Is $TIA Modular Money? | Nick White

In today's episode, David delves into the interesting dynamics between Ethereum and Celestia. While Ethereum and Solana are often seen as the main rivals, Celestia shares similar design philosophies and goals but with notable differences. Is it Ethereum's true competitor? Joining us to help answer that question and much more is Nick White, COO of Celestia Labs. ------ 📣 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 🔐 SAFE | ATTEND SAFE{CON} https://bankless.cc/SafeCon ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku ------ TIMESTAMPS 0:00 Intro 5:28 Celestia 2 Years Ago 6:30 Build Whatever & DA 11:29 Celestia Design Architecture 19:15 Ethereum vs. Celestia 22:26 Celestia No Virtual Machine Trade-Offs 29:57 Sharing DA Layers & Blockchain Interoperability 37:23 Celestia Trustlessness 42:09 DA as a Commodity? 54:09 Network Effects of DA 57:35 $TIA’s Role in Celestia Ecosystem 1:01:50 Lightnodes 1:04:57 $TIA’s Moneyness 1:10:20 Execution & Settlement Layers 1:16:46 Cosmos & Celestia & Ethereum 1:21:56 Sovereign Endgame 1:26:42 Closing & Disclaimers ------ RESOURCES Nick’s 1st Bankless Episode https://youtu.be/bmSU3cZhe3U Nick White https://twitter.com/nickwh8te Celestia https://twitter.com/CelestiaOrg ------ Not financial or tax advice. 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

  Point of bill, whatever, is there's no optimal point. It's all like a trade-off curve, right? And Celestia is optimizing for a certain thing. Ethereum optimizes for a different thing. And again, also to tie it back, that's why it's not, they're not commodities. Cause they're, they're, they're just going to be very different. It's like Ethereum block space is going to be different than Celestia block space because they make different choices. They're optimized for different things. I think that like Celestia just has a different philosophy and that results in different design.

• 0:33David Hoffman?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today, we explore the frontier of Celestia and the roll-up landscape that it wants to bring into the crypto universe. Bankless Nation, there is a paper-thin wall between the design of Ethereum and the design of Celestia. These two networks are both designing for very similar outcomes. It's often discussed that Ethereum and Solana are the biggest competitors out there. But I actually think the reason why these two networks are positioned as big competitors is because the design philosophies of Ethereum and Solana are just completely opposed to each other. I suggest to you, Bankless listener, that it's actually Celestia that is the real competition to Ethereum.

• 1:16David Hoffman?

  Because it's made the same choices, optimizing for the same outcome, but with just some few key differences that we're going to unpack here on the show today. Perhaps this is also why there is a much more friendly relationship between these two ecosystems, between Celestia and Ethereum. Because despite being more meaningful competitors, our values are the same. So personally speaking, if Celestia won the Game of Thrones in crypto, I would actually still consider that a positive outcome for the preservation of crypto values in the Bankless thesis to which I hold dear. And to which other networks I could not say the same for. Today on the show is Nick White, the COO of Celestia Labs, and has been with Celestia from the earliest of days. We had Nick on the show about two years ago.

• 1:59David Hoffman?

  But since then, both Celestia and my understanding of it has grown quite a bit. And also this meme of TIA as modular money has also emerged. And whenever some token presents itself as money in the crypto space, I immediately want to go kick its tires and see where that idea holds up or where it breaks down. So let's go ahead and get right into the episode with Nick White from Celestia Labs. But first, a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken, our preferred crypto exchange in 2024. If you do not have an account with Kraken, consider clicking the links in the show notes to getting started with Kraken today. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Kraken, one of the longest-standing and most-secure crypto platforms in the world.

• 2:41David Hoffman?

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• 3:25David Hoffman?

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• 4:07David Hoffman?

  Click the link in the show notes to learn more and take your first steps towards smarter crypto management. 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 MiniPay as one of the fastest-growing Web3 wallets, Cello is seeing a meteoric rise with over 300 100 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? With Cello Layer 2, gas fees will stay low,

• 4:52David Hoffman?

  and you can even pay for gas natively using ERC 20 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. Bankless Station, I'm here with Nick White, COO at Celestia Labs. Nick, welcome back to the podcast, my man.

• 5:17Speaker 00

  Thank you, David. I think it's been almost exactly two years since I first came on Bankless, so I'm thrilled to be back.

• 5:25David Hoffman?

  Yeah, and two years ago, let me tell you, I had much less of an understanding of what Celestia is. I think even we were using Lazy Ledger as the name for this whole system, and the concept of DA was just very foreign to me. So I'm hoping to do kind of just like a reprise of that same podcast, but your host this time has a lot more knowledge to ask the right questions and take this conversation into the right direction. Celestia has like, the project has grown immensely and has really redefined an entire meta. So A, just like, congrats on the success, my man. What's it been like over the last two years of Celestia? Give us a peek behind the scenes.

• 6:06Speaker 00

  Well, it's been a grind. There's been a lot of work happening behind the scenes. You know, people like to call things overnight success or whatever, but really, the reality is it started way back in 2019, and it may be even earlier in 2018, when Mustafa and folks like John Adler, some of the co-founders of Celestia, were researching rollups and L2s back when no one was talking about them, forming the foundation of data availability sampling and all the technology that now is live and in production, and forms a basis of modularity. So it's been a huge amount of effort and work to get where we are. And I think to us, it was kind of inevitable because these things just make so much sense when you get to the bottom of it. It's like, this is the right way to build blockchains.

• 6:51David Hoffman?

  One thing I appreciate about Celestia is that there is a notion of like a logical conclusion of the design construction, like from first principles, like you can arrive at the conclusion of Celestia. And so, I mean, maybe we can kind of start there. Like Celestia's motto is build whatever. And I think going into the design construction of Celestia, people listening to the podcast will be able to understand like why and how that motto emerges. But maybe you can just like kind of walk us through like the first principles, nature of Celestia, why Celestia, it's a data availability layer. Maybe you can kind of like walk us through just the base foundations of like the theory, the thesis behind Celestia, and why might one be interested in building a blockchain that

• 7:36David Hoffman?

  starts using, starts with DA first and foremost to build like, to be at the bottom of the stack. What does it mean to build whatever? And how did you start here at DA?

• 7:44Speaker 00

  So first, what is Celestia? Well, you can think of, well, Celestia is the first modular blockchain network. And the goal of Celestia is to make it easy for anyone to securely launch their own blockchain. So you can kind of think of Celestia as an L1 that's been designed from the ground up to do one thing, which is to provide secure and scalable data availability for rollups. And so now to go like a step further, like, well, what does it mean to be a modular blockchain, right? And this is kind of what ties into the build whatever concept. Monolithic blockchains, which is pretty much every blockchain up until, you know, the first rollups and Celestia came along, were blockchains where all the

• 8:27Speaker 00

  functions were combined and coupled into one protocol. And so the nodes in that protocol had to do all the functions of running a decentralized application at one time. And you, when you do things that way, you fundamentally have a bunch of constraints that when you take a modular approach, where you decouple those functions and break them into separate protocols that are optimized for that, and that can be remixed. You get all this, you remove those constraints and you have all this freedom as a developer, as a builder, to build new things that weren't possible before. So Build Whatever is touching on this aspect of modular blockchains that really removes all the constraints and just blows the doors open in what's possible.

• 9:12Speaker 00

  So that's, that's really what Build Whatever is about. It's about, so first of all, you know, what are some of the constraints to get removed? First, scalability in a modular system becomes like, is significantly better because you have a really high performance data availability network at the bottom, which provides this very cheap, scalable, secure block space. And that's enabled by data availability sampling. Then you have rollups which scale the execution part. So all of a sudden, you can have a blockchain that can have really high throughput while still being secure and trust minimized and all the things that we want. And that wasn't really possible before those two innovations. That's the first thing. Scalability, you don't have to worry about the throughput and congestion and all those kinds of things.

• 9:55Speaker 00

  You can get dedicated block space, basically, because you're running your own chain. The second thing is that you get to mix and match the different components so that you can actually choose the kinds of features that you want your chain, your application to have. So you can choose different data availability layers with different properties, different trade-offs. You can choose different execution layers, like you don't have to be just in the EVM or the Solana VM. You can choose any kind of VM or build your own custom execution environment. You can choose various kinds of fast confirmations, like sequencing schemes to have, you know, different trade-offs or different kinds of mempools that have MEV tooling or, you know, privacy-enabled features.

• 10:38Speaker 00

  And so all these different pieces can be, and you can control the economics of your chain as well, which is really important because you can, all of a sudden, instead of giving all the value back to the L1 that you built your application on, you can actually capture some of the value that you're creating as the application builder for yourself and for, for your community and your network. And so. It's all those kinds of things that, as a builder, open the door wide open to what you can build. So build whatever is like, whatever you can imagine, you can build. Like, let's, and we want to explore and encourage the exploration of this design space. Because ultimately, how, how we get from where we are to where blockchains and Web 3 are used on a daily basis

• 11:22Speaker 00

  worldwide is by, by, by app builders experimenting and showing us what's possible. Because, you know, ultimately, a lot of people also say like, oh, well, modular blockchains are just a bunch of infrastructure without real users or real applications. Well, and, and so it's like, you know, you guys are just really just, I don't know, it's kind of like a, uh, I don't know, you guys aren't actually thinking about the, the end product or what, like the real users, right? But really, modular blockchains are about that. And it's about experimenting and unlocking new capabilities that I think are going to be the key to figuring out how blockchains become usable, you know, for, for the rest of the world.

• 12:01David Hoffman?

  Baked into, there, there are some opinions in the Celestia model. There are opinions in every single layer one. And so I kind of wanted to like, define what the opinions are of the Celestia design architecture. First and foremost, like modularity, of course, but like, first and foremost, I think like there, the, the Celestia model is opinions that there will be many, many, many, many blockchains. And in fact, it's trying to encourage the growth of that. And what do all blockchains do is that they need to provide like assurances and verification about their state externally, so that the world can verify the state of, of all of these blockchains. And so like, um, you know, every single blockchain like with that we've had from the beginning of time

• 12:45David Hoffman?

  has some sort of just like node set internally, like Litecoin has nodes, Bitcoin has nodes, Ethereum has nodes. You know, you pick, pick your blockchain, it's got some nodes doing some verification. And that verification is some sort of data and all these nodes are verifying the data of the state of some particular chain. And so Celestia's opinion is that like, hey, like, we will be the place where That data is posted. We call this data availability. That's what Celestia is providing to the world. And there's some sort of like opinion that like data availability is like at the bottom of the stack. Because in order to have verification of all of these blockchains, we need to verify the proofs, the state proofs of all of these different chains. And so like, I think one of the opinions of Celestia is that it's a multi-chain world.

• 13:30David Hoffman?

  There's going to be infinity of different chains. And actually, like, not only was there, we can actually encourage that. And we can actually support more and more chains by actually doing one of the, one of the jobs that all chains have, which is the verification of the state. And like where, whether you're an Ethereum layer two, and you are posting your fraud proofs or your blobs to BlobSpace, it's kind of doing the same role. Or to the Celestia data availability is like, there is proofs, there's statements about the state of all of these chains. And you can post them on Celestia in order to like, get the security of people able to verify the state of all these things. And so this is something that's like, this is just fundamentally true about crypto. This is not something that Celestia invented.

• 14:15David Hoffman?

  This is something that Celestia discovered and is now optimizing for. And so when I hear like, kind of the build anything model, or the, excuse me, the build whatever motto, it's, to me, it's like, Celestia is providing this like space for blockchains to do something that they all must do, which is allow for the verification of their state. Except the difference is Celestia is just being this one central place to kind of like, all of these proofs to be posted, which helps more and more blockchains kind of like manifest. That's kind of like my attempt at explaining this. How would you, how would you riff on that?

• 14:49Speaker 00

  That was great. I mean, there's so many things I want to say following that. One is, so Celestia is the most minimal blockchain that you can build. Because when you, when you go down to first principles, all that you need to build these trust minimize applications is some form of

• 15:10Speaker 00

  Ordering, which is consensus, you need to figure out like, what are the order of the inputs to this, you know, state machine, right? Because every, every application on a blockchain is a state machine, is a computer. And you're trying to make sure that everyone can verify and arrive at the same state. So if you want to be able to all arrive at the same state, you need to agree on what are the, what's the order of the inputs to the state machine? And you need to know, first of all, what are those inputs in the first place? And that's data availability. That's data publishing is maybe a better way to put it. You need to know, everyone that's participating needs to be able to see what, what, what's actually happening, right? So, but then, the actual state machine and the execution, the verification of those transactions, doesn't have to live on, on the layer one,

• 15:54Speaker 00

  on, on that chain. It can be run sort of client side, or on a different layer, a layer two, like a roll up. And so that's, that's really the insight. So, when you think of things that way, what, one way to sort of tie this back to bill whatever, is when your L1, when your layer one, your base layer is that minimal, you're kind of, you know, you're basically providing the maximal expressivity for the other, the people building on top of it. Because you've made the most minimal amount-

• 16:20David Hoffman?

  So we're, we're taking some opinion out of the layer one, to allow for all of that choice of what that opinion is to be made by all of the layer twos on top of Celestia.

• 16:29Speaker 00

  Exactly. Yeah. And so, and like, also to, to talk about monolithic blockchains, right? Like Solana, or whatever, it's sort of a one size fits all model. It's like, let us make the choice for you. We know what's best-

• 16:40David Hoffman?

  We have all of the opinions.

• 16:42Speaker 00

  Yeah, exactly. We, we're the experts. We're, we have the best execution. We have the best this and that. And just like, build on us, and we'll take care of it for you. Now that, I think there's, there's validity in that, but I think that the, the vast majority of the opportunity is in this space of giving expressivity to developers and, and app builders, because they're smart, they know what they want, right? There's no one size fits all. It's like, everyone has a different style, everyone has a different size that fits them. It's, anyway. And then, another thing about when you make the block space minimal, one, maybe one analogy that could help people, is that, it's sort of like- Like a refined sort of commodity, we can also touch on this, like refined oil

• 17:24Speaker 00

  or something that's like now been processed into something new, like a value-added product versus something that's raw and unrefined, like a pure, just a pure, like just got it out of the ground resource. And so block space that has an execution layer embedded in it, to me, like if whether it's on Ethereum base layer or a Solana, and a monolithic chain is a refined sort of value-added, like already transformed good. You can't take it back into the raw form that easily. I guess you can, like in Ethereum, you can just like post blobs, but that layer is not actually built for that. Whereas Celestia is optimized just for massive scale of the of raw block space, unrefined block space. And then you can go and like take however much you want, basically purchase it from

• 18:08Speaker 00

  the protocol and refine it to do the thing that you want. It can be jet fuel. You know, maybe you're running like an S V M L two and you want it to go really fast. So you refine the block space, the crude oil into jet fuel. Or maybe you're just like, hey, I just want to, you know, everyday EVM chain, turn it into gasoline to put it into your car. I don't know. It's that kind of mentality.

• 18:28David Hoffman?

  Yeah, I totally see that pattern. And I know you read the, an article that's going to come out this week on Bankless. I call like Celestia in this, there's an axis here on size of blocks and sophistication of blocks. Sophistication being like basically, is there a virtual machine in the blockchain or is there not? And Ethereum and Celestia actually occupy opposing corners here, where the Ethereum layer one is a small block chain. We have like small constrained data with a virtual machine. Whereas Celestia is the opposite, where it is unconstrained, as in the layer one can support like massive size, massive capacity blobs, but it doesn't have a virtual machine, because that's one of

• 19:09David Hoffman?

  the opinions that it allows. It pushes up to the higher layers to the layer twos. Interestingly, even though we occupy like kind of opposing corners here, we've taken like the opposite trade-offs, there's still a lot of like shared values and shared like philosophy here, like easy to verify clients, like even though Celestia is like kind of a big, a big block chain, since all the blocks are like simple, because they're all unsophisticated, there's no virtual machine, there's no computation here, it's still trivially easy to verify, which is also one of the goals of Ethereum. Maybe even Celestia is like even more easy to verify than Ethereum, because Ethereum, you have to actually redo computation to verify it.

• 19:46David Hoffman?

  And but like also at the same time, both are interested in like producing this layer two design space. Maybe like, correct me if I'm wrong, but I think like kind of the main difference between Ethereum and Celestia, especially now that Ethereum has 4844, it has its own blob space, whereas Celestia is like only blob space. So the only difference between Ethereum left and Celestia is that like Ethereum retains its virtual machine at the layer one. And whereas Celestia just like has no virtual machine, it's like just post your blobs. Is there any other differences that we should parse out? Or is that kind of just like the main one?

• 20:18Speaker 00

  I think that I really love that diagram, by the way of like, and I like that way of thinking about sophisticated, unsophisticated, and big blocks and small blocks. And I think that basically Celestia really believes in, yeah, big unsophisticated blocks, or I like to say big lazy blocks that are, because when you, as you add sophistication, what happens is it becomes more difficult to to verify. If you have state and execution, then the the transactions that come through, like all of a sudden to run a node and verify the chain, you have to have a bigger machine that holds that state that actually processes those transactions. Whereas the point of Celestia is that because of data availability sampling and the fact

• 21:00Speaker 00

  that it has no execution, you can run a light node. You don't, it has, you can run on your phone. It requires almost no bandwidth and no, no compute and very little storage. And yet you can basically have the assurances of verification of a full node. And when you start to add execution and state, the more state you have and the more execution you add, the the worse and worse that becomes. Basically, like you, you lose that ability and it becomes heavier and heavier to to run a node that that has like, you know, fully verifies the chain. So in Ethereum's case, you know, obviously, it started out as a monolithic blockchain. And and it's been extremely successful. There's been so much, so much application, there's so much state, so and that's the value of Ethereum, right? There's so much valuable state.

• 21:46Speaker 00

  And applications and logic on Ethereum. And now Ethereum, and so it's actually pretty, I mean, it's way cheaper than running a Solana full node, but it's actually relatively expensive to run an Ethereum full node and fully verify the chain. Now, adding the sort of sidecar of data availability through blob space and eventually like full dank sharding, kind of like gives you this sort of like dual system of like you have a monolithic stateful execution environment with this like more modular, very like, you know, specific, big, big unsophisticated blocks thing. So it's kind of this amalgam, which I think has some trade offs that are actually good and are different than Celestia.

• 22:28Speaker 00

  It's just, it's just like, so I think there's similarities, like you can think of like Celestia is very similar to like when dank sharding is fully live. But Celestia will never have this like full stateful L1 because we just, we want to be as minimal as possible because we think that, you know, we want to preserve, like as soon as you have that stable L1, every rollup that launches on top of you has to pay attention to that and run a full node of that whole execution. And we don't want to, we want to be as light as possible for the rollups to build on top of us.

• 22:59David Hoffman?

  Right. And Celestia as a platform for sovereignty is something that definitely like comes to mind here, which is exactly what you were talking about, right? So because Celestia pushes its virtual machine to the higher level, there's no, there's no virtual machine on Celestia. And so all rollups must, must make their own opinion about like what kind of virtual machine do they want? Can you talk about that trade off and like what properties that gives Celestia based rollups that Ethereum based rollups don't have? Whereas like Ethereum based rollups are also free to choose their virtual machine, but there's something different about the fact that the settlement layer for Ethereum rollups all uses the EVM. Can you talk about the difference in this model?

• 23:38Speaker 00

  This is such a great question and a great segue because so I really think this is one of the philosophical differences potentially between Ethereum Ethereum's approach to modularity and Celestia's. Now, first of all, as a disclaimer, like Celestia also believes in settled rollups, but we also very bullish on sovereign rollups. And the thing is, when you when you take the Ethereum approach where you have this

• 24:02David Hoffman?

  Is a settled rollup an Ethereum rollup? Is that is that

• 24:05Speaker 00

  Yeah, it's like a smart contract rollup. It's a rollup that like settles to other another chain and like has to like sort of it's for choice rule and sort of like the canonical chain is sort of determined by what like a bridge contract on another chain. It's also a very controversial topic as well. People remember like a year ago, like there was like months of discussion and debate on this. Anyway.

• 24:29David Hoffman?

  Wait, so Celestia rollups don't settle to Celestia because Celestia isn't a settlement layer, right? And so like they settle to themselves. They are their own layer one. Whereas what you're saying is settled rollups are there is a kind of like a hub of final settlement, which is like the Ethereum layer one or any other smart contract chain.

• 24:48Speaker 00

  Yes, well, but you can still run a settled rollup on Celestia. So there's no reason. It's just that Celestia does not want to be a settlement layer. And there's no way currently

• 24:58David Hoffman?

  A settled rollup can settle elsewhere that's not Celestia.

• 25:02Speaker 00

  Yeah, including another rollup on Celestia.

• 25:04David Hoffman?

  Right, right.

• 25:05Speaker 00

  Yes, exactly. We can unpack all that. I guess it's a little confusing, but

• 25:09David Hoffman?

  Yeah, that was here.

• 25:11Speaker 00

  I also want to say that Celestia doesn't have any means of settlement right now. And it but we are adding gonna add away and one of the downsides of this is that there's no way to bridge Tia as a token in a trust minimized way up to rollups without some form of of settlement and and but we have a plan to to solve that. So we can talk about that later.

• 25:34David Hoffman?

  Yeah, we just put like three pins in three different conversations, which I all want to come back to.

• 25:40Speaker 00

  Anyway, um, okay. So when you are Ethereum, right? Ethereum lens of like rollups. You know, starting back like in 2020, when they were first getting sort of proposed was this idea of we want to extend the throughput and the functionality and the users and the assets and all these things of the L1 itself. Like Ethereum has this rich ecosystem of users and applications and liquidity and stuff like that. We need to scale that. So the mental model of-

• 26:09David Hoffman?

  The original fight, just to really extend that, both Arbitrum and Optimism were fighting over like which one is more Ethereum equivalent? Because they are, they are trying to literally blur the lines between the layer one and the layer two by being exactly the same as Ethereum and having this like very natural continuation. This was the genesis of like the Ethereum rollup, uh, like landscape here, just to add on to what you're saying.

• 26:31Speaker 00

  Exactly. And so when you start with that mental model of what rollups should be, they're just, they're sort of subordinate. Like, you know, add-ons to the, the scale of the layer one. You, you kind of, you, you have just different assumptions about how they should work and what they should look like. And then you see that everywhere in the Ethereum L2 ecosystem, in my opinion. Most of them are just running the EVM. Most of them, uh, also pretty much all of them settle down to Ethereum. I mean, that's the whole point of building Ethereum is that there's users and assets and all that stuff. But they, they make those assumptions in their design that they, they basically need to be, they need to have this bridge contract and a lot of them have it baked in that that's like the bridge contract is sort of like the source of truth

• 27:16Speaker 00

  for their rollup. And so that's what you can think of as like this, like a non-sovereign rollup, like a settled or smart contract rollup. Now, if Celestia comes at it from a very different angle, which is more sort of from the, the Cosmos sovereign chains interpretation of what rollups are. In our minds, the rollups, there's actually no reason why rollups need to settle to another chain at all. They are actually their own blockchains in their own right.

• 27:45Speaker 00

  They just happen to run, it's like a virtual blockchain where they run on someone else, some other chain's block space. So they borrow, they pay to use a block space of another chain, and that's it. But there's no reason that they need to actually post like a proof to another chain to be able to determine the canonical chain for themselves. And so now, but there's reasons they might. Like, obviously, and this is also, there's a whole spectrum of like, well, once you start bridging to other chains, do you lose sovereignty? I happen to have my own opinion there, which we don't need to get into. But that's sort of like the big difference. And where Celestia is right now is they're actually helping a lot of Ethereum L2 chains still like

• 28:29Speaker 00

  scale by using Celestia DA while still settling to Ethereum, right? And we do that via this data availability bridge called Blobstream. We're rolling that out. Also, we deployed it on Base and Arbitrum. And the idea there is that like, you can still tap into an external data availability layer while still being able to settle to another chain. There's trade, other security trade offs there, which is that that bridge contract now makes an honest majority assumption on the external DA layer. And so it's not as good if you, if you're ultimately caring about, you know, Ethereum is my settlement, like root of trust for like the liquidity and everything,

• 29:10Speaker 00

  then you know Ethereum DA is sort of the gold standard because that is more secure from that lens, from the lens of the bridge. But as you know, our belief is that like, we're still so early in the development of blockchains that eventually like, it's going to become like, there's like rollups and like the successful rollups are going to become so big that they're no longer really necessarily have to be tied to anything. They can stand on their own. Legs and basically like all the liquidity and users and things can be native. And so I think that's sort of like we're, we're, we're thinking like that's the end game of where, where this, the stack goes. And so we want to build for that.

• 29:49Speaker 00

  And also just, I guess philosophically, we believe that like these applications, these communities that are building and using these rollups should have control if they want to of, of, of their own chain and not. Cause like when you settle to Ethereum, ultimately if you, if something happens and there's a hack or something like that, in order to change anything, you have to like change the bridge, right? Cause the bridge is a source of truth, but you can't fork your bridge unless you fork Ethereum. And so you, you end up kind of like stuck essentially, you're, you're embedded within the Ethereum social consensus and social contract rather than being on your own thing. That was a long rant and there's a lot to talk about, but I'll stop there.

• 30:30David Hoffman?

  I think maybe just one pattern I'd like to elevate. The idea when I got into crypto in, in 2017 and ever since then, honestly, there's always been this idea of like, it's a multi-layer one universe. It's a multi-blockchain universe. There's going to be so many blockchains, blockchains everywhere. And then as a result downstream of that, like meme, a lot of like interoperability chains surfaced, like chains that are trying to connect other chains. Some are like bridges, like in the 2017 world, there's like Aon network, which is like this one chain that would connect to other chains. There's a blockchain that connects to connected blockchains. And there's been this whole entire sector of like these, these like interoperability solutions that like would solve the interoperability problems of blockchains with like another blockchain.

• 31:14David Hoffman?

  And that like those of all that whole entire sector hasn't really taken off yet. But the same opinion of like, hey, there's going to be a bajillion chains is nonetheless held by both like Ethereum and Celestia. It's just like, there's this main one difference of like, instead of like adding a, a third chain to connect two chains. Instead, these two chains are just using the same sort of like shared resource being DA. And that is actually the thing that actually allows for two blockchains to actually talk to each other without having like this intermediary third chain that does that one, this like one global service. Riff on that for a second, like, cause like this is kind of the evolution of like the many chain world.

• 31:57Speaker 00

  Absolutely. I'm so glad you brought that up because that's something I wanted to talk about earlier, but then there were so many other things to mention. So that the why does it make sense to share a data availability layer? Like, why, why does it make sense for this like base layer of security like Celestia to be, to be data availability? And the reason is that data availability, it makes sense. If we're living in a world where there's tons and tons of different chains, it makes sense for them to, to share the same DA resource for a few different reasons. One is exactly like you said, data availability, there's, there's actually like an impossibility result, an interoperability for blockchains, which states if you don't, if you're not able to verify

• 32:41Speaker 00

  the other chain's data availability, you cannot have a trust minimized bridge with them. And so if you want to have these chains be able to interoperate with a high like degree of fidelity and security and economic bandwidth, you need that, they need to be sharing a common DA layer. Right now.

• 33:00David Hoffman?

  Is that just because like you reduce, you just reduce trust assumptions if we all make the same trust assumption? If we all agree to use Celestia as the place to, to, so like on, from the Ethereum side of things, right? Like a roll up organizer use Ethereum DA, Ethereum for settlement, which can be expensive, or it makes an all different choice. It makes, it'll, it'll make the choice to have an additional security assumption, which is using an external third party DA provider, which is what Celestia is. But if we all make that same external choice, then that same external trust assumption is better for all of us and we're all making the same trade off. And so that trade off actually kind of becomes more secure because more people have made it. Is that, is that what you were saying?

• 33:43Speaker 00

  Sort of, it's, I wouldn't even call it a trust assumption. It's sort of like, well, this ties into the idea of light nodes, which I was talking about earlier, right? Which is that, okay, so how does blockchain interoperability really work under the hood? Well, there's specifically when you're trying to do it in a trust minimized way. What you do is.

• 34:00Speaker 00

  So you need your blockchain, blockchain A, to verify the state of blockchain B, right? Like if I'm in a, if you're like, you're, you're, you're saying I bridged these tokens, or I did action, certain action on blockchain B that I want to trigger to, you know, mint my tokens here or do some action here, right? I need to actually, this blockchain A itself needs to be able to verify that that actually happened. Now, the way that we do this currently in the most trust minimized way, for example, like, let's say IBC, is that these two different chains, they run what's called a light client of each other, which is the same thing that certain users run, like you can run a light client on Bitcoin or whatever. And what that light client does is it basically verifies the signatures of this other chain,

• 34:45Speaker 00

  the block producers, and it says, okay, all the block producers signed off on this state. Therefore, I'm okay to trust it and do, you know, mint these coins and whatever. Now, the problem with that is that a light client makes an honest majority assumption on the other, the validator set of the other chain. If this, if this chain decides to go rogue and sign some, you know, arbitrary state, this chain has no way of defending itself. And so that's, that's what I mean.

• 35:11David Hoffman?

  It assumes that both chains are secure, when they might not be, but it assumes that they are.

• 35:15Speaker 00

  Well, it's, yeah, specifically assumes that the validators are secure, not going to like corrupt, get corrupted. The problem with that is that, like, if a rational validator, if I have a certain amount of stake, at, you know, value at stake, if, if I sign like invalid state, I get slashed for that, right? But if the amount of damage I can do to other chains that I'm bridged to is a higher, like amount of money I can steal is higher, then like, I may as well do that, right? Or like, it becomes rational, the rational choice to do it. So in this world where interoperability is based on light clients, which even to this day, like, most interoperability is not even based on light clients. Like, light clients is better than 99% of other interop. But even in this world, you have this problem, right?

• 35:58Speaker 00

  And, and, and the way that, okay, one, and tying it back to data availability, I hope, I'm not losing the listeners, is that, um, now, if we want to do this in a trust minimized way,

• 36:10Speaker 00

  What we could do is instead have this chain post an actual proof, or use proofs, rather than just like a multi-sig or like a, you know, sign, like a signature set. It can post like fraud proofs or ZK proofs of the state to this chain. Now, the problem is, and we all know that, so that's a big step in, step up in like the, the security. However, there's still another attack, which is a data withholding attack, which is this chain posts its state over there and then, but it never actually publishes the data behind that state transition. If this chain doesn't, is not able to verify that all the data is available on this chain, then it can again, break the bridge and steal all the money, right?

• 36:52Speaker 00

  So now you're stuck in this thing of like, okay, well, in order to have two chains, have totally secure interoperability, which is proof-based, not like validator signature-based, honest majority-based, trust, fully trust-minimized. They need to verify that each other's data is available. So now all of a sudden you're like, okay, well, it makes sense for us to post our data to a common data availability layer. Now, before data availability sampling came along, that didn't really make any sense because ultimately if every chain posts its data to the same DA layer, that DA layer just gets bigger and bigger and bigger. And now everyone is burdened with having to download more and more data. So every chain now has to do way, like more work.

• 37:34Speaker 00

  It basically increases linearly with the amount of, like the amount of chains and the amount of transactions. With data availability sampling, all of a sudden you make it sublinear so that we can actually share a common DA layer without increasing the load on the other chains. So now you can have this interoperability, fully trust-minimized without, in a scalable, an actually scalable system.

• 37:57David Hoffman?

  Okay. And this all kind of, this conversation all kind of spawned with, uh, Celeste has a platform for sovereignty. Sovereignty, yet, yet trustless composability. Is it trustless or is it just like, we call it trust minimized? And it's like, is it an N of one trust assumption?

• 38:13Speaker 00

  Something that I learned very early on from Mustafa is to never use the word "trustless" because there's always-

• 38:21David Hoffman?

  There's no such thing as trustlessness?

• 38:22Speaker 00

  There's no such thing as "trustless." There's always some assumptions baked into these things. But you want to be as trust minimized. And the most trust minimized that we know how to build so far is basically having some kind of execution proofs, whether it was ZK or fraud proofs, with some form of- with data availability guarantees, like data availability sampling, or if you want to, you can just download all the data. And that's, that way you're like fully secure and you're not making any assumptions. Now, the reason why, tying this back to sovereignty, you're like, why does it make sense to share a common DA layer? First of all, it's an interoperability thing. And then, and I guess why I kind of already covered it, but before, yeah, before data availability sampling, like, it didn't make sense for chains to all like couple this.

• 39:04Speaker 00

  But you also get this, this shared security of the consensus as well. Like, if you're also deriving consensus from the underlying DA layer, you don't have to have your own consensus network and your own proof of stake system. It can all be kind of within one proof of stake system. And the good thing about consensus is that it's extremely scalable because all you're doing is just voting. Like, consensus is actually one thing that is inherently makes an honest majority assumption. There's no way consensus is a subjective thing. It's not an objective like, oh, well-

• 39:38David Hoffman?

  Consensus is honest majority.

• 39:40Speaker 00

  Yeah, yeah, exactly. Whether it's proof of work, it's like you're assuming that like the majority of the miners are not going to like go back in time and start mining a different like, you know, Uncle Chain. And proof of stake, you're assuming they're not also not going to sign conflicting blocks, essentially. But the beauty of sharing this common DA layer is that you don't have to spin up your own chain from scratch. So all of a sudden, you can have consensus and data availability, which is the root of the security of your chain, out of the box. And, and, and you can pool all those resources together rather than duplicating the effort and fragmenting the security.

• 40:16David Hoffman?

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• 41:00David Hoffman?

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• 41:45David Hoffman?

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• 43:08David Hoffman?

  of DA, which is the network effects around many rollups, many, many, many rollups, all kind of like leveraging Celestia for DA. And like especially that like sublinear relationship with more rollups using Celestia for DA and how scalable it is, right? And so like technically infinite amount of room for Celestia to fit many, many rollups who can all have this like logically concluded minimized ease of verification of other chains, giving you like a maximum level of like interoperability with the retention of sovereignty. And all of this happens because of like, there's a common layer here.

• 43:52David Hoffman?

  So like, maybe DA is a commodity, but like, that's not all what Celestia is. Like, Celestia is more than that. This is my intuition of like, I think where this conversation goes. Maybe you can pick it up and run with it.

• 44:02Speaker 00

  Yeah, absolutely. I'm glad that you're talking about DA as a commodity, because this is one of the takes that I hear the most, which I think is like the most short-sighted or just like misguided, basically. Because, again, like if you think about it, right? I mean, do you think that, for example, any EVM block space is the same? Like, is block space on Ethereum L1 versus like Tron? Or like, I don't know, even let's say Arbitrum, right? All like block space, all block space is like differentiated in some way. They have different features. And just, I think people just think like, "Oh, well, data availability, it just sounds like, oh, I'm just putting my data somewhere and like, you know, it could be anywhere."

• 44:45Speaker 00

  So like, it's trivial to just spin up more data availability. But the reality is that data availability is just another name for block Block space. It's just unrefined block space, but it has all the same properties of block space in other contexts. So like if you, if you, unless you think that literally all block space is a commodity, then you should not think that DA is a commodity. And I, I think there's a lot of others, like one way I've heard kind of this expressed, this idea expressed with some, I think someone in the Ethereum community uses analogy of like block space as a building material, right? And so this is another way of like explaining this is like, not all block space is made the same, not all DA is made equal.

• 45:31Speaker 00

  In the sense of like, there's, there's block space or data availability that's, that's flimsy. And then there's block space and data availability that's very strong and robust. And like what, you know, if I'm a builder and I'm building this whole, the whole point of blockchains, right? Is to have this shared state in a trust minimized way. And if I'm building my application and I choose certain building materials, like something that's flimsy, I'd say like particle board or something like I like the house I'm going to be able to build or the tower or whatever is going to be like, just frankly, not very sturdy. Right? And maybe that's okay for your, your specific thing. But for the, the majority of like use cases and like the, the real essence of what makes blockchain is useful.

• 46:14Speaker 00

  You want something that's very sturdy, like steel that you could just like, you could build like a tower. Like, and the social scalability of that is so much greater. So it's like, it's kind of like this, this building material analogy is one way to think about it. And Celestia's goal is to be the most sturdy, trust minimized and yet scalable DA. So it's like, so it's cost effective. You might also might think like, well, okay, if it's, well, if it's made out of steel, you know, it's going to be more expensive than if I bought just like plywood or like particle board or something. And they're like, yes, absolutely it will be like, if you want to just use DA on AWS S3 or something like that, go for it. And that's going to be cheaper, obviously, but you're going to pay for it.

• 46:52David Hoffman?

  Post your DA's tweets on Twitter. It's great.

• 46:55Speaker 00

  Yeah, exactly. Exactly. Right. But you're going to pay for it in other ways. And so like, but the goal of Celestia is like, maybe, maybe, okay, this is maybe a good thing. Like, okay, maybe Ethereum block space right now, right, is like steel. It is like the most, it is like insanely secure, like, like so many people running nodes, like all these, you know, different features. Celestia is perhaps not as sturdy yet for now.

• 47:20Speaker 00

  But it's cheaper. So maybe you think of it like carbon fiber. I don't know if carbon fiber is like actually cheaper than

• 47:26David Hoffman?

  Definitely not cheaper, but.

• 47:27Speaker 00

  Okay, never mind. That's a bad analogy. Imagine something that's like not quite as strong, but cheaper to build on and still extremely sturdy.

• 47:35David Hoffman?

  Build houses out of wood.

• 47:37Speaker 00

  Yeah, yeah. Well, I'll think more about what the specific analogy could be, but that's the way to think about it. It's not a commodity. Now, within each block, like within Celestia, like block space is kind of created equal. So you could think of it as a commodity within like all Celestia specific block space, all Ethereum specific block space is a commodity. But then you even have Ethereum breaking out its block space into like execution block space and DA block space, right? And also you can think of it like, well, top of block is actually more valuable, sort of like part of Ethereum block space. Cause there's MEV to be extracted at the top of the block. So anyway, that's just sort of me. My rant of like, DA is not a commodity. And like, I don't know, we can, we can talk more about specifically the network effects

• 48:23Speaker 00

  around block space and DA generally, which I believe are there. There's another sort of like element of this conversation.

• 48:31David Hoffman?

  Yeah, I see two pillars of this conversation. The one that you were just talking about right now, and then the second one, which you just identified, which is just like, what are the extra features that come alongside of a shelling point where everyone's using the same DA layer? And like, how can like a platform like Celestia or any other DA platform, like how can they maximize network effects? Which is, which is one part of this like DA as a commodity conversation, which I want to definitely want to get to. But I still want to hang on the first one for a second. Cause I don't, I don't think what your opinion was actually directly attacks at the heart of like the whole DA is a commodity meme. Like block space is also a commodity, like to your point, it's definitely a commodity.

• 49:11David Hoffman?

  But like block space is less commoditized, whereas I think DA is very commoditized. As in like, you can, like Ethereum produces block space, the Ethereum layer one produces block space at a very specific rate. And so it's producing this commodity, but in this very. Very constrained fashion, which is actually where Ethereum block space gets its value from. The fact that it's so constrained in its supply and production. Whereas, uh, Celestia as like the big block, big unsophisticated block blockchain, actually can like expand the supply of DA very readily to host infinity chains.

• 49:54David Hoffman?

  And so like, because there's no fundamental constraint on literally the supply of DA, we can totally compare and contrast Celestia DA with all the other DA providers. And we can say like, well, like Celestia is just like the best. It's like the best product. It's, yeah, it's the best quality out of all the DA. But it still doesn't like, address the point that like, it's Celestia can also massively expand the supply of data availability when needed to sell it to all the rollups that are purchasing it. And so I think that's where kind of the meme of like, DA is a commodity comes from.

• 50:27Speaker 00

  Yeah, here's, here's maybe a better to, to, on your, to reply to your point, maybe a better analogy is, is like, maybe Ethereum block space is like diamonds or some kind of rare, rare mineral where it's like,

• 50:40David Hoffman?

  Precious metal, yeah.

• 50:41Speaker 00

  The supply is so limited and you have to do a lot of work to like, get it out of the ground. It's insanely secure, like, you know, diamonds are like the hardest thing in the world, right? Like, you're not going to break it. But like, you know, you're, it's just difficult and the supply is fundamentally constrained, right? And what Celestia is more like, is actually more like steel where the, the ingredients to make it are very cheap and accessible and so it's, it's very scalable, right? Um, but, but it's, but it's still a great building material. It's not, maybe it's not as strong as diamond, but you can still build in, you know, really, really good things out of it. And ultimately, like, what Celestia wants to, like, what, like, okay, if we were never going to, if we want to reach web, web scale for, for, for web three and blockchains, we can't do it building out of diamonds.

• 51:24Speaker 00

  We're going to, we need to have steel or some, something like that to build all these different things. And so that's why we fundamentally believe that like, we, like, constrained supply of block space.

• 51:37Speaker 00

  Is a blocker to actual adoption, right? And, and there's, and now you're thinking like, okay, well, if it's totally unconstrained, then there's no, like, how do you price it? The price is like a, like a race, race to zero. And that's also not the case. Like, the price just needs to be higher than the cost to produce, to produce it, right? When I'm, if I'm a steel manufacturer, it's like, would I rather, like, I could sell like a thousand, I don't even know what you call those, like, you know, it's bars of steel. Yeah, yeah, exactly. Beams of steel at like a, you know, a thousand dollars a piece, or I could sell like a million of them at like a hundred bucks a piece or something like that, right?

• 52:17Speaker 00

  You, you wanna, it's better to have a low price point, but sell a lot. Like, that's how, that's how we're gonna actually make these systems work in the real world. And that's what Celestia wants to do. Rather than trying to constrain supply and, and drive the price up, it's like, have the price be low and accessible to anyone and just, you know, sell a lot of it, basically. It's like, it's economy of scale is, is sort of like the, the underlying goal.

• 52:46David Hoffman?

  Yeah. All metaphors like sadly break down. And so this is where kind of like these, these like economic resources are like metaphors are kind of like imprecise. But I think like, really the measure is like, both Ethereum and block space and Celestia blob space are both like renewable resources, but Ethereum constrains its supply and Celestia maximizes the supply. And so like Celestia regrows its block space very, very quickly because like that's kind of the nature of blob space is you can actually prune it. And so like its ability to regrow more blob space happens at a, at a very high rate and is also interested in growing it, growing like renewing its resource over and over and over again, faster and faster and faster, where Ethereum is like, yo, like, really, really

• 53:31David Hoffman?

  put a damper on how much new commodity that we are producing, because that's just what the nature of block space is.

• 53:39Speaker 00

  Yes, exactly. Yeah. And just a quick thing on like the pruning part, right? Which is that data availability is different to data storage. So like, people get mixed up. They're like, oh, man, well, Celestia doesn't store its data beyond, you know, 21 days. I think that's, that's what the pruning threshold is. But the, the reason for that is that data availability is about publishing and not about storing. And those are two different things. It's sort of like, you know, like a newspaper publishes data and distributes it around the world, but you don't expect them to have the copy of, of, you know, the newspaper from three weeks ago, like, you know, when you, when you go back and check it because it's like, well, they already did their thing. If you need it, there's a copies of

• 54:20Speaker 00

  that newspaper everywhere. Just go or go to a library and pull it out because the libraries are storing it. And libraries are more like a storage. Anyway, that's just a small aside.

• 54:30David Hoffman?

  Yeah, right. It's not, it's not the newspaper's job to retain the knowledge like humanity does that in other places. And so like their knowledge remains, but the newspapers decay.

• 54:41Speaker 00

  Exactly. Yes.

• 54:42David Hoffman?

  Okay, let's get into the, the other pillar of this conversation, which is like the specific network effects around Celestia DA or any sort of DA layer that generates network effects. Because this is the, and I think we've kind of talked about it. So we're actually kind of rehashing part of this conversation. But just like, it's one thing to talk about, say DA is a commodity or not, or it's actually a precious material. But really the separating factor between like one DA platform's quality of their DA and others is largely it's like shelling point as like a settlement network for DA. And so like, we've already talked about like when we, if we're all, if rollups are all using the same DA layer, call it Celestia, there are like tailwinds. Maybe we can just kind of run through that conversation a little bit more formally, one

• 55:24David Hoffman?

  more time about like the nature, how the quality of DA changes when everyone uses the same DA platform.

• 55:32Speaker 00

  Yeah. So.

• 55:34Speaker 00

  The, one of the main ones which we already covered, well, I'll just recover quickly, is that if every, like, the more, more rollups, the more chains are using a specific data availability layer, you get this shared security property, basically, which is, you can have, first of all, you share the same, like, root sort of consensus and ordering between the blocks. And you don't, and you have this, like, shared sort of proof of stake network at the, at the base, right? But then, more importantly, potentially, is the fact that you share this common data availability root. And there's actually, in Celestia, there's this, it's what's called the data root. And if everyone's verifying the same data root, then they get this privileged

• 56:18Speaker 00

  access to each other's state. And they can have these trust minimized bridges that allow them to have, you can really have this high fidelity, high economic bandwidth interoperability between these chains, which I think is going to be vital to achieving the actual, like, value proposition of what blockchains are supposed to be, right? And, because as soon as you sort of like bake, if you want to now, all of a sudden, you're, you're on this DA layer, you want to talk to this other chain on a different DA layer, or its own sovereign chain, whatever it is, you end up, now you're having to cross this boundary of trust that has all these limitations and security implications that, right now, we might not really care about, because we're such, like, where we are as a space is so, like, peanuts compared to where we want to be. Like, fast forward 20 years, right? Like, it's the same as the internet. Like, people throw stuff like, oh, whatever,

• 57:03Speaker 00

  it's email, blah, blah, blah. Literally, now, everything runs on the internet. That's where I believe Web 3 is going. And except, instead of just, like, data and information, it's going to be like the value. It's like everyone's livelihoods, you know, you know, the equivalent of whatever next, like, the next iteration of central banks are, and like, the whole global financial system is going to be on these things. It's not going to be a joke. It's going to be like, well, I actually want to stay within my zone of, like, if I go outside of this trust minimized zone, I'm actually taking a risk, and there's going to be a limit. Like, obviously, people will take that risk. I'm not saying that we're going to be these isolated islands. There will be bridging between these, but it's going to be constrained by those trust assumptions baked into them, and that are just inherent to the nature of blockchains, as far as we know, with this impossibility result. So,

• 57:47Speaker 00

  like, there's going to be this privileged, there's going to be, like, I would say, like, a natural sort of, like, a, like, pooling slash aggregation consolidation around specific DA layers for the, for the chains that really need trust minimized. Interoperability with each other. That's one.

• 58:07David Hoffman?

  Okay, beautiful. I want to get into the conversation of Tia, the token's role in the Celestia ecosystem. So of course, Tia gets the economic security, gives the economic security to the Celestia ecosystem. Basic proof of stake principles. I don't really think we need to define proof of stake here. But like, what is Tia's relationship with the rollups that build on top of Celestia? Like, how do these relationships emerge and progress?

• 58:36Speaker 00

  Yeah, so Tia is basically, first of all, the proof of stake token at the root of the network. It's also the token that people use to pay for block space. So whenever, if you want to, you know, if you're running a chain on Celestia, you're going to need to pay Tia to the underlying layer to purchase the block space. And the fee basically is proportional to the amount of data that you want to consume. So it's actually more similar, but the fee market is more similar to Bitcoin, which is like a byte-based fee model versus Ethereum, which is like gas-based. So that's another interesting difference there because there's no execution, there's no gas.

• 59:18David Hoffman?

  And it's linear. Is it linear to bytes? So bytes go up by one, gas or price goes up by one? Or is there?

• 59:24Speaker 00

  Basically, yeah. There's like a base fee. And then there's like, it scales up as you consume more data beyond that.

• 59:32Speaker 00

  But I think Tia, ultimately, there's like nothing, there's nothing stopping it from being used as a gas token for execution layers built on top of it, which actually could be very useful, similar to what rollups use for ETH. You may not want to issue your own token to do gas. If those rollup operators and folks using it. Already posting data to Celestia can kind of make sense to just have that also be Tia, because it kind of aligns the the cost of execution with like the same sort of unit of account, essentially, between the DA and the execution. So there's a lot of reasons why that that could make sense.

• 1:00:11David Hoffman?

  And just to put a pin in this, this is something that I've learned from David Graeber's book Debt First 5000 Years. And also, like, one of the ways that we understand money emerges in the first place is that, like, some governments have some control over some piece of land, and then they say, hey, citizens, we are going to protect you, and you are going to pay taxes. Oh, also, you're going to pay taxes in this unit of account, which is our currency that we issue. And so, go do commerce with each other, generate revenue. We charge you in taxes in this unit of account, and because you have to pay taxes in this unit of account, that unit of account becomes the money of that, like, particular domain. It's like, just a very, like,

• 1:00:51David Hoffman?

  understood way in which money emerges in a particular landscape, is that people just use the money that they are required to pay taxes in. And in taxes, in this particular, like, Web3 context, it's just like what it costs to pay for the resources that are required to make your blockchain work.

• 1:01:06Speaker 00

  Exactly. You know, that that book is something that I remember I bought it at one point, and I was like, I'm gonna read this book. I just could not get through it.

• 1:01:14David Hoffman?

  Dude, it's such a good book, man.

• 1:01:17Speaker 00

  I know, I know. Everyone says, I gotta, I, it's on my list. Anyway, that's a great way to think about it, I think. And then, similar to Ethereum, Tia can be used as, like, in DeFi, it can be used to price NFTs. And also, in the future, potentially, people could build sort of restaking-type functionality to Ethereum, to, sorry, to Celestia. So I think there's a lot of actual parallels, frankly, between

• 1:01:47Speaker 00

  Like Tia as a token and ETH as a token, it's just like very, they're like, they have very similar like uses or potential uses, like Ethereum is obviously way further along in terms of like distribution and you know, there's actually, actually people like pricing NFTs and doing all these things like in Tia's case is still very hypothetical, but there are people that I'm aware of that are, that are building these kinds of things. And so we'll, we'll see how it plays out. And, uh, and I think that's, that's one, I don't know if we were already off the topic of network effects, but there's a couple other ones that I think are, are kind of interesting to go into if that's, if that's something that we have time for. Um, one other interesting network effect around data availability specifically.

• 1:02:32Speaker 00

  And this, this is, is light nodes. And so something that we didn't talk about is that in order to have this ability for the, the block space to scale, but in a trust minimized way where it's still verifiable. You, uh, need to have a certain minimum number of light nodes that are sampling the data. If you don't have that minimum number of light nodes, the, the assumptions that, that allow you to, to call that block space trust minimized, collapse basically. And so the interesting thing is that when these, you know, networks get really, really big in the future.

• 1:03:11Speaker 00

  If you want to compete and have that much throughput, that much block space that you produce, but still have this very sturdy trust minimization, like steel property, you are going to need to have a ton of light nodes out there in the world and bootstrapping that, getting light nodes distributed, getting users and different people, entities all around the world to run these light nodes is a fundamental thing that you can't just like snap your fingers and be like, okay, all of a sudden I have, you know, 10 million light nodes all over, all over the world sampling my chain. So I think that's another really important part of this that like, you can't just replicate, you can't just fork, you know, Celestia or some other DA layer, just like you can't fork Ethereum. It's like, yeah, okay, fork Celestia and run in your basement,

• 1:03:55Speaker 00

  but no one, no one cares. And it's not trust minimized because you don't have all, all these, these things that, that are fundamental to making that possible. And then I think the last one is just, you know, integrations. And this is not necessarily like at the protocol layer, but just if you think about it. You know, the modular stack, as much as we want things to be like pluggable, the reality is I think we're still pretty far from that. And right now, to integrate different kinds of DA layers and different tools, like the amount of tools and tooling and integrations you have with execution layers and shared sequencers and all those things is actually a very fundamental sort of network effect of like, if I'm building a new modular component, where am I going to choose to build it on first?

• 1:04:39Speaker 00

  Or what is my priority going to be when I'm launching it? It's like, okay, well, I'm going to go to the DA layers that have the most, you know, users and other integrations as well. And so like Ethereum, everyone's like, everyone immediately built, if you're building a modular thing and it doesn't like, like touch Ethereum, then you're, it's like, what are you doing?

• 1:04:57David Hoffman?

  Yeah.

• 1:04:58Speaker 00

  And I think, yeah, exactly. And so it's like, well, who's, who's really going, like, that's your main user base. So that like, if without an Ethereum integration, it's kind of like, well, you know, no one, no one's, no one's really going to care. And I think that there's a similar sort of path here where there's like, ultimately going to be a limited number of DA networks that these builders are going to want to support and continuously like battle test and, and like upgrade and like maintain these integrations with. And so I think there's, there's kind of a consolidation also at that layer.

• 1:05:31David Hoffman?

  Okay. So I accidentally truncated this conversation and you brought, you brought us back to it, to the, which is just like the network effects around the Celestia ecosystem. But I also think that also bleeds back into the money conversation because like, what is money? It's just like network, it's just network effects, it's just network effects. And so like, some of these network effects, like many, many, many more light clients, I think are like loosely affiliated with the money-ness of TIA, but affiliated nonetheless, which is just like, there's some sort of like security and money are go hand in hand. Like you don't have money without security.

• 1:06:08David Hoffman?

  And so many, many, many light clients produces security for many, many more, more chains, which kind of just like fosters some sort of like emergent breeding ground for like TIA as money. Like no one can ever force money to become a thing. It's like kind of this bottom up adopted thing. As a result of just like the correct context. And I think what you're saying is just like when many rollups use the same settlement DA layer. When many light clients are securing all of these rollups, all of a sudden like we are fostering a lot of the ingredients that one would require in order to like allow for money to emerge. And I think you're continuing, the continuation of that is like, well, naturally TIA is the most logical thing to like leverage as money inside of the modular rollup ecosystem.

• 1:06:53David Hoffman?

  Is that kind of the thought process?

• 1:06:55Speaker 00

  Yeah, that is, that is the good way to summarize it. And one thing I didn't mention is that there is actually a blocker to that future currently in the way that Celestia is designed, because without execution or without like settlement, I guess, there is actually no way currently to bridge TIA in a trust minimized way to the rollups on top of it currently. And so now TIA is getting bridged there, but it's using IBC or Hyperlane or like, you know, these, these non-trust minimized options, right? And like, that kind of sucks because if you think about like Ethereum, one of the great, the great things for like the ETH L2s is that they have, they have a canonical bridge

• 1:07:38Speaker 00

  that is like, in theory, as secure as Ethereum itself. So when you're bridging Ethereum up into those rollups, it's like, it's like the purest, like that ETH is not compromised. It's like, it's like almost as close to native ETH as you can get, basically.

• 1:07:51David Hoffman?

  Unmeated ETH, yeah.

• 1:07:53Speaker 00

  Exactly, unmated, there, that's a very good way to put it. Love that. And, and so Celestia right now does not have that ability. And that was, we chose that because we thought, at the time, we were like, we would, like, there was, the only solution we could think of was basically to add execution to Celestia in order to do that. So you can have a smart contract that verifies the rollup, but that would add state and all these problems. So like, we were like, how can we do this? How can we add this functionality of being able to have a trust minimized bridge to rollups without adding complexity on state and all the, like adding baggage and weight to the L1? And we came up, Mustafa wrote this forum post on the Celestia Research Forum, I don't

• 1:08:38Speaker 00

  know, maybe over a year ago, which is basically like, described this idea of having a Snark account or a ZK account at the Celestia base layer. And essentially what it is, Is, you know, normally, you know, it's a basically a stateless way of having a bridge to other rollups and like an execution minimized way of doing it. Where normally an account on a chain, right, it has an address and a private key. And if you sign a message, if you have a signature, right, a valid signature of a certain like transaction, if it matches that address, then then the chain will execute that transaction, right, it'll consider it valid.

• 1:09:21Speaker 00

  Now, what you can do, and this is a vast oversimplification, by the way, but it's it's a, just trying to get the message across, a ZK account is essentially, instead of like the the the public key, essentially, you have a a ZK program, like a commitment to a ZK program. And if you provide it a valid proof, rather than a valid signature, that some execution happened on on the ZK program, then it will carry out that transaction, which could be like, you know, moving, moving Tia to another address. So all of a sudden, with this thing, you can have an arbitrary sort of like, it's kind of like a, I wouldn't say enshrined ZK rollup, but it's sort of like as you can

• 1:10:02Speaker 00

  have a ZK rollup that can settle to Ethereum, to Celestia, and that rollup can can be like just used as a bridge, essentially, to to get Tia up into that thing. But you can also, interestingly, likely build more interesting things, like potentially restaking and stuff like that. And so this is, this is something that we're still designing and specing out. If people are interested, we have a working group, we have a very active CIP process, so Celestia Improvement Proposals process, where there's a lot of really like giga brain people, much smarter than me, who are like designing these kind of systems. And I'm excited about that because I think that is the key to unlock this this ability and in a way that stays aligned with Celestia's values of like, we try to be minimal as possible

• 1:10:47Speaker 00

  and and not burden the rest of the rollups with like, all this state and execution.

• 1:10:53David Hoffman?

  So is this feature, is this inside of BlobSpace? Or is this kind of like making a new lane just to kind of enable this one particular feature?

• 1:11:02Speaker 00

  So Celestia is execution minimized, but it still has execution. We actually thought originally, one of the designs was like, okay, actually, we'll just have all the execution can be just a roll up on top of Celestia. But it turns out you do need a minimal amount of state for like proof of stake and doing all and all of that. And so

• 1:11:20David Hoffman?

  Kind of like Ethereum's beacon chain, right?

• 1:11:22Speaker 00

  Yeah, exactly. So there exactly, that's a very good analogy. The, so there is execution, Celestia, but it's as minimal as possible. So basically all it is like staking related things and transferring tokens. And you, and that's it. So this just adds one other feature to that state, very minimal state machine, which is like, hey, we can have these ZK accounts where you can verify ZK program on the Celestia base layer. And that can add all this like rich functionality on top of it.

• 1:11:52David Hoffman?

  Okay, so this is kind of like Ethereum started out with a very, from the Celestia perspective, like a heavyweight execution layer. And it's always been that way. And that's what Ethereum does. The Ethereum layer one does execution. Recently, in Ethereum land, we added 4844, which is like a pretty lightweight data availability sidecar. Whereas Celestia is like the heavyweight DA provider, like DA champion of the world. And now is adding a very lightweight execution module inside. And like, I don't think you like the word enshrined, but like, kind of, kind of like built into the Celestia layer one itself. In order to like, kind of like converge back to like the Ethereum model, which has

• 1:12:34David Hoffman?

  execution on the layer one, and now is adding DA, whereas Celestia is DA, now is adding a light little like execution module. I see like a ton of convergence here.

• 1:12:45Speaker 00

  I would agree, however, it's really important, right? That people get the message that Celestia is not trying to be a settlement layer. And the difference, right? Between having this ability to bridge and verify something on Celestia base layer and being a settlement layer is like, there's no way to issue tokens on Celestia. There's not even a way to bridge tokens down. There's no way to represent other tokens on Celestia. So Celestia is not a liquidity. Like a lot of settlement layers are like, okay, we'll verify your proofs and we'll have this pool of liquidity and users and whatever. And, you know, that's, that's one of the value propositions. And Celestia is not trying to do that. Celestia very, very distinctly does not want to ever be a settlement layer. We just want to be purely DA.

• 1:13:27Speaker 00

  It's just we're adding this because we think it will be useful for the bridging part and potentially some other interesting things, but not, not for settlement. So I think that's, that is sort of the difference, but you're right that there is a little bit of convergence. But Celestia, again, it's like, what's the minimum amount of things that we can do to provide the maximum amount of expressivity and functionality? And adding ZK things is, is, is one of those things that makes sense for us on the, on the trade off. Interestingly, Bitcoin, a lot of people want to do the same thing to Bitcoin. And it's because, you know, that diagram of sophisticated, unsophisticated, like both Bitcoin and Celestia have very unsophisticated block space. And in Bitcoin, people want to build these L2s, but there's no way to, they have the same problem. There's no way to bridge the Bitcoin up. So they want to add a ZK op code.

• 1:14:10Speaker 00

  Obviously, that's going to take a lot longer to, to, to ship on Bitcoin than on Celestia. But I think it's just a last point on the settlement thing. One of the reasons why Celestia doesn't want to do settlement is because we have this vision of scaling any ecosystem and being fully, like, you know, the Switzerland of DA essentially, and be very agnostic to any ecosystem. So like, obviously, most of the chains using Celestia right now are Ethereum L2s. But in the future, as there's more Bitcoin L2s, we're, we're going to provide DA to Bitcoin L2s. When there's, you know, there's a lot of Cosmos chains that are now thinking about using Celestia and some, some of them are already using something called Rollchains. So like every ecosystem, and now Base and Arbitrum, right? They're going to have their own L3 ecosystems that can use Celestia.

• 1:14:54Speaker 00

  So we're, we're trying to be this like, Underlying, very thin, minimal layer that encompasses as much and can service as much of the ecosystem as possible. And, and that's really, I mean, as soon as you start to, you know, do settlement and try to like, I feel like it compromises that your, your, your ability to be that credibly neutral, just like maximally minimal settlement layer, or sorry, DA layer. So that's, that's, that's like the difference. And like, yeah, I think there's a lot of other DA, like for example, EigenDA is very Ethereum centric, right? So like, would a Cosmos chain or Bitcoin chain use it for DA is unclear. So like, or like Ethereum DA is all opinionated with, you know, the, this, this, this very heavy

• 1:15:38Speaker 00

  settlement, like execution layer attached to it. So like, would a Bitcoin roll up use Ethereum for DA? Probably not because of, because of all those things. So like, that's, that's one of the core value props of like, the, the, the, the reason why not to go to settlement. Because so many people have, have been like, well, you guys should do settlement or whatever. We're like, no, that's like, very short sighted, in our opinion.

• 1:15:59David Hoffman?

  Just to be clear, this whole like ZK thing that we were, that Celestia is like trying to figure out how to add to the, to its chain. It is settlement, not on the Celestia layer one, but it is like cross Celestia rollup settlement. It's like a settlement module that is a service to other rollups, where that settlement doesn't happen on the layer one, but it does facilitate settlement as a module. Is that correct?

• 1:16:23Speaker 00

  Yeah, facilitates settlement specifically for Celestia, the TIA token. It's possible-

• 1:16:29David Hoffman?

  Oh, it's specifically a module for the TIA token?

• 1:16:32Speaker 00

  Well, it's a, it's a, it helped, you can control an account on Celestia with that, that can transfer TIA or do different things with, with TIA. But it's not a settlement, again, like, you can't take tokens from that rollup and then bridge them down to Celestia, and then bridge them to another rollup, if that makes sense. And I think another part of this-

• 1:16:55David Hoffman?

  It's specifically, the opinion here is it's elevating TIA the token as a first-class citizen. It already is a first-class citizen, but it's really like, it's really elevating TIA the token as a first-class citizen of its rollup landscape.

• 1:17:08Speaker 00

  Yes, exactly.

• 1:17:09David Hoffman?

  Yes. Okay.

• 1:17:11Speaker 00

  Yeah.

• 1:17:11David Hoffman?

  Which is where we get to the whole meme of TIA is modular money, right?

• 1:17:15Speaker 00

  Yes, that's, that's, that's part of it. Exactly. Yeah.

• 1:17:19David Hoffman?

  Okay. Okay. So like one thing that I'm like optimistic that Celestia brings to like its own ecosystem, the Cosmos ecosystem, I kind of like categorize Celestia inside of Cosmos, the Cosmos ecosystem, the Cosmos idea, right? What is, what is Cosmos? It's this idea of like producing like super sovereign chains. The, that's, that's a great like notion about Cosmos, but like I've always thought it's like, it's going to be unconstrained, pretty constrained as an idea because like Cosmos is like too goddamn like, it's too much of an anarchy to like really coordinate and scale because like all these chains are so massively focused on sovereignty

• 1:17:59David Hoffman?

  that they can't collectivize, they can't coordinate, they can't band together because they're all so goddamn focused on sovereignty. And so Celestia seems to be like the minimum amount, the absolutely lightest amount of compromises on sovereignty, which do exist, although they're extremely minimal, to allow for some sort of like, like shared coordination layer for this like Cosmos idea, Cosmos meme to proliferate. Whereas like, hey, guys, use the same layer for DA, maybe perhaps consider using Tia as money. But like Tia is this one like platform inside of the Cosmos ecosystem that I actually see becoming like

• 1:18:41David Hoffman?

  a shared resource by all of these independent Cosmos chains that actually produces some sort of like coordination in these chains, which I have always considered the Cosmos world to have lacked.

• 1:18:53Speaker 00

  Great way to put it. I would, I would say Celestia shares a lot of philosophical roots with Cosmos. It also frankly is built, the, the, the base chain is built with Tendermint or now Comet BFT and the Cosmos SDK. So there's like this deep root in Cosmos, but I think Celestia's vision and value prop is like quite different. So I don't, I don't like, Celestia is, is definitely part of the Cosmos community, but I think it's, it's something sort of to its own in a sense. And I actually, I think of Celestia as sort of the, the perfect middle ground or marriage of Ethereum and Cosmos. That's, that's sort of the way that I, that I think about it.

• 1:19:35David Hoffman?

  I see that.

• 1:19:35Speaker 00

  Is because like. It's exactly what you said, which is like, we, we do believe in the idea of like app chains and sovereign chains. I think Ethereum is now like also moving more towards the direction of app chains. App chains and sovereign chains, but we also believe in like shared security and coordination. Some of the things that Ethereum provides to its things that which the Cosmos ecosystem as it, as it currently is, does not have. And so like Celestia's role is like you said, to be like this minimal coordination layer and sort of like shared security layer for whatever kind of role if you want to build, whether that's sovereign or, or settled. And, and ultimately, um, you know, we're, we're, we're just, we're unopinionated.

• 1:20:18Speaker 00

  Like, yes, I, I, I frankly believe that in the long term, just technically, more and more chains will be sovereign. Because I think, I believe that like settlement and settlement layers will become less and less important as chains get more and more abstracted. And actually, my, my view is that in the long term, execution becomes commoditized. Because if you like, I'm running my application on your, on your roll up or on your shared, you know, shared layer. All of a sudden, when, when rollups are a thing and bridging becomes like trivially easy. It's just like, oh, well, as soon as I want to, whenever I want to, I'm going to just spin up my own execution layer and migrate there.

• 1:21:01Speaker 00

  And there's very little cost or downside to doing that. And so all of a sudden, it's like, it doesn't matter. But Barry from, from Skip, which is a Cosmos oriented interop, like chain abstraction project, said, said this the other day, which I thought was like, just really expresses as well. It's like, in the long term, it's going to matter less where you build as compared to what you build. Right. And we're in this world where the first thing you ask someone when they're like, say like, I'm building an app. It's like, oh, well, where are you building it? Are you building on Solana? Are you building on Ethereum? Are you building it? Blah, blah, blah.

• 1:21:33David Hoffman?

  And VCs will make venture judgments based on your answer to that.

• 1:21:37Speaker 00

  Exactly. And I think maybe there will still be a component of that of like, which DA like trust zone are you building on? Right. Because that, there is actually a reality of like, in the future, that, that is a hard boundary that. Is just set by the technology that will still matter. But in terms of like, are you building on like X EVM chain within this trust zone? Or Y chain over here won't matter. It's like wherever you're building, it's all part of like, you could, you could just like, it matters more what you build. It's like, well, what are you building? Because you will have access to all that liquidity and users and, and that the flow of that will be so much more seamless and liquid essentially in the long-term future. And that's why sovereignty, like settling and being rooted in some other chain is going

• 1:22:21Speaker 00

  to be less important because like, like rollups will be able to stand on their own two, two feet, basically, and be sovereign.

• 1:22:30David Hoffman?

  Nick, this is, this is really great. I really love this construction mainly because I think it's extremely parallel to Ethereum with just like very small divergences. I really think the difference between like the Ethereum landscape and like what Celestia is building towards is really defined by like this very marginal difference of like how sovereign are your rollups? Whereas like Ethereum's rollups are very sovereign, right? Like you can pick your virtual machine, you can pick your block space, you can build an app chain, you can like make something brand new. Like you have a lot of freedom in the Ethereum rollup centric roadmap here, but like it just makes one more opinion about like, well, you use the Ethereum virtual machine on the layer one for settlement, which is an opinion that Celestia does not have.

• 1:23:11David Hoffman?

  And making Celestia rollups like more, I will call it like marginally more sovereign, because like Ethereum's rollups, like I said, are already very sovereign, but Celestia is like, well, no, no, no, a little bit more, like literally up to the theoretical maximum of sovereignty while still preserving like this base layer of shared resources, shared interoperability, which is like this Celestia platform. So like, I actually think there's a really in the, in the end game for both ecosystems, there's actually like a pretty marginal difference as to like what each one is building for. And it really comes down to like how sovereign are each other's respective rollups? Do you agree with that?

• 1:23:49Speaker 00

  Yeah, I think that that that has an element of truth to it. And I think that, you know, obviously, if you were Ethereum, right? And you had all this rich state and all this stuff, that approach makes total sense. And I think the difference is that Celeste is starting from scratch. And so we have the ability to basically, well, first of all, actually, we had this disadvantage, or rather, not the privilege, we're not in the privileged place of Ethereum, which has all that state and users and things like that. But it's also, it's also a superpower in that, like, if you start over from scratch, it's like, well, and you were really building for the long term, long, long, long term end game. Right? What would, how would you design a blockchain?

• 1:24:31Speaker 00

  And like Zuckey, apparently, I have heard him say that when he, when he read the Lazy Deja White paper and heard about the project, Celeste, which that used to be what Celeste was called, he was like, oh, you guys are building the last blockchain. That was, that was sort of the phrasing he used. And that was also my, my feeling when I read the paper in 2020 was like, holy crap. This is like so forward thinking and like, I, I feel like if you play out the various ways that blockchains, you know, evolve, this optimizes for the end state the most of any design that I've seen. And now, to be clear, it could, that could be wrong. We could be wrong about a lot of different assumptions we make. In fact, we're guaranteed to be wrong about some things.

• 1:25:16Speaker 00

  And ultimately, there's going to be always different trade offs. And this is also comes back to build whatever is that Ethereum makes different trade offs. And that's a good thing because what we want is more optionality for builders. So like, building on Ethereum right now is actually very appealing and, and, and great. And it will probably continue to be despite this trade off of like, well, Celeste is like very minimal with no settlement and Ethereum, it does have settlement, it has state, it has execution. It's not necessarily like, the point of build whatever is there's no optimal. Point is all like a trade off curve, right? And Celestia is optimizing for a certain thing. Ethereum optimizes for a different thing. And again, also to tie it back, that is why it's not, they're not commodities because they're, they're, they're just going to be very different.

• 1:26:01Speaker 00

  It's like Ethereum block space is going to be different than Celestia block space because they make different choices. They're optimized for different things. And yeah, and like, that's great. So, um, yeah, I, I, I think that like Celestia just has a different philosophy and that results in different design.

• 1:26:22David Hoffman?

  Well, Nick, this is, this has been fantastic. This is exactly the episode that I, I wanted to record. So thank you for coming on and sharing the, the perspective on Celestia. And I wish you the best, my man. This is really cool.

• 1:26:32Speaker 00

  Thank you, David. Yeah, I mean, I'm just all fired up now. This is awesome. You ask the best questions. You have great analogies. I kept finding myself being like, oh damn, that's a really good way to explain it. So thanks for having me.

• 1:26:43David Hoffman?

  Hey, that's what, that's what we do here on Bankless. We are, we are people who do analogies and it's kind of like our one thing.

• 1:26:50David Hoffman?

  Awesome, my man. Bankless Nation, you guys know the deal. Crypto is risky. You can lose what you put in, but we're headed west. This is the frontier. It's not for everyone, but we are glad you're with us on the Bankless journey. Thanks a lot.