BLAST: The L2 with Native Yield | Pacman

✨ DEBRIEF | Ryan & David unpacking the episode: https://www.bankless.com/debrief-pacman-blast-l2 ------ Pacman is one of the most interesting builders in crypto right now. After creating Blur, a disruptive NFT exchange, the crypto wonder kid is targeting the L2 space with his new yield bearing L2 called Blast. In this episode, we cover Pacman’s story, how he built Blur, how he pioneered Points and finally, we get into Blast, the already third largest L2 in TVL. ------ 📣 SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 💸 CRYPTO TAX CALCULATOR | USE CODE BANK30 https://bankless.cc/CTC 🦄 UNISWAP | SWAP SMARTER https://bankless.cc/uniswap ------ TIMESTAMPS 0:00 Intro 6:45 Pacman’s Story 24:40 Blast’s Perception 29:36 Blur 34:45 Points 47:55 Blast Genesis 54:35 Blast’s Native Yield 1:19:05 Yield Risks 1:23:15 Net Gas Revenue 1:26:00 Projects on Blast 1:30:12 Is Blast a Multisig? 1:32:51 Blast’s Vision 1:34:10 Blast on OP Superchain? 1:36:53 Closing Thoughts ------ RESOURCES Pacman https://twitter.com/PacmanBlur Blast https://blast.io Pacman Blur’s Episode https://www.youtube.com/watch?v=KBKRrKtGTY8 ------ Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures

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

• 0:00Speaker 00

  We want to build the L2 that provides the most value to developers and users. The most value of any L2, that's our goal. And we see the path to getting there is you have this L2 with native yield, where everyone's just earning that by default. But also now you're enabling new types of applications. Robinhood, for example, right, like them charging zero fees, that's actually providing more value to the market than if they had charged no fees. So it's like these business model unlocks. It's not just like, oh, it's a new business model. It's like, no, this is actually providing more value to the market. This is why these disruptive business models get adopted in the first place. So the only thing driving us is that we want to build the L2 that provides the most value to end users and developers.

• 0:40Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Pacman is one of the most interesting builders in crypto right now. He created Blur, which is an NFT exchange that came out of basically nowhere in 2022, and now has over 70% of the NFT market. And it almost seems he's about to do the same thing with Layer 2s. He's got a project called Blast, which has blasted its way to number three in terms of total locked value of all Layer 2s. You do not want to miss this fascinating conversation with this crypto builder. Number one, we talk about who's Pacman? This crypto wonder kid? Where'd he come from? What's he about? Why is he here?

• 1:23Ryan Sean Adams?

  Number two, how he built Blur into the world's largest NFT exchange. Number three, points. Pacman actually created the points meta that we see today. What does he think of points now? Number four, Blast, the yield-bearing Layer 2 that's blasted its way to third-largest Layer 2. How did he do that? Is it secure? Is it safe? What about all of the criticism surrounding Pacman projects?

• 1:46David Hoffman?

  There's a lot to pull out from this episode, not just about the technical details around Blast and what it actually means to be a yield-bearing Layer 2, because I think a lot of people actually don't fully understand the technical implications of what that means. And that's something that we pull apart here on the podcast with Pacman today. But just zooming all the way out about like yield as a concept, points as part of the meta.

• 2:10David Hoffman?

  Movement of ETH and users onto layer twos and really how to be a builder in the space. Depending on who you are in this space, whether you are a user, you're a builder, or you're a VC investor. There's something in this episode for you, depending on how you look at it and what you want to get out of it. So we touch a little bit on many different metas that are going around in the crypto sphere in the middle of this bull market. And I've found that I've learned quite a lot. I think I, like many other people, kind of discounted BLAST in the early days because of the spinal reflex that I think a lot of people had from his go to market strategy, which we also talked about with Pacman. But this was me coming at BLAST with fresh eyes and really appreciating the novel mechanisms that BLAST rewired into an OP stack fork

• 2:54David Hoffman?

  in order to make native yield bearing a thing inside of the BLAST ecosystem.

• 2:58Ryan Sean Adams?

  Yeah, he's got a way of implementing these clever shifts in mechanism design that have really, he used the term profound outcomes. We'll see, bankless listener, if you see one of those profound outcomes in the conversation today. Of course, David and I will unpack all of this in the debrief, which is available to you if you are a bankless citizen on the Bankless Premium Podcast, newly available on Spotify, might I add. So you can get Bankless Premium in Spotify. Go check that out. All right, let's get right to the conversation with Pacman. But before we do, we want to thank the sponsors that made this episode possible, including our recommended crypto exchange for 2024 and the way to blast your fiat into crypto that is Kraken. Go create an account.

• 3:39David Hoffman?

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• 4:24David Hoffman?

  Whether you're a complete beginner or a seasoned pro. Go to kraken.com slash bankless to see what crypto can be. Not investment advice. Crypto trading involves risk of loss. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world. Driving real-world use cases like mobile payments and mobile DeFi. And with Opera Mini Pay as one of the fastest-growing Web3 wallets, Cello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now Cello is looking to come home to Ethereum as a Layer 2. Optimism, Polygon, Matter Labs and Arbitrum have all thrown their hats in the ring for the Cello Layer 2 to build upon their stacks. Why the competition? The Cello Layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability secured by Ethereum validators and one-block finality. What does that all mean for you?

• 5:09David Hoffman?

  With Cello Layer 2, gas fees will stay low and you can even pay for gas natively using ERC20 tokens, sending crypto to phone numbers across wallets using social connect. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forums. Follow Cello on Twitter and visit cello.org to shape the future of Ethereum. Are you launching a token? Is it already live? How are you managing the legal and tax obligations for providing token grants to your team? It's no secret that token management gets complicated. Between learning all the legal language and tax obligations in every country that your team is in, token grant management can feel like an obstacle course. But it doesn't have to. That's where Toku steps in. Toku provides practical tools to handle token grants,

• 5:51David Hoffman?

  allowing for effective oversight of token distributions and payroll tax compliance for employees, contractors, advisors and investors. They also handle tax withholdings through their real-time tax calculations that can be done by Toku or integrated into any payroll EOR providers in any jurisdiction. Toku is a trusted provider of Protocol Labs, DYDX Foundation, Mina Protocol and many more. Get started for free and make token compensation simple at toku.com slash bankless. Bankless Nation, happy to introduce you to Pac-Man, the co-founder, Blur, creator of Blast. We had Pac-Man on the show a little over a year ago to talk about Blur and my how things have changed in just a year. Blast is now the number three Layer 2 on Ethereum by TVL. Despite just being a few days, maybe a week old,

• 6:35David Hoffman?

  already has a countless projects trumping at the bit to deploy on Blast and build inside of the brand-new Blast ecosystem. Pac-Man, welcome back to Bankless. Jim, Jim, thanks for having me. So Pac-Man, you are 2 for 2 on projects that have completely redefined metas inside of the crypto industry. Blur really just changed the game in terms of NFT trading and the whole NFT marketplace ecosystem. Blast has now done the same again because there is now a new focus on natively yield-bearing Layer 2s, which was a narrative, a theme, a construction, completely novely introduced by Blast. 2 for 2 on projects that redefine the industry is a pretty unique place to be. So just a little bit of just like, who is Pac-Man?

• 7:18David Hoffman?

  How does he not miss? Where did you come from? Who are you?

• 7:23Speaker 00

  Yeah, really appreciate the kind words. So just for like a brief overview, I got my start in Silicon Valley around nine years ago. I started off as a software engineer, working at a company called Teespring. I actually had a bit of an atypical journey. So I went to Teespring when I was in high school and ended up dropping out to work there for a year out of high school after my sophomore year.

• 7:44David Hoffman?

  Dropping out of high school? We're not talking in college, you dropped out of high school? Okay.

• 7:49Speaker 00

  Yeah, I dropped out of high school. So I was 16, 16 at the time. Yeah, it's fuzzy now. It's crazy how the time flies, but 16 at the time and then I went over to Silicon Valley and I stayed and I ended up actually starting a company right after Teespring. And we went through, it was called Strong Intro. We went through Y Combinator and the Winter 16 Batch. I was the youngest like batchmate at the time. I was 17. Went through that experience and then I really wanted to go to college after, ended up going to MIT and I studied math with computer science there for about two years where I met my co-founder, Anthony. And we basically just immediately started hitting it off. We started building together. He graduated a year early. I ended up receiving the Thiel Fellowship to go and drop out again after my sophomore year, coincidentally.

• 8:32David Hoffman?

  Serial dropper outer.

• 8:34Ryan Sean Adams?

  You just keep rugging schools, man.

• 8:36Speaker 00

  Yeah, I know, I know. They, you know, but you know, MIT actually has a really nice program where it's like you can drop out and just come back like even when you're 50. So I would like to go back at some point, just you know, for the fun of it.

• 8:46David Hoffman?

  To drop out a third time?

• 8:48Speaker 00

  Exactly, exactly. Maybe I can drop out of the MNG program, but... I left and Anthony, we started our first business, which was Namebase. And that was a really niche company built on a blockchain called handshake. It was like a decentralized domain name blockchain. And we ran that for around three years and we sold it at the end of 2021 to Namecheap. And then basically after, immediately after that, Anthony and I, we started Blur, which is the NFT marketplace for pro traders. And we've been contributing to Blur for the past, you know, two, two and a half years now. And we, you know, a few months ago, released Blast, which is our latest project. It's an L2 with native yield. And so that's kind of like the short summary of my professional history.

• 9:31Ryan Sean Adams?

  When you were in high school, I'm curious, Pacman, just so we can get some insight into you and how your mind works. What gave you the conviction to a dropout in your sophomore year?

• 9:41Speaker 00

  Yeah, it was actually like super, super easy. So I had discovered Hacker News, which is like a very popular, like it's kind of like Reddit, but for just like nerds. I discovered that when I was 13 and I basically just became super obsessed with Silicon Valley. Read all of Paul Graham's articles, was really into that. And my, my dream, like my number one goal was just starting a company and going through by Combinator. Like that was like the only thing that I wanted to do. And I got really lucky when I was in sophomore year of high school. I discovered Teespring, which was this like custom t-shirt, like printing startup. And they were like doing incredibly well. Their founder had written a blog post on how they got to a million dollars in revenue in eight months, which was like crazy at the time.

• 10:27Speaker 00

  And I became super fascinated with that. And I actually wanted to go and like build a competitor to Teespring in Boston. And I was like a high school student and I ended up coding up a, like a, you know, a competitor to Teespring. And then when I got around and finished a clone, I was like, wait a second. Like there's a lot more to building a business than just making a website. So I ended up emailing the CEO and I, you know, I shared what I had built and they hired me as an intern. And then after working as an intern, they were just growing like crazy at the time. So they really needed more hands and everyone at Teespring was like really, really professional. Just like really exceptional quality in terms of builders. And I just felt like it was like a good mentoring opportunity. So I asked them if I could work full time and they agreed. And the rest was history from there.

• 11:12Ryan Sean Adams?

  Do you advise this to any particular, you know, high school student that that might be listening, or is this just, you know, a road less traveled that is only suitable for a few?

• 11:21Speaker 00

  Yeah, that's tough. You know, there's a lot of, there's a lot you miss from like not going to school. I'm actually like, I'm not anti-school. I actually really love school, especially college. I think it's like incredible. I think high school too is like so formative for your like social and emotional development. So I'm actually like really bullish on school overall. I would say if you like really want it though, it's like, it's not really something I can like advise. It's more so just like, if you want it, you're gonna do it. And I wouldn't like tell someone to do it or not to do it. It's really just a matter of like what they want.

• 11:48Ryan Sean Adams?

  And what did you want about this life? What attracted you to Silicon Valley, to Paul Graham posts that you read, and now later into crypto?

• 11:57Speaker 00

  Yeah, I think just the ability to build things that are really massive was something that was just incredible to me. You know, the idea that you could have, you know, the classic Silicon Valley stories, you have these like kids who are coding up a website in their dorm room, and then they go and build like the next big thing. That was just like so incredible to me. I was like, how is that even possible? It seemed like a pipe dream. And the closer I got to it, the more I was like, oh my God, this is like real and you can actually do this. And it was just like, I was just like super addicted. I was like, I wanted it like more than anything. It just seemed fascinating to me and being able to actually like go into that world and, you know, live and work in Silicon Valley. I actually got to spend a lot of time in, there's like early

• 12:42Speaker 00

  in the Teal Fellowship, which also like funded Vitalik. They actually had this like house called Mission Control, where they hosted a lot of the Teal Fellows. So I got to like hang out there and meet a bunch of other, you know, like young kids who had dropped out to start things. And, you know, they actually had funny stories of, you know, Vitalik staying there in the early days and trying to like give people Ethereum as compensation for letting them crash on his, on their couch.

• 13:01Ryan Sean Adams?

  Really?

• 13:01Speaker 00

  And everyone was like, we don't want your Ethereum. Yeah, nobody wanted to the Ethereum and then everyone regretted that afterwards, of course, but yeah, it's just like really cool, you know, being in that IQ system, just surrounded by builders, you know, it's, there's really nowhere else like it. I feel like it's a little bit different now, but like definitely in that time, like 2014, like that era, uh, was just like really incredible for Silicon Valley.

• 13:24David Hoffman?

  What do you think about, um, this life motivates you so hard? Is it like building towards something that's larger than yourself? Is it like, to me, the whole kind of Pac-Man ecosystem between Blur and Blast? There's a little bit of like world building going on there. What about this life is so like motivating and compelling for you?

• 13:43Speaker 00

  Yeah, I think it's just, uh, it's like a very like visceral thing. I think building things is like really satisfying. And I think if you're going to build something, you should try to build the most significant thing you can build. You know, actually, there's, there's someone that I know, he works at like OpenAI. And he said something about like, you know, people basically, uh, could increase their ambition a lot, like almost like across the board. If you talk to anyone, you could have them like 10x their ambition and that's probably like still like beneath where their ambition should be in terms of like what they can actually accomplish. I think, uh, my perspective is just like, yeah, like I really enjoy building things. Uh, and when I think that there's, you know, problems and opportunities, I want to go after it. And, uh, specifically, I really want to go after like the biggest problems and the biggest opportunities. I'm not particularly interested in like smaller things.

• 14:26Speaker 00

  Uh, I think it's like totally fine to go after that, but it's just like, I think for me, I really just want to go after like the biggest things and, um, you know, I just throw all my energy into it.

• 14:33David Hoffman?

  So when, when you get a Thiel fellowship, do you, do you get to meet Peter Thiel? Or like, how does that work? What's the, the selection process like? And just like, you know?

• 14:42Speaker 00

  Yeah, it's, it's pretty, it's pretty basic. They just like, you know, you do interviews, you chat with like the other fellows, fellows. If you've ever done like a YC application, it feels like very similar to that, uh, but a little bit more process, but you know, very, very similar to that. You do get to meet Peter Thiel, uh, at least, you know, like I did, uh, it was cool. He's, uh, it was a cool conversation, but you know, he doesn't really spend a lot of time with the fellows. It's kind of more like, you know, he, he brands the, the kids and then, uh, gives them a hundred K and then, you know, he's just like doing his thing. So I only had one conversation with him, um, but the biggest, I think the biggest benefit is actually just being able to hang out with the other fellows because it's, they do a really good job of just kind of like curating a group of, um, you know, some of like the most like motivated, uh, people, you know, of that age bracket, uh, you know,

• 15:27Speaker 00

  kind of like in, in the US, kind of in the world. So I think just that network alone is, is where most of the value is.

• 15:33Ryan Sean Adams?

  I was gonna say, that's like a good portion of the value of going to college, like going to university too, is that sort of that selection effect? And I guess you sort of get that with the Thiel Fellowship then?

• 15:44Speaker 00

  Yeah, I think you do get a lot. I would say it's different, though. Like MIT is the densest network of high caliber engineering talent that I have ever seen in my life. Like when my peers there, they're like way, way smarter than me technically. And you just go there and you know, every kid there can just, they can build anything. Like, there is really nothing that's like rocket science there, like not even rocket science is rocket science. Everything is learnable. You get access to, you know, the people that like invented the technologies that we use today. I think going there is something that's like unparalleled. The Thiel Fellowship, you kind of get that more for like entrepreneurial people, but that's different than like engineering density. So I think they're both like very valuable for different reasons.

• 16:28David Hoffman?

  Well, I know we want to focus a little bit on, more than a little bit on this episode, on Blass and that whole ecosystem, but kind of like as I intro to you, I said, Pacman is two for two on projects that have redefined the industry. How surprised would we be, should we be, if there was a third? Or do you already have ideas that you're thinking of?

• 16:48Speaker 00

  Let me just say, I would be surprised. I would be surprised.

• 16:50David Hoffman?

  You would be surprised.

• 16:51Speaker 00

  A third, yeah. I was surprised that there was a second, actually. That was never the starting intention. That one was more like very fortuitous. In some ways, I'm happy to kind of like share more about that. But yeah, I don't really go out and just like, I'm not like actively like, oh, I want to start like 20 different projects. It's just like, you know, Blass was something that I felt needed to be built. And so I started working on that. I would be surprised if there was a third, but you know, anything could happen.

• 17:18Ryan Sean Adams?

  Pacman, we started this episode like with calling you Pacman. And I gotta think that's not your actual name. Can you, can you tell us at least your nation state name, let's call it? Why did, why, where did that name come from? Why do you call yourself Pacman? Why do others call you Pacman? I think you started with a blur, you know, sort of pseudonymous, and now you're not. Can you tell us the story of how that happened as well?

• 17:45Speaker 00

  Yeah, totally.

• 17:47Speaker 00

  Yeah, Pacman is my pseudonym. I'm Doxx. My real name is Teshan. It's Teshan and Mandarin. And, you know, actually, adopting it initially, it was more so about like optionality than anything else. I had a conversation with Anish. He was at Paradigm at the time, but now he's, I think he's on like the founding team of Ritual. And he was really deep into Ethereum. So I was just like, hey, like, what do you think are the pros and cons of, you know, Doxxing versus not Doxxing? And he was saying how, you know, he actually, in retrospect, probably would have started like Anon if he could. And he said, you know, at minimum, you always have the optionality to Doxx. And, you know, it was like a free option just sounded great to me. So I decided to go with Pacman as a nickname. And yeah, it's just suck.

• 18:29Speaker 00

  One of the nice things about it that I didn't realize at the time was having a name that people know how to pronounce is actually like a huge advantage. Normally, when I introduce myself, like with my real name, it's like, you know, they're spending five minutes just trying to figure out how to pronounce the name. Just me to say, hey, I'm Pacman. And then that's the end of the conversation. It's actually extremely nice. I never really realized that benefit before.

• 18:49Ryan Sean Adams?

  Yeah. And so how did you become, like, was it your choice to become sort of quote unquote Doxxed? Or how did that happen?

• 18:57Speaker 00

  Yeah, it was, you know, my intention from the beginning was basically to Doxx. We never really went hard on the like Anon mentality. Like, if you were to actually try to be Anon, like, it takes a lot of work. You have to be like really, really thorough. And it's like, yeah, you have to be very, very thorough. It's almost always gonna get out eventually, like even the Anons in the space, like, you know, a lot of people know who they actually are, you know, behind the scenes. So for us, it was, and for me specifically, it was never something that I intended to do forever. It just felt like a convenient thing to do at the time. And then after, I think I Doxxed after the Blur Governance launched along with the token.

• 19:38Speaker 00

  And, you know, it just felt like it was getting enough attention at the time that I might as well, you know, go and kind of share with the world who I was then. So that kind of came, that was where it came from. But the, it was always intended.

• 19:50Ryan Sean Adams?

  You did it yourself before somebody else did it to you.

• 19:53Speaker 00

  Yeah, exactly. I like to be able to do it, you know, like on my own terms. Just like if I'm gonna Doxx, I might as well do it myself.

• 19:58Ryan Sean Adams?

  Now, has that changed anything for you? Like, in a post-Docs world? Is it easier? Is it better? Or it's just you really haven't noticed anything?

• 20:06Speaker 00

  You know, actually, one time I got recognized in San Francisco, which was kind of scary to me. I was like, never really expected that, ever. So, you know, besides that, I don't think it really has made that much of an impact. I would say I do, like, there are a lot of benefits to being pseudo. It's cool just being able to navigate the world without people knowing, you know, and just being able to have... I think it's really just like an optionality thing. Like, having the optionality to divulge that information with someone that you trust, like, when you want, that's really cool. Versus like, when you're docs, just like, everyone already knows by default. And I think in many ways, it's like, you can get more authentic interactions with people if they don't know your background. Versus when they know your background, it's just like, by necessity, like, that's just gonna change how they think about the situation.

• 20:48Speaker 00

  So, I think there's actually like, a lot of benefits to being anon or pseudo. But, you know, like, the docs is like, the default state for like, almost every builder in the world, like, ever. So, it's like, not that bad.

• 20:59Ryan Sean Adams?

  I wonder how much of this, too, becomes like, sort of a persona that you wear? Almost like, you know, Peter Parker has Spider-Man, right? He's got a superhero outfit and a superhero name, and is sort of a different person as Spider-Man versus, you know, Peter Parker. I don't know if this has become that way for you, Pac-Man, but Pac-Man definitely has a name in the crypto industry, I would say, and sort of a narrative associated with that. David kept mentioning, we're gonna get to these projects. Like, Blur's been an incredibly successful project. Blast has been an incredibly successful project. You as kind of like, a young wonder kid, kind of like, founder, building these things and seeing the vision for them, making them so successful.

• 21:39Ryan Sean Adams?

  I'm curious what you think the perception of Pac-Man is, kind of like, the narrative? How do you think the industry sees you?

• 21:47Speaker 00

  Yeah, that's an interesting question. I think it really depends on who you ask. I think if you ask crypto natives who are like, on-chain, I think that they would think of me favorably. Maybe they've even used Blur, maybe they've used Blast. I think they would probably enjoy that as users. I think if you talk to, you know, different crowds, maybe they think I'm like reckless or something, you know, based on what was built. So, I think it really depends.

• 22:15Ryan Sean Adams?

  Are you reckless?

• 22:17Speaker 00

  I would say, no. Although, I think there's definitely a perception of that. I wouldn't be surprised if there's a perception of that. But in general, I actually don't like taking risks, which might seem weird.

• 22:28David Hoffman?

  The perception comes from so far?

• 22:30Speaker 00

  I think it's just like optics. I think I would have to share like if you like list out like specific names, I might be able to like try to like put my head in there, you know, put my head in their like mindset. And then I think about from, from that perspective, but I think that, uh, yeah, I think it's just like optically, it's like really easy to,

• 22:48Speaker 00

  like FUD ultimately. And what I've noticed is like a lot of FUD really comes from like optics more than like fundamentals. So I think that's really what it comes down to. Usually when you get into the fundamentals, like you're, you're going to find a different story than what you see just like on the surface level on like crypto Twitter. Uh, and that's just like not, not just for me, but you know, something across the board that I've observed is that when you talk to people who are like really deep into a system, an ecosystem, they usually have a very different perspective than when you talk to people who just kind of understand things at a surface level, or maybe like to understand like the technical underpinnings of a thing. Um, and so there's kind of like different levels of narratives based on like how deep you go. So I think like on the surface level, that's, that's probably where it comes from.

• 23:30David Hoffman?

  On a surface level, what do you think, uh, just to put an archetype on it, like the classic ETH maxi, decentralization maxi, what do you think their perception is of the, the Pac-Man ecosystem is?

• 23:42Speaker 00

  Yeah, I think it really, uh, it really depends because for some of them, like some people like really, really get it. Uh, and, uh, I think that they, uh, would be like very positive. And I think other people would, uh, would, would be negative. I think if you, if there are like specific perspectives that you shared, then I think I could give my perspective on it. But what, what I typically do is I really just care about the end users at the end of the day. Uh, and I like to think from first principles is like, okay, like what are we doing and, um, how are we doing it? How do I feel about how are we doing it? Can I analyze how we're doing it and evaluate it against, you know, certain criteria that I think are important? And then from there, uh, that's basically underpinning everything that, uh, you know, I and the team is, is going to do.

• 24:24Speaker 00

  Uh, and then I pretty much ignore everything else, um, other than, you know, like the, the user perspective. So, uh, I would say I don't really have as, as a clear of a perspective on like, you know, oppositional, uh, framings. But, um, you know, if you, if you share specific ones, I could definitely talk about it.

• 24:40David Hoffman?

  Yeah, well, one of my interests in this episode is really unpacking the technical properties of what it means to have a layer two with native yield. And maybe that's kind of what you're referring to is more of the fundamentals. But I think people's, this is me sharing a perspective. I think people's like reflex when they saw the launch of Blast was they saw a founder who was very successful gamifying the launch of Blur with different strategies for getting the token like season one, you would do this activity to get this many points. I think, I think, correct me if I'm wrong, but Blur was one of the first things to do points to begin with, or just to like have seasons around like how to get the future token, really like, kind of like crescendoing and corralling a community to

• 25:24David Hoffman?

  do something that the protocol want. And this more or less spawned the points meta. And I think when people saw the launch of Blast, they saw a founder who had experience doing this and really just like turned that dial up to 11 with the launch of Blast with relatively like aggressive marketing of points, marketing of yield, blasting the layer, the native layer two, and then launching the system before it was even a layer two. So like launching a layer two, that was actually a multi-sig with aggressive incentive marketing with both points and yield. I think this was like people's spine reflex. And to this day, like for people that still haven't like looked into Blast, that's probably still their

• 26:06David Hoffman?

  perception of what Blast is. And so, hyper financialization, hyper incentives, aggressive marketing is like one, like a decent cohort of people's perception of what Blast is. Like, how would you, how would you respond to that?

• 26:20Speaker 00

  Yeah, I would think that for a cohort of like the crypto population, that definitely resonates with what I've seen. Yeah, you know, actually, some of that's very interesting about the points meta is, as far as where we were the, you know, on the Blur side, we were the first, you know, team product protocol to ever do that. What was really surprising to me was that I thought that that was going to get copied like very, very quickly. Like, I thought it was like very clear to me that this would be, you know, the new distribution model. I thought everyone was going to do And actually, it wasn't really until 15 months later, when when BLAST was released, that I think then I started seeing a lot of points starting to proliferate.

• 27:03Speaker 00

  And it's like weird, it's like 15 months is like a really long time, right? And I think it was just like, maybe like the market just kind of need to see like the track record of, of you know, like you were saying, like the two for two. And then they're like, okay, maybe there's something here. And then and then they started copying. But it was very surprising to me that, you know, other builders like didn't really pick up on it sooner.

• 27:19David Hoffman?

  FriendTech, FriendTech was definitely a very big leveraging of points. It was like the only ecosystem that I remember that came before BLAST that really leveraged points. And if I remember correctly, they also credited the whole Blur campaign as like one of their big prime motivations. Also, Paradigm shared investor in both Blur and FriendTech. And so maybe maybe they were like, hey, points work, you guys should do points.

• 27:40Speaker 00

  Yeah, yeah, definitely. I think that they, I think they came out like in the summer. So it would have been like, maybe like 12, 13 months post, you know, the initial, the first Blur campaign, which was in May of 2022. So it was May of 2022, and I think FriendTech was like August of 2023. And then BLAST was November of 2023. And then, yeah, I guess, I guess from that perspective, actually, there was like three, three like good data points. And then, and then we started seeing a lot of it. In terms of like the, you know, that that perspective that you shared, like the aggressive, like hyper financialization. And in terms of like how things are developed, that's like never the perspective.

• 28:25Speaker 00

  Like, that's never something that's like considers like, oh, how can we like hyper financialize things? Like, that's, that's like never, never actually the root of it. And even like the incentives, the incentives are always an afterthought, actually. The, the thing that's the starting point for everything is just really just, you know, where do we see gaps in the market? Where do we see problems that aren't being addressed? And then how do we provide more value to the end user? And, you know, this is a financialized market, so more value typically is very correlated with, you know, is a user making more, you know, in this system than an alternative system or the status quo? And and those are the first principles in which we're basically addressing these problems.

• 29:07Speaker 00

  And then from there, we'll, we'll design things where you think, okay, this is actually going to provide more value to the end user. And and then, you know, from there, we can design like a launch, right? And we can design a campaign, but that's always like the base of it. So. I think that those like reactions, it's like really interesting. I think those are reacting to like the surface level like outputs. But it's actually the inputs that are actually driving everything. And I think the inputs are actually way more more interesting here when you look at it. So happy to talk about that, but I know you were gonna switch topics.

• 29:36David Hoffman?

  No, that's actually exactly where I want to go. I want to go into just like, what is the secret sauce inside of the BLAST system? But before we get there, I kind of want to just like speedrun through the arc of time that got Pac-Man to BLAST. So we just got a, for the listeners who didn't listen to our first episode, Pac-Man All About Blur. Let's see if we can just like speedrun through the history of Blur. We had you on the show in February 2023 to talk all about it. So like, speedrun us through your thought process, like why launch Blur? And then what were some of the big lessons that you learned during Blur? That carried forward into BLAST and then we'll formally unpack the BLAST conversation.

• 30:13Speaker 00

  Yeah, so Blur started off, started building it in January of 2022. The impetus for Blur was actually in my own experience as a user. So I really fell in love with NFT trading in 2021. Minted up Blitmap as my first NFT. It was actually-

• 30:31David Hoffman?

  From the Loo ecosystem?

• 30:33Speaker 00

  Yes, yes. It was actually Warm Emoji. I don't know if you are familiar with him, but he's in the NFT ecosystem. And he was working with Dom Hoffman at the time. They worked on the TikTok competitor that was later like other sold or shut down. But you know, from that day, they started Blitmap and he was in one of my group chats. He was like, hey, I created this project and I think you guys should check it out. And I was like, you know what, like, why not just like throw a few hundred bucks at a time, you know, to the NFT? And I bought one and then the entire like NFT bull run happened and I ended up selling around like 25, 30 ETH. And I was just like super hooked afterwards. I was like, what is this crazy ecosystem? And I started getting really into trading NFTs. Like I was writing, you know, I was like doing some scripting, doing some like, you know, data analytics.

• 31:15Speaker 00

  And just like really getting into the ecosystem. I just really fell in love with the entire NFT ecosystem myself personally. And then as I was using the different infrastructures, I realized that everything was just like really, really inefficient. Like I as a user was, you know, feeling a lot of pain. Just like a lot of repetitive clicking, a lot of like slow load times and it's just like very frustrating. I think there's like a lot of studies on this where it's like any sort of like perceived like lag by users is like really like painful. It's like actually like infuriating for people and I I just like felt that myself, right? So I was just like, okay, there has to be a better way here. And that that was the impetus for Blur. So then we started building Blur in in January 2022. We end up launching in October of 2022.

• 31:57Speaker 00

  And basically, within three months, we went from like 0% market share to greater than 50% market share. And then now we set around like 70% market share. And that was like the kind of the the trajectory of it. So we released Blend at some point, I think it was in May, May or June of 2023. And Blend was the lending protocol, the first peer-to-peer oracle-free, you know, lending protocol for NFTs. And we integrated that and that basically became immediately the number one, like literally like within one day, the number one NFT lending protocol on Ethereum. And since then, we yeah, we just continued building and contributing to Blur.

• 32:38Ryan Sean Adams?

  How'd you do it? When you when you kind of look back at this period of history, when we go from 0% to like 70% of of market share. I mean, obviously competitors weren't sleeping either. I mean, they were continuing to build and there were some that thought the the moats around things like platforms like OpenSea were pretty hard to like, you know, hard to get over, pretty impenetrable. So what do you count to the success of Blur? Why do you why do you think it did so well and is doing so well?

• 33:05Speaker 00

  Yeah, when you looked at the landscape at the time, there were a lot of NFT marketplaces. It was like, I actually remember like looking into them like early on, like before, sorry, Blur, just because I was curious like as a user. And I kind of like, there's like a spreadsheet early on, but like 40 different NFT marketplaces. Coinbase, of course, famously was, they spent like, you know, millions and millions, I think it was maybe like hundreds of millions, like launching their NFT marketplace, which is like a total flop. Of course, there is OpenSea, there is, you know, LooksRare, there's X and Y2, there's there's so, so many attempts. The reason why there was an opportunity was just because, you know, even though there were so many attempts, no one was actually really building, uh, I think for the, the end user that kind of like fit my profile, which was like, I really loved

• 33:50Speaker 00

  trading NFTs specifically. Uh, so there is a lot of people kind of focusing on the retail aspect of things, but they weren't focusing on the trader aspect of things. And the vast majority of activity was coming from the trader side of things. Um, and so no one was actually, so even though it was like very like competitive, um, no one was actually building for the traders and we were really the first to build for the traders. Uh, and it's, and it's non-trivial to, to build like a really fast, real-time platform. So I was really fortunate that, uh, you know, my, my co-founder, um, and I, we recruited a bunch of our friends from MIT. They worked at, you know, trading firms like, you know, like Citadel and, uh, you know, like other, other firms where, you know, just building like really, uh, high-speed, low latency, uh, infra is, is like, you know, very important there.

• 34:33Speaker 00

  Um, and it's, it's like, it's non-trivial, uh, for sure. So it was a combination of like being the users ourselves and also just, um, kind of being fortunate in that our skillset was very aligned with what the market needed.

• 34:45Ryan Sean Adams?

  So, uh, Blur has obviously been very successful and so is the, the concept of, of points, which, uh, I think we, we've basically given you credit for, and I think, uh, well-deserved Pacman of, of sort of creating that, that meta in crypto and, and launching the current points craze that we're in right now. Can you talk about the genesis of, of points in Blur? Was this like a very obvious concept to you? Or like, how did this come to be and why did you do it?

• 35:09Speaker 00

  Yeah, Blur, Blur was very interesting because, um, well, obviously it's, it's like a protocol, uh, not just like a, like a startup, uh, but if you think of it like a startup, it's like very interesting because normally the startup journey is like, oh, you're supposed to like launch things quickly, iterate a bunch and actually you're going to like pivot a ton, you know, along the way because you're like thesis is going to be wrong. You're going to have to like update. Maybe you go into a cold, cold new market, you know, et cetera, et cetera. Uh, Blur was totally different. Blur was basically like before even starting on it, the entire like roadmap and what was going to be built and how it was going to be built was pretty much planned out. Um, we knew that we wanted to do a point system. We knew that we wanted to do an NFT marketplace for pro traders, uh, make it like a real-time, um, you know, Bloomberg terminal-esque experience. And that

• 35:53Speaker 00

  was, you know, all conceptualized, you know, prior, uh, prior to launch. I think the, the- Motivation behind it is, you know, our, our perspective is it's not, it's not from a perspective of like growth. It's not like marketing. Um, I think if you're thinking from a perspective of marketing, you're probably thinking about it wrong. It's more so about how do we align incentives with the users? What we wanted to do was we wanted to, uh, basically create this system where it's like, as a user, if you're contributing to the growth of this protocol, then you're going to be rewarded in the same way that if you think about like Bitcoin, it's like as a Bitcoin user, Bitcoin actually aligns incentives like so perfectly, right? It's like you, as a user, you can hold it and you can chill it, right? And that, that's actually supporting the growth of the ecosystem.

• 36:36Speaker 00

  As a miner, you can, you know, go and, uh, build out mining capacity and that increases security of the network, which is actually allows, you know, more users to come in and you're rewarded that way. So Bitcoin actually like per, like almost perfectly aligns incentives and it's no wonder that it's, you know, grown to be as big as it has been. And I think there's like the OG like incentive alignment that's just like so, so beautiful to study. Uh, when we think through like, okay, we want to, you know, build this protocol and, you know, in our view, there, there's a way to actually build a protocol where the entire market is benefiting from it. Well, how do we create a system that is basically kind of tracking people's contributions, uh, you know, to, uh, to that system? Um, and so that's, that's where the points, uh, came about.

• 37:16Speaker 00

  So it's, it's funny because I think that a lot of people would probably, not people who are like users, but people who are like, kind of like outsiders, like watching in. They might kind of think of points as this like, just like cheap gimmick in a way. Um, but it's, uh, again, like, that's just like an, an output from someone that's like not, not a user. The, the entire point of points is that it's actually incentive alignment, uh, with, with the user base. Um, and so basically we wanted to encapsulate and, and be able to measure people's contribution. And then our perspective is like, okay, from there, then they get to, uh, uh, end up basically controlling that network that they're contributing to. Uh, in a similar way to, you know, again, like with, with Bitcoin, it's like, if you build a, a miner, if you're a holder and you actually, you know, onboard more people, you're actually, you know, being rewarded for that and implicitly.

• 37:59Speaker 00

  Um, you know, that's, that's the motivation for everything.

• 38:02Ryan Sean Adams?

  So it's not about marketing, it's about incentive alignment. How's that different than marketing? So in your mind, is marketing a bit more kind of like top down, the startup, the protocol kind of like pushes that out to the masses, whereas you know, something with aligning incentives makes each individual user a marketer? How would you like, why is this not marketing?

• 38:24Speaker 00

  I think of marketing, you can consider it like, I think it's fair to say like, the output is kind of doing the job of what marketing would do. I think like that would

• 38:34Ryan Sean Adams?

  be a fair Marketing is a byproduct.

• 38:36Speaker 00

  Right. Marketing is a byproduct. So the input is incentive alignment. One of the outputs you could say is marketing. I think that would be very fair. When I think of marketing, I think of more, so it's kind of like more of a, almost like a selfish orientation. It's like, oh, how do we like, you know, sell this product to users or how do we like get this into the hands of people? It's really from the perspective of like, what's good for like a specific organization or whoever's like doing the marketing. And like, that's fine, right? Like, that's a, that's a separate thing. And it's like very valuable, actually, right? Like, there's, you need to invest in like marketing. Like, that's definitely a thing that that matters. But you know, for, for the point specifically, that's not the goal. It's not the thing that like, it's not the input that's leading to

• 39:18Speaker 00

  the design. It is like an output, though. I think that's super fair.

• 39:22Ryan Sean Adams?

  What do you think of where points have evolved up to this point, where, up to this point? Yeah, where there are so many crypto projects now that have implemented points. Are you sort of proud about your contribution here? Do you think they're doing it the right way? Do you think this is a better state than like the world of crypto 12 months ago, which basically had no points apart from the Blur project?

• 39:42Speaker 00

  It's interesting. I, what I've seen a lot of is, you know, something akin to what I would say like copy trading, where it seems like there's a lot of teams, you know, implementing these points, probably from the perspective of like marketing and them being like, this is like a good growth mechanism. And it doesn't actually seem like there's a lot of like in-depth understanding from first principles. And I think that when you're not approaching it from first principles, then the output is going to be like really, really different. You know, something that I see a lot of is, you know, something kind of akin to like farming the farmers, where they almost seem like Predatory programs that's just extracting value from the user base in a like very gamified way. And I think that's fairly suboptimal. And a similar way to like, you know, I think Bitcoin like align incentives and created something really incredible.

• 40:27Speaker 00

  But that doesn't mean that like every crypto project that ever that spawned since Bitcoin has been like a net positive to users, right? I think a lot of them have have been fairly large net negatives. That doesn't detract from what Bitcoin has done. I just think it's, you know, some projects are are kind of taking learnings from Bitcoin and implementing things again from first principles to create net value for the world. Other projects seem to kind of just maybe copy it for, you know, their own, their own reasons. And I think that ultimately it's the ones that are, you know, really think about it from first principles that are making contribution. The other ones just kind of, yeah, it's just like copy trading. It's not necessarily beneficial.

• 41:02Ryan Sean Adams?

  Go into that more. Where do current point systems go wrong, do you think? What does it mean to farm the farmers? What did you mean by that?

• 41:09Speaker 00

  Yeah, I think that if you like, you know, something that I see a lot of is there's two things. Sometimes like they're they're like very undefined timelines. That one, I think, is like really, really hard, but it's not just undefined timelines. It's undefined timelines plus basically what the incentives are doing is that it's incentivizing people to transfer money from like their wallet to the team or the protocols wallet. And so basically like what what that is doing is it means the the teams are being rewarded in the short term. And the users who are participating are, you know, hopefully rewarded in the long term. But there's almost this like incentive misalignment where it's like the teams actually have like a short time horizon in which they're benefiting. The users have a long time horizon in which are benefiting.

• 41:53Speaker 00

  And actually, in the short time horizon, the users are are losing out because they're like literally spending money and, you know, getting their wallet drained over time. And and that incentive misalignment, I think, is actually like really, really suboptimal. So, you know, I think if you look at like specific projects and you kind of like think about it from this perspective, you can see, you know, these like incentive misalignments coming coming out. Really what you want is you want, you know, all of the contributors, whether it's like the team, investors, like random users, you know, core users, like everyone ideally is incentive aligned on a similar time horizon. That that is like the best thing, but if someone's like benefiting in the short term and others are benefiting in the long term, that's misaligned.

• 42:30David Hoffman?

  This just reminds me of just the same pattern that we've seen throughout crypto, throughout all of the cycles where the ICO movement started with some of the best projects that we know of, the major one being Ethereum itself. And then as time went on, the ICOs increased in their misalignment between token issuers and ETH receivers. And surely that principal agent problem, that is, I think, more or less what you're talking about, where teams benefit in the short term, users might benefit in the long term, but as time goes on, that might becomes, you know, even more dubious and almost assured that users end up not, users end up getting kind of like exploited just because of that incentive mismatch. And this is something that I kind of see happening with the points meta. Like,

• 43:14David Hoffman?

  people are using points very effectively to get what they want done. And I'm worried as time goes on, that appropriate leveraging turns into user exploitation as kind of this meta spirals out of control. Pacman, just what advice would you have for users who are interested in points, who also don't want to lose, lose out on their stack, lose out on their weapon? Like, what advice do you have for users who are playing in the points game? How should they think about this whole thing?

• 43:41Speaker 00

  The best way to think about it, and you know, this is tough because it's like, it requires like effort and like thoughtful analysis, which takes time. And especially in this market where it's like a bull market and you have crazy opportunities, you know, popping up and you kind of have to like act fast. I think it's like really, really tough, right? It's like every, every single bull market is similar. Same thing with the ICOs, right? It's just like, oh, if you participate in Ethereum ICO, it's like you were made through that. It was like one of the best like wealth creation events, you know, in history, especially for like the general public. But then a lot of the ICOs afterward were obviously just like taking funds from users and you didn't want to like miss out on the next thing. So I think it's like really, really tough. I think that, you know, to the extent that a user can try to understand the system and get a sense of, okay, is, is

• 44:25Speaker 00

  the team that is implementing this system, are they actually incentive aligned with us as users, you know, on, on the same time horizon? Basically, if everyone's in the same boat, then I think that that's probably a good heuristic. If the users are in one boat and, you know, other people are in a different boat, whether it's like the team or investors or, you know, other counterparties in the system. If they're on like a different boat and you're not on that boat, then you're probably on the wrong boat. At the end of the day, maybe it still works out, but you know, I think it's much more dangerous. So I think thinking about it from that perspective.

• 44:58David Hoffman?

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• 45:43David Hoffman?

  to promising projects that help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantel.xyz and follow them on Twitter at @zeroxmantle. It's everyone's favorite season in crypto: tax season. And crypto tax is always an absolute headache, especially for all you degens out there. But it doesn't have to be a nightmare. That's where CryptoTax Calculator comes in, the software built for degens by degens. As Coinbase's official global tax partner, CryptoTax Calculator focuses on making complex transactions into easy ones, supporting over 300,000 currencies across Ethereum, Arbitrum, Optimism, as well as 1,000 other integrations as well. It's as simple as connecting your wallet, pulling in all your transactions, and following the automated suggestions

• 46:27David Hoffman?

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• 47:55David Hoffman?

  Let's finally get into BLAST, the subject matter of the episode. All of that, I think, was five or six or seven different ways to enter into the BLAST conversation, and now we're finally here. But really, starting at the very, very beginnings. Where did the idea for BLAST come from in the first place? Because you already had Blur. Blur is already a project that you could spend your whole entire life building that whole kingdom. But BLAST is also an entirely brand-new, very ambitious project. Where did the idea for BLAST come from? Why does the world need BLAST? Why do you need to build BLAST?

• 48:27Speaker 00

  With BLAST, the intention was never to start up another project. That was like, one, contributing to one is enough effort. Doing two simultaneously is extremely exhausting. But BLAST came about for a number of reasons. One of them was actually informed by my experience contributing to Blur. So at a certain point, we started looking at layer twos. I think layer twos in general is pretty obvious. They're the future. Someone having to spend like $50 in gas on an NFT on L1, that just really prices out a ton of use cases and possibilities of what NFTs, which is like non-fungible digital assets, can be.

• 49:12Speaker 00

  We were really digging into the various L2s. I was fortunate to be able to talk with, you know, pretty much like every team, you know, like the founders of the various L2s, uh, you know, had, uh, you know, my co-founder digging into them as well from a technical perspective. And the thing that really stood out to me after doing that investigation was as, as a, and this is from the perspective of a builder, right? Cause there's, there's different perspectives that you have to consider here, but from the perspective of a builder, you know, behind one of the largest, you know, L1 apps, right? If you go out to and look at like the, the gas consumers, you know, um, blur is consistently uh, one of the top ones. Um, so from the perspective of a builder from one of those apps, uh, I didn't find any L2 particularly compelling.

• 49:55Speaker 00

  Um, they seemed to all offer pretty much the same thing. Um, and it was really confusing to me because I was like, okay, you know, actually when I, my, my perception of L2s as a bystander, right? This is like as an outsider, again, and the outsider perspective is usually the perspective that you can kind of discount the most, uh, usually, at least she's like weighted the least, but as an outsider, initially I was like, oh, these L2s are like super differentiated, like, you know, this one has this feature and this one has this feature and they all, they all talk about different things and, you know, they're all, they're, they're all kind of have their stake in different aspects of the market. Um, so that was like my perspective. And then once I actually dug into it, I was like, wait, actually like as a builder, I don't really find any of these like particularly compelling. Um, that, that was one.

• 50:38Speaker 00

  Another one was, you know, on, on the blur side, uh, you know, and a problem that we experienced was that the, the blur pool had around like a hundred million dollars in it, uh, you know, since, um, uh, since like February, basically of, of 2023. And that ETH was just sitting there not earning any yield. Um, and we realized early on, we're like, wait, this is like a ton of ETH in the pool. Uh, if yields could be earned from this, uh, it could, it could, uh, be really utilized in a helpful way, right? It could fund further contributions. It could go back to the users, um, like those would be great things. But when we dug into it from a technical perspective, it was not really feasible to go ahead and take advantage of the yield just due to the transactions and the gas and just like the mechanics, like what needed to be done.

• 51:22Speaker 00

  So we had this, you know, pool with a ton of ETH and there's value that could have been unlocked from it. And we just were never able to tap into it. And then basically, you know, those were kind of like two underlying principles. You know, BLAST came about from identifying, you know, after digging into the L2 market, realizing that, you know, there is this large gap that wasn't filled and that none of these L2s were offering yield to the users. And, you know, when we think about yield, it's a really important concept because ultimately, you know, there's, there's two high level principles that you kind of hold to be true. Uh, one is that, you know, markets will march towards efficiency. Uh, and two is that liquidity will flow to where it can get the highest yield.

• 52:03Speaker 00

  And if you think about the different types of yield, uh, there's a lot of history that you can study. You know, one, one example of yield, uh, of course, is, uh, the, you know, the quote unquote risk free rate that, uh, the Fed controls, right? And, and this raising this or lowering this by even like a few bips actually has like drastic impacts on the economy and it's how they actually, you know, control and influence inflation. And just with, uh, you know, a few percentage points, they're able to actually like drastically have, you know, significant impacts on the economy. And if you look on-chain, uh, there now exists on Ethereum, you know, a similar, you know, low risk yield in the form of ETH staking. And so Ethereum as an L1, uh, had this yield, right, is around, around three to 4%.

• 52:44Speaker 00

  And that alone sucked up around, you know, like $20 billion of liquidity, uh, into the various like liquid staking, uh, protocols. Uh, now it's probably more, I haven't tracked recently. But that was the case on the L1s, but on the L2s, all of them had a baseline interest rate of about 0%. Um, and when I realized that, that really stood out to me. I was like, wait, like the, the interest rate is 0% on L2s when it's actually, you know, around three to 4% on L1s. Uh, and so the realization was that we could actually basically have a zero to one moment. We could raise the interest rate from 0% to around three to 4% by implementing native yield, uh, into the L2. Uh, there's a big question initially on whether that was even possible. Uh, we had to make really significant changes, um, uh, as well as just like coming up with like fairly novel mechanisms

• 53:29Speaker 00

  to actually make that native yield possible. Uh, that was like step one, but once we That that was possible. We're like, okay, this is clearly the future. This actually enables a lot of really interesting things. One is obviously for the users. Now they're just, you know, earning more by default. So like blast users as a whole are earning around a hundred thirty million in annual yield, just by keeping their, you know, ETH and stables on blast. But actually, from a developer's perspective, it actually enables you to build new kinds of depths and specifically new business models that aren't really possible anywhere else. And once we realized this, we're like, okay, this is clearly going to be, you know, like where the future lies. And that's where we, you know, threw the energy into. So again, it wasn't like a premeditated thing. We didn't like plan

• 54:11Speaker 00

  on going out and, you know, my co-founder, we didn't plan on starting up an L2. We weren't like, oh, the L2 market is like a big market and we want to get into that. That was not at all the intention. Really, it was us as users, as builders, in this case, you know, looking at L2s. Basically realizing that none of them were particularly interesting for us as builders. And then from there realizing, oh, like what, you know, this, this is the shape of something that actually would be really interesting and valuable to us.

• 54:35David Hoffman?

  All right. So Arbitrum, Optimism, Polygon, they're all going after like EVM Ethereum equivalents. And you were looking around the layer two landscape and saying, well, there's not a lot of differentiation here. And then noticing just the massive opportunity there is in just like putting dormant assets to work inside of a layer two, hence blast being the natively yield bearing, natively yield bearing layer two. I'll have to admit that I actually totally mid curved this when I first heard about blast in the first place where and maybe that you can actually answer this question. I always thought that like, my first impression of blast was like, why does it need to be natively yield bearing? When I could just use Lido staked ETH inside of Ave on optimism, right? And now, now I'm getting yield and I'm on optimism.

• 55:20David Hoffman?

  And so like, why, why does the layer two need to be native yield bearing instead of you could just use a staked ETH token? Send that over to your layer two and now you're just getting that yield that you would be passing along to your users on blast. But now you're just doing it in all the other layer twos. Tell me why I'm mid curve on this.

• 55:37Speaker 00

  Yeah, that's a great, great presider like that reaction is like, that's like a, I think that's like a reasonably smart person like default reaction. So like totally makes sense that like, that's like the default reaction. Um, in terms of why it's important is because fundamentally, when you think about the on-chain economy and specifically within the Ethereum ecosystem, there's a base unit of currency that people use for transacting and that's ETH. And all of this infrastructure is actually, you know, built around spending ETH as this transaction primitive. When you look at L2s, it's similar, right? Like everyone's spending ETH as a transaction primitive. And actually that as like the default transaction primitive has like that default really matters because all of the infrastructure, all of the users, they're all oriented around spending ETH.

• 56:19Speaker 00

  When you have a ERC 20 instead, um, there's a number of differences there. Uh, one is there's just like baseline, uh, just like programming differences in terms of like, you know, you need to approve the spend on an ERC 20. It's less gas efficient. Uh, there's a number of like UI UX differences between spending ETH and spending an ERC 20. Um, and then again, there's, there's a lot of, uh, default infrastructure that's built around ETH that you have to basically change to build around like an ERC 20. And there's just like a lot of path dependency, basically where because of that path dependency, using a ERC 20 is actually like really suboptimal because you're not going to get adoption within the system, uh, both from like the, the DAP side, uh, the infra side, and then also just from the user side. Uh, because users are very oriented towards spending ETH.

• 57:02Speaker 00

  So the ETH itself, and again, like it's, it's not just that it's like a, a default, but actually, you know, what you can build when you have ETH that you can spend that's earning yield versus like an ERC 20, uh, those are, those are different things.

• 57:16David Hoffman?

  Okay. So maybe we could just like kind of set, set the table here. The reason why wrapped ETH exists on the Ethereum layer one at all is because ETH is not an ERC 20 token natively on the Ethereum layer one. ETH is ETH. All the other ERC 20 tokens are ERC 20 tokens, but ETH is ETH. Uh, and so there's this mismatch there that creates the need to have wrapped ETH, which is the ERC 20 version of Ethereum that can be like used. It's used in AVE, it's used on OpenSea, it's used in Blur, uh, just to make it compatible with all the other ERC 20 tokens. And so what you're saying is that like if we denominate our layer two technically at the technical level, at the deepest level in an ERC 20 token that can open up some DeFi UX

• 58:00David Hoffman?

  new surface area, new improvements. And simultaneously, it also allows us to have native yield as the unit of account, the denomination of the BLAST layer two. Is that what you're saying?

• 58:12Speaker 00

  That's along the lines, but I want to make it clear. It's not an ERC 20 that is like the native unit of account on BLAST. It's ETH itself. And there were significant changes that we had to make to make the ETH itself natively yield bearing. And that's, that's actually what we mean when we say native yield. What's really funny is that post-launch, we've seen like a lot of competitors actually kind of like copy that wording and they say like they'll basically deploy like STEETH on their chain and they'll be like, we now have like native yield. And it's like really, it's like really funny when we see that because it's like, okay, they're copying the marketing, like they're copying the output. But they're not actually copying the input, which is like, what is the thing that's natively yield bearing? It's the ETH itself. I think a good way to like get intuition on this is imagine if like Ethereum as an L1

• 58:55Speaker 00

  suddenly made all of the ETH yield bearing, right? So you're not, you're not converting your ETH. It's not that everyone's converting their ETH into STEETH. It's that, you know, your ETH itself in your wallet is now natively yield bearing. You know, the, the effect of that would be so profound, like the second order effects of that would be so profound. It's very, very different than just STEETH on its own existing because STEETH already exists on Ethereum, right? But if you consider, if you imagine a scenario where ETH itself was the thing that was yield bearing, you'd have a very different output from like a system perspective. Now ETH, you know, can't really do that. Well, maybe, maybe at like the technical level with like certain upgrades, like maybe that would be possible. I think that, you know, that's not really something that we've really considered, like, you know, ETH and from a practical perspective is not going to do that.

• 59:37Speaker 00

  But an L2 actually can do that. And L2 can basically create an environment where it was as if Ethereum itself had ETH be the, the yield bearing asset. And again, the, the second order effects of that are quite divergent than, you know, what you have on an L1 today, which is you have ETH and STEETH.

• 59:52Ryan Sean Adams?

  It's kind of interesting, and of course Ethereum will never do this for the same like for partially maybe some of the same reasons that the US would never do this. But it's almost like, you know, US economy runs on the dollar, basically. And what if there was a, you know, a US government treasury update, which basically made all dollars into treasuries or something? And you got like the dollar plus your, you know, 5% yield or whatever the, you know, the current Fed fund rate is. That's essentially what you're doing inside of BLAST. But you're, you're making that kind of the, the unit of account, the medium of exchange for, for, for everything there is you're just providing the yield. So how does that work as a, as a user than Pac-Man?

• 1:00:33Ryan Sean Adams?

  So basically if I move some Ether over to L2, does it instantly become yield-bearing? And how about my stablecoins too? Because you're not just limiting this to ETH, right? We're also, if I move my SDC or my DAI or something like this, it magically becomes yield-bearing? Can you talk about the mechanics for someone who hasn't used BLAST before?

• 1:00:51Speaker 00

  Yeah, totally. And before I dig into that, I think that your example was really great for developing intuition on this, right? It's like, oh, like for US dollars, like, yeah, we do have options where you can deposit your US dollars into a yield-bearing account. But intuitively, you can understand that if, if everyone's US dollars, right? The dollars that you're spending from your credit card, the dollars that are in your bank, you know, the dollar that you're wiring. If every single dollar that people were using was actually yield-bearing, that would have very different effects on the system. And I think that's a great way of like developing intuition about it. And it's like a very subtle thing, right? So it's like, it's not, it's not like a media obvious, but it's a subtle thing, but it has like a profound impact. And in terms of what the user experience is, so this is actually the hardest thing. When you bridge your ETH over to BLAST, basically you'll have like, let's say you're using MetaMask, right?

• 1:01:36Speaker 00

  You bridge one ETH from mainnet to BLAST, you switch over to the BLAST network, you're going to see one ETH in your MetaMask wallet. The difference is that in a, in a year, that one ETH is going to become, you know, 1.04 ETH automatically, right? And the next year will be 1.08, next year will be, you know, 1.12, et cetera, et cetera. So as a user, you don't actually have to do anything to opt into this. It's just automatically happening and your balance, your balance is actually just like automatically accruing. And the challenge that That we had was actually making sure that we could implement the system while maintaining EVM compatibility. That was super hard. We basically had to modify, you know, low level details about how the EVM works, including the underlying storage layout for every account, for every wallet, in order to make this possible.

• 1:02:20Speaker 00

  So it was pretty significant engineering that went to it, but the output is actually like really simple. And I think that's, that's actually why it's like really easy to like dismiss it because the output is just like, oh, I deposit my ETH over to Blass and now I just have, you know, the same amount of ETH in my wallet. Optically from a user, from a UI UX perspective is actually the same. And a lot of work had to go into making that experience the same.

• 1:02:41David Hoffman?

  So that's like the technical moat around Blass is like you guys have done like the hard, low level engineering to make this thing technically feasible without breaking compatibility with the EVM ecosystem. You, you keep saying this word profound about like what this unlocks and, and all of the downstream consequences of that. Like spark our imagination here. Like what, what about this is so profound?

• 1:03:02Speaker 00

  Yeah, I think there's, there's a few different aspects of it. And frankly, I actually think that like even my understanding, because it's like, it's very hard, I think, through like second, third level effects. So like even my understanding is going to be probably like limited in terms of like what actually ends up happening and the, the differences that, that end up happening. But, you know, just like at a surface level, if you think from like DAPs, right? Like you think about every single, every single like successful DAP category. Once you have this native yield as a primitive, when you think about like the unlocks, you actually are able to unlock new business models that aren't really possible otherwise. So I think a great example is if you look at like perp decks, perp decks, they typically will go ahead and monetize off of trading fees.

• 1:03:45Speaker 00

  Right? So like, that's like very standard, but they actually have a lot of TVL, you know, like D Y D X will have like a few hundred million in TVL, GMX is a few hundred million. You know, they regularly have around, you know, like a few hundred million TVL. And what you could do with this native yield is that you can actually have a perp deck that monetizes off the yield instead of trading fees. Very, very easily. And now it's, it's a, again, it's like, it seems very simple, but it's basically like a disruptive business model approach where you can kind of be like Robin Hood. With all the the brokerages, right? Robinhood came out and they they charge everyone, you know, zero trading fees. And, you know, they coupled it with like a nice mobile app, but it was mobile app coupled with, you know, new business model. And all the other, you know, trading firms were were charging you like $5 per trade, you know, that kind of thing.

• 1:04:27Speaker 00

  And, you know, Robinhood actually, you know, had a profound impact on the market, right? On the service level, it's just like, oh, they just like charged zero fees. Like, that's that's not really, you know, something that's interesting. But actually, the the second, third level impact was that it onboarded a huge amount of of retail, you know, into trading and it's where like Wall Street Bets came from, right? And there's so many other things that happen, you know, as a result. That's just for, you know, PricewaterhouseCoopers as an example. If you look at, you know, Dex's, you know, Uniswap has like billions in TVL on L1 and across like all their different different apps. Those that TVL could be used to, one, give the yield back to the LPs. So now you're increasing the, you know, basically like the yield rate for people who are, you know, market making effectively for Uniswap.

• 1:05:11Speaker 00

  So that can actually, you know, deepen liquidity because if you increase the rewards, you're going to have, you know, more participation. Another thing that could happen is, you know, all of this drama around the Uniswap fee switch, you know, there there's a world where actually Uniswap just monetize off that yield and they never had to turn on the fee switch and they actually never have to worry about what happens when they turn on that fee switch, right? Because, you know, I guarantee as soon as Uniswap turns on that fee switch, there's going to be competitors that are trying to vampire attack Uniswap with a zero fee model. Of course, we'll have to see if it works, but you know that that's just going to happen. But and and this world is like, you could actually completely circumvent that entirely because now you have a protocol that can fund itself in this, you know, kind of invisible way because people don't really like feel yield intuitively. I think that's why I like, you know, that's why I like the the dollar supply increasing is like so invisible to people, right?

• 1:05:56Speaker 00

  Inflation is like so invisible to people on the hell it gets like really bad. So there's a lot of things that you can do with it that you you can't really do, you know, without having that primitive built in.

• 1:06:06David Hoffman?

  Historically, inside of the Ethereum ecosystem, we've illustrated ETH staking as like the opportunity cost. Like the 3.5%, 3.8% rate that you get from staking your ETH is the payment that the Ethereum protocol is paying you to forego any other opportunity costs that you would have in DeFi. And this is true, like when you put your ETH into the ETH-USDC pair on Uniswap, you're not staking your ETH, right? When you're lending out your ETH inside of Aave or Compound, you are not staking your ETH. You're getting rewarded for it, but it comes at the cost of not being able to also stake your ETH. And so it's really always been like, do you either stake your ETH or you use DeFi and you never really get to do both?

• 1:06:49David Hoffman?

  But really, you've, you know, seem to place a lot of emphasis on the aligning of incentives. Maybe one very simple way to articulate what BLAST is, is it's DeFi and staking rather than DeFi or staking? Is that like a dumb way to put it? A simple way to put it?

• 1:07:04Speaker 00

  Yeah, I think removing the opportunity costs and changing the or to the and is like a very simple way to put it. But I think, I think that that's a good description. And again, this, this has really significant impacts because we know, we know that when, when interest rates are zero in the US, like now there is no longer this or, you know, psychology that I have to go through. It's actually, it goes to an and, right? Because you're, you're earning 0% anyway. So you might as well go and deploy that capital into the market. And we know that that is a very different market that we operate in than when you have interest rates at 5%. And now that or is actually quite significant. And basically we're changing the, the or to an and.

• 1:07:44David Hoffman?

  The other thing that comes to mind is that being a developer becomes a lot easier to leverage in all of the yield if you don't have to think about it. And so previously, like if you were building like GMX on Arbitrum or, or any other DeFi app anywhere else, you would have to think about like the opportunity costs that you're giving up in trying to like manually rewire yield back into your app by redenominating in like Lido Staked ETH or like staking natively inside of your own protocol. That's like overhead for all the developers who would manually have to manually have to like wire that up. And so what you've done at BLAST is just you've wired it up natively into the whole entire layer two without breaking compatibility. So like the developer overhead is much easier. Like they get efficiency out of the box by being inside of BLAST.

• 1:08:30Speaker 00

  Yeah, exactly. Although I would say it's like, it's not just like overhead, like in some cases, it's like, it might just like not even be feasible. Uh, right. Cause there are certain like contract size limitations. There's also just like gas limitations. Like if you have to, if you're taking an ETH and you have to like reroute that into a different contract to get like steeth. And then when users want to like take that out, you don't have to like unwrap the seat somehow, right? So you're probably gonna have to, you know, like sell it and maybe you're taking slippage and maybe that's just like unacceptable, right? So maybe you have to now keep like a separate pool of like each seat. So you're not actually able to like stake the entire ETH that you take in. You have to stake like, you know, 80% and then if it, if, if more than 20% gets withdrawn at a time, uh, now you have like a very difficult situation. Where like the withdrawals either take a long time or you have, uh, like, you know, incredible slippage for the users. Like, you know, it's, it's not just that it's like overhead.

• 1:09:14Speaker 00

  It might just like not really be feasible, given the, uh, you know, technical constraints and also just like the business constraints of the DAP. Um, so when you have the ETH like native, the yield bearing, uh, that, that just really changes things. Um, now that isn't to say that like DAPs can just like copy paste, you know, what's on, uh, you know, Ethereum L1 and, and put that onto BLAST and take advantage of it. Uh, they can do that and their DAPs will actually just work, um, uh, you know, fully without them having to do anything. Uh, we have like some very interesting, basically we have modes for different DAPs where they can actually either opt in to take advantage of the yield, uh, or not. And this, we, we had to design the system so that you could, uh, have this kind of like on-ramp period where DAPs can actually deploy onto BLAST before they fully taken advantage of the native yield.

• 1:09:54Speaker 00

  Um, and have this like transition, uh, in order to take advantage of the native yield, like you have, you do have to actually like change, uh, like what you're building, right? It's like, if you're, if you're building a perp DEX that's charging, you know, zero trading fees and, you know, monetizing off the yield. It's like that's, you're gonna have to code it a little bit different than if you're doing a perp DEX that, that charges fees. So it's like, it's not just like, oh, you kind of get it like without any effort, but it's more so, it actually makes it possible for you to kind of put in some of that effort to design a new system to take advantage of it. When it wasn't really possible before.

• 1:10:23Ryan Sean Adams?

  Where does this yield come from for Ether Pac-Man? So obviously it's from kind of ETH staking, right? Which is sort of, again, the risk-free rate for Ether. But is this inside some sort of a staking pool? Like is it, you know, under the covers? Is it all going into something like Lido? Or what is this coming from?

• 1:10:42Speaker 00

  Yeah, that's a great question. And, you know, actually, this is something that we saw criticism on that we were like, wow, this is people like really not getting the path forward here, which was kind of interesting to contend with. But basically, the yield for the ETH is coming from Lido. It's coming from C. The yield for the stablecoins is coming from Maker DEX DSR. And on the topic of like using Lido, this is the infrastructure that the protocol uses during this bootstrapping phase. In the long term, Lido is not going to be the only protocol used. It might not even be used at all. What's really important is that the L2 gets to choose like what strategies are applied.

• 1:11:26Speaker 00

  Lido was chosen initially because it's, you know, the largest ETH staking protocol. It has, you know, over $20 billion in it. That's like a very large security bounty. So it made a lot of sense to us to rely on that, you know, initially. But in the long term, the L2 can basically replace Lido with other additional, you know, liquid staking protocols. And actually, you know, the nice thing about this is like it can actually decentralize liquid staking even further because Lido has like a crazy amount of share, right? And all those deposits are controlled by Lido. But in this case, all the blast deposits are controlled, you know, by the L2 itself. So the community in the future could actually, you know, divest away from Lido and actually, you know, basically decentralize the staking pools even further than it is today.

• 1:12:09Speaker 00

  And that was actually something that I saw a lot of criticism on because people were like, oh, like they're using Lido, they're just like making Lido like even more of a threat to the system. It's like, no, it's actually like the best way that you could actually probably decentralize assets out of Lido in the future. You just have to think on a longer time horizon.

• 1:12:27David Hoffman?

  So are there, is there a notion of like other modules, like yield modules that you could leverage as the layer two? So Athena comes to mind as like another place to generate native yield in dollar-denominated terms. There's Eigen layer for not just ETH staking, but now also restaking for additional yield. So what is the thought about the evolution of where yield actually hooks into, into Blast?

• 1:12:53Speaker 00

  Yeah, so this is something that we're gonna have to work with the community on. I think ultimately, anything done here has to be a community-driven initiative. If it was, if it was not, I just, I think that really affects the governance of the system. Like, I think it has to be community-initiated. But to the extent that any of these initiatives are put forth by the community, I think at minimum, you know, and this is something that we, where we still have to define the, the process, right? So like, this is something that, that will come out, you know, once, you know, we're, we're writing also in like the building phase, like the bootstrapping phase, it's like all the focus is pretty much on helping DApps on the L2 actually take advantage of the native yield. So it's real, more so on the, the application layer. But when we think about like the, the yield layer and, you know, what improvements can we make there?

• 1:13:36Speaker 00

  There has to be like a lot of process that's, you know, defined for it. But I think it's really important for the community to think through and analyze like what are the risks of any of the models, right? So like, you know, Eigen is, you know, clearly like a very interesting model that has like a ton of TVL. There's a lot of people that put their trust in it, but I think Eigen is like, it's like relatively new, right? And we, I don't think they've even like turned on their, their ABSs. I'm not like super deep into the system, but it's like, you know, their slashing isn't even like possible right now, right? So you have a ton of, ton of value in the thing, but you don't actually know like how much slashing will occur. And hopefully, you know, they turn it on and there's like no slashing and everyone's just earning like a lot more yield. And you know, basically like for free, like that is like definitely the hope, but we don't actually know that yet.

• 1:14:19Speaker 00

  And that's not, that's not like a, to like to neg Eigen or anything like that. It's just like, I think for, for like the L2, when you think through like, you know, what is driving like the yield for like assets on the entire chain? You have to choose things that have a, you know, better security profile, like a better track record, you know, more lending. Right, this is why like Bitcoin is where all the value accrues because if you want something else, it's like a better digital gold. It's like you don't really have the track record. You don't have like the, you know, the trillions in, in security budget that Bitcoin has, right? Because if you can attack Bitcoin, you literally have, you know, trillions of value that you can unlock there. And they haven't really successfully attacked it yet. So, you know, that just shows that there's, uh, there's a lot of trust they can kind of put in it.

• 1:14:58Speaker 00

  You know, similarly, I think for any new strategy, whether it's like Eigen or Athena, um, you know, you really have to, uh, look at what the security profile of that strategy is. Uh, you know, I think Athena similarly like on, on the stablecoin side is like, okay, they're, they're basically democratizing the basis trade. Um, like that, that's great. That makes a lot of sense, but there's like, you know, we, we know ways in which the basis trade doesn't work out, right? If the interest rates go negative, if the, if we switch from a bull market to a bear market, um, you know, you, you can have these issues where, where now like you're not no longer earning yield, you're actually, um, you know, you're actually losing money over time, right? So you have to like really think about each of these, uh, different strategies and in terms of like, you know, ultimately it's like securing the value on, on the chain itself.

• 1:15:39Speaker 00

  So I think that, you know, will the L2, you know, basically decentralize the strategies, the yield in the future across like multiple different strategies? Like absolute yes. Uh, is that something that's going to be like super fast or should be super fast? Uh, like no, it needs to be something that's like very, very thoughtful, uh, because ultimately it's like the security of the entire chain.

• 1:15:59Ryan Sean Adams?

  Yeah. And I even wonder if you'll ever want to go there. I mean, it's kind of like when we were talking about forklifting, upgrading the US economy to, to T bills. Imagine doing that rather than T bills, yield from corporate bonds. You, even if it was like a massive company like, uh, Apple, uh, bonds, for, for example, I mean, would you really want to risk forklifting your entire economy? And, and making it run on Apple bonds rather than, uh, you know, risk, risk free rate of, of T bills is kind of the question here. And I, you know, while we were talking about rates, oh, go ahead, Pacman.

• 1:16:28Speaker 00

  I was just gonna say, like, I don't, I don't really think it makes sense to, like, have different types of yield. I think it's okay to have different providers of yield, so it's like, you know, it's, it's not Lido versus, like, lending to some random, like, firm that's like, you know, giving you some interest on that, on that rate. It's like Lido versus like, um, uh, you know, like the next biggest liquidation protocol, right? Or some other liquidation protocols. Yeah, exactly.

• 1:16:51Ryan Sean Adams?

  Um, so while we're talking about yield, we've been talking about Ether most of the time, but you also slipped in that, that stablecoins have a yield here that comes from DAI, the DSR, you said. So the DAI savings rate, I assume. So if I move dollars into this thing, uh, what happens? You know, I understand what happens with my ETH, but do I get yield-bearing dollars? And can I move USDC in this, or is it just limited to DAI? Can you describe what that, what that looks like?

• 1:17:16Speaker 00

  Yeah, definitely. Um, and actually, I'm happy to touch on this. And there's another thing which is not stressed as much, but actually really important as well, which is BLAST as an L2 actually gives all of the net gas revenue back to the DAPs. Uh, so it's, we had to come up with like pretty novel mechanisms to actually do that in a, in a secure way. And I'm happy to talk about that. Uh, and the impetus for that was like when we thought from the ground up, like, what could an L2 be? We kind of realized that that would be something that we really valued as builders. Um, but just to touch on the stablecoin side of things. So basically, when you bridge over like USCC, USCT, uh, you know, DAI, um, to BLAST, what you get on the receiving end is USCB, which is BLAST's native stablecoin.

• 1:17:59Speaker 00

  And USCB is a yield-bearing stablecoin. Uh, so, you know, basically goes from, uh, if you have one USCB in your wallet today, uh, in a year, it becomes, you know, 1.15, uh, USCB. The current, uh, you know, interest rate for USCB is 15%.

• 1:18:13Ryan Sean Adams?

  Wow.

• 1:18:13Speaker 00

  15%, yeah.

• 1:18:14Ryan Sean Adams?

  And that's coming from DSR, right? The DAI savings rate?

• 1:18:18Speaker 00

  Yeah, it comes from MakerDAO. So basically, when you bridge over, your assets are put into, uh, MakerDAO's DSR. And MakerDAO recently updated their interest rate from, uh, 5% to 15%. Um, and, and where that yield comes from is, it's a combination of things. Uh, a portion of it is in, uh, there's various, like, T-bill, like- Strategies that MakerDAO has that it's like Montessori is like Lido sale or something like that. Basically, there's some of it is in like, you know, off chain like T bills. A lot of it is also just being lent out. So, you know, MakerDAO is this this protocol where you can like deposit ETH, right? If you deposit like one ETH, you can you can basically mint like a few hundred dollars of DAI, right? It's like an over collateralized lending protocol.

• 1:19:01Speaker 00

  And basically, the borrow rate for that DAI is 15%.

• 1:19:06Ryan Sean Adams?

  That's very cool. Let me ask you, you're talking about sort of robustness of the of the system and, you know, like the different sources of these yield, how you have to be very careful. It strikes me that the entire setup, though, of this system is for like a positive interest rate environment, positive yield environment. And, you know, like recently in COVID, of course, we saw rates go into for some central banks in some countries, kind of like negative interest rate territory. I'm not saying that could happen with Ether, but it's not completely off the table. There are some protocol upgrades that might make that a possibility in the like medium to distant future. And also, the DSR could get into negative rate territory.

• 1:19:50Ryan Sean Adams?

  What happens to BLAST if some of these assets start getting like negative rates? Does capital just flood out? Or have you thought about that scenario very much?

• 1:20:00Speaker 00

  Yeah, it's a great question. And actually, it's interesting because a lot of what is implemented for these individual protocols, right, like whether it's like Lido or Maker or, you know, a lot of these different like, you know, yield bearing protocols is something that the L2 itself also implements. So pretty much like every protocol has this insurance program that they run, right? Whereas like they have this insurance pool and in the case of like adverse events, they can deploy that insurance pool to make everything whole. And, you know, for the for the most part, I'm pretty sure that hasn't really needed to be deployed. But that's what these underlying protocols, you know, utilize. And similarly, for the L2 itself, it also utilizes an insurance pool. So that insurance pool grows over time.

• 1:20:43Speaker 00

  And basically, you know, to the extent that like insurance pools of the underlying protocols are kind of like blown Then the the L2 itself has an insurance pool that can be utilized. And this entire system, it's, I mean, yeah, we can talk a lot about like insurance, like the the finance of insurance is like really, really interesting. But it's basically just like you're borrowing from the present in order to pay off like debt in the future. Right. Because like, you know, in in in a long enough time horizon, you know, maybe something adverse happens. And if you borrow enough in the present, you can actually like pay off those adverse events in the future. That's like basically how insurance works and and that's basically the same model that the L2 has.

• 1:21:17Ryan Sean Adams?

  I was thinking less insurance, though, that that that is great. And it's important to kind of cover that and more actual like rates of Ether itself going into kind of negative territory. Because there there have been some talk of this as a potential in the future. We've never done a bankless podcast because it's still kind of like research type conversation. Yes, we have. I did it with. Okay, well, so some ability for there to be like a hard cap on the number of ETH validators potentially, which you could send rates into kind of negative territory. And the reason that the protocol may want to incent for this is so that not like 100% of the ETH, you know, doesn't get staked, right? That might, Ethereum might decide that's not in the best interest of the Ethereum network. We start to get negative staking rates here, right?

• 1:22:01Ryan Sean Adams?

  I guess capital kind of floods out of the system and maybe that kind of equilibrates and balances out. Or maybe it stays negative for a while. What happens if Ether goes negative? Again, this is a hypothetical in the future, but probably comes into play if your entire layer two is based on ETH yield.

• 1:22:18Speaker 00

  Yeah, that's a great question. That's a, that's a very interesting model. If if like the L1 were to upgrade to do that, I'm sure it would be something with like months and months of like preparation ahead of time. So I can't imagine a world in which that happens and the L2 is still like staking its ETH to get like a negative interest rate. It would just, it would just operate like every other L2 and not stake the ETH. So I think like the simple answer is that it would just stop staking it in like lighter, right? It would just keep the ETH in the bridge, which is the default on on every other L2. And and the system is built to basically handle variable interest rates. So if the interest rates went to zero in that sense, because like now is no longer getting staked,

• 1:23:01Speaker 00

  then the the layer would would basically be able to update to handle that. There would, there not really need to be any changes made to do that. It would just be like, okay, now, you know, if you have a one ETH in your wallet, a year from now, it's still going to be one ETH.

• 1:23:15Ryan Sean Adams?

  Pacman, get back to this last thing that you mentioned earlier. The net gas revenue goes back to the DAP. So I actually wasn't familiar with how that worked. Can you describe how that works in BLAST?

• 1:23:25Speaker 00

  Yeah, so basically, the way every L2 works today is that the DAOs, or it might just be like the foundations behind the L2s, they're earning sequencer revenue, right? So it's like, you know, people are paying a certain amount of gas to use the L2, and then the L2 is paying a certain amount of gas to put those transactions onto the L1. And usually, there's a difference between those. And the L2 is actually like making profit and millions in profit from that net gas revenue. And those foundations typically keep that revenue from themselves, which makes sense, given their business model. But something interesting that BLAST is able to do is because it has this yield as a new primitive, it can afford to actually zero out the gas revenue.

• 1:24:06Speaker 00

  So I kind of talked about how this yield enables like new business models for DAPs that aren't possible today. But actually, it enables new business models for the L2 itself that aren't possible today as well, in that all the net gas is actually given back to the DAPs that are generating the transactions. And this is, I also think that this is really interesting, because now you can kind of build new types of DAPs that monetize in different ways, right? Like, if you have a DAP that isn't really accruing a lot of TVL, but is actually just like used a lot, right? Like, maybe it's like the Disperse app, right? Or like, you know, some random DAPs like that. You can actually monetize that DAP through the gas, because they can basically just like call a function to basically send all the net gas revenue to like a separate address.

• 1:24:50Speaker 00

  So that's like one model. The other thing is you can have like assets, whereas like maybe instead of having like a token where you charge like a 5% tax, maybe you can just have the token basically give all the net gas to the creator. And now you can have like a new business model, you know, like for that token. Similar with like an NFT. It's like, oh, every time that NFT gets traded or used in like a game, whatever the net gas is, it actually could be sent back to the creator. So that's like another primitive that I'm really excited about. But any of these new primitives is going to take time for it to play out. Like, it's, you know, we've only been live for, at this point, 18 days. Days. I'm really, really happy with where the ecosystem is today. It's like over a billion FTVL in the DAFs. It's like the second largest L2 by DAP TVL, right?

• 1:25:35Speaker 00

  Third largest by Bridge TVL, but second by DAP TVL, which I think is, you know, just as important, if not more important. But in terms of like the builder lifecycle, to take advantage of these primitives, it takes like a number of months to actually go and, you know, build something new. Like if you're like a legit team and you're building something that's providing value to the end users, like that's probably going to take you at least three to six months. And that's if you're like a really quick team. So I think it's going to take a long time to kind of see this play out. But it is a primitive that I'm very excited about.

• 1:26:00David Hoffman?

  There's recently a competition of sorts that happened on Blast for all these different projects that are incubating themselves on Blast. There's like a hackathon of sorts where there was like competition for Blast points and like support from the Blast team. What kind of projects did you see? What would the, if you just kind of gave us the lay of the land of the projects that are building on Blast, what do they kind of look like? What are you excited about?

• 1:26:23Speaker 00

  Yeah, so the purpose of the Big Bang, honestly, the name, the name was like fairly descriptive. The purpose was basically just to kind of like start up the ecosystem from zero. And so we actually focused on very basic categories. Those were, you know, perp decks, spot decks, lending protocols, you know, NFTs, gaming, you know, social fi. So those were the key categories that we focus on. And we focus on those, you know, those are categories that like everyone already knows. We focus on them because, you know, this is a new layer. We need to bootstrap the ecosystem with this, you know, fundamental infrastructure that we know exists on every layer, right? You know, a spot tax is going to exist on every layer. You know, a perp tax is going to, you know, a lending protocol is going to. So those were the types of apps that we saw.

• 1:27:07Speaker 00

  Something that was really exciting to us is we saw the level of like nativeness that we saw amongst submissions. I think before the competition, we kind of just assumed like, you know, if you look at like every L2, like they kind of have all the usual subsects, right? They have like Uniswap deploying, they have like AVE deploying. You know, you have that like same basic infrastructure and it makes sense for those, you know, applications to go and, you know, deploy on those L2s. But the thing that I was really curious about was like, Okay, how many of these teams are actually going to be like BLAST native teams? Whereas like they're very clearly tied to the BLAST ecosystem. And you know, some of them are actually doing interesting things with the yield already, or some of them are planning to. But you know, regardless of where they are at in that like development lifecycle, like they're bought in and they're building.

• 1:27:52Speaker 00

  And that was the thing that stood out to me the most. If you look on like DeFi Llama right now, if you look on the dApps and you look at like which ones have TVL, pretty much like every top app that has TVL is a app that only exists on BLAST. It's not on other chains, it's like a BLAST native team. That was the thing that was really impressive to me. Like it was not something that we like planned for or something that we hoped for. But the fact that you know, that was kind of like an organic development was really cool.

• 1:28:18David Hoffman?

  Right, and this is because you can't just copy and paste like AVE or Uniswap on to BLAST, because you actually do have to rewrite some of the code to fit the native yield-bearing nature of BLAST, correct?

• 1:28:30Speaker 00

  Yeah, it's a little bit different actually. So you can, you can just copy paste AVE and Uniswap. Actually, I'm pretty sure the Uniswap Foundation is like deploying on BLAST like this week or something like that. They had reached out, so it's like you can actually just deploy, because we set up the system such that dApps can actually opt in to take advantage of the yield. And we did this so that you could have existing players or existing contracts that you know are tried and proven, deployed very, very quickly. But in order to actually do something with the native yield, you do have to modify the contracts in order to do that. So I think that, you know, if I was like, understand like why? I don't actually know why it seemed like there are so many like BLAST-oriented teams in the competition.

• 1:29:13Speaker 00

  You know, if I were to like guess, it would be that, you know, something that we really stress is that we don't really care for things that just exist on other L2s. The only thing that's interesting to us as builders about BLAST, and the thing that I think is the only thing that makes it enduring, is that it enables, you know, new types of dApps that aren't possible on other L2s. I think that's the thing that probably is what drew a more native crowd. Of course, we're gonna have to see that play out over time. It's gonna take time for people to actually, you know, do the programming necessary to do that. But I think that just like conceptually, that's probably why it attracted more native builders. But I don't, I don't have like, I'm not like GOS, I don't really know, you know, what went inside the head of all these builders, but I think that might be why.

• 1:29:55David Hoffman?

  Yeah, maybe just to bring this conversation full circle, are you going to put Blur on Blast?

• 1:30:01Speaker 00

  Yeah, the Blur, you might have seen the Blur account tweet something in February, late February, I think February 29th. But Blur will be coming to Blast in April.

• 1:30:12Ryan Sean Adams?

  Pacman, can you update us on kind of the security? So you mentioned some of the flood or some of the criticism when Blast was first launched, right? I'm reading one crypto headline, "Blast TVL Hits 390 Million With No Product." The 3-of-5 multi-sig contract, promising airdrop in 2024 would be a top-five TVL. Basically, 3-to-5 multi-sig contract. I'm also looking on Layer 2 Beat, which is, of course, I think, a pretty objective source for the security profiles of various Layer 2s. You've got 2 of the 5 slices of the pie in green, congrats on the green slices, and then 3 in red, which I'll note is similar to OP Mainnet.

• 1:30:52Ryan Sean Adams?

  What is the current security profile of Blast? Is it still a multi-sig? Like, what does this look like?

• 1:30:59Speaker 00

  Stepping back a bit, it's the security profile of the layer is very similar to Optimism Mainnet. The original source code started off as a fork of the OP-GETH, but it's quite different now. And just to kind of give some intuition around that, OP-GETH started as a fork of Ethereum-GETH, right? Go Ethereum. The codiff between OP-GETH and GETH is smaller than the codiff between Blast-GETH and OP-GETH, the version that was originally used as a base. So because of that history, it's a very similar model from like an L2 perspective to Optimism.

• 1:31:41Speaker 00

  When it comes to the security, so every L2 bridge basically operates the same way, where every L2 basically has a multi-sig that's used for upgrades. And there's many important reasons for that, but whether it's Arbitrum, Optimism, Base, Polygon, Blast, it's all the same security model. I think the reason why Blast got so much... Uh generally so much noise for it is because I think this is one of those things where it's like for people who are like really deep into the weeds, they would understand the security model is actually the same across the board. But for people not um in the weeds, they'd be like, oh, it's like this contract, which doesn't have like a live L2

• 1:32:21Speaker 00

  uh on top of it is just like a multi-sig, like that's like a really easy like takeaway to take if you're like not really deep into the weeds. Um but if you actually get deeper into it, it's actually the reality of it is that every L2 effectively has the the same security model uh from this perspective. Now, they might operate in different ways. But when you consider like security and the different uh attack vectors, like they all kind of like share uh this like risk surface area. Um I just think that, you know, like it it was just like an optics thing. It was very easy to kind of call that out about blast specifically.

• 1:32:51Ryan Sean Adams?

  And Pacman, you are now number three, or at least blast is by total locked value behind Arbitrum and OP mainnet. And um pretty early in the journey, I would say as well. Are are you going for number one? Like, uh, you know, are you competing up the charts? Uh, is that the end destination? What do you think it'll it'll take to uh to continue to grow here?

• 1:33:10Speaker 00

  Oh, yeah, I think there's a difference between emergent outcomes versus the inputs. And for for us, the input is we want to build the L2 that provides the most value to developers and users, the the most value of of any L2. That's that's our goal. Uh, and and we see the path to getting there is, you know, you have this L2 with native yield where everyone's just earning that by default. Uh, but also now you're enabling new types of applications that are actually, you know, like Robin Hood, for example, right? Like them charging, you know, zero fees, that's actually providing more value to the market than if they had charged uh no fee. So it's like these business model unlocks, it's not just like, oh, it's a new business model. It's like, no, this is actually providing more value to the market. This is why these like disruptive business models get adopted in the first place.

• 1:33:54Speaker 00

  So the only thing driving us is that we want to build the L2 that provides the most value to end users and developers. I do think that an emergent outcome of that is that, you know, conditioned on accomplishing that goal, we would be the largest L2 uh by TVL and usage. Uh, but the the input is really just, you know, how do we provide the most value?

• 1:34:10Ryan Sean Adams?

  Are you are you going to join join the OP superchain? Is is that part of the roadmap or have you already?

• 1:34:16Speaker 00

  No, it's different because my understanding, I actually have only loose understanding of the OP stack chain. My understanding is that it's basically all OP stack forks, right? It's basically like each chain is like a copy paste of the OP stack base. And they're basically just like different instances of it. So it's like different, like go to markets maybe. But BLAST is like very different from optimism at this point. So it wouldn't, I don't even know if it would be like technically possible. I don't know like what can like, is it actually like a technical thing when something's part of the superchain? Or is it just like an OP stack fork is technically part of the superchain? But either way, it wouldn't be part of it just because it's quite different now.

• 1:34:54David Hoffman?

  Yeah, to answer some clarity on that, it starts off being an OP stack fork. And then beyond that, then you can opt into the optimism collective and then you're a part of the superchain. If you're technically differentiated from the OP stack fork, you can still become a part of the superchain. It is just another technical lift in order to formally enshrine BLAST version of the OP stack as a verified thumbs up part of the OP stack superchain optimism collective.

• 1:35:22Speaker 00

  Is that like a more of like a governance, like vibes thing? Or is it like a technical thing? Like could Arbitrum become part of the superchain? Or is it just like a label?

• 1:35:30David Hoffman?

  Arbitrum cannot become part of the superchain because you have to be an OP stack fork to start there. I mean, like, maybe that's technically not true. The closer you are to be technically similar to the OP stack fork, to the actual reference code, the closer you are to getting into the superchain. But beyond that, then it turns into a vibes governance thing. So it's a little bit of both, like how technically differentiated are you? Because that is a technical lift in order to make homogenous block space a thing. But then, once you are within like reason, it's kind of like, like Argentina is never going to become part of the EU, although the EU could technically vote in Argentina, but it would still never happen. It's kind of like that. And so like being technically differentiated removes you from being part of the superchain.

• 1:36:14David Hoffman?

  But then you could still lobby to have your forked version of the OP stack as a verified part of the superchain. And then you could have like multiple BLASTs be a part of the superchain. You could have BLAST get forked into BLAST 2 and 3 and 4. And then all of those would be like approved modules inside of the superchain. But then ultimately, it is still a governance collective, unionization kind of thing. Just to provide clarity there.

• 1:36:38Speaker 00

  Yeah, that makes sense. I guess like my my model would be like, you know, if if China like thought it was valuable to become part of the EU, it maybe it would, but it's probably like not going to. It's probably gonna stay independent. I think that's probably the case for for BLAST.

• 1:36:53Ryan Sean Adams?

  Yeah, yeah, that makes sense. Pacman, this has been really cool to just understand you, understand you as a as a builder, you know, going through Blur, going through through BLAST. I'm wondering about kind of your current your current commentary on the state of just crypto right now in 2024. And in general, I guess I would I would say maybe a few themes. Of course, yield has been front and center in 2024 with everything Eigenlayer is doing. And certainly, you're contributing to to part of that with BLAST. So has Layer 2s, right? Sort of now it's being pitched of we've got the, you know, the modular stack and all of these Ethereum based Layer 2s, Ethereum line

• 1:37:31Ryan Sean Adams?

  Layer 2s, and they just got, you know, a new EIP 4844 that's decreased the gas and, you know, gas fees are down versus this monolithic approach from Solana and some of the other parallelized chains, Layer 1s that are developing. What's your take on all of this? How do you think it's going to play out specifically on the on the chain wars side of things? Do you are you like, do you like the modular approach, monolithic? You think it's going to be some of both? Who do you think kind of nets out as a winner here?

• 1:38:03Speaker 00

  Yeah, I think that when it comes to the the chain wars, you know, especially in financialized spaces, typically there's extreme power law outcomes. And I think the intuition for for Y is because, you know, there's there's network effects to these systems. Liquidity tends to concentrate. It doesn't really disperse, you know, over time. So I think the the outcome that you'll see is is kind of similar to what you see now, which is, you know, you have one dominant Layer 1, right? That's Bitcoin. Then you have the next most dominant Layer 1, which is, you know, Ethereum. And then you have the next one, which is Solana. If you look at like Ethereum to Bitcoin, it's like a, you know, like a 3x difference, like Solana to Ethereum, it's like a 2x difference. And the drop off is like very extreme after that. So I think that the the end outcome, you know, and I think L1s will like always kind of get a bid because there's always going to be people who are

• 1:38:48Speaker 00

  Like, oh, what's the next Ethereum or what's the next Lana? So I think there's always going to be, you know, some noise about that. But in terms of like, what is like the end, you know, structure? I think that it's, you know, likely the case that there's really going to be only like two to three relevant ones. You know, to the extent that, you know, Ethereum and Solana kind of have like different, you know, stakes in the sand. I think that they can like all coexist. I think that's still regardless of, you know, which, which path is like right. It's just going to be very, very clearly, there's going to be like a power law outcome, just regardless of how it goes.

• 1:39:19Ryan Sean Adams?

  Pacman, as we maybe finally close this out, it's been great. Do you have any advice to sort of, you know, I consider you sort of a, you know, Gen Z builder. I don't know if you're officially in kind of that generation, but kind of like younger.

• 1:39:32Speaker 00

  The oldest, the oldest Gen Z.

• 1:39:33Ryan Sean Adams?

  So you're an elder Gen Z at this point. Do you have any advice for any of the up and coming crypto Gen Z builders? Like what's, yeah, what would you say to them, a younger version of you?

• 1:39:44Speaker 00

  Man, it's so hard to give like generalized advice. Like I'd really have to, you know, see like a specific builder, uh, because everyone's going to have like different skillsets. I think ultimately though, I think the thing that should drive any builder is, are you able to provide net value to the end users, like differentiated value to the end users that doesn't exist elsewhere? You know, I think there is a lot of, you know, trend surfing. There's a lot of, it's really easy to kind of like look at the market and be like, oh, this is like a big market. And I should like get into it and like go and, you know, build this kind of protocol. Because this kind of protocol has been proven to be valuable, you know, by the market. I think that that is something like that I very see, that I see a lot of across the board. But that's not really the thing that's interesting.

• 1:40:27Speaker 00

  What one is I don't even think that's really how you, you know, build something great. But also it's just like, that's like not an interesting thing to do for you, like spend your time on. I think the only interesting thing is like, can you actually provide something that's like creating value for the end users or for the stakeholders that are involved? You know, if you're doing that, then I think you're probably on the right track. If you're not, then you should probably reevaluate what you're doing.

• 1:40:45Ryan Sean Adams?

  Well, thank you so much for joining us today, Pacman. This has been a lot of fun.

• 1:40:48Speaker 00

  Thanks, Pacman. Thanks guys, this was really fun.

• 1:40:51Ryan Sean Adams?

  Bankless Nation, gotta end with this. Crypto is risky. You could 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.