Andre Cronje on DeFi, Sonic Network, and His New Apps

Transcript

we've got a whole new captive audience of suckers that haven't been burnt yet let's let's make sure they never want to come back and Andre goes on his next Hiatus God damn it Andre glad you have to say it like that man this like meme coin 8 D gen culture you think we're we're moving further and further away from some of the true technologists facilitating that swap to happen without slippage that's a big one that's the Andre that we know right there bro what's going on guys welcome back to the rollup today we have an episode with Andre cronier uh one of the original OG kind of defi uh Pioneers I I could say I mean I myself was a year Finance Farmer on like day one um unfortunately I I

didn't have much Capital back then but still one of the best farms in defi um and so yeah a lot to talk about about the kind of transition of defa and into kind of where we are today Andre it's your first pod since I think you said 2022 so glad to be back on the scene um and thanks for coming out man yeah um happy to like I never actually I'm not willing to do podcasts it's just people normally always ask for it at the weirdest times and it just doesn't match so um you guys chose a great time congrats nice why really that simple why is this a good time because I happen to be like awake and working hours currently so um I time Zone's always the best way to mess stuff up up and people

always want like 2: a.m. or you know 11:00 p.m. or whatever I'm not awake enough to do anything then cool I think Sonic uh the push to mayet may have something to do with it as well but I think we'll kind of get into that Andre what have you been been up to man um how's how's life go broad questions to start with hey [Music] um life has been interesting um there has been a lot more legal Regulatory and compliant stuff over the last three years two to three years um that have definitely been a very steep

learning curve as well as um a lot harder than I think I anticipated um I I not not I mean you guys would have seen it on Twitter and stuff already right like almost every single team out there have received some kind of notice either via ACC or doj or ctfc or other entities you know um Vara UAE um um casar cment Etc you know there's there's there's definite attention on this field um positive and negative I think some of it is coming from the right

place some of it is definitely some some regulators and institutions we work with and and they just want to know how how should they shape rules and or policy Etc to facilitate um others definitely just see it as complete fugazi and they're just trying to they're just trying to block it any way they can um don't necessarily think they're even wrong um I think there's definitely instances there but anyway so so that's definitely been very timec consuming I deal with lawyers a lot more than I deal with coders over the last three years

but I I'm I'm happy to say that has been transitioning over the last year and my coding time has increased more than my regulatory time which is nice which is very very nice um because ultimately that's where my my passion lies on the on the coding SL development side of life um there's been a lot of stuff that you know we've just kind of been working on um I hate to use the word but you know in stealth wasn't really meant to be in stealth just we happen to be working on it without advertising it um one thing that I'm definitely excited about is obviously Carmen the new database coming out with um Sonic I

think that's a big thing not just for for Sonic um but for all e VM enabled chains you know irrespective L1 L2 whatever um it's a it's a database customized for VM especially evm you know execution and op code so like even anyone that uses the standard evm or even a slightly modified one will be able to get benefit from just plugging into this you know they'd swap out their payable or Badger or whatever that so anyway that's a big thing definitely um Sonic is obviously a big thing sort of parallel to that you know um I I've been trying to get unchain credit scores going for quite a long

time now since as early as 2021 um it it took it took a lot longer to find the right people for the team um and that's partly because the right people aren't crypto people they're traditional credit scoring people and traditional credit scoring people I had to really hard sell to convince them hey leave your very comfortable you know big TransUnion or XDS or whatever job and come work on this experimental stuff um that alone took almost a year and a half and then when we finally got the right people and now we have a phenomenal team you know then there was

an immense learning curve for them because they're used to credit bureau data now part of their job is needing to you know ETL and transform um on chain data um but it's it's been nice seeing you know these guys start out like a little bit hesitant and then a little bit frustrated with the data and nowadays they're the biggest preachers to everyone that crypto is the next thing blockchain more specifically um and it's always nice seeing that sort of conversion happening in people that are that start off very antagonistic myself included you know I mean that's that's how I got into the space as well by um by thinking it was all [ __ ] and that's why I started with my original

you know code reviews was because I was like well this is a lie This Is A Lie This Is A Lie um but turns out you know there's there's something when you start poking underneath that is really phenomenal um anyway yeah bunch of cool new stuff coming out um a bunch of daps that I've sort of shelved or have not been able to complete due to underlying technology constraints coming out um so I'm expecting the next few years to be quite busy um uh zero knowledge technology has advanced so much that you know stuff that just wasn't possible a year ago two years three years however long term you want to do is not yet possible but starting to become very close to real um and that is a big thing in in crypto

because you know even even right now Bridges oracles um exchanges you name it where whether we like to admit it or not there is still a lot of trust assumptions like so much of cryptography is still just private publicy um and ZK really changes that you know it removes that that private out of the equation so it removes those trust assumptions those centralized entities um and I think like not not maybe commercial level grade ZK but but at least Niche like libraries and stuff is going to completely revolutionize oracles exchanges Bridges um even you know offchain execution um to a large part um anyway sorry long

rambled but lots of exciting stuff you know um and a lot of bad stuff in between yeah I'm sorry to hear that um the legal stuff can be quite quite the headache and I'm sure I'm sure the stuff that we've dealt dealt with is quite a bit less than what than what you guys have right so um props to you for just kind of sticking around I think like one thing that that stuck out was there was a lot of there's a lot of building that you're talking about there but there wasn't a lot of like de Jenning on Shane and I I had a really good podcast with Kane from OG synthetics and I was building infinex right and um he the original DJ I'm sure you have some funny stories there but we were talking about how how like godd damn it man like uh

back in 2020 and 21 you know we were pushing thousands of transactions per month on Shan and how now it's like the enthusiasts on Shan are just like not doing that that you know that much um you know so I'm just curious like what's your what's been your perception of the evolution of defi since kind of this a lot of these big zero to ones that that came right like amm um you know even just urine was a massive breakthrough right um and then you know how that has kind of changed and you know why defi enthusiasts aren't really like on chain as much as they used to or like what what's going on there um again a lot of factors to that question you know let's let's let's

start from the technology perspective um I I always believe that technology is iterative so it's it's it's it's it doesn't really run linear you know it's like there's a massive jump and then there's a plateau and then there's a massive jump and then there's a plateau um and that's been true for for every disruptive technology that's ever been created so so so so to put that in context um defi couldn't exist with just Bitcoin you know so first the ethereum and the evm had to come along and then even if you just had

the evm in isolation you still can't have Define so the Ico boom kind of had to happen because that created onchain assets for the first time and you needed onchain assets so and then even something like something like yield Primitives like Ur Etc couldn't exist because you first needed some native yield so you needed automated market makers you needed money markets you know Unis swap compound avva Etc when those existed now you can start you know doing aggregators um you can start doing derivatives so a lot of those Concepts that came later um um something like um GMX comes to mind you you know all of these things were only possible because

of the previous iteration but those iterations are unlocked either via some kind of social event like icos or some kind of technological breakthrough like the Eva um it's not necessarily only technology it's not necessarily only social but there's a mix of it that kind of have to happen and I think right now we're not seeing a lot of new stuff because we're waiting for that next technology leap um and I think obviously I'm biased with the stuff we're doing at Sonic so anyone listening to this I have clear bias don't take this as gospel um but you know a lot of the things we're doing there in terms of um removing gas as a barrier um

removing um just cryptography private public hey for accounts as a barrier um incentivizing projects um and then of course the the just latent throughput of the chain they make these things these this next wave possible um and I'm going to try and show that with some of the the new defi apps I'm launching as well but again to use an example you know if you if you look at YouTube or or twitch or any of these streaming platforms today they they it would be completely impossible for them to have existed in the 1990s internet um what it is today would have been even impossible in the in the early 2000s internet you know it first had to

evolve sort of dial up sdn ADSL fiber interconnected with Secom cables Etc to get it to the point where it is today where it can handle the scale and I mean today you know Google Yahoo whatever um YouTube etc those are some of the biggest businesses in the world but they it was impossible for them to exist without those technological leaps first so that next leap I think is an important thing um then from from sort of the the social aspect you know a lot of a lot of the old school defi fun for me personally came not from so much the yield farming but

from playing with new stuff New Primitives new things to interact with new things to explore and I think largely new things to learn um and and today that's not really the case you know like like all of every everything that's happening now is just maybe a different spin but mostly copy and paste of stuff we've already seen so I I I I think there's I think there's definitely sort of defi fatigue and and you can see that with people being more excited about you know Meme coins or whatever I I I mean yeah man 201720 if someone launched a meme coin like the community would have completely violi them you know like it would have

been everything against all of us stood for back then as pure technologists but at the same time we need to accept that this industry has changed drastically there are a lot more non-technical participants than there used to be um and a lot more greed not necessarily saying that's a bad thing um each to his own you know I'm I'm I'm sure I I do not believe the people that get excited about mcoins are the same demographic as people that get excited about defi apps you know so so I don't particularly think there's sort of a an an argument I had sort of original early 2021 with all of these pointless

Farms was that they're stealing capital and investment from projects that are actually trying to build real stuff um and I think it might have been a little bit more true back then but nowadays I don't think that's true anymore because these same people that you know throw their life savings into the next I don't know something with a hat they they don't particularly care about you know defi apps and they would not have invested in that in any any case they would have looked at it thought that's complex I'm not going to touch that um but funny picture I understand um which I guess is also a bit of a Natural Evolution from nfts really which if I look at it from that perspective it's really nft without the technology it's taking away another you know step that people actually had to go through

um so yeah I think Market fatigue I think technology leap and I think um an entirely new demographic um that we need to kind of start accepting our you know in the in the I'm hesitant to say community but you know in the in the sector as a whole the mem coin Apes whatever what however they wish to refer to themselves I will I will defer to them do you own any meme coins Andre I do not I do not do you think nor do I have any plans do you think any nfts so fair enough do you think this progression into more of

this like meme coin AP D gen culture and is that taking us away from like you said you know back in 2010 2017 they would have gotten vilified do you think we're we're appeasing that that social demographic and we're moving further and further away from some of the true technologists are we losing them or or we or now is they're both demographics here um I I I I think it's probably a bit of both I I think the silliness of the sector would definitely drive away some people that would have otherwise you know probably contributed in some technological way um but I I I I don't think that's a huge amount um I just think you know one of one of one of I

think the silliest sort of crypto memes is the is the where so early wait till retail gets here um retail's been here for the last 3 four years and they're the ones yellowing into all of this stuff um so I think you know this is just this is what happens when you reach a certain momentum you you know I mean if if we look at traditional stocks it kind of went through the same iteration right like it was originally like a lot more proper Finance technologist that were excited about the potential technology of building the stock exchanges you know settlement engines Clearing Houses Etc um but as it becomes more and more

accessible you start getting more and more meme stocks and these kinds of things I I I was watching a fasinating documentary um I want to credit the guy now YouTube something Yanni something um about bed bathing Beyond you know and like him interviewing these investors I mean the company is bankrupt the the stocks have been wiped out and these guys are still convinced it's part of some kind of plan that they're going to be reissued shares and there's some behind the scenes acquisition with GameStop and it's watching that it's it's both sad and very eye opening because like a lot of those people are in crypto as well and it makes me understand that you know back again going back to

early defi like my my disclaimers and my medium articles and stuff were enough for the people interacting with it because they used to research before touching stuff towards the end of that cycle you know 2021 2022 probably people weren't reading anything anymore they were just looking for a contract and throwing money at it and I realized that no amount of disclaimers or medium articles or anything was really going to prevent that anymore and that's also why I took a definitively little bit step back um and fast forward to now I think people people don't want to you know they they they want to gamble anyway sorry I I I I think I'm veering off with the original thing but but I think it

really just comes down to there are a lot more participants which is both good and bad um there's a lot more attention which is both good and bad um I I I I do feel like there has been a lack of new entrance and new ideas into this Market but like I said in the original question I think that is largely due to needing a next technological wave or social or regulatory or whatever it is um maybe that's hopium you know maybe maybe maybe we've chased away all of the technologists but we'll see we'll see that's that's for the future to decide

right yeah I think like I mean I think we we'll get into some of the Sonic stuff right and just the the thesis behind of extremely high throughput Bas layer right because ultimately a lot of the stuff that we were doing on ethereum back in 2020 21 became pretty quickly limited by the ethereum L1 scaling capacity which has kind of LED now to to sana's growth um you know and and that's kind of T that's grown an entire narrative in of itself but one thing that I wanted to hit on with particular to one of your core defi Innovations was this idea of like ve tokens and this vote locked um you know this kind of bribing mechanism um and one of the most

prominent and successful defi apps today is aerodrum on bass they're like one of the only defi apps that's got a very bullish token they've got the Flywheel spinning things are going like what is your take on on the ve token model today the bribing Aerodrome like is this model like now that we're you know several years past so so these kind of these vesting schedules have ran their course in some capacities like what's your what's your overall thesis or kind of view on the V model now yeah well just just one correction there the the ve model was designed by by Mitch from curve they were the first ones to introduce it um credit credit where credit is due that man is an absolute

genv that was a that was a crazy day yeah my my my my add-ons were just you know the the change of flywheels where the LPS don't get fees um they get the bribes instead and their fees go to the the bribers who are the ve holders it was just to add a little bit of an extra layer there and like obviously was quite active within the curve ecosystem while not being you know a part of that team Etc but like work closely with with with Mitch guys um and you know a lot of the stuff kind of naturally evolved over time you know the the bribing mechanism that that was you know originally built by by by Ben and kind of just launched by me um but

that already showed that hey there is an interest in people incentivizing ing these emissions now you could also argue that that's just an extra step right because I mean you can just instead of bribing these guys to vote for emissions on the pool you could just put your bribe directly onto that pool and then have them vote for it um I I think that's hard for a lot of you know starting teams um because people might not have belief in their token um so people don't really want to accept that they'd rather take the the emission and then at the same time for the ve holder

you know their stuff's already locked so so there's no real and and they're not getting those emission rewards to their ve so to them it makes more sense to to take on that bribe risk um so so that way it kind of worked I think in terms of like the the social lay and social perception I still think it's a great model um I do think that we have seen that four year locks are probably a little bit too optimistic I think that should definitely be something a little bit more liquid and again something I tried to address with the ve nfts that later came so you can at least sell the position even if you can't get the underlying um but we haven't really seen

any real marketplaces for that kind of stuff but that's also because the nft scene as a whole has definitely um quieted down a bit um in terms of does the model work and people reference aerody drum yeah and and Andre real quick I think the big push back is that like after time people vest they vest longer then they have to keep Reves their rewards because they have to keep up with inflation and so it's like when where's the exit right and you kind of addressed it with the the ability to kind of sell as an nft but yeah I think that's that's the push back so so so two comments I think one

is does the ve model v33 not necessarily original niches V I'm talking now about my ve bastard diation that came with solidly and eventually turned into all of these other guys um there are a lot of solidly forks a lot um probably 30 to 50 um of which three or four are actually successful now now that to me says it's not the code it's not the it's not the tech it's not necessarily the flywheel even um that to me tells that there's other external factors you know

if if you take raw Unis Swap and you deploy it on on any chain and and there isn't other competition um raw Unis swap will be the best I don't think % is true for using solidly on any chain um so so I don't think it is the model that is making it successful and I do think the model has some flaws as well that can be addressed but now quickly want to go to a different example and then I'm going to come back to that the the idea of the flywheel right is that eventually actually let's let's let's let's let's forget about the amm quick let's just go to bitcoin BTC let's keep it

simple eventually emissions stop eventually it hits theoretically let's say theoretically instead of eventually because I have my own opinions on whether it's going to happen or not but theoretically at 21 million there's no more issuance so there's no more subsidized block rewards the theory at that point is that there's enough onchain activity that the fees generated in each block are enough to pay for the security of the network for miners validators whatever you want to call it this same statement is true for any blockchain out there we're all basically um subsidizing you know it's it's it's a little bit fake till you

make it we're we're we're subsidizing activity until there's enough activity for the chain to survive should it reach the point where those incentives are no longer enough or where the incentives stop and the fees are not enough the blockchain should in theory suffer economic death you know there's just no one's willing to provide security to it it just kind of dies out same is true for a bribe based flywheel right the bribes are there to originally incentivize trading activity until the fees generated are enough that they themselves can sustain um now now in that already you're seeing a flaw cuz if we look at

at again let's go back to BTC they only care about one thing and one thing only security so they are paying purely for security now we are saying that the thing we are trying to pay for is fees now fees are generated by trading activity does anything in the flywheel promote trading activity and no it doesn't so right off the bat it's incentivizing the wrong behavior um so so I think think there is definitely you know the the first kind of thing you want to address and then you also need to tweak that so that it's more aligned necessarily to Capital efficiency than

just was trading um and at the same time you know there still has to be a little bit of an economic cost so the max you can really go to is like a 90% sort of fee to bribe ratio because otherwise people can just watch trade and and and you know claim all of those fees um but anyway so so so sorry again very long-winded but but I think the main thing is the the the conceptual model is right but it's still not incentivizing the the right thing yet you know and uh when I when I went from V to v33 I I was already trying to change it so that so that the LPS don't get all of the benefit because there the LPS you know they collect all of the fees um I think some pools have a fee share

of 50% but um that already I think was an important change so that that should go to the people who are managing the protocol you know because those those ve lockers they're the ones who are really coming to work on a day-to-day basis and saying okay no this pool is more important that pool's more important this is what we want in our system this is what the assets we want to promote they're they're doing the work so they should get the pay the the LPS aren't really putting in work you know they're they're putting in their assets and they they they they still should be rewarded and you know that's where your Bri Blom comes in um because they still need emissions Etc but but but I think it's it's it's still not right yet um but

again going back to Aerodrome that has nothing to do with their success you know the I've I've said this on Twitter a few times because I I I I do sometimes get annoyed when they try and distance themselves from the fact that they are using my code uh and I think that is a little bit douchy but at the same time I keep telling them guys why are you distancing yourself because your success is not because of this Cod it's not nothing to do with it um so anyway all all all all Kudos and respect to them but but but but the vft isn't there yet um a few more changes a few more changes a few more iterations and I think it can get there but but the goal of any decentralized solution needs to be

self-sufficiency um and there's very few other than like Unis original Unis swap V2 there aren't many Primitives that really capture that level of pure decentralization do you think that's maybe because they can get forked and any self-sustaining model doesn't really have a mo um well now again I I think it's because the participants changed right I mean even even if we look Unis swap I think is a fantastic example because if we look back at Uni V1 and V2 they weren't a bus business they were a bunch of hobby technologists that were playing around with some awesome ideas and built what I think is still till today some of the purest Primitives ever

created in our space um fast forward a bit a lot of funding a lot of Incorporated entities all of a sudden it's starting to become clear okay hey look these guys are now a business now now as a business you you almost have to add that centralized hook you know CU a a true decentralized system cannot have an owner it cannot have an operator it cannot have a value extractor um and and I I think a great example of that is again um when I launched solidly because you know I launched it as a purely decentralized primitive I could not interact with it I could not update anything I could not change that I wanted to have something

as pure as univ V2 was um but already back then you could see that the audience no longer cared about that that that's not what they understood you know they they want a team that is going to continue building and maintaining and they don't want decentralized primitiv they want nowadays people building successful crypto businesses nothing wrong with that again I I I I myself am um well I don't know about the successful part but I building crypto businesses we'll find out about the successful later um so so I think you know the space has changed the people has changed the requirements have changed and and it

it's sometimes hard to apply our old mental models to the the current or even future ones that there are going to be but but we have to constantly be updating what we think of the space and how we look at the space um another example you know from my personal experience is I I received a m backlash when I started you know talking about and exploring regulatory crypto um the most prevalent one you know is is that you know okay but I've now made my success and then I closed the door behind me which is wrong for a bunch of reasons that that we can go into but I also don't want to waste the focus of this podcast

but that already was you know acknowledging the fact that we're moving away from true decentralization and we're moving to businesses um nowadays you know if if if if you're going to be maintaining that entity and you are an active participant slapping a dow on it and calling it a day is not enough you need a registered entity you need to have you know your checks and balances in order you need to have a Incorporated something somewhere um because the the flip side to that is if if you don't put your flag in the ground and say hey I ABC from XY

Z and a lot of your users for example are from China then China's going to say okay but you're not Incorporated so you're now part of China so give um so the the regulatory side is is it's it's not a hey scroll you Deens that just want to ape they're still going to theen an ape because no one can do anything to them but but these teams are 100% a Target um and they need to look at those things to protect themselves again I go on such tangents I apologize it's been a while stuff I mean I I I'm thoroughly

enjoying um I think like part of the podcast that that we wanted to get into was one of your recent one of your recent tweets that kind of stirred up this like modular community that pays attention to a lot of our content as well as like the eth rollup community which was um basically your Tweet said that the idea of launching your own app chain for like an L2 is like ridiculous because it's extremely expensive and I'm kind of generalizing this but before we get into exactly kind of that I just want to preface the community so they understand your perception with building uh kind of Sonic and kind of why you may feel this way outside of just like the logical reasoning so basically people have been asking kind of what is Sonic so Sonic is a evm compatible L1 um super

high performance uh you you guys are are advertising over 10K TPS subsec finality basically trying to provide developers with you know except exceptional scalability good security and basically this fee monetization program where you return 90% of the basically the block space demand from these uh apps on Sonic back to the daps themselves in this broader Community initiative which I think is ongoing right now in the biggest way ever of like make apps great again and like let's not give all the me to the validators and in your blog post you wrote that you love validators I

sense some sarcasm in that one but you maybe you do so like is that an accurate understanding of what Sonic is and kind of like how you guys are thinking about it and then like what is the relationship between Sonic and Phantom and just like if you could just kind of clear that up a bit that' be fantastic and then we can kind of dive into some other the more technical stuff as to kind of uh you know that app chain or not yeah I mean I I I I I hope people know about Phantom at least um I mean I think we're high enough in the rankings have been around long enough that people should at least even if they haven't used it know of it um I mean next to Ether we the oldest we it is the oldest operational evm um so I I think that

counts for something and you know one of the highest excluding ethereum one of the highest up times of any chain out there um Sonic Sonic originally started as an internal um project name really for our next iteration so so we we ended up getting a bunch of insanely talented professors um and PhD guys from all over the world who who all at very very specialized Fields you know these guys weren't like we bu blockchains they were like oh this one guy he builds these specific op codes for this VM and you know oh this guy builds these specific like B tree indexes for databases you

know ridiculously specialized stuff but all of these guys gave came with such a wealth of information and their perspective field that when when we started engaging with them we started hiring a lot of them they presented a lot of amazing Solutions and fixes for what blockchains could still accomplish and and to digress a little bit you know this is something that I've seen in crypto so much and and it's largely part to you know a lot of the sort of I think cyberpunk philosophy of screw institutional knowledge and blah blah blah but we spent so much time Reinventing wheels and not learning from

industries that have already been through this stuff for decades um so there's a wealth of traditional information out there in the technology sector that's just not apply to crypto anyway so what we wanted to accomplish bring these guys in so I I'm trying to recall now I remember back then I was pushing for VM parallelization um and for us to find ways to create optimistic ways to execute transactions as quickly as possible and by having the transactions themselves identify the memory space that they want to access so that you know we can sort of pre-sort based on who's accessing what memory and then we can parallel execution um and we were gungho on that and we're busy developing that stuff and

then I remember when Schulz came in um Professor Bernard Schultz from from University of Sydney he's now with us full-time thankfully man's a genius um he came in and he was like okay well him and his team are going to spend a few months and they're going to run some some they're going to build a system that's capable of doing proper performance analytics um which at the time seemed a little bit eh but still I was 100% wrong it's absolutely phenomenal um anyway fast forward they finally built this stuff and now they're they're in a place where they can basically make really fast changes on the tech stack and then really quickly rerun entire blockchain

execution whether it's evm um Phantom whatever and this allowed them to more accurately start seeing where are the real bottlenecks and something like 90% of the bottlenecks was just with the database read and writes um something I wasn't looking at something we we weren't even really exploring so he proposed this new database that now ended up being Carmen um and that was already a massive step you know that's a that's a almost 8X performance on throughput right there and then they approached the VM um and they also started looking at parallelization and it's still on the road map but it's a much smaller line item than a lot of the other stuff the the main thing that they started focusing on the VM is superset

instructions which again very standard and traditional VMS where hey if I see this particular set of instructions repeating a lot I combine that into a single instruction which makes execution faster it makes CPU usage Etc faster I mean for example every single erc20 transfer right they go through a few up codes they go through a s read and then they go through a write and then they normally go through another read and then there's a check or something condense that into one line item and all of a sudden you know that's that's three times the overhead on DB AIS and right ax and all of those things that you remove um again huge performance increase there and and the two biggest things going into okay and so so all of these little sub projects Tusa was the

VM Carman was the DB all of these sort of started falling under the banner of of Sonic which was just you know show speed the the speed um um Sonic blah blah blah um and then because it ended up being such an internal name when we launched the first test net you know it was also called Sonic um and we just got such positive um feedback from that that we ended up saying hey let's stick with the brand um people seem to like it at the same time I think it's beneficial to show hey this isn't a you know this isn't a small upgrade this isn't a a 1.01 to 1.02 release you know this is a version one to version two release it's

very significant in terms of what this blockchain is capable of doing um and that's kind of where Sonic came from and where we're at now and why we're really excited for this launch you know and and it's the future of that seems even brighter right because I mean all we've done so far is the database and the and the and the super sets but there's still yeah a ton of other bottlenecks we've identified not to mention stuff we've we've found in the consensus engine itself where we're where we have a lot of room for optimization and and I mean you know we've we've I I have long felt that there is still a lot of room of optimization at the base layer um you know the the when again using the internet analogy the

guys when they started you know when when we had 56k modems their solution wasn't to put more 56k modems on top of 56k modems you know their solution was hey we need to get a better bottom layer a better Baseline and that led to ISDN and you know if you had an ISDN line or a 56k modem line and fiber came out you had to fully upgrade to that thing you know it wasn't just built on top um and that shows you that the base layer changes um and will keep changing and you know there is still a lot of room to change now at the same time I have to give a nod to a theorem here I don't blame them for the approach they're taking because I mean ethereum itself has so much economic

value it it I it must be terrifying for them to make any change there and I know it's terrifying I mean you can see it by how long they they they take to release and stuff when you have when you have that much economic value at risk the best thing to do is to do nothing um I don't disagree with their stance I don't disagree with their position I understand why they're exploring what they're exploring um I I do think it's a little bit premature though and I think you know that's that's again I I cannot express how much I love ethereum ethereum Community their their road map I mean I I would not be here today if it's not for them and I will

continue supporting them but I do kind of feel you know that they're starting to turn into the the Nokia or blackberry and and I mean eventually you have to adapt or or or or kind of fade away I I don't think they will for the record but to use a crude analogy I I I think that might be where we're at there unfortunately anyway sorry again longwinded but that's how from Phantom to Sonic and that's why the Sonic launch is coming up now that's on the tech stack right that's on the tech stack and and like I said in the original very first question I believe that the tech needs to be faster gas fees need to be less for people to be able to build new apps you know you you I I think this

sort of social layer of apps is definitely we're starting to see and the same thing kind of happened again if we compare it to traditional internet where the very first things built for traditional internet was finance and Military because it's the only two things that made sense given how much it costs to interact with um and then as it be got cheaper and cheaper and faster and faster you know we started seeing um user created content Myspace whatever Facebook and eventually as it got even faster we started seeing streaming YouTube twitch Etc Tik Tok and we're kind of our current iteration of of of HD internet if I can call it that um and and the same needs to happen on blockchain right like it needs to get to

that point where your users aren't because no user is ever going to pay a 100 bucks to upload an image or listen to a 20- second video you know but um they might be willing to do it for a few cents so you know it's it's it's the same Evolution um so gas fees had to come down and then and then value cap AP now value capture this has got nothing to do with technology but but this I think is the premise of most of these things and and again I'm going to use Unis swap as an example and I use them as an example because I think they are a bloody pillar so I'm not trying to pick on them I'm not trying to point them out again absolutely wonderful and you see how we have to like be PC in our in our

talks nowadays cuz we have to add comments like that cuz otherwise there's a bunch of people he hates Unis swap oh blah blah blah blah blah yeah you way more humble these days Andre you're far more humble you you you have to add qualifications you know cuz cuz I I I speak out of respect not out of um PE people often see criticism as as a dislike or a negative emotion or something like that and and it's not it's it's it's it's a comment on what is happening versus what we're seeing and a different perspective um but they are now launching unich and they're probably one of the few ones that can do it if I'm being honest I I I think a lot of teams are going to follow their example though

and fail and and why why would Unis swap do that I mean Unis swap has generated almost $3 billion doar in fees for validators not for LPS not for uniswap foundation not for the team not for their VCS not for the the the fake Unis swap da which I feel sorry for those guys um but $3 billion in fees just to validators that's ridiculous that's absolutely ridiculous so it makes a 100% sense that they're like that's the value we want to capture and I I think secondary to that you know base coinbase really showed us how much money you can print by just

like launching a centralized L2 and capturing all of those fees for yourselves because I mean what they pay to optimism and ethereum is negligible in the fees that they are able to capture um now obviously my own comments there on centralization blah blah blah it not being a real blockchain but whatever they're businesses they're running it as businesses and and I think again that's why I love Unis swap as the example because because you can see their own evolution in their crypto Journey you know when they started it was Hayden and um uh Moody and a few guys you know just in a dorm room like having fun building Tech and now it's evolved into a multi-billion dollar business so it makes sense that they are running it as a business now because it is no longer univ V1 univ V2 which was

just these awesome experimental Primitives um they should be doing value capture because they are an incredibly successful business um ah y i i i don't even remember what the original question was go un swap about value well okay so you were getting into like the the CR of the yes so so it makes sense that apps are like hey I want some of that that's where the real money is at um now for me to use a very dumb example we we at Sonic approached it from the perspective of okay what are the successful companies that we think

we are closest to and those would be YouTube twitch and um the the Google Play Store and the Apple App Store and all of these guys have a similar model you know they are hey you you people out there you're the content provider we're the platform you come to us you provide your content we're going to link you to the eyes that are going to be looking and interacting with you and you're going to get part of that Revenue rev share whatever you want to call it you know content creator program payments in the App Store whatever it is um so in this example you know if if if let's say the next Unis

swap um comes out team not the original project I need to change the name two swap comes out and and they're like we're going to launch an app and their option is hey we can launch on ethereum and have no value capture we can launch our own app chain and have value capture or we can launch on a blockchain that shares that value capture with us um I I think each one is a different example for a different requirement if you want maximum security you're going to go to ethereum because that's what you're paying for right if you want maximum capture and you are willing to run all of those overheads run your own app but to take that back to to to the YouTube or twitch example you know that's like that's like hey my content is successful

on YouTube so I'm going to launch my own website so I don't have to share fees with YouTube anymore and we SE content creators try that I think that that's in the Paradigm Andre right where like the interoperability and like that there's there's there's these Concepts around how bridging isn't that easy and you know we still have to switch chains and things right so it feels like that but like in a in a in a future world of interoperability between blockchains either by coordinated block building or ZK proof agregation you you stack that on top of some sort of like chain abstracted wallet experience which of of course Sonic would be included in this kind of broad crypto chain experience doesn't really matter if you're a if

you're an app on YouTube it's like my channel on YouTube is in you've got Andre's Channel and Rob's Channel and whether we're on the same base layer or we're all just a our own chain the end of the day the user experience shouldn't be drastically different um and then I think like like the customizability that you get from being an app chain is a strong strong argument towards the app chain I think all the economic arguments I think some of yours are a little bit rooted in like 2020 and 2021 I I I'm not sure how aware you are of kind of like the developments of the commoditization of the infrast stxs but I do think that like in that future world that app chain thesis becomes composed of like how

customed do you want to build your execution environment and if you don't really need that then like something like Sonic makes a ton of sense right but I think like broadly the YouTube example is good for the here and now but I also think that in a in a future world that the YouTube example will look like my channel is my chain but it's still connected to the entire YouTube Network um and so that is kind of like what I would push back on that example okay so so there there there's a lot of wh ifs in that world right like chain abstraction is not there wallet abstraction is not there interoperability is not there and interoperability has been a hot topic of discussion since as early as 2017

big guys back then Aon Wen Etc not around anymore or maybe they are I just don't see them on my feed so if if you are out there my apologies do more Twitter stuff so I can see you again um so and and we've had our own massive interoperability incident with with with multichain and and and the Chinese government seizing their servers and stuff you know so um I for now I will say I do not believe that that abstracted future is anytime soon um I'm actually willing to go as

far as to say I don't think we're ever going to see that abstracted future um but let's let's park a pin in that Let's ignore that quickly actually first things first a disclaimer right I think this is important I think one thing that I loved seeing on those posts that I did um two biggest push backs were always yeah but a lot of the stuff has already been commoditized to the point where it costs zero um which I then went and I looked at all of these things that they say is commoditized to where it's zero it's not it might be it's not right now um the other one is definitely that

I'm living in 2020 2021 which is interesting CU maybe maybe I've definitely not been as active on Twitter that's possible there definitely could be Tech out there that I haven't seen um but the main disclaimer that I wanted to get to is that the biggest Believers in rollup as a service and that these things are commoditized to the point where it won't cause any friction are people selling rollups as a service or at the same time now at the same time I'm saying hey don't do that go to a layer one that shares the fees with you and that's because I'm selling a layer one that

shares the fees with you so you have to take into consideration where this information is coming from right show me the incentive I'll show you the outcome um but I think it is important to take the eura now into consideration right like like sure with enough for sight you could have said oh why B building my space it's not going to exist in 5 years from now um but it's the only thing that could exist in the year and now for the next iteration of stuff to happen now a lot of these things that they say are commoditized oracles native issuance um bridging

block they aren't you know like like like the one the one response on one of Nick Nick White's tweet tweets um uh was cuz cuz he was commenting on mine where he was saying that hey look um you know you get Block explorers block Scout you get oracles um skew and a few others that he mentioned um you get you know bridged assets which are as good as native assets and and and the comment was there are stable coins then there are stable coins there are explorers then there are explorers there are bridges then there are bridges and and I think that is true but now that being said that doesn't mean no app chains

will be successful but it also means a lot won't be you know there there are exceptions but I think people are underestimating the real cost of overheads of running these things a a big example right now is is um I think it's inisha um which I play with a bit which is which is phenomenal like I'm so shocked how easy it is to get you know sort of a a test net and everything up and running um at the same time I can get a layer one up and running with a few clicks within half an hour that is not a layer one you know when I actually want to productionize that thing there are a lot more costs there are a lot

more overheads there are a lot more Integrations there are a lot more B there's the sort of fun experimental side which is normally designed to be very easy and then there's the production Level side which is a lot harder and you need teams and you need people that can support and and you need you know all of a sudden now you need to think about hosting infrastructure you need to think about am I running this on someone else's infrastructure I'm going to be running it myself how are people going to be participating how customizable is these things am I doing vendor lock in when it comes to an article or a bridge or something and what if I need to change those later what if these guys no longer support it which we've also seen happen a lot in the space so there are a lot of locks

you do when you do that versus deploying adapter on a layer one a lot easier to move around a lot easier to migrate there's already a lot more infrastructure available so so while I acknowledge rollups as a service is definitely a lot further than I thought it was but I think it is still very far away and maybe we'll never get to the sort of end vision of complete abstraction because I have yet to see any real Bridge breakthroughs that can get us there with with maybe the exception of ZK Tech like I say if it gets there or or maybe rather when it gets there

because I do think it eventually gets there um but there are a lot of problems to be solved in between now and then you know so so and and and one thing I I do know our industry absolutely loves is is building a technical solution and then looking for a problem that fits instead of finding a problem and then building the solution yeah and I I I do think that there's there are Arguments for the customizability of app chains given even given the the despite the the overhead but you mentioned like the real overhead cost and how that differs from the cost that is being paid to validators and so

I mean in my mind part of the value in blockchains is that these systems are so Dynamic that they converge to their real cost otherwise someone else will come in and subvert it and you'll pivot to the to the technology provider that provides that at a lower cost and so how is H you know I I saw on on your article you know two and a half billion dollars unit swap is paid to to validators is that because the ethereum security costs that much or why why I I guess like why safe is moving the world's GDP onchain with the introduction of safe net safe is taking this to the next step very soon check out net. safe . Global to learn more about how safe is moving the world's GDP

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oracles are available on 50 plus chains trusted by over 100 clients and over 6 billion in total value secured visit redstone. Finance to find out more articles again I think are a great example you know there are a lot of article providers out there some do an incredible job probably better than some of the best guys but they're not used because they don't have that aggressive BD that locks in the big teams if if you want a to deploy on your chain you're going to have to open your wallet and pay chain Le it is that simplistic there is no two ways about it so you know there are oracles and then there are

oracles and I I originally when I launched year there's a medium post I did at this point probably six seven years ago where I specifically said I am launching year and I I am not adding any fee extraction because eventually someone will copy this code and the fees will converge to zero so there's no point in having that fight I'm just going to make it Zero from the start and I was very wrong turns out you can add a lot of fees on top of that and people people almost feel safer when there are fees because then they feel oh there's someone that's actually looking after this and they're maintaining it and

they're making sure it's in the right places Etc um I I Loosely sort of follow us politics to give a different example in terms of their Economic Policy not so much about anything in the country but but one thing that that I didn't know that I started looking into was because because tariffs is currently a big topic you know putting a tariff on external Goods being imported in the country um and it was I chicken tariffs if I remember correctly that they were importing chicken tariffs and they ended up putting a tariff on all external Imports of like 20% and this was back in like 1960 or something something around there a very

long time ago and it was meant to only be for like five years that tariff still exists today because what ended up happening is now all of the imported chickens all of a sudden cost a lot more so what you expect is now consumers are buying the local stuff but instead the local guys saw hm that costs a lot more it's upper prices and now when people try and kill these tariffs these guys with all of this extra profit are lobbying to say no no no no no no no no no no no don't do that don't do that let's keep these tariffs we like these tariffs these are good tariffs and everyone got screwed except the local producers who could just take that extra 20% as a pure profit margin so there's there's there's the

theory which is the same in you know Capital efficient markets which say that it converges to you know the real cost it's just not true that's not how humanity and greed Works um and it's the same for these blockchain Solutions now so so again you've got the social element which is okay this Oracle does the same job but it doesn't have that that stamp of approval that a lot of these teams want the same thing with a lot of the the the the the so-called native usdc um and and all all respect again to teams like layer zero um wormal well I guess not wormal anymore he but but all

of these guys like like it it has worked great and so far there has not been issues but a user that's holding let's say $5 million in usdc is still going to want it a native issued instead of the bridge one just again from that social mental perspective even though technologically it's the same thing so in in practice yes it should converge to zero but we've seen for a very long time block Scout I think is a great example fantastic Explorer I used to use them on all of my experimental and even when we launched phantom for the first time block scope was what we use it they were phenomenal they are still

phenomenal but they're just not not as good as eph for scan and they just doesn't have that same name recognition so the big chains are willing to pay eer scan so that they can deploy that they're willing to pay chaining so they can get the Oracle they're willing to play circle so that they can get the usdc issuance because that that little bit of brand and that bit of recognition is worth more than just having the stable coin or the Oracle or the bridge or the Explorer and and I think that's being missed by a lot of these guys and that's because none of them have yet gone from this is technologically possible where which it is right now it is technologically

possible to launch a rollup at near zero costs that has a block explorer that has stable coins that has an oracle that has a bridge this is a fact I've seen it myself but you know it's it's it's not a production scale Circle issued chain link supported etc etc I mean and that was your argument in in the post right like like you like if you're trying to build for top 10 chain right then there's a different level of scill that you're going for and I'm actually like I'm I'm literally here with a friend who's building like his his own L2 using a kind of like customized execution environment and you know they're going

to raise their series a for you know many millions because it costs them a lot of money and I asked them today I was like what's your what's your burn he was like it's around 400 Grand a month and I was like holy [ __ ] it'll spy quick it'll and I was like yeah and they're on like you know they're they're pre-main net right and so and so I think that that undeniably is is is true but I think like you know there's there's use cases where like stable coins are stable coins Bridges Bridge 100% is great 100% you know I think like gaming is a good one that we've seen social stuff oh yeah stuff that's off the grid is a great example I think I mean we'll we'll see how well it still does in the future but but that's a that's a comment on the

game not a comment on the tech you know what Avalanche did there by giving it its own chain with its own costs and everything thing great 100% wonderful idea is there a spectrum of of like applications or like specific is it like applications which don't need that much interoperability perhaps are not that financially sensitive but maybe require like extensive customiz customizability or uh a special like ux maybe or something like is is there a class of applications other than just like I'm polym Market I have a massive Marketplace I I'm getting all all my traffic from like massm media toly market.com they're not coming in from binance you know I can just launch my own chain or you know unit chain like

outside like these large ones is there like a spectrum that you think of like what class of application is better suited for that for the app chain model versus it not or or no so so I in the current iteration of this world I would say app chain works if you don't need interoperability or composability but if you don't need interoperability or composability launch a AWS server with a mongod DB database you do not need the extra complexity of blockchain on top of that blockchain's beauty comes in when you add the interoperability and

composability so again it feels like a technological solution trying to fit the problem instead of the other way around yeah so you so you like the abch thesis as Tech technological as a technologist because of because of is is it the sovereignty Properties or what is the properties that that appeal to you uh I truth be told it's just awesome I mean like like I the amount of effort it took to launch a blockchain when I did my first ones in 2017 2018 versus now being able to gock launch having a block Explorer oracles it's just cool man like I I don't think it's practical I won't use it or launch anything with it but

but it's just amazing I mean the space has come so far that we've gotten to a point where we can offer that to someone what what I'm a little bit worried about is you know new people coming into the space seeing that and thinking when they click those boxes and say launch then they're golden because like your battle has only started then and you probably need to investigate a little bit more on your requirements for now I think for now I think L2 have just moved the value extraction you know it used to be layer one validators and now it's whoever is running the sequencer um so in the Unis swap example you know

they're going to be running the sequencer great in the coinbase example they're running the sequencer in the I I saw recently optimism paid like 50 something million dollars in tokens to ccken to launch their L2 who do you think's going to be running that sequencer and you guess I'm guessing Cen uh Kraken and then by Downstream effect optimism gets the uh like the revenue sharing that's tiny man like like you you look at the numbers that Bas is paying to optimism it's it's not even Pennies on the dollar it's whatever smaller it's um to join the super chain you you there's a there's a fee requirement that you pay back to optimism

Collective yeah it ends extract it's tiny man it should be a lot more it should be a lot more it's it's it's like a it's a database license that's what it is it's hey I want to have my app using Oracle so I pay Oracle a license I'm still extracting a lot more value from the consumer than Oracle is getting for the license so this is where Sonic's idea comes from then because I'm with not a bad business model but may another way to look at decentralized sequencers shouldn't be getting all of the revenue well let first let's first drop the decentralized word cuz decentralized centralized the centralized sequencers should not be

getting all of the revenue they should be going back to the apps yeah which which which again is at least a step in the right direction with Unis swap where they're like that value capture is going to token holders again it's a bit of a solution trying to fix a problem because their problem was really we we kind of in a response launch uni when we maybe shouldn't have yet and like now we kind of have to help those guys still they're trying to fix it Kudos um definitely centralized sequencers I think is pointless I think run a database why does it need to be a blockchain it doesn't um I I don't think Sonic solves sort of the umbrella problem of

why rollups why app chains Etc I don't think so I'm not egotistical enough to say it does I I I think it addresses a very Niche problem which is we see an incredible amount of value extraction from meev guys or validators that should be going to deps you know it's it's the same early YouTube twitch using that example again there wasn't Revenue share but it was those early content creators that made the platform what it was and the reason why it continued growing is because they were smart enough to be like hey it's actually the content creators that's drawing the eyes so let's pay them money and in our world it's the adaptiv you

know no one uses a blockchain because it's fast you use it because there's an app you want to use you use it because there's some economic activity you want to accomplish so those are the guys that bring the users and those are the guys that need to be appropriately incentivized um and that's the thing we're trying to address we're like so so so we ran the numbers we were like okay at what point we acknowledge that the validators are being grossly overpaid you know the amount of money they make versus their overheads in running cost and we work closely with the teams running these things to see hey what's your profit margins how much can we realistically drop this before you would no longer be running a

validator um and that that was a big bloody margin you know I mean our our our fee program is 90% of the transaction fee now goes to the dep instead of the validator and the validators are still profitable on that so I mean that's a lot of extraction That's Just Happening as pure profit um but you know that's the specific Niche we're trying to address where the guy is like I don't want to launch an e because my app is going to be generating a ton of fees so what options are there for that guy or girl my bad uh where do they go you know do do and and I don't really think there is a lot of

options for them right now other than launch my own appj yeah they or until these l2s start to yeah or or l2s find ways you know to to split those those sequence to those steps which which they can do which they can do but again then you're relying on a very centralized entity now to be fair you you do the same thing by by implicitly relying on the Sonic chain that it is going to distribute you know so you can still see that as a centralized entity but that's ultimately controlled by the code and the validators you know that's not okay so it's valid yeah yeah it's not like governance-based or anything it's like a strict like programmatic distribution of fees based on who generates the most

basically who spends or which app spends the most gas or the most demand for Block space or how exactly does the same thing so you deploy a smart contract that smart contract when you inter with it it it gener it cost you let's say a dollar in fees now it might have interacted with subcontracts so you know there's a little bit of calculus that has to happen there to see but but ultimately it's who used what amount of gas right because that's what we're looking at $1 equals let's say a million gas this contract used 200k of that this contract used 300K of that this contract use 500k of that okay you get 90% of 500 you get 90% of 300 you get 90% of 200 done and that goes to the person who deployed the contract or the the

subsidiary they sent from there so it's simple you know it's it's it's the same as registering for any Revenue based program where I'm like okay I'm going to upload my videos here's my banking details and the system needs to do the rest yep and it goes It goes to the the apps that brought that user activity and not only does it does it bring you 90% of the activity that you brought the platform but you also lower your overhead from all the cost that we were talking about about earlier because now all of a sudden you know you you you still get all of the benefits of a layer one you know you get the chain link you get the native usdc you get the the the the native bridging you you you get I I mean another thing right is is centralized Integrations like like a lot

of if we consider let's say someone wants to build the next big payment app L2 at some point they need Fiat and exchange onramps off ramps you know binance okx coinbase whatever they're never going to be like oh if you deploy with this L2 stack you native integration into us that's just never going to happen they have to add that integration layer they're they're we're we're we're in a different crypto world now where it's not just a technological solution there are real companies real Integrations real people that need to put in time to connect your thing to theirs now the argument there is obviously eventually we get to the point of composability where your Layer Two then sends to the bridge contract that is integrated into the coinbase thing and then it's automatically on there

sure I acknowledge that that could exist in a future world from a pure technology perspective when I review that from a business opportunity perspective it starts falling a little bit flat because again it doesn't make sense for coinbase to automatically integrate that because a big part of exchanges using them as an example a big part of their business model is things like listing fee marketing fee Etc so them controlling that gate to stop you from doing that integration that's that's inherent to their business unlikely they're going to remove it now at what point does it make sense for an app chain to graduate or excuse me for an app that is deployed I I think it makes a ton of sense right to for projects to deploy they think that

they're going to generate fees they want to get the most fees as possible but is the only in your in your thesis for app chains is the only reasonable uh deployment of an app chain going to be to to graduate Beyond and get go from 90% to 100% of fee capture so so I I would like to refrain from commenting that now until I see what happens with uni chain um and the reason I say that is because you you you in theory you gain a lot right but the question is how much of those fees are because of a shared user base or because of composability you know I'd like to do the numbers and see how much of Unis swaps fees are because of onchain

liquidations happening now if you're in your own ecosystem and there is no Ava compound Silo whatever Moro all of the new stuff see I keep up to date I'm not in 2020 um how much of the activity is generated by them you know or how much of the activity is because of Arbitrage happening via aggregators how much of that activity is because of there being multiple amm and that spread being covered between it I'm very curious to see what their fees are going to look like when they're living in isolation but we might see a deploy on uni chain now now now now that's the exception I wanted to say is a auni has that level of power that they'll probably get

native usdc they'll probably get Jing they'll probably get a compound Etc to all come join their ecosystem but will it ever be as big as everything happening on layer one ethereum we'll see and that's why I'm saying I want to refrain from answering that until I see that because they might now be capturing 100% but they might actually only be getting 50% of what they could have been getting if they were on layer one and they they had some kind of fee split we did a theum layer one was never giving it was never giving fee rebates like Sonic no no no so so for them it makes perfect sense but but I'm saying for me to answer the question when when should you go from 90% to 100% I need that data yeah yeah understood I

think they'll be making less than they would have if ethereum was giving them some kind of fee rebate yeah we did a podcast with Justin Drake and this was his the entire thesis around composability was was just this that it it it would make more to join shared sequencer environments or in fact based sequencing because you have the net positive effects of composability and you might lose some from giving up your centralized sequencer Revenue but it it would be offset and then some by the shared sequencer composability benefits no I 100% to the degree but in that case just launch on a layer one that already has all of that stuff whether it's salana Avalanche Sonic not plugging ourselves but you know there are a lot

of options out there where you get that composability we saw that same kind of Phenomenon with regards to the lvr scenario on on sex deck Arbitrage currently where the question is like should we should we basically conduct app specific sequencing for a decks right where they have their own transaction rules and they kind of they have this own kind of like I isolated Silo app but then the same conundrum comes right where it's like is the loss of composability which is is where a lot of the uninformed flow is derived from which is where the LPS on dex's get their get a lot of their uh profits from

or at least their Roi from is that is that loss of uninformed flow going to offset the potential loss in me or or gain in me and the reality that we kind of came to was until the composability benefits of like Builder commitments or shared sequencing kind of comes about uh the loss of uninformed flow is really not going to make it's not going to help anything it's just going to pull both down in terms of the amount of revenues available to LPS just going to make LPS less profitable uh it's not really going to make a big change ironically it's the same kind of scenario here with where should you deploy it because and we keep coming back to this Andre which is like in a future of you know 200 200 um 200 millisecond intent-based

interrupt ZK proof aggregation and chain abstraction these questions change you know but for the current reality these trade-offs are very present so yeah like like I'm I'm not discounting the potential future or the future that all of these rollup teams are working towards but I am acknowledging that there are on a daily basis new dep Builders an entrance into our markets and I think right now are confused as hell about what they should be doing or where they should be going or who they should even be talking to and I think it's enough of a barrier that it actually kind of stops you I mean looking at year right like like why did I launch that on ethereum

instead of phantom I mean Phantom was the blockchain I had built it makes sense that I would support that right but ethereum was the only place to deploy because that's where the composability was that's where the apps was that's where the heeld was that's where it made sense and that's not the case nowadays anymore you know like when when I was deploying that as a d Builder the answer was presented to me rather intuitively now I feel a builder coming into the space it's it's enough of a choice that it'll shut you down yep I don't think that's a good thing one of our most red pieces is is a piece that we that we put out as to like if I'm a builder today where where do I build and it was basically like general purpose L2

or salana fast L1 or app chain and and it's just like honestly the trade-offs of all of them they're they all exists it's like not it wasn't just like plug into ethereum um so Andre you're like to kind of wrap us up here it's been a it's been a great conversation but I really want to talk about some some of these app ideas um for Sonic going into mainnet you know you're like to me you're like one of the OG kind of ideas for apps uh in in in the space I mean we had we had year then there then there was uh keeper then we had some others that just kind of came and came and came and um you just constantly had these iterations and ideas and so a couple that that I saw you recently tweet about that i' wouldd love to learn more about

and I think that the community is particularly interested in if you're going to launch any of these Primitives uh that you've been kind of teasing about uh with the Sonic mayet the first one being uh protection markets so basically this idea of generalized onchain insurance for arbitrary claims using vaults with collateral deployed into yield that seems pretty interesting um then there's another one they put called levx which is onchain leverage spot with arbitrary margin we've seen this I think in some other ecosystems but you might have some twists um and there's a couple others in in in particular one that you already mentioned which was the blockchain bureau on chain credit scores um basically like let's get some under

collateralized lendon going in def5 I mean it was a dream kind of you know back back in 2020 so there's there there's three or four app ideas there um I mean if you just want to take a couple minutes and just talk about these and maybe how they work or why you think that that those product product Market fit uh that'd be super cool and just kind of like uh talk you know just run through them yeah so I mean first question will they launch on Sonic uh yeah I mean I'm getting 90% of all the fees and I'm confident they'll at least generate fees wherever they're successful or not and I want to get paid um my my Persona there has definitely changed if I'm going to be eating [ __ ] on Twitter I might as well be getting paid um year keeper Etc was not worth it

I got all the [ __ ] and none of the dollar so screw that change of mentality there for me and you became a legend you became a legend not not sure if that's a good or a bad thing but still um but you know again going back to the going back to the I could only launch year on ethereum example some of the stuff I can only launch on not necessarily only Sonic could probably go salana or Avalanche as well but you need something that's low on fees high on throughput and and that's not ethereum nowadays could argue it's one of the l2s um but for obvious reasons um I'll be sticking to to to to Sonic and I I also think it's a nice

chance to to show people the new kind of stuff you can build with this new kind of speed um and this is new speed you know this is this is speed we have not seen um in blockchain yet um protection markets that I've been toying with for a very long time um the the concept consider a standard money market you know let's take a you you deposit money you deposit usdc and someone borrows that usdc right now now in this case instead of I'm still depositing usdc but I'm deciding I am depositing usdc into let's say usdc Unis swap which means this this bucket that I'm depositing

this is underwriting Unis swap risk so if there's an exploit there then I will be paying via my deposit for this okay now on the counter side to that you have someone that I have a million dollars in Unis swap so I would like a million dollars of coverage so I go borrow the usdc Unis swap which is now deposited by that original depositor now I've as long as I'm holding that I'm paying those interest rates you know and that's more equivalent to sort of monthly fees um versus a lot of the existing Insurance models we've seen are very high upfront fees because they have no way to do any kind of recurring systems so this changes that already to a

recurring system so there's very little upfront cost um other than like whatever amount of collateral you need to You Know cover the the difference in LTV basically but so now let's say an exploit does happen now I can redeem my borrowed usdc Unis swap for the the underlying usdc if an exploit doesn't happen then you know the usdc depositor just keeps getting those interest rates um and the nice thing about that is is you can create any kind of arbitrary coverage without anyone needing to you know an entity that stops IT or controls it so if I launch my new amm I can go to protection markets I can deposit 100K of usdc for usdc my new amm I create that

market and then anyone that wants to go deposit money they're they can just borrow from that market and then they've got coverage you know the the only time when there is interaction and this is why it does need some layer of governance and this is potentially why it needs a token but I'm trying to not do tokens on any of the stuff because I don't think the current user base really understands tokens anymore so I'm trying to get as far as I can without um but in this example you do need some kind of governance that decides when the claim becomes valid so you know they don't create markets they don't do any of that stuff but you do need an arbitrator to be like an exploit data curve sometimes it's easier so one of the first things I'm launching with actually is a

codified protection market for um impermanent loss um so I can I've got the onchain formula that I've already created that measures the volatility and that can show realized impermanent loss based on when did you deposit and where it is now so in this case you'll have us d c IL Unis swap because you deposited into the Unis swap pair um and it's it's paragnostic you just point to the lp where you deposit it now in this case it's nice because whenever I make that claim on chain the system can go and check hey what was the ilil okay cool this is the coverage that the guy needs to be able to claim so then you don't need that third party um but in some

cases you know third parties are required for for offchain stuff because because one example could be you know if if there's a you you could assume that a money market gets exploited when a lot of its funds disappear right but at the same time someone could do a flash loan to withdraw all of the funds then say hey there was an exploit then the system Triggers on chain there is an exploit because all of the funds disappeared and then it pays out so that's a case where you don't want something like that you don't necessarily need a token right you could use an oracle of if I mean you could treat your own token as the governance system and use the Oracle that way treat that as the Oracle or you could just plug in your own that would tell whether a dispute it happen yeah

correct so you can either do it centralized or I can obviously like use fees from the system to hire a team to do it or you can you know get volunteers which I think is dangerous um the the it it it all depends on your spectrum of decentralization right like at its base I can do it now one more removed is okay cool I'm not doing it altruistically I need to get paid for my time so we add fees right um so now instead of the the lp getting 100% of the interest rate I'll take 10% cut okay but now all of a sudden okay now we have fees let me hire a team okay so that's sort of the next stage because now it removes my um centralized you know component but now at the next stage

you're like okay but let's make it user participants which has its own red flags because now as a user I can deposit a lot of money now I have a big say in the in the vote and now all of a sudden I decide there was an exploit and people can't override me so now at the most decentralized stage that means that these guys need a something at stake problem and now all of a sudden you come to a standard you know model and you have a token so so tokens to me are the absolute of decentralization um people nowadays don't understand that you know they they see a token as somewhere lower down year on the Spectrum where it's like part of the team and it's just not the case so I

mean as as as I'll it we we'll see where it ends up on that scale you know it'll kind of start with the fees and then kind of with a team and we'll see if it moves along but but I'm I'm going a lot more pessimistic this time round when it comes to my belief in decentralization and Humanity as a whole um because my last few Cycles showed me that that people act more irrationally than I can ever plan um and for that sake you know I can't start with any like like absolutist ideals on what decentralization or immutability even should like like these Primitives will the be the first ones that I'll be deploying with um proxy patterns just because you know I I don't even trust

immutability anymore when it comes to how users interact with these systems um LX also builds over for money market I don't think it's something we've seen before and again use that money market model so you can do this right now with something like AA compound actually right um let's say I want to go long um uh BTC right so I'll take I'll get a bunch of Bitcoin I'll deposit it as collateral I'll and I want let's say 3x leverage which means you need about 75ish 80% LTV so I'll borrow a bunch of usdc against the BTC I just deposited I'll go swap that usdc to BTC I'll put

the BTC in again as collateral I'll do that another time and now I have a 3X position that is a BTC long with a usdc short with BTC as collateral um this really just automates that whole process and it means that you know anything that's accepted as collateral you can use as margin um margin can be different from collateral you know so in the above case my margin could have been a th000 usdc but my collateral is the BTC that's part of that wrapping process and if you look at you know per interest rates that's really the difference between my my long and my short positions and in this case you know the amount of usdc borrowed that's the premium people are paying for that short position and the

interest being paid on BTC that's the interest for their long position so money markets already do that it's really just changing the ux and the flow and facilitating that swap to happen without slippage that's a big one you know because otherwise you need to go to an amm and exchange the usdc for a BTC so in this case that happens on on the on the money market itself as an atomic level where it's just exchanging it at the Oracle prices with a small fee and then your your per interest that you pay or get paid um funding rate as they call it in per technology that's just the difference in the interest rate you're paying for the borrowing asset versus the interest you're being paid for the providing asset and then you have onchain burps you know with spot burps

that are whatever leverage based on the LTV and you can put whatever margin you want um that one and will you guys be able to do an order book there Andre will I be able to do an order book because of of of Sonic you can you can so one of the things we'll also be showing is order book based trading instead of standard amm so Standard Club um this is something we we actually already had ready at Phantom but we didn't want to deploy it there because if it gets a lot of activity it can drive up the fees but in Sonic it doesn't so it's it's pretty straightforward to do it there um it's it's not needed for the Primitive to work but I do think it's a nice little value ad on top of it um witness net I don't know if I've

mentioned that one um I'm trying to remember what I said in the tweets it was FX it was fx- Swap and blockchain Z as well FX swap one is actually easy that's that's a new volatility based amm curve I came up with um so stable swaps you know you've got sort of at the X3 y plus y3x and then at the full extreme of 100% volatility you get um x * Y which is the Unis swap one X3 y being the solidly one and this one adjusts between those two curves based on the onchain volatility of the trades happening so if it's stable swaps you know it'll naturally gravitate very low volatility

and end up at the X3 y if it's super volatile or even just during a period of time super volatile it'll move towards the X3 y but then for like closely correlated assets that trade somewhere at like 10 to 15% volatility it'll trade closer to the X3 y than it does the XY but still enough on that curve so that you still have the correct pricing um so again pretty straightforward in my mind but you know X3 y was also pretty straightforward in my mind but people aren't building this stuff a big reason actually even with year why I didn't build stuff is I used to think of something and then I'm like n that's too easy of an idea someone would have built it but it doesn't exist so obviously it wasn't successful and then I just never build stuff but I I really think

Builders when they get an idea just build the bloody thing you know you'll some will be successful some will be failed but you'll be amazed how many times I have shut down my own ideas because I'm like no that's too simple why has no one done that yet obviously someone should have done that this is another example of that witness net is a bigger one that's a that's a um fully decentralized ZK article for arbitrary requests um so you you the the the little bit of code that's encapsulated with the circuit that anyone can run um you give it a https request it unfortunately has to be https because I need those CTS to be

able to identify the the the keychain that occurred it then calls that request and and it does a handshake with that session so that it gets all of that session data then it Returns the whatever it was from the HTTP request you know whether it's HTML or adjacent blob or whatever doesn't really matter um and then it uses the session Keys along with the handshake along with the um the uh the the the encrypted transfer that happened that proves that this bunch of encrypted packets is this bit of data that you received and then it runs all of that stuff through a circuit to prove that those session keys were in fact belonging to that session that did use dir encryption to prove that it is this data and then you have a URL you

have a data blob and you have a uh ZK proof that you can submit on chain to prove that this data did come from that URL this is to prevent like fraudulent user interfaces well this is for anything so so so so I believe that the current Oracle pattern is wrong um you know right now if I want to use let's say a weather data right I'm going to go to I'm going to go to chain link and I'm going to be like hey guys I need this weather data can you please collate and collect this um a lot of new deps might not have that kind of power and they don't want to you know need to be the centralized entity so this thing they can run on their client side code you know you can Chuck this in your little

web app or however people are accessing your thing so then the client while they and and then the other thing is I I feel Oracle update should happen during the transaction and not just continuously on chain so if you're looking at pricing updates you know that's just happening whenever it's not being triggered by an event meanwhile if the price changed there will be someone who has an incentive to update it on chain you know whether it's a bot that wants to liquidate or a Trader or someone at a money market that wants to do good a deposit and a borrow all of those events should trigger the Oracle update so in this case you need that person initiating the transfer to provide you the Oracle update but you don't necessarily trust that person so you

need a way to be able to say hey the data they're giving me I can trust it and the way I trust it is because I know it's a URL I trust it's data that's secur and encrypted and they are providing it to me as part of their transaction so now when they want to borrow money you know I don't need to go look at whatever article to update the user submits that for me and thanks to this proof that shows that that handshake happened and everything happened and it's the correct CT that I'm expecting I know the data is solid and I can accept it as part of that onchain update so that's how I think the Oracle Paradigm should happen um because I think it removes a lot of onchain bloat um yeah that one's probably the most technical of the projects which I

quite enjoy and more like infra Focus whereas I think a lot of your your focus is typically on like end users user yeah right yeah and so this last one yeah yeah no I I I wanted to say it is and it isn't you know I mean year year I think is another good example because y was never meant for end users year year started as me managing the bit of money that I was doing for some teams back then um and every morning I used to log in I used to go look at compound I used to go look at dydx I used to go look at Ava and I used to check their interest rates and then I used to manually like move the money from the one to the other one if the fees wouldn't cut out the amount I would make for the day back

then fees were a few cents so you know it was worth it moving it every day and then eventually I was like after doing that for a few weeks I was like under your a coder there has to be a better solution so I started doing a smart contract that then checks all of the rates for me in real time so then all I need to do is click the well not click but I have to send the rebalance transaction and then the smart contract would look okay which one's best and then move it there and then I still once a day I had to go and you know send the rebalance transaction and then I was like hey if I open this up to other people every time they deposit or withdraw it'll rebalance and then I don't have to do the stupid transaction

every day and that's why I open that up to users um no way so whenever they interact yeah that was it and like the solidly was originally built because of the stuff I wanted to build on top of it protection markets LX all of the stuff I mentioned needs an amm that has a reserve based Oracle because one thing if you look at Unis of t- wops and stuff which which are awesome onchain oracles but they don't take onchain liquidity into consideration so if I want to do let's say a half a billion dollar swap they give me the price but they give me the price irrespective of the available liquidity one thing I needed on chain was a was a t- web that I could use but it needed to take in consideration the liquidity so if I want to liquidate you

know someone's position it doesn't help I ask uniswap for the t-w because it gives me a fixed price based on the last trades I needed to know this big block that I want to sell how much are you going to give me for it so it's almost like a quote based system if you change it to reserve based liquidity so that's one of the biggest things in solidly actually like like it's it's one thing that often pisses me off a little bit because like there's a lot of technology in solidly that is not being used in any way everyone's like v33 wo whatever that's that was the jokey Mimi fun part that that wasn't even meant to to be core um the the the the the built-in volatility because it has its own little volatility measure so that you know like I said you need these volatility

measurements to be able to do those amm curves it was designed for that the the rwap as I call it which is reserve based time weighted um that is meant for being able to do like onchain quoting for liquidations or again Lev X being able to see what can you quote me for that trade without needing to actually execute the trade right um so just just a little disclaimer the stuff I built aren't actually for end users um they're actually built because there's an onchain technological requirement that I need to facilitate that's the Android that we know right there bro I'm glad sorry guys not for you they're just because that I am just too lazy to click a button every morning

[ __ ] it [ __ ] you oh my goodness you pay the fees good stuff that's true that's true well I think the last one and then we can kind of close us out really appreciate you taking the time today um is is the is the under collateralized lending the the this idea of onchain credit I I I I had a comment on that actually and like there's this one is a much more traditional business like I said it already has a big team it's been in development for for almost four years now we have a ton of data it's almost a petabyte of like data that has been eted and it has been changed to facilitate a

credit score now the one part is the onchain part but when you say onchan I have to add asteris because there's the hey I don't want a kyc and give you any of my personal details and that guy has a credit score now that one we can't give an under collateralized loow because you can try and fake the system and cheat it around so that you get a nice score and then you try and get a massive payday so for that guy who's not willing to provide any additional data what we can offer is better LTV and better interest rates but it's still going to be a collateralized loan there's no way around it unless you're willing to give us something that we can use in the normal legal World um the guy that's willing to add

the little bit of extra so so so that one we can still do as a decentralized primitive we can write that on chain and that's actually where my witness net comes in again because I don't want to be writing that stuff on chain the whole time but when the guy applies I want him to sign a message that proves that this is my private key that private key then goes to our blockchain Bureau servers that gives me the score and then I know that score came from that URL and then I publish it there you know I I know it seems like I'm building all of these things in isolation but they all actually come together um every so often I'm just chased out of the space for a few months and then I have to kind of restart by my own choosing I guess but

yeah so so so that one you know you'll you'll be able to get better rates likely than you'll get at a A or a compound or whatever but it's still going to be um collateralized then if you are willing to provide some real world information then we start looking at the under collateralized lending which you can still do on chain and we can do most of that kyc stuff also you know via ZK implements so that you don't actually have to disclose anything serious you just need to do some proofs um then there's sort of the traditional credit scoring side which a lot of traditional institutions in the non- crypto world that might have a crypto touch point you know so they have someone they might have a deposit address for usdc so they have that address and they now want a little bit

of extra credit scoring data you know maybe you're a thin follow or whatever so they talk to us so that we tell them hey this is the activity this address this address is like linked to these this is the ofac and the compliance and blah blah blah blah blah because we've got sort of standard regulatory stuff in there as well so that enriches their data set so that they can do that and then the last one is the standard regulatory stuff but you know that competes with the likes of of trm chanales all of these guys that are already doing those reports so that's not really the core business but it it is there because that was part of the score building process so we do offer it um but those are traditional business stuff you know that you sign up with an account and you grab a credit card you

you never even touch the blockchain there in terms of the data because this was the fun part you know because every every money market every every amm is a little bit different you know some do events some don't do events um some have onchain logs some don't have some you actually have to look at the transactions some do it as internal transactions some do it as core transactions so that's been a process to sort of adapt each of these main money markets um and look a lot more Niche stuff we don't yet support but you know we've got all of the big Guys across all of the big chains the money markets the amms um it's also at the point where we're looking at Trader activity you know what kind of stuff do you buy how long do you

buy and hold because because there is a direct correlation between you know how much you're trading versus your credit worthiness and the kind of assets you're buying and your credit worthiness I mean no surprise the guy that just buys a million dollar of Bitcoin and holds it for five years is better than the guy flipping $10 of shitcoin number of three this week every five minutes um but still it's it's nice to have been able to codify it and show you know the data proves my theory um so yeah that's quite nice but otherwise you know a lot of the stuff when I kind of took my Hiatus I think towards the end of 2022 i i i shifted my focus to a lot of things that are an intersection of traditional

finance and and and decentralized finance um credit scores was a big one I we identified at that time I was also helping a few regulatory bodies and stuff in terms of of ETFs you know standard spot ETFs nothing fancy um we were looking at facilitating funds that hold the spot assets um uh custody was another one we helped with a little bit so you know all all of these things were where it it isn't really onchain but it's interacting with onchain Assets in an offchain way um but but but I definitely think the biggest one of those ended up being the blockchain bureau which which um I think is a lot bigger than I I again you know

it's it's that it's that combination of the technology and the social layer where you need credit score to facilitate a lot of stuff we take for granted nowadays you know even even something as simple as having a a postpaid cell phone plan you know that's based off of credit scores like buying a vehicle with financing credit scores um being able to to to rent an apartment credit scores you know um so so I think that's another one of those things that opens a bunch of new Primos that will become available on chain within the near future not the hypothetical amazing rollup abstraction 20 years away future

yeah oh man you know Andre's got to build something that allows us to spin up another debt cycle of Def El this thing's never going to get off the ground again so let's just throw collateralized lending that got to keep that Deb wheel going my man like we've we've we've got a whole new captive audience of suckers that haven't been burnt yet let's let's make sure they never want to come back yeah Andre goes on his next Hiatus God damn it Andre you already have to say it like that [Laughter] man oh well hey man Robbie Andre it's been a it's been a bit of a journey here today um Andre thank you for for the for the time um yeah this is has been great welcome back to the to

the side I guess yeah I never left I was still trolling on Twitter Etc but um just haven't really done any public facing stuff but you know there there was a lot of just building that needed to happen versus most of the projects are now ready to you know start having external people interact with it which is also probably a reason why I'm more willing to do interviews and stuff now again because I'm a bit more bored because it's all Audits and reviews and waiting and so that that means Sonic's gearing up for mainnet as soon as we get these audits back and whatnot uh most of them already back we're already checked off um I know the team has an internal launch pretty soon and then when that goes well external launch but it's all

ear marked for December as far as I know last time I spoke to the team sweet which which I act like was a long time ago but it was like Monday so nice cool well sweet man looking forward to that and um looking forward to messing around and aping again um I think that no tokens so no aping for you no no I'm just gonna just gonna play some New Primitives man it's been a while yeah look I'm excited about that as well I I I think like I said I think under collateralized I think um insurance I think is important for a lot of bigger players to care about the space um and I don't think we've nailed that onchain yet um Forex

you know is one of the biggest markets outside of crypto but it's just not a crypto present so I think and I think that's just a function of amm Curves aren't as competitive um the the the the one that I think technologically is cool but it's probably not that useful is the is the is the levx um because onchain perss are pretty what's what's out there is pretty good I'll have to say there's um those teams know what they're doing darus from vertex told me I was going to get absolutely owned in the app Chain versus uh L1 conversation so like I say I I think there is a room and a place for everything I think that a lot of people that might be exploring app chains are

just doing it for the fee extraction which I think is the wrong reason to launch an app chain and I think there are a lot more costs than they are aware of and it's just about educating them on that um I think there is a place and a time right now I just think it's the hardest times for Builders to actually know where to go and what to laun to go yeah well hopefully really trying to address that's it yep well Andre thank you so much man uh it's been a pleasure again welcome welcome back not in the back way but kind of again and appreci so um and yeah man we'll speak to you soon thanks guys thanks Andre