Alkimiya: Blockspace, the Digital Real Estate - Leo Zhang. Ep. 561

Transcript

the Fe is interesting because Fe is universal like no matter how the way that people's relation with this asset class changes Fe is always going to be something that people have to pay everyone regardless of how complex your transactions are it doesn't matter if it's a simple wallet transfer or you're doing nft Mint or you're doing like multiblock M you're trying to capture it doesn't matter the complexity you're all competing for the same resource and these resources are quite limited they can't Scale based on demand just because demand suddenly scale demand is quite ephimeral comparing to uh how in elastic Supply is so pricing the access to these resources will always be a market oriented problem welcome to EP Center the show which talks about the

Technologies projects and people driving decentralization and the blockchain revolution I'm Ryan Crane and today I'm speaking with Leo Chan who's the founder and CEO of alemia alemia which is a project that's creating a market for Block space so before we're going to talk with the it's just a a few words from our sponsors this week this episode is proudly brought to you by nosis a Visionary Collective committed to fostering and expanding applications for a decentralized future nosis is at the Forefront of innovation with nosis pay circles and metry revolutionizing open Banking and creating a superior form of money with Hashi and nosis VPN they are building a

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high yield staking to your own customers using their API your assets always remain in your custody so you can have complete Peace of Mind start sing today at chorus. one thanks so much for coming on Leo it's really great to have you on the podcast thanks for having me Brian should also mention here brief disclaimer that with course one we actually did invest in alemia tell us a little bit about like how did you get into crypto yeah for sure um I I started my career right after graduating I uh my first job was in traditional Finance I was doing uh Equity durative uh some pricing some modeling uh it was not the most uh riveting job I had to say um but

I I follow um a you know a relatively um you know stereotypical traditional Finance path for about you two three years um and in 2016 I became obsessed with Bitcoin and what and and I started going to um uh some of the meetups in New York it was still very very small at the time there are not that many people talking about it there are not many firms doing it fulltime um but in 2016 I was pretty certain that I wanted to uh I wanted to see this become a real thing fulltime uh it was a lot more exciting back then to be honest I think the possibility of this growing into a real thing U it there's a slight digression but I was

just you know looking at um you know people Cher like celebrating uh Trump speaking at Nashville uh politicians inor foring it like you know like 2016 people would be will be mind blown by you know by this but and and I know you know this is something that people wanted for a very long time right this becoming mainstream and now they black rocks picking up some countries talking about making this asset a national reserve and it's very clear now this is mainstream asset but I kind of missed the the sentiment back then when uh we're still just trying to figure out like you know what to do after the ethereum Dow hack um and but anyways um

I uh yes so I joined a small crypto Fund in New York uh around 2017 um I was a researcher there uh after Ico in 2017 there were really not that many you know interesting thing to look at so I end up spending a lot of time doing uh mining uh spinning out mining operations sourcing machines from China up data centers so that that was my um I guess journey into block space I guess um and and around around 20 um 2020 I had the sort of the vague free Mark so that was for for Bitcoin or for like other other cryptos oh there were a

lot of things GPU we with mining a lot of like smaller coins as well uh that that was the game to play at the time you know it was um some of these smaller small model projects and use GPU to mine it for a while and it pumps and and you know I mean it's it's it's not that different from um the io game to to but but the distribution was uh required a bit of work I think yeah so so in 2020 I had the Vape framework for what later became alemia at at the time so I left that job to to sort of uh try to craft this idea um I started writing about um some of I guess observations and reflections of the mining industry um and uh uh in 2021 put together a small

team and um that was the birth of alemia and then what was when you started working on it what was the vision that you saw for emia it was definitely very different from the project from the version that we have live now that was the I guess the Prototype the Prototype at the time was very much um cater towards uh miners well at the time you know uh both Bitcoin miners as well as eth perer Miners and the although the discourse at the time was much much more interesting because um that was just the beginning of I guess people taking uh Meb more seriously and just trying to understand like how uh what kind of roles that me is going to play in uh for eth miners my mining pools um and and

just very very early stage conversations uh but anyways so I uh at the time the focus was more for uh for miners to hedge against their cost uh so the instrument that they will be creating will be a like synthetic representation of um the revenue produced by their hash power uh and later the so that that version we launched um in early 2022 and that version ran about uh 35ish million in transaction volume but towards the end of 2022 we saw very clearly the growth uh slowed down and at the time we were're not sure if it's you know mining industry was Chang in or just this is the fundamental uh bottleneck of the of the of the sector uh but the conclusion

we have was that like our protocol was not good enough so we start working on a second iteration I mean I can see as a minor right I'm basically spending all of this money on building mining farms and then uh of course I don't know exactly what the revenues are going to be so if I can kind of hedge some of the my future revenues then that can decrease my risk so that was kind of the the Target and I'm curious on the other side like who would take the other side of that trade yeah that was exactly the problem so we're hoping that we can create something that can capture the cash flow of mining Revenue uh and present it as sort of something that's um uh a new I

guess Atomic toy for for the rest of the def Universe the challenge we faced at the time was that and also the context at in in 2020 that was just around defi summer right like Midway into it and and just looking at the source of the yield right is uh all all these all these fruit uh fruit themed uh eel source is either inflation or just selling volatility and uh at the time we thought okay you know this is something this is a revenue generated from from uh producing blocks this is you know this is block subsidy this is the actual transaction Fe people pay to process their transactions and there are a lot of like interesting Dynamics there um as is a much more I guess organic cash flow uh comparing to just pure token

inflation um so the conceptual we thought it was it was it was sound and and um to as a building block however I think we we underestimated the complexity of just how much jargon there is in a in a mining sector and how small it has gradually become over the years um especially after China banned the Min industry and a lot of them moved to North America the type of players in North America are much more traditional I should say they're more from you know energy oil and gas Industries they are much more interested in playing the traditional Capital markets game Equity that's spack uh rather than something that's crypto native so that severely restricted the size of the playable

addressable Market I guess um so anyways but during this journey we realized that hey people are much more interested in just the fee component Peter hash all like farash all these things are are pretty difficult to talk about outside of beyond the miners um but just the fee the fee is interesting because fee is universal I no matter how uh how how much like the way that people's relation with this asset class changes fee is always going to be something that people have to pay and and at the time okay rollups are starting to post like millions of dollar uh with cetta to pay for cetta on L1 um there are like serious commercial activities taking place on chain that are starting to look

more and more like um energy energy Industries where people have to hedge against the fluctuation of electricity price um large utility companies were hedging against um yeah the primary resources they were using so it became very obvious to us that hey this is um this one slice of the uh of the of the block like Revenue being produced by the block space produc block producers is much more interesting uh for for infrastructures that building on chain uh frequent settlers right uh or service providers who need to settle on chain regardless of the Fe enironment um so this essentially became our primary

focus for the version that we uh just launched okay so now the focus is on fees so basically that people can and trade the future of transaction fees yes I mean so I think right now it's just like for Bitcoin but then you want to do it for ethereum or like for for for all the major networks yeah so the architecture is synthetic So in theory we can support anything that has high volatility and people want to hedge um I mean there's several factors of uh considerations take take to to to to address one this is still a market place so we need we need buyers and sellers to be balanced

for mining it's it's easier because without it's actually not has nothing to do with proof of work versus proof of stake it's really uh e 1559 um without 1559 you know uh bit Bitcoin is just first price auction it's it's very straightforward the transaction fee they go to mining pool it distributed to the miners um so anything that people pay we can find strong correlations to what the mining uh the sorry the the mining pool they ultimately collect whereas for yeah people night this is very different right so validators don't actually collect the base fee um and um most of your income is from is is from block rewards uh these days uh and and given the I guess much more

reduced onchain activities um 444 is definitely changing things uh for for validators on L1 and there's just a lot of I guess moving pieces uh of how people where people want to take etherium right in in terms of how the relations of of Builders and proposers and and users um I think there's a lot a lot of changes that's being proposed right now and there and and I I almost lost track of like the the the latest discourse but um yeah with Pepsi to to braid um I think there's just a lot of direction that people are pulling uh e towards uh and none of them really consider the the feelings of end

users yeah that's definitely true so can you tell like like when you have now this market for uh transaction fees I mean who who do you see as the main parties that want to trade in this market yeah so the kind of the most natural user the most organic type of users who who are interested in these are service providers who have to set on chain regardless of the fee environment right so on eth this will be the sequencers uh what before 4844 they will have to pay call data and now they pay call and uh or and or blobs blob fee um and uh applications who are are uh launching on uh sorry users of applications who are on L1 and like

these days uh there are starting to have a few meme coins popping on b e L1 take advantage of the low fee uh I guess ultrasound money meme is is not dead but uh the the these activities they do uh they do have pretty strong impact on the volatility of the Bas of the of the uh of the I guess you know settlement cost for for regardless of the chain they're on right uh and for Bitcoin this used to be you know ordino runes that had a pretty drastic impact on how full the the blocks were um and this has pretty severe impact for you know service providers who just have to settle on chain regardless of the fee how high the

fee is um one example that we saw uh several weeks ago was um so okx they did um utxo consolidation which is a very you know uh exchange housekeeping thing where they just combine a lot of like dust utx so exchanges do this centralized exchanges do this all the time uh and they had a bug in their script where uh their Bots started bidding against each other and resulting feed to escalate during those uh one two three days is around that period and okx paid about 18 million in transaction fee and so these kind of things that happen on chain all the time right all the time uh in 2022 summer um other had this crazy popular mint and and users I I think it was

something crazy 150 million in gas costs incurred right that was the nft CR the the the peak of nft summer so it's it I mean at the end of day this is this is um everyone regardless of how complex your transactions are it doesn't matter if it's a w simple wallet transfer or you're doing nft Mint or you're doing like multiblock MV you're trying to C after it doesn't matter the complexity you're all competing for the same resource and these resources are quite limited they can't Scale based on the demand just because demand suddenly scaled uh I mean uh parishan has some interesting ideas but unfortunately nobody's really using them but uh but but for most of the popular popular

public blockchains this is the case right demand is quite epimeral comparing to uh how in elastic Supply is so pricing the access to these resources will always be a market oriented problem but so if you now I don't know you take some L2 or you take some other kind of application that need sell one is your idea then that I don't know let's say at a time when maybe there's not so much demand they kind of pre- purchase right or or they basically you know take out some some asset that reflects how much they expect to spend

in transaction fees over the next year for like you know all the different maturities or something and then uh and then it will sort of be the inverse correlation with what they actually spend on chain when that time happens and so then they can kind of have like you know predictable cost for the next year so is is that the kind of like trade that you expect people to make there that's the that's the hope and dream yeah um I I think for service providers although one year is is we have to grow there right now the tener is about 2 weeks if it's just two weeks do you think it actually makes sense for some L2 to like do this kind of thing so al2 some of the al2 actually want shorter time it's it's very very uh interesting so I had a conversation

where one of the largest uh sequencers they want like 10 minutes they want to trade every 10 minutes because they want to they want to have some more visible the these guys are pretty sophisticated they have they want more visibility on how they control the pricing um but you know it's impossible to find like sellers who are willing to sell on 10-minute like basis unless um uh unless sellers are you know uh seriously taking advantage of but uh there are also sequencers who want to just like lock in you know several month a quarter half a year uh which is also very hard to find uh sellers who are that kind of like that bearish on on um on the outcome of the other activities on on that chain so

we're starting with you know some tener in the middle and try to nurture this market and see which direction is more popular um so with traditional uh energy market right for oil for instance the oil companies they would hedge very long term they would buy fatures that are you know quarter long or at least month long uh but the speculators who are looking at let's say uh the progress of you know uh Ukraine Russia war and they're trying to think like some events how they impact the oil price intraday they would trade like intraday contract okay okay okay and then you've like on the I mean I can see that there's like some demand here or there could be some

demand from the people who want to hedge who who do you think would be the other side is that just some kind of Market maker hedge front types or like who would want to trade there yeah yeah so for Bitcoin it's easy for Bitcoin is the minor um from and this is this is the reason we're starting with with Bitcoin for it's pretty difficult to construct a market like this which doesn't quite exist in the doesn't exist in crypto at very least um so we need to limit the number of variables that we're exposed to and just try to structure something simple and just try to establish a foothold uh and and grow and touch something that's more complex like eth which has 1559 a lot of other moving pieces and and potential directions that

people are taking uh the the I guess block supply chain uh uh to uh but with with with with Bitcoin miners this problem is pretty pretty easy to illustr to see right with more Habs now we have so many Habs at this point uh block subsidy is just Inc decreases very quickly and the industry is becoming more and more competitive highly industrialized highly competitive it's impossible for anyone with I don't know less than 10 million to spin up a real like mining operation anymore and the amount of like optimization you can get from data centers is di minous at this point um so more and more of these uh Bitcoin

mining players in Bitcoin mining field they're starting to figure out okay how exactly do we capture more transaction fees uh now that there are these meta protocols like oros runes and some of their you know extensions bom MV is a thing now there's a lot more sniping activity and with 10-minute block time uh some weird behaviors we've never seen before on eth are starting to emerge Bitcoin uh and there are like serious uh investments into M sniping toolings anti sniping toolings in uh Bitcoin so you mean the miners would want to basically say hey I'm I'm going to trade in this market because that way I can sort of you know guarantee some

income stream and then on the other side it would be like wallets or exchanges that pay for user transactions yeah um the on bitcoin side this is more I guess more custodian uh type of user service providers comparing to uh because there's just much less onchain activities with a different chain that has much more like onchain activities this could be like anyone who's doing a large amount of like unchain transactions this could be a project that's doing you know preparing for an nft mins and this is uh this is this is um people who are expecting like a cast skating liquidations cuz like several days ago no sorry I lost track of time

or a week or two weeks ago or maybe two years ago there was uh e just dropped uh like uh pretty significantly um and there was a lot of like unchain liquidations that cascading F and and uh gas price went from 5co to uh 200 something uh in a short period of time and uh came back down okay okay okay and then what how do you imagine this product would look like on the ethereum side yeah it's it's interesting um I think I think for the uh the use case like why people would use it and why some service providers want to use it is

very clear especially with pay masters and this is this is personally I think is a very good direction for end user uxx really and and especially if can you explain maybe for what Master oh yeah so uh yeah so uh there are these services that um so for example a smart wallet that coinbase just roll out uh so they will sponsor uh transa so they will allow users to pay gas in a token that's not e um let's say for example uh I Circo for example is pushing for a usdc based um pay masters for uh obvious reasons and so if user wallet doesn't have east and they have uh like app native to and of course pay

Master alone wouldn't be able to achieve that but but but just general account abstraction uh bundle I guess stack I guess um and and with pay masters they sort of effectively just concentrate end users responsibility of paying gas to a single entity so during that time they charge a fixed cost or even subsidy right free uh let's say one cent for for every uh wallet transfer um denominate in usdc for n users uh and during this time the pay Master actually pays for the uh the the gas to to complete the transaction on chain um so during this time the pay Master yourself and whoever runs the pay master who is paying for

sponsoring the pay Master will have to take on the gas U volatility as well as the Forex risk so these these entities they are um the primary type of user who really really would want to benefit from hedging um otherwise it's just be like marketing budget that keeps eating into their uh Revenue yeah okay okay and then what's the what's the state with the he product like when are you planning to launch that uh I don't want to share too much uh I'm actually talking to Michael on your team about this um yeah um but yeah soonish do you feel like in the longer

run these kind of instruments will end up becoming interested also for like more to trafi to trade yeah actually the the funny thing is with trifi people or or or crypto traders who came from trfy or qu mostly they understand this right away it's very intuitive that they've seen this like a million times in in in like I guess real life um cuz cuz the parallel with like commodity Futures Energy Futures and just how like you know Starbucks had just coffee being so that latte has a fixed cost um and not fluctuating because all like a forest burned down somewhere real time and all of a sudden

a cup of coffee in New York like doubles price it and and and you know Airlines Hedges again like jet f price these are you know establishments that have been been around for hundreds of years um the in the past this wasn't really a problem for a CR because there are still not really that serious of use cases until more recently in more recent years um now with you know centralized exchanges uh traders who like have a lot of Unchained Footprints uh yeah pay masters Bridges and rollups um now that okay this consistency lead to uh the importance of having this type of

instrument right now this the alemia product it's on it's built on basee is that right or it's on L1 it's it's on each L1 okay okay and I'm curious for example for the Bitcoin uh transaction fee thing do you need some kind of Oracle or like how do you get this data onto uh e one yeah so uh yeah we run our F noes and um yeah we and we use Oracle we have we build our own Oracle essentially it's it's an inevitable part um but we feel okay because it's pretty easy to verify this data like anyone who's running for or actually anyone who's who who who access quicknote or is

able to verify this data so it's not like some kind of like price Oracle where you have to uh pull you know some price information of a specific coin from uh like multiple exchanges and compareed the millisecond ticks this is uh something that's very easy to verify for uh anyone who uh has basic understanding of how big works okay okay okay what what do you feel like we should talk about I'm I'm actually interested in um your view on you know because there's a lot of things that's going on with um with the how people are thinking of like how the proposers role in in in the

ecosystem right and and I feel like proposers are one of the groups that get marginalized the most while users and propos like the the the E researchers they they they they think about users less and then uh uh validators and and and uh and the rest of the St um there are a lot of you know interesting directions and and a lot of them are are have very clear trade-offs they all of them are pretty pretty complex right going from uh the old Pepsi fossil inclusion list uh now to multi-c concurrent proposers with very clear tradeoff of sacrificing you know users uh ux um but I feel like all of them they

they've almost never had you know conversation with validators or asked like how validators feel about the the the uh directions that that that're changing yeah I I I just wonder like how how was your because you're you know on the front line of this um I was just curious how you feel about all these directions that eth is going yeah I mean it's a good question I mean actually we did uh we did a podcast with vitalic at ECC and we asked him like Hey do you I asked him how do you feel about proposed Builder separation today you know do you feel like this was a mistake or was it like the right thing and he was kind of like not really sure if I would do it

again uh so I feel a lot of it you know it's kind of Downstream from you know proposable Builder separation and then pursuing that path and and now of course you know one of the situations which not sure I I don't think people are like particularly aware of it right but is that on the Builder side you know it's really very concentrated right I think you have today like two builders that make up something like 90% of the blocks and then and then I so I feel like a lot so you know there was maybe some idea right I think propos ability separation to some extent where you basically say okay the validator doesn't

build the block anymore doesn't like arrange all the transaction theci side what goes into it you know of course flash BS was kind of the company that said okay let's try to split this up and have this separate system that ranges the block and then the validators just gets the block and then I I think to some extent you know they they sort of said oh this is because we want to it will help keep it more decentralized make this open market so anyone can compete in and I think that was one of the reasons why you know the etherum foundation and researchers also kind of pushed this and then help to make this part of the Corum protocol but I think the sort of unintended consequence was

that actually in some ways it became much more concentrated because now you know if you look at the the staking side you know the largest validators you know which I guess like coinbase and Kraken or something like that you know they're like 30% yeah yeah they they're like 10 15% or something like that now when you look at the uh the block Builders right they the largest block Builders are more like 40% right or like the two largest I think are together like close to 90 although you know it changes so you have this big concentration there and I think one of the one of the things that uh that's driving I think the etherum researchers is like oh how do we

make this more decentralized I mean there's different concerns but at least I think that's like one of them and then you know they come out with some new thing and uh and you know who knows what uh what the implications are of that I mean we are pretty in at the course one side we we are actually pretty you know we try to be pretty at The Cutting Edge of that so at the moment one of the areas that where there's the most interesting activities around this idea of pre confirmations where it's basically something like you know you can get a promise or some kind of guarantee that a transaction will be included in a block further down the line and then I think there's also two different uh

philosophies that or two different approaches one is the idea that the proposer the validator would give this pre confirmation and then there's another approach where the Builder could give this pre-confirmation so I think that there's like different companies pursuing the those different paths and you know we're kind of interested in it and we you know we run some of these things on test Nets we not sure we like super opinionated there at the moment yeah I don't know do you have any faults on pre confirmations or like this or like how that also intersects with uh some kind of market for blog space yeah I I think um precom the the one thing I I've had really uh and I

think this is probably something that we just have to see how it unfolds in real life uh is how to price these things right how do how to price how to price this future slot that you're going to sell um and it's the same problem if like starting from the Builder side or starting from the proposer side like for actually from from prop proposer side uh it's probably harder uh because okay there's needs to be enough like volatility okay can you cancel can builders actually cancel it uh I as far as I know there's no such option right like they they buy it they have to they have to use it um so I I think I think the the nature of this kind of commitment to uh to buying okay uh specific uh like Block in the future

without knowing okay what kind of content I'm about to produce about to include my block it makes it very difficult to know like what kind of Premium I'm going to pay for to to to option for that unless I have like a lot of like information about what I'm going to get but I guess in the current landscape of the builders where two players are highly highly have a lot more information than the rest uh this is potentially less of a problem um but I yeah I'm really curious like how Builders actually you know react to this if there's interest yeah from them right so yeah I guess this guy kind of quite in the be uh I mean if you have

I think if you have you know in the end right the Builder produces some block at this particular height and it's like hey this is this is the block it includes all these transactions and here's how much I'm willing to pay for it and then the validor will basically compare the different blocks for the different Builders and choose the one that kind of pays the most now of course if the if the validator The Proposal kind of goes to the to the Builder and says hey you have to include this transaction then it's like a constraint for the Builder and uh and then it may lower uh the value of that block I mean it depends also what what does it mean

right because is it I I think from my conversations here it seems like something like an Arbitrage transaction probably wouldn't be suitable for a a propos of pre-confirmation right because like in an Arbitrage transaction you say like okay you know there's like some Dex state or some Unis swop pool for example and you can make an Arbitrage with some other thing and you get that transaction in and then someone is willing to pay a lot for that because they can make a lot from that but I think the the like for the proposer to basically uh promise to include such a transaction when it

doesn't really work very well cuz one is that the proposer is too slow because like the proposer has to communicate back and forth to the Builder and then uh so they they at sort of disadvantage there and then I guess the other thing is that you know let's say now the proposal makes a bunch of money because they're getting paid to include some transaction that is basically money that the Builder is not making you know so it's not really like a net gain uh and uh and and if you of course the other thing is the order of the

transactions in the block right for for that transaction to be effective right it would have to come first in the block but then that's the most valuable block space right the I guess the first part and the last part so yeah I don't know uh it's it's all very complicated and it's just getting more complicated right with these new things the whole thing about concurrent block producers so basically for for the listeners who not aware it's basically the idea so so this is something that has been an idea in the Solana ecosystem for a long time an to has been talking about this for years but it's basically the idea of having uh different block

producers um or different sort of Val produce blocks at the same time uh so in the salana world it would be you know the validators kind of all let's say there's like five at the same time they're all you can send transaction any them they all include them and then somehow in the end it gets kind of resolved about like you know the order and uh and I guess that's a similar that that idea is being explored inum as well to have like different people producing blocks at the same time uh I'm not sure actually haven't really spent the time looking into this in terms of you know how it will work what the implications are I'm also not totally sure

how uh how far long that is and how likely that is to happen anytime soon although it seems to be getting some traction and and people seem to like or some some of the key people seem to like this direction yeah yeah that's the that's the that's the reason the the funny thing is um cuz cuz the the most popular I guess uh at least so it seems right for looking from from far away the most popular solution which is the max Ric proposal of bra braids I think um is incompatible with precom because you won't have you know a proposer that has the ability to to commit to a future block because now you have like oh you have unionized uh all

these like number K of different like parallel chains that like unionize them or however it's it's getting like uh agreed on in the end so like it just changes all the time you know and these are not small changes these are very fundamental changes I say all of a sudden okay we enter into a precom uh Market where uh all these pre- Comforts pre- Comforts right it is it is actually wor it is a real world um um and the and just you know just bookmark that thought for a second the the the the thing with pre-confirmation is that you have a very complex Market with a lot of like moving pieces and you have so few players yeah yeah yeah yeah you have so few players to to to to drive

pricing I mean actually it seems like whoever it seems like the market for someone who would be interested in pre-confirmation is probably very similar to the market of someone who would be interested in some kind of you know uh future of transaction fees right on ethereum or maybe even this same right maybe it's like I mean probably a significant am that there will be the same kind of players and maybe they're kind of like do you think these are substitutes like if you have free Cs and it's kind of like less important to like maybe H your future transaction fees yeah so I think physically allocated block space are very very

different kind of products from synthetic block space I guess uh block paper block space with a lack of better word um and I think they're they serve very different purpose and they serve very different uh user base um so with like these kind of uh I guess we can call precom or Pepsi as like physically allocated block space right I think these are more for yeah these are for Block Builders it's it's uh the the the the users who would use this are people who are very very uh have very specific needs have very high requirement for granularity of ordering the transactions and the timing of these transactions getting included in the block right they they want to pay for that guarantee so I think that's the level of like Precision

that they're operating in order to for this kind of instruments so the concern is less about like hey I want to uh pay for uh the I want to pay for a future block because I want to lock in the the base Fe I think it's it's less you know less about that uh and because you know frankly the builders they they know exactly what the Bas Fe is going to be anyways um whereas for paper block space with you know this kind of block space futures uh the kind of users it's servicing are businesses who are just trying to not think about like fees for long period of time right they are trying to have uh this part of volatility removed or partially removed from their operating

like day today uh operations uh for okx for example they would uh if they're constantly hedge when they have this kind of like screw-up they would be able to at least like partially collect or fully collect their uh loss um which is not something that you can really achieve with like physically allocated block space and the kind of things that you can achieve with phys physically allocated block space of like okay I want to get my transaction into that specific flock that's not possible with paper block space because it's entirely different thing yeah okay that makes sense yeah do you feel like any other chains are doing something interesting uh related to block space besides uh Bitcoin any

eum yeah uh I mean Polkka has been experimenting with this idea for a very long time right like I think um they are the this idea of like Emeral uh blockchain or sorry ifal block yeah ifal blockchain um I I think the the implementation the design has evolved a lot for the past few years um I always think that you know poov people are the the the original crew they're they're quite you know Forward Thinking in terms of um how to manage like okay full no resources and that relations with with uh with with I guess uh end users the only problem is that I think they have gone to the r hole a little bit too far you know uh so uh so it's a little you know uh what the kind of problem that it

spent a lot of headspace on is uh not something that end users you know particularly are interested in right so um I I think that trade-off is is is is very hard to to to balance I mean same can be said for ethereum today um to to be to be fair maybe I mean you're coming from the like uh traditional Finance base so I see lot of like Finance knowledge as well I'm curious what are your thoughts on the current market and where do you see things going oh I mean so I I've spent far more time in crypto uh than in traditional Finance at this point uh I think i s seven years of full-time in crypto uh 3 years in

traditional Finance after after graduating from college um yeah uh I I I think I think it's hard right like that I I definitely I mean have opinions but I think uh I definitely don't look at Market as closely as uh people who have more time I guess uh yeah it's I I do think that if anything I do think eth is probably a little oversold um but at the same time I think there are some bigger problems that uh more fundamental question I think e as uh a community needs to needs to needs to answer right like I think it's very clear that people are not happy about uh how fragmented al2s are today um and

people are not necessarily happy with like the kind of questions that ethereum foundations are choose to spend their time on um and how some of you know these newer proposals they're further and further away from uh users I actually think multic concurrent proposal is is pretty interesting um because the the tradeoff is very very clear right like okay censorship resistance um and and and the but of of course it breaks a few things including pre- confirmations um and there a lot of like ux tradeoffs like okay more transactions are going to get reverted and of course the the the all of the proposals are still very much

Ino stage um I yeah I I I'm just curious like how validators um adjust to these kind of like big drastic changes um because they do affect like how how you collect revenue and I guess a lot of these things uh they have been such that validators can kind of you know just run the software and it works and you know even like propos a builder separation I mean that that I guess was the big or the big uh thing that flashboards like achieved right they said like hey just uh just run this other client and uh and they basically it takes care of

everything so the validator doesn't actually have to know that much right and uh and you can make more money right so I think in the end they got so much adoption at the time right so this was still Pro for work days right but I think they got something like 80 90% of the hashing power uh to use that and I think they did it because like it you know really raed away and like validators don't really have to worry about it and uh and I think that's still the case today right like most validators don't really have to worry about like how does all of this work some of them go much deeper like so we have gone very deep there at course one like where we basically you know modify the serum client and then would would measure you

know different parameters in network different things we can control to try to build more valuable blocks and then you know we we have you know we are able to do that and then you know we're able to like uh generate maybe something like a little bit less than 10% in additional me revenues so there's there's a bit a bit you know there are some things you can do there but then that sort of requires a lot of sophistication and uh and it's probably not something that's like worth it for most validators they but they just sort of like run it and then I think fine so I think most Val is honestly I don't think they really worry too much about you know concurrent proposers or things

like that I guess they will have to worry about it once once it comes and then you know I guess we will see what the implications will be certainly will possible it will break a bunch of stuff right maybe breaks pre-c confirmations maybe I don't know what it means for Block Builders but I think that I I would say on on a high level right a lot of the move hles of of proposed Builder separation has been that a lot of the complexity and sophistication has been uh moved to the Builder and and the validators have you know less uh less sort of degrees of freedom of which is maybe for example what's somewhat interesting there is

like I think salana is maybe a bit different right where salana there's also a lot of things happening a lot of transactions there's a lot of me on salana uh and there is a lot of degrees of freedom now how you can run things right so you have a client called GTO right that does like some M then there's another thing um I think it's called stake weighted quality of service where basically um someone will pay validators for including transactions um and then you can make additional revenues from that so and then some of these things can work with

other things or not work with other things so we have also gone you know gone to some length there to like you try out different things test what works better what generates higher revenues so I think salana is probably the other ecosystem where there's actually a lot of I mean Bitcoin I guess there's not that much happening right and there's maybe some things and that but but I think it's really like ethereum first and then salana probably second where you know you really have enough activity happening enough M enough of this kind of value that's there that you know people can really try out a lot of things and it's worth it um so I think it would be very interesting to see both these places evolve and and of course

they have like very different philosophies as well I feel like in ethereum it's much more something where the eum foundation in core development is sort of trying to steer things in a certain direction and control things whereas I feel like with salana a lot of the stuff is like different teams and protocols just building on top and I think salana the salana code developments is a bit less involved there although I guess this I mean I'm not actually sure how far they are with the whole you know concurrent proposer thing on the salana side I know it's been an idea here for

many years but I I'm not sure if this actually something that's being being built I haven't heard at least of of this being uh far along um but yeah in general I think it's mostly other teams like you know GTO blocks out and a bunch others that are building some of these things on top of salana yeah yeah it it definitely feels like um with salana the the the the building blocks are I guess slightly more decentralized in some sense right the I guess people who are building like the critical toolings and critical infrastructures in that sense um the the tradeoffs are are also very uh clear um but yeah it it's

definitely it's definitely very very different type of experience transactions you know barely land but but it's a slightly different thing um but it's one thing that's pretty interesting is you I guess most people don't have like a lot of disability on staking business because just you know so far away from uh uh everyday life um it's it's pretty interesting like like some validators right like like yourself would um invest so heavily into R&D and look at okay additional ways to capture uh mvs and try to like capture these I guess additional Alpha uh and it comes with cost it comes with time energy like mower uncertainty and I guess some like most staking business they just uh spend money on BD and just try to like get as

many Wills as possible uh and and don't really care about like oh what's going on with the with the like what's like what's changing underneath yeah certainly cool well thanks so much for coming on Leo was great to talk to you and I'm excited to see sort of how this whole thing is going to evolve I think it's going to be interesting especially uh you know with them blockchain's becoming more mature right and with uh I think some of these markets will really start to emerge and I'm excited to see how alemia is going to uh go and play out there yeah I'm pretty excited myself cool okay thanks so much thank you