like on the screen, like you see them all confirmed. And these are smart contract transactions. You can go look at the code. And I demoed this to Sam and he was like, okay, everyone else needs to see this. And this engineer saw. Sam's the founder of FTX. Yeah, they like showed this to their like engineering folks and they've been thinking about this from like a trader's point of view. If you can actually have a system that was fast enough to do full style central limit order books, the stuff that they know.

• 59:22Speaker 02

  There's a chance that decentralized finance could potentially get 50% of the world's finance, maybe 25, doesn't matter. It's big enough for them to like, holy shit, this is like a big opportunity.

• 59:34Ben Gilbert?

  Just to make a meta point here, and I think I'm understanding this right. You could basically say, hey, you want to run a quant fund on the regular stock market? Well, use our blockchain based software that can execute super fast and go trade regular securities. You don't have to trade blockchain assets.

• 59:52Speaker 02

  Yeah, you could trade anything, right? Because this is an open network, the tokens can represent whatever the settlement layer tells the chain that it's representing. Could be stocks, could be something like dollars like out of USDC. But it's more the idea that if you have this open permissionless platform that is fast enough for this use case. Will like things just kind of naturally roll downhill and like end up there anyways?

• 1:00:16Ben Gilbert?

  It's yeah, right. It's, it's kind of like separating the pragmatism from the idealism where like most of the people who actually bought Tesla's early bought it because it was a status symbol and like a really sexy car. And they said, I'm saving the world. And so like, this actually could be the best fast software to use for a high frequency system that we're describing that may or may not trade blockchain based assets. So you pick it because it's the best system. Oh, but also I have this idealistic view of this decentralized world and that's the way it should be.

• 1:00:46Speaker 02

  And like, is a decentralized world the natural endpoint? Because it's easier, right? It's cheaper, it's faster, it's fall tolerant. You have stronger guarantees. Like, if all those things are true, right? Like, then will things just naturally gravitate there? Like, and as soon as this thing exists?

• 1:01:04David Rosenthal?

  I mean, if you don't have to pay Visa 5% of every transaction, like, you wouldn't.

• 1:01:10Speaker 02

  If you don't have to pay, NASDAQ, I think, earns like 10 billion a year. Where does that money come from?

• 1:01:16David Rosenthal?

  Yeah.

• 1:01:17Speaker 02

  This comes from the people.

• 1:01:18David Rosenthal?

  I want to rewind back. You talked about the validators. I think this is an important point for building a crypto, at least a protocol, that I hadn't quite thought about. It's kind of like supply and demand. You needed the supply before the demand. Before you could go get an Audius or you could go build a NASDAQ, you actually needed the network of validators that were gonna run this, right?

• 1:01:36Speaker 02

  Yep. And we started with like just 40 of these dedicated people that were just there through our first launch that crashed in 20 minutes. The second launch that crashed in two hours. Like, over and over, they like just came back.

• 1:01:53David Rosenthal?

  And I get what you're saying about them just being like, they're there because like, this is cool.

• 1:01:56Speaker 02

  Yeah, that they were true believers, right? And like, some of those folks were so early and like, they had bug bounties that they were finding these really hard to find critical bugs, that they're now founding their own security firms because of this like early investment in like, digging through our code, understanding like where we made a mistake and demonstrating it. And like, that commitment really created a ton of value for everyone, for everyone involved. It was just awesome to have these folks early on working with us.

• 1:02:28David Rosenthal?

  That's amazing.

• 1:02:29Ben Gilbert?

  All right, so Anatoly, after all this, it sounds to me like Solana is just gonna work. It's gonna take over the world, like it's gonna be this super high-frequency, perfectly optimized blockchain for exactly what it's doing. When I sort of turn my head and see the sort of elephant in the room of Ethereum sort of coming up with ETH2, which is not necessarily the tightest defined at this point, but there is going to be a system based on sharding and moving from purely proof of work to proof of stake. Like, how do you think about? Ethereum and Solana, does it coexist in the same world? Is it one or the other? Are they doing things right? Are they doing things wrong?

• 1:03:11Speaker 02

  So what I remember from open source world, like 90s, I was like a Linux geek. I built Linux from scratch and Microsoft was trying to kill Linux. And you just can't kill it. You can't kill an open source community. We can kill Ethereum just as easily as Ethereum can kill us, meaning it's impossible. Like if you have people that are willing, willing to work on something over the weekend, right? At their own time, just to, because they think it's fun. There's no killing that, right? Like it's just code that people want to write because they love to do that. But we're competing because there's overlapping features, right? There, at any given moment, there's a certain number of users. And that competition, I think, is awesome because we do something well.

• 1:03:54Speaker 02

  People look at it like, can my application running Ethereum adopt it? Improve on it and vice versa. And we're going to see this kind of bouncing back and forth between any of these healthy communities that are growing, that are like doing the iteration cycle, product market fit. And it's not just like, I think the kernel engineers, like honestly, we're all friends.

• 1:04:15Speaker 02

  We all like hang out when we go to conferences. We end up like all at the same bar, drinking beers, talking about like, you know, consensus or whatever, just like Windows and Linux kernel engineers hang out because it's just interesting problems, right?

• 1:04:28Ben Gilbert?

  Yep.

• 1:04:29Speaker 02

  But the ecosystems, I think, have this like, I think, healthy flow of competition that I think is necessary for the entire space, the crypto space to onboard the next billion users. Like this world right now that we live in is just so small. How many people do you think self custody keys? Do you guys self custody keys?

• 1:04:50Ben Gilbert?

  Should.

• 1:04:50Speaker 02

  I know I should. You guys are in the crypto industry at large, but you don't self custody keys.

• 1:04:57Ben Gilbert?

  Yep.

• 1:04:58Speaker 02

  So not your keys, not your coins. You can't directly connect to an artist and audience without your own self custody, right? You're not in this interconnected world. You're still in the web two world where you're going through intermediary.

• 1:05:10Ben Gilbert?

  Yep. What percentage of people who think they own cryptocurrency self custody?

• 1:05:15Speaker 02

  I don't know. I think my upper estimate for self custody is maybe 30 million, but that's like a very generous estimate.

• 1:05:23Ben Gilbert?

  30 million people.

• 1:05:24Speaker 02

  Yeah. So DeFi summer with 30, 40,000 people participating in these like flash communities that would form like overnight. Imagine that was 30, 40 million people.

• 1:05:36David Rosenthal?

  Yeah.

• 1:05:37Speaker 02

  That was rapidly coming together around an idea and like pulling resources together around an idea, just like in an hour and a day, like around the world with no friction. That's the power of cryptography, like that peer-to-peer part of like us with keys, all connecting is just kind of mind blowing how, how important that is. The layer one tech is like, I think we're just kind of arguing about, you know, Intel versus AMD or like x86 versus MIPS. These are details that are important to us as engineers, but like that end-to-end user, like super connected world is just so wild. That's so cool.

• 1:06:16David Rosenthal?

  Yeah. Well, it's interesting to think about what you were saying a minute ago about you guys and Ethereum, you know, going out to a bar and having drinks and talking about technical problems. Without you guys, I wonder, do you think, maybe you can't answer this, but like Ethereum didn't really have any, I mean, there were other, there are other competitors for sure. Let's not say you guys, all of the various Ethereum killers out there. If they didn't exist, Ethereum would just be like dumb, fat and happy, right? Like you need this motivation to like push things forward, right?

• 1:06:45Speaker 02

  Maybe. I can't imagine a world where people wouldn't look at it and, and decide, I want to build something different because the design space for these systems is just so interesting and so big that like as an engineer, it's like operating systems, right? You look at one, you're like, well, I want to make a bunch of different choices and do something different. Like, let's see what happens. Like, there's like an urge to try it.

• 1:07:08Ben Gilbert?

  Well, give me your pitch. So I'm an application developer. I'm coming with some heavy weight. Maybe I've got money behind me or a great team behind me. And I'm saying, geez, if I write code that's compatible with Solana, it's not compatible with ETH2 and vice versa. Why should I write it on Solana instead of ETH2?

• 1:07:26Speaker 02

  Because we guarantee this super connected world for one billion users without shards, without intermediaries, this is where it's going to happen first. Like, we're the, this is what we're building for. We don't care about anything else except connecting this billion people together. So you can go deal with shards, layer twos, all this other stuff if you want. Or if your vision is bigger than x86 Intel, right? If you're building software and you don't care about the hardware, like you actually care about the user experience, like we're, we're the place to do that.

• 1:07:58David Rosenthal?

  There's also an element right now, too. Like, if you want to do this, you're the only place you can do it, right? Like, none of these other, ETH2 isn't live yet.

• 1:08:06Ben Gilbert?

  It's a theoretical concept.

• 1:08:09Speaker 02

  We, we also, like, I think if you talk to any of the folks that worked with us, Raj and I are, like, it's, at the end of the day, it's like about the people. Like, I don't know what it is about Raniel that just be instantly connected. I don't know what it is about Sam that there was this, like, instant trust. Like, we're in it together, we'll just go do whatever it takes to, to make this work. There's, like, people like that in the world that, like, if you're like one of those and you talk to us and you're like, I have this massive vision, I don't know how I'm going to do it. Like, we will just boil the ocean, we'll eat glass to make it happen for you.

• 1:08:45Speaker 02

  Without, like, actually thinking about, like, any of the, the details are not as important to us, like, right now, like, the, the commercial parts of it. Like, none of that is as important as, like, actually building something cool.

• 1:08:57David Rosenthal?

  Yeah.

• 1:08:58Ben Gilbert?

  I love it.

• 1:08:59David Rosenthal?

  Love it. All right, listeners, now is a great time to talk about one of our favorite companies, Statsig.

• 1:09:07Ben Gilbert?

  Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 1:09:17David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that. Signal to guide what you ship next.

• 1:09:38Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system. So teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 1:09:50David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/ acquired to get started. All right, well, to cap it all off, this is so exciting. Everything that's already happening, even just Audius itself is one example of like, this is live, it's happening today. What do you think the Solana ecosystem looks like in two, three, five years?

• 1:10:18Speaker 02

  I think, well, the ecosystem, I think, like, you know, we have this dream of this being competitive with like something as big as like Google, like Android. There's 5,000 engineers working in Android. 5,000 engineers cost a billion dollars per year. We can't possibly raise that much to compete with them.

• 1:10:39David Rosenthal?

  I don't know, in this environment, maybe.

• 1:10:42Speaker 02

  There's no way, right? Like, so we actually have to have folks come into the space, build awesome products, love the tech, go like, start being those, one of those 5,000 engineers on their own. And like, build a community that's more grassroots than this top-down, like, Google-style centralized system. There's just no other option. So like, if we succeed, it's like this amazing set of engineers that are just working and building really cool shit, and amazing set of validators that are building really cool hardware to make the stuff run as fast as possible. Like, and that's kind of the dream of it, you know, that there isn't this one single central authority that's telling anybody what to do.

• 1:11:25David Rosenthal?

  Love it. Great spot to end on. Thank you for joining us.

• 1:11:30Ben Gilbert?

  Where can people find you on the internet?

• 1:11:33Speaker 02

  Solana.com is where you can find all the information and like Solana's Twitter handle. Like, go follow it on Twitter and follow me if you want to hear me talk about consensus and censorship resistance. Or Raj, if you want to, you know, he's far more active on Twitter about like ecosystem and like cool shit that's being built.

• 1:11:53David Rosenthal?

  Are you guys on BitClout yet?

• 1:11:55Speaker 02

  No, no, we're not. There's a cool project called Wombo that is like creator tokens that are part of the that can like attach to any like social network that folks are building on the Hackathon. If you want to do some work and you're not an engineer, go look through the Hackathon submissions and then tweet at us and like, what is good? Because the hardest, one of the hardest parts in like the space is actually synthesizing information, right? Go use your massive brain, the most advanced piece of technology in the universe. Go look at all this information and all these other teams that are building stuff and tell us what's good. What do you like? What's actually high quality? That takes a ton of work. Amazing.

• 1:12:39Ben Gilbert?

  All right, we'll put links in the show notes.

• 1:12:41Speaker 02

  Awesome.

• 1:12:42Ben Gilbert?

  Anatoly, thank you so much.

• 1:12:44Speaker 02

  Thank you.

• 1:12:45Ben Gilbert?

  All right, listeners, we'll see you next time.