Deep Dive: Supra’s Vision and the Rise of Automatic DeFi | Joshua Tobkin

Transcript

all this data can be conditions in which you create your automation script and your automation logic so there's many things you could say hey if Bitcoin is at this price and ether's at that price and the interest rates uh come out report comes out at this price move my assets from here to there and it'll happen instantaneous once the the Oracle data and the conditions are met in the same block hey everyone quick shout out to today's sponsor namada NADA is currently entering phase three of their main net roll out so make sure you check it out by following the link in today's show notes we'll talk about namada later today but for now let's get started hey everyone quick disclaimer before we get into today's episode nothing said on bell curve is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and

the views expressed by anyone on the show are solely our opinions not Financial advice our guest and I may hold positions in the companies funds or projects discussed hey everyone welcome back to another episode of bell curve today I'm joined by Josh topkins from Supra uh this was a really interesting episode where we dug into the architecture of supra and how I came out thinking about this was if you have uh general purpose chains over on the left and app chains on the right Supra is falling into this ever expanding bucket of purpose-built chains where it's constructed very intentionally uh to serve one use case in particular so uh this was a really interesting episode in full disclosure super is a bellur sponsor so thanks to them for making this up possible okay onto the interview all right everyone

welcome back to another episode of bell curve today I'm joined by Josh tokin the co-founder and CEO of supra Josh welcome really great to be here Michael yeah this is really excellent um I appreciate it Supra has been a great partner of uh bell curve and blockworks and uh I'm really excited to do this with you because um Supra is a very unique design um actually you know just getting uh to work with you guys a little bit more I've gotten to see a little bit behind the curtains so to speak in terms of how you're thinking about designing Supra the protocol and there there's some very interesting parallels I think to um other chains out there today and I want to do uh do the listeners a service and kind of unpack um some of the design philosophy behind Supra so maybe we can start uh you know

from a high level can you just give listeners a little bit of a description about what Supra is uh and then I would love to get into you know these two um kind of foundational Innovations I think which is one kind of this like full like vertical uh integration and like full stack design that you guys are employing with your L1 uh and then I want to talk about this idea of automations um but first let's start with the the high level just what Supra is yeah our design philosophy is if a blockchain has enough computing BWI to do more than one thing it should now we call ourselves an all-in-one blockchain so that's a layer one smart contract platform with Native oracles with Native Crossing communication onchain Randomness and the big one that we're rolling out very soon is enshrined automation so a single

stack that can traditionally do what are oracal or external networks services but across the same set of nodes and we do this in a very unique manner okay so um let's let's I I think the through line that I want want listeners to take away is that I think there's a lot of experimentation right now in terms of l1s and l2s or just uh developer Platforms in general of how um open and permissionless do you make it in terms of hey we're just going to give you the basic building blocks and we want everyone to come and build every little part of the infrastructure so we want people to come and build a decks and Oracle stable coin Etc versus hey we actually might be want to be a little bit more opinionated um and actually own some of the like first almost have like

a first-party app approach um and we've talked about this on um so we've talked about this on previous episodes of bell curve we've had uh Eugene of Atlas come on and describe their enshrined Oracle so that's something that uh Supra is doing as well um you're seeing this with bar chain they're launching with their own native decks and stable coins so you've got beex and honey um and it seems like Supra is taking a very similar approach so can you just walk us through you know how do you think when you're designing Supra what is it that you want to build and control to give a good user experience versus what um what services do you want to leave like a blank canvas for other app developers to come in and build like how do you think about that push pole or tension yeah that's a great question so you know

first of all we are a permissionless chain so we can work with our competitors and we will and uh for example we have a cross chain communication protocol that's actually bridg less uh we do this by layer one to layer one just recomputing consensus of the change that we interact with but we still will work with other Bridge providers many of them that you folks know uh now we are opinionated about our protocols for example espe especially with onchain Randomness or Price feed oracles uh we think it's very important that we have strong security guarantees because smart contracts don't know the difference if the data is any good or not it'll just execute whatever is fed so we have designed uh a very robust and fast low latency Oracle protocol our our

uh onchain Randomness is Cryptor rapidly secure our Crossing communication protocol is also cryptically secure and the layer one itself is built from scratch now that said uh we're actually kind of the the opposite thesis of the modular stack approach now that said you know uh we have been kind of described as a mega monolith however in any like internet global scale system even though it's a kind of Monolithic design so to speak there are modular components right so our consensus algorithm Oracle protocol Crossing communication protocol automation aching Randomness even our native decks all of these components can be swapped out for something new so it's a mod unified system uh excuse me it's a

monolithic unified system with modular components got it um now how do you think about this idea I mean I think this was a little bit of a something that apple had to figure out as well when they're like the first party versus third party app so which apps when they were originally bootstrapping the demand for the for the App Store right it's kind of funny to think about now but there were not very many people that were thinking about designing apps right so you kind of had these original first-party apps that were designed for your iPhone by the actual Apple team itself um and eventually I think you you saw the vast majority of that be designed by thirdparty application developers over time albeit with a strict set of standards that the App Store would enforce um and so I guess the you know the advantages that I would

say you have is you can kind of start from day one with a very nice user experience right like the super team which I'm you know I know is a very top-notch they can kind of build all this stuff and ensure this nice seamless experience on the other hand there may there might be this perception of actually competing with the app developers that you want to come in and build the native deck or borrow lend or whatever it is on Supra so how do you think about is there an eventual transition that you see happening like when you're talking to app developers like are they concerned about potentially competing um like almost like friendly coopertition with Supra at a certain point or you know how do you think about that um Dynamic so most of what we do at Super is actually on the infrastructure layer

uh so we actually view it as we provide really great integrated tools that allow you as a developer do more things now that said um for examp example we actually don't have a problem to work with a chain link or a pith for example uh because we're a layer one itself first and foremost that said also our Oracle protocol however we are opinionated we do have an the opinion that we have the best designs and that's what we actually think and we have you know this has been accepted to top academic venues through you know double blind peer review processes through computer scientists Etc and it's fast and it's it's uh decentralized and the way that we handle it is uh has a lot of capacity let put it

that way that you know so regardless of that though if we if anyone wants to deploy for example some of these competitors May provide services or data that we don't offer so we would still love them to deploy uh in terms of onchain Randomness that is also a service that we offer we do this through a threshold signature scheme built into our consensus itself the signing of blocks gives us a randomized seed on a block-to-block basis we could still have EXT parties uh work with us uh that's not a problem at all however it's just not going to be as fast and you have really strong guarantees in terms of uh unpredictability and uh the the quality of the randomness um furthermore for uh I mentioned that we are building a

dynamic function Market maker our own kind of enshrine decks as well and our uh in our own kind of network on liquidity treasury uh these things are going to be uh kind of available to all developers as well to tap into they don't have to use this deel uh end consumers don't have to use our services but we do have this idea of instead of a constant function Market maker we have a dynamic function Market maker that utilizes our Oracle price fee data which we think has a good chance of U you know limiting things like impermanent loss and uh you know better execution uh but once again this is just one service we offer and we think this tapping into our also kind of network owned liquidity or

treasury can allow folks to borrow from the treasury at discounted rates and perhaps have uh you know it what I'm trying to say is if we enshrine these things into the system itself we actually don't have to charge as much as PTO peer so we think that this can benefit other D5 protocols as well uh but certainly there are dexes already launching on Supra that are not related to uh our existing kind of designs and future plans but developers know about it um But ultimately yes our point of view is that these are tools you don't have to use them uh but they're there and we we spent a lot of time and care to design these and since we have kind of made them first class citizens into the chain we can prioritize it for

example we intend for Oracle data to always land in the blockchain sometimes in blockchains with high congestion that Oracle data doesn't make it in and that can cause problems for defi but since we are enshrining it like this we can actually prioritize it make sure it lands in every single block and this we think is ultimately going to result into a better execution quality and execution quality at large is our North Star okay so I want to dig into that a little bit and I want to start to relate uh some of what we're talking about here on the technical side to some of the broader debates that are happening in crypto at large and I want to get your thoughts Josh just in terms of like opinionated versus unopinionated design um and where we stand on that because

for a very long time the design philosophy of something like ethereum has been explicitly to be unopinionated and Incredibly neutral and you know they're trying to make it as easy as as uh you know they they don't want um the perception of any sort of opinion to sway like a an app developer or someone who's building infra etc etc um now some of the newer chains um that are coming is layer twos on AUM or alternative layer ones or whatever it is saying actually we want to be opinionated because maybe we've seen you know 10 or we have 10 or 15 years of data right now we have a better understanding of what users might want um or maybe we just need to differentiate against some of the some of the incumbents um and so I want to actually connect as well this uh enshrined um Oracle price feeds to what

Atlas is doing as a layer 2 for example that's a way that both of you are opinionated in the same direction here so can you just kind of walk us through how you think about opin like the opinionated versus unopinionated design thing and then like what are some other um you know what are some other axes of opinionation that uh that super has right so I have a pretty controversial opinion here which is that uh and this is a little bit uh contrarian which is that uh a single expert team is capable of building better protocols than hundreds of ad hoc teams they're just kind of coming together uh now that said remember Supra is kind of even though it's monolithic it's modular its components so if another team if it's

open source has something better then we could swap it out and improve our system without affecting the whole entire stack um so you know just to kind of talk about our team for a bit uh our our team is led by Dr anakate K he's the inventor of kzg commitments kzg commitments underpin like uh d sharding as well as Igan da those both wouldn't be possible without his invention and he's also an expert in cryptography for dkg distributed key generation and and other things as well as distributed compute and consensus um when we have folks like that right who are very very you know professional and you know uh considered top 1% of the world and they do and then

you have someone like me who is more of a kind of a product guy and kind of idea guy it's like hey can't we try doing this way I always try to push the limits but I have someone like him who pushes back says well actually that's going to break liveness or that's going to break safety guarantees or XY andc that's a very good balance between us and we we do have like uh 10 phds full-time computer scientists um and it's a nice blend of what we have at Supra which is both very rooted in Academia as well in science computer science as well as like product driven Direction um so I know that it sounds a little bit pompous and a little bit um you know may be slightly arrogant to say that we do have strong opinions that our Protocols are probably

among the best for these components so for example um even though Dr Kat is the inventor of kg commitments and they're utilizing data availability approaches we don't use kg and Supra for our own da data availability approach um we have a different approach that Dr K you know obviously knows the other approaches and we decided to go a different direction uh that that's only through having a lot of expertise and experience in space um our consensus algorithm called moonshot moonshot for classical bft algorithms are considered the maximum you can take that type of algorithm and we've also formally verified this through the Microsoft I Checker so we're very rigorous in what we do here uh I'm always pushing to you know um just like

in our industry how do we push the limits how do we maximize you know throughput while keeping latency as low as possible and we do this across every single protocol so many things including our onchain Randomness and we'll talk about our uh kind of native enshrine Automation and other things these are actually zero latency strategies and techniques that actually compound over time to make a big difference for the end consumer uh so I would say that we do believe strongly that uh we have great protocols um and if there is something better we're always studying we're always willing to learn and since we have built our system in a modular manner even though it's a monolithic kind of unified system if there is something better we can swap it out and

we will if we're allowed to meaning if it's open sourced or if the licenses allow for so um our point of view is basically standing on the shoulders of giants and always have humility meaning we are very quick to change our opinion if you show me something better we are very fast to say okay let's look into it this episode is brought to you by namada namada is the shielded asset Hub rewarding you for protecting the multichain shield your data across any asset and any chain and get shielding rewards for helping strengthen data protection for everyone to learn more follow the link in the description below today's episode is brought to you by Ledger the global leader in digital asset security celebrating 10 years of innovation Ledger is trusted by 7 million users secures 20% of the world's

digital assets and Remains the most secure Hardware wallet for your crypto and loin follow the link in this episode's show notes to grab your Ledger today okay so that's it so help me I want to actually um you know pull out one of the points that you mentioned which is you might have a decentralized treasury at some point and so you know again just using analogies here or maybe drawing comparisons to previous chains um you know in this sense this actually looks a little bit to me like uh like previously l1s have kind of shied away from having a treasury at the L1 level um for various reasons I think at least in the ethereum case because that's seen as not being necessarily like form of uh you know it makes it seem a little bit less money like I guess if you have um

you know community members that get to allocate funds but in the hub uh over in Adam um or Cosmos land there actually was this sort of community treasury likes thing so how would governance um necessarily work there and then how do you how do you kind of think about in general I guess um you know Supra as being historically you know l1s have been very opinionated on we're a form of money all the way to something more like we're an operating system we don't necessarily think of ourselves like that so how do you kind of think about Supra within that context text and then what is the governance going to look like around the uh the treasury yeah so we kind of view blockchains as distributed computers actually right and we we actually to the point of us you know we're actually a multi-m chain we think hey a computer

can run Linux uh iOS um you know Windows uh they can run multiple virtual machines why can't blockchains so our fundamental belief is that these are decentralized computers and to add upon that and I'll come back to uh the treasury and governance in a second um adding to that this idea of a you know everyone talks about world computer right but World computers that don't speak to the outside world you need oracles for that world computers that don't speak to other blockchains you need Crossing communication protocols for that world computers that don't have automation you need inine automation for that uh so with that said our general point of view is these are comp just a new paradigm of uh computation platforms right um and you it has very interesting qualities of trustless Etc uh in terms

of Treasury and governance so what we are trying to avoid and this is you know we're we're quite vocal that Hey listen governance is a lot harder than it sounds or looks because we're trying to avoid a plutocracy where those with the most tokens make all the rules so um what we are doing is actually working towards um a system that's based on Merit so we want folks to have like a soulbound nft some type of thing that can ACR reputation over time that is very difficult to ACR reputation and that reputation can actually uh uh contribute to your your vote your weighted vote okay and uh we we're actually hiring uh you know in the middle of hiring like you know political

economists uh behavioral economists um political scientists as well as of course we already have computer scientists as such and and and and to really uh to kind of think through this deeply about how do we create a system that cannot be you know uh usurped by those that have more tokens or more value but is actually more of a merit based system now one of these things are towards that agenda we have actually uh we putting out the paper and we have a demo prototype of the following already which is privacy voting so it's like you can vote without revealing what you voted for so that you know you can imagine the leaders of these other chains have so much Sway and influence and people are just going to say I'm just gonna do what he he does or you

know um because I believe his General ethos and but we actually think it's probably a better kind of voting system democracy governance system if you actually cannot Reveal Your vote until later uh and then it's revealed after a certain period of time um so in that direction we do to give you a sense uh the system is going to be progressively decentralized so we have stakeholders we have the foundation and and others not opers investors VCS some community members that are going to be kind of the initial Committee of that are going to make decisions we have to move fast and the early uh kind of phases we're only three months live in main net but over time we do want this to be a governance-based system that's based off of Merit uh

reputation uh and that we avoid excuse me that we avoid a plutocracy but we enable um at the same time a liquid democracy so we can switch your votes to different leaders periodically maybe every six months or once a year or whatnot um yeah so that's kind of how we how we view it and also the treasury and and I hope we get a chance to talk about how we plan to actually generate revenue for the treasury um that will be decentralized governance spacee yeah I um I'm very interested in that I uh you know I I think in general with this um you I've been tweeting about this quite a bit but I think that in general you know you need to have a a very strong explanation for why someone will hold your uh L1 token if your name isn't uh Bitcoin I'm

pretty sure that really comes down to fees uh and the yield that you're going to earn on your L1 so uh but before we get there I do want to just one um one more question to touch on which is you know I'm curious how you think about um just enshrining uh in general and maybe this is a little bit more relevant for uh like a more decentralized context but you know I think that one of the interesting things about uh blockchain design thus far and this is always a little bit of a um a push pull when it comes to something like standards is uh you know I think one of the things that ethereum did very well in the beginning although people are uh complaining about a little bit now is creating the erc20 standard which allowed you to trade uh tokens to tokens um and that was really

good at the time but but you know as we uh as technology progresses you're like o maybe those standards that we agreed upon or the way that we enshrined this into the protocol wasn't actually the best way of doing things like people are now you know looking back even at EIP 1559 which was an extremely popular proposal at the time they thing actually maybe uh the market would have actually worked itself out here without necessarily EIP 1559 or we could have done it in a different way so I'm curious you guys seem to have a very um you know enshrining heavy approach uh and I'm just curious in a fa in a space where crypto moves as fast as it does you know how do you kind of balance um you know enshrining things that are you know kind of state-of-the-art or Cutting Edge at the time versus how quickly

their technology uh changes that's another great question so the reason why we do this in the first place is smart contract platforms alone without oracles automation Crossing communication onchain Randomness they're not as expressive they can't do that much actually especially with the Oracle component Now by tring it what you end up doing is you actually cut down a lot of latency and you also so it's a lot faster and you kind of tighten the Gap from you know time the data is executed you know let me kind of describe the status quo right now you have a layer one and then all it does is smart contract execution and value transfers then you have a different network for Oracle price feeds

a different network for automation a different network for Bridges and Crossing communication every time you call out to a different network you add in latency and you also add more more cost because you have to balance more tokens and you also break the layer One Security guarantee you start to inherit the security of the weakest component that you you you utilize you know so um our point of view is like well you know if there's enough compute and bwith to do more than one thing we should and we also have a very unique Network architecture that allows us to do more than one thing at a time and we do this by randomizing the notes into subcommittees called Clans we Shuffle the notes periodically do sub sampled subcommittees called Clans the whole

system is called a tribe and we randomly sample the system to do um various services so it's actually very scalable and some of our insights include why the whole system is up to oneir bisontine nodes the ram sample set only needs to have uh can operate on these algorithms at the 51% threshold so the probability that one3 of the bantine nodes in the entire system are in the sub committee that overtake 51% of the nodes in the subcommittee are very low the probabilities are very low so this allows us to have multiple compute Services running simultaneously in parallel and this is how we have a lot of actually I would argue the most compute possible of any layer one and we

can run these things together uh so once again our opinion is to enshrine it because it's safer it's faster it's cheaper and is single developer experience for the end for the developer in the end one framework only now now uh back to your question though yeah yeah so the how do we feel if there's uh you know if we ins try something and there's something better later right yeah so this this will have to uh so in the beginning it'll be kind of uh kind of the research team's job to push these through but eventually as we progressively decentralize we're going to have to put it through governance and decide what to do here and I'd imagine through this idea of liquid democracy where we can appoint certain leaders for different kind of departments or you

know um you know uh agendas of the general ecosystem that might be research based Technology based engineering or economic space um we can kind of delegate your your vote to those folks and they can decide what to do ultimately and uh you know we can we we'll have to be very thoughtful about this we have to be very careful about this this is why we're not trying to rush into governance too soon it's actually way more subtle and complex than it looks uh but yes ultimately uh this is why also we think it is important to build in a modular manner so unified system modular components that can be updated and upgraded uh as we go uh remember what traditionally in the ethereum world when you hear modular

it's actually a different network for each component different network different team different codebase different programming language sometimes um different tokens that as latency you don't have shared security and you also um have a complex developer experience so modular is good but you know we're a unified system single node network instead of multiple different dis networks now Josh how do you think about um you know because like let's take the example of oracles um so in let's say an ethereum or a salon type context you have the private Market that are competing to produce different solutions so you might have like a chain link or a pith or something like that um and the disadvantage of that as you eloquently outlined is that there's because these

are all third party vendors everyone needs to make a margin and so you might actually there could be uh you know one you might not get like very nice integrated approach of being able to prioritize Oracle transactions so they don't always land they might be more expensive than they ultimately need to be um but in uh maybe one of the drawbacks of the system that you're describing here is um once an oracle is enshrined into the chain then there are going to be a bunch of other protocols which build upon that Oracle and then end up relying on it and so when you do want to make changes in the future and you've outsourced it to governance then it seems like you're kind of increasing the governance load um over time as like more and more solutions get built on top of like the portions of the stack that

you control so how do you think about kind of governance load uh for Supra uh over over the long term or um over time do you see decentralizing maybe and allowing the free market to compete on some of the stuff that Supra has originally uh taken and solved on the infrastructure fund yeah so I want to be clear that super as a permissions network will allow anyone to deploy anything so we can work with those folks and also for the smart contracts uh we can use like proxy contracts so you can just point it to a different contract and try to make it easy as possible for developers to switch out yeah got it got it okay cool that makes sense um all right I want to talk about um automation uh which is a really interesting idea that frankly I hadn't really heard um

outside of uh Supra U and before we chatted so can you just give us a sense of you know when you when you talk about automation um as an innovation um access for Supra what is that and then maybe we could connect that to that point that we were talking before about the uh some of the revenue generating strategies for the treasury that'd be great yeah so I'm really excited about this first of all so layer ones with Oracle price fees crashing communication are really great but automation most blockchains lack this usually some external entity or or you know provider has to submit a transaction to trigger a smart contract to do something and also um what we're bring to the table is what we call zero block delay automation these are effectively cron jobs or if that um you know if this then that else if else if

kind of microscripts that we could run at the end of every every single block so we execute the blocks transactions and then at the end of the block we execute the communities like the retail and you know like our the end consumer can actually set their own automation tasks then ultimately at the very end we set enough execution space for system level automation tasks now these are checked every single block continuously and because it's executed in the same block or at the end of the block we call it zero block DeLay So if the transactions the Oracle price feeds the conditions are met in the same block block immediately if the if evaluates to be true then it'll execute as part of the execution load uh so this is the first time to our knowledge of any

blockchain to do this and especially combining it with Crossing communication onchain oracles and automation the reason why that's so powerful is because with the Oracle data you can do sure we have 500 data pairs uh we have um you know cryptocurrency FX equities Commodities uh we're going to be bringing other types of data including world events interest rate Cuts job reports you know uh and these can all anything we can technical indicators for example we're really excited about that as well all this data can be conditions in which you create your automation script and your automation logic so there's many things you could say hey if Bitcoins at this price and ether's at that price and the interest rate cut or interest rates uh come out report comes out at this price move my assets from

here to there and it'll happen instantaneous once the the Oracle data and the conditions are met in the same block so uh this is basically zero latency as well and uh it's effectively onchain like almost like onchain Bots but they're driven through the automation Network their onchain strategies that exist in real time and it's almost like giving uh the end consumer um like high frequency trading tools you know because they can actually play with the big boys what you otherwise would have to do generally is have like a very sophisticated kind of operation to monitor the blockchain to submit the transaction you might want to be a node operator or work with a node operator to ensure that your transaction lands and then also with MV you want to

kind of position it where you want it to be with automation you kind of skip all that it's just immediately executed upon the conditions being met so we're very excited about this okay so this is uh super interesting so I actually want to um maybe connect uh it seems like at the scale that you are thinking about this this is definitely unique but I want to draw maybe a connection here up to the concept of hooks which some listeners will be familiar with so uh this is something that exists around like ethereum may be uni V4 right is kind of premise on this idea of hooks where you have a bunch of different amm designers um that can build these post execution if then statements and solve mostly things like meev um and actually another uh like immediately where my brain goes here when you're describing these

automations um is actually me um and so actually another um analog might be osmosis where they had this protor rev module where they actually the protocol took an opinionated stance on uh back running as a you know non-malicious form of me and it was actually Revenue that they generated for the protocol so um is that sort of analogous to um the way that you thinking about things and then I have a couple more questions for you in terms of like the priority stack between like kind of the retail programming and then the systemwide programming as well yeah I think a lot of us are that have been in industry for like seven years plus like myself and our team um we end up looking at the same things and we solve it in a different manner uh I

think we all see like wow this automation can really improve uh execution quality as well as uh just expressivity and and more more capabilities um I have looked into hooks just more recently I'm not super familiar with it to be completely Frank uh but my understanding is that they don't necessarily run continuously um whereas ours are can be run up to a couple times per second because our blocks are so fast uh but I think directionally we're looking at the same things as well in terms of Ms we actually have a very interesting um approach to MV as well uh you know basically what we do is as I mentioned we have onchain Randomness right and this is achieved through a threshold signature so our approach to M

mitigation I'm not going to say it's perfectly solvable right I think that's a a little bit too far to say but we think a mitigation strategy is the following use the onchain randomness uh threshold signature as a randomization seed to execute the transactions in the block so you randomize the execution why is this interesting is there's zero latency here as well so there's not an external network that's doing Fair ordering then submits the whole thing to the network that adds latency it could be seconds in this case there's no latency is a randomized execution of the transactions within the block now the uh you know astute kind of hacker or um you know uh defi connoisseur might say well you know what I'm going to do is I'm going to just Spam your blockchain so we

actually have to and like I'll spam my block your blockchain to increase the probability of my trans is actually Landing where I want it to be right so we actually have to couple randomized execution with localized fee markets so it gets prohibitively expensive to spam the same state so the these two things uh is our me mitigation strategy for toxic M but there's also like good MV so to speak right where that's uh you know timely liquidations or Arbitrage opportunities to keep def5 Balan and that's precisely where we actually can Leverage The systemwide automation to generate a new Revenue stream for the treasury for the daps and for the node operators you know we're we're kind of trying to take away this toxic MV from the node operators you know and they're making a lot of money in ethereum and in

salana right we're trying to remove that because that affects the execution quality for the end consumer and we're replacing it however with what we consider to be a much more Superior uh Revenue stream and would happy would love to dive into that more namada is the shielded asset Hub rewarding you to protect the multichain built to give you full control over sharing your personal information NADA brings data protection to existing assets applications and networks namada ends the era of transparency by default enabling shielded transfers and shielded cross-chain actions to protect your data even when interacting with transparent chains namada also introduces a novel shielding rewards system by holding your assets in the shielded set you help strengthen nada's data protection guarantees and collect n rewards in

return to learn more about namada follow the link in the description below Ledger is the global leader in digital asset security trusted by 7 million users and securing 20% % of the world's digital Assets in recent years Ledger has built a comprehensive ecosystem of products and services making digital ownership more secure and accessible for everyone Ledger's newest devices Ledger stacks and Ledger Flex introduced the world's first secure touch screens making it easier and safer to manage your assets alongside Ledger stacks and Ledger Flex they have also launched The Ledger security key app offering a safer alternative to traditional password management follow the link in today's show notes to get started with Ledger today yeah let's talk about that a little bit so um I'm trying to remember

someone uh this like the random the random uh uh transaction generate I think it was like maybe cow swap that had this idea as well about mitigating me um but I got to go back and double check that but the uh so talk to me about what you consider like malicious versus more benign forms of me and then how are you preventing like the more malicious like I guess I'm assuming when you're talking about execution quality you're talking about slippage or you know front running or sandwiching or something like that is maybe the more obious forms of more malicious me um and then what are the more benign forms of me that is the right way to think about this as Supra is internalizing this me as a source of Revenue into the the protocol treasury or is that the right

way of thinking about it it is it is it's uh is correct now um I I I'm not so familiar with what the cow swap team is doing but what's different about us for sure is that it's being done on the layer one itself you know it's not an external service so there's no latency here but I'm glad to hear that others are thinking this direction um I do believe one of the um co-founders of uh flash spots had also engaged me on Twitter or on X rather that they also were looking into randomization uh as a potential mitigation strategy so I think there's something there but I think you have to couple it with localized fee markets to prevent the spamming problem um yes so you know uh yes so toxic MV

front run sandwich attacks you know back running perhaps maybe not as much uh but the the that's like the toxic MV the you know just basically reorganizing the transaction ordering for your benefit is basically toxic MV um I don't think that's actually considered legal in the traditional world and if we go mainstream this may have to be addressed so this is why we're thinking that it's important to address and also uh I just came across we were at MoveOn and eth Denver we we hosted it co-hosted it withu and I just found out thatu is also looking into different types of resistance strategies as well um so but what is good me right that really comes down to timely liquidations and Arbitrage you know to make sure that def5 is balanced and that uh you know

you're getting the execution ultimately quality and experience that you're you're hoping for so the way I look at it is toxic MV is when the end consumer like the barometer the way that I kind of look at it is or we look at it is that it comes down to execution quality if the end consumer doesn't get the execution that they thought they were that's toxic MV if they get good spreads um not so much slippage and it's a you know they get what they expect that's that's great that's that's ultimately what we want and we think that this creates a positive uh flywheel where execution quality will bring more onchain activity which will generate more Arbitrage and liquidation opportunities which can be kind of um handled through the system level

automation to as a you know Revenue stream for the treasury but for the note and for the deps in which this opportunity came from so that's kind of how we're looking at it yeah okay um so in in in terms of uh you know as being a source of revenue for the L1 uh and the L1 treasury one of the big trends in me is uh at least in more of like a traditional L1 context is that me is moving up the stack so it's ultimately like user flow which is generating this me so it's kind of moving from being internalized to the L1 uh so maybe like ethereum or even tws in this case to the apps and then ultimately to the users um and so you know on some of this benign me that Supra would internalize how do

you think about keeping that as a form of revenue for the protocol versus returning it to users well uh that is the way we look at it is if we do Revenue share and I should mention for example Arbitrage on salana according to a helus report was around $142 Million last year alone and that's probably not capturing everything it's probably just what they could kind of Garner uh and then and then also for liquidations there's I think tens of billions of dollars of liquidations every year in crypto at large and there's usually 1% fee so both of these can be substantially larger than transaction fees in general we still have transaction fees but you know on the quest towards high througho low

latency blockchains actually it's race to the bottom for transaction fees to be race to the bottom you know so it's a hard business to make so but we realize that folks with good execution quality will have um more activity which will do more things in D5 which will lead to more Arbitrage opportunities that the system level can handle at the every every single block we can handle this um and same with liquidations that fee and revenue as we mentioned can get redistributed to the DAP that dap can decide if they want to just give back to the users or or whatnot but at least we'll capture it in a very efficient manner and keep it within the ecosystem so uh daps can put it back to maybe a borrow lending protocol and um maybe they want to mitigate impermanent loss

so they can kind of take that Revenue to help stifle that maybe they just want to redistribute it to their users directly they could do that as well um but we just want to we think that daps need to have a healthy Revenue stream uh we think if we take away this toxic MV for node operators they need to have another thing to replace it so we are going to be revenue revenue sharing with the DAP where these opportunities came from with the node operators that are doing the execution and the treasury itself that treasury just so folks know if the decentralized governance over time wants to say we're doing BuyBacks we can if they want to say we're gonna try to buy the Mona Lisa we we can you know if they want to say we're gonna reinvest in ecosystem we're gonna increase block

Rewards or whatever it might be we can the key point though is we want and we think is very important that we have potentially a very lucrative business model to to fund the treasury in the first place and we think that what's nice about this approach is that It ultimately ends up we believe with less M better execution quality and there's cis's virtuous cycle this flywheel effect where less M better exe execution quality leads to more activity which leads to more Arbitrage and liquidation opportunities which can re that Revenue instead of being extracted from the network which is happening on these layer ones layer twos and you know and such right now it's being extracted away um especially on layer ones um we can keep that value within the system within

the ecosystem and redistribute it and this is happening on a block-to-block level it's like micro fees but high volume this can execute we think up to two or three times per second so it's it's pretty pretty interesting as a new Revenue streaming business model for this for the network okay so uh couple follow-up questions on so basically what I what I just heard um the tldr there is that you're G that kind of going to let the apps decide there's going to be some Revenue share in between the treasury and then daps and then that I think makes sense right for D daps will you know do what's best in the you know keep whatever margin I guess they can but ultimately we'll probably end up returning most of that to users it's very competitive market um that makes a lot of sense to me talk to me about how

you think about like one of the interesting tradeoffs and it really is a trade-off because you could view it as a positive or A negative is you know ethereum has left its um MV Market mostly up to the private market and so you have um a very small set of Highly competent uh very well capitalized uh M extractors right so this would be mostly the integrated like Builders um that you see and so on the one hand the good part of that is that this is the private market and they're highly incentivized to extract as much MV as they can so they probably do you know that's probably the best job of extracting the most Ms you possibly can um on the maybe more negative front is that uh you know you don't get to decide how that Meb gets redistributed so I would guess in

the Supra case um you know just because it's one team and you're not like kind of opening it up uh quite as much um then maybe you don't extract quite as much MV so there's a little bit of like welfare loss there in terms of you pure efficiency but the benefit of it would be that you get more of a say in terms of how it gets redistributed is that roughly how you think about it or or no well so I I would just be I I would say that right now you know we are one team that's building the infrastructure uh but we have uh you know uh and even ethereum usually has to they started with one team as well you always start with one team um and then also I just want to point out these lir ones you know uh the benefit of us going so late

in the game so to speak is we got to stand on the shoulders of giants we got to see ethereum salana ethereum didn't even have a concept of me they didn't even know it was the thing until later right they didn't even realize oh maybe having oracles would be interesting the industry didn't know that oracles were was gonna be a big thing until chainy came right so we had the privilege of seeing all these things and we know every blockchain wants oracles they want Crossing communication they want onch Randomness uh you know um so in terms of the M uh discuss um we think that uh it can create a lot of perverse incentives uh where these extractors are gluing with node operators to reor organize the transactions in the block which is not

really fair uh to their benefit that's mostly the negative or toxic MV that we're trying to avoid and we avoid that with the randomization localized Fe markets you know that kind of thing uh and the thing is we actually think that this system level automation that's executed at the end of the block for Auto Arbitrage and auto liquidations is going to be by far more efficient than any extractor external party doing this so we think we can just keep the system extremely efficient balanced and just redistribute that value to the the ecosystem stakeholders we hope that this can dominate transaction fees and be a new type of Revenue model that can be orda to larger than transaction fees that daps we really want daps and and

node operators to be healthy economically we want them to make money and they can decide what to do with it uh to give it to the community or what not or if they have a token they can do BuyBacks whatever it might be uh it's important for everyone to kind of win together to keep this healthy now I just want to make this clear that um while we are initial team we have a very opinionated idea I want to and I've told my team I want to obsolete myself in a couple years right I want our team to be obsoleted and I want this to progressively become decentralized but the truth of the matter is it to go fast you know we have to have some level of you know uh concentration of talent let's put it that way but we will you know part of

part of building up a treasury and kind of really being uh opinionated about this now is we we have a I have kind of an Ecom background as well and we have a very strong focus on sustainability we're like man these transaction fees and block rewards are not going to last forever and and and there's a kind of this contrast between High through blockchains where it's actually ra the bottom for transaction fees house supposed to be sustainable this has been the back mind for years and when we stumble across oh wow this we can do system level Arbitrage and system level liquidations and these can be major Revenue drivers for the ecosystem uh my key point is that I will feel comfortable and extremely happy if we have a fair Revenue driver that's healthy for Defi and our end consumer

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on coinbase just as web two companies like Google Amazon and meta were built on internet protocols the largest financial companies of the future such as coinbase will build on decentralized protocols like Moro whether you're an individual fund fintech or institution Moro is for you follow the link in today's show notes to try Moro today okay Josh I want to um you know is your transition into uh uh this sort of starting to maybe uh begin to wind down here I want to talk to you a little bit less about the technical side of things and more on like the go to market um incentive program design and uh you know I I'm I'm very curious now there are so many different um l1s and l2s today that are all competing for the relatively thin uh pipeline of application uh applications so um I I'm very curious

like even on this um like what is the strategy here that super has for going out and recruiting um apps and then how do you think about um incentivizing those apps and uh you've seen very different approaches on different l2s I think suie you mentioned um I know you collaborated with them a little bit earlier but their I think their Foundation is doing something very cool where they're redirecting sort of protocol emissions to different daps in the ecosystem so I think there's a lot of innovation that's beginning to happen at the L1 and L2 layer of how do you incentivize different application developers so you know talk to me about how you think about go to market recruiting apps on the platform and uh you know any sort of incentive program design so you know in addition to the revenue sharing model we talked about uh

we also have like the last component that we're going to bring to market is called containers containers are like they these uh almost like l2s or app chains on the layer one itself so uh these these application developers can create their own ecosystem with their own gas token and set their own gas fee well for example it might be a gaming container or a defi container or regulated defi or rwa container um these containers exist on the lir one and they have own gas token and yes they have to pay sup's micro fee but they can set their own transaction gas in price so for example some transaction on super might cost one tenth of a penny right but they might charge two cents that's actually a 20x

markup that margin is 20x basically that's a new Revenue stream for the DAP the revenue share for auto Arbitrage the auto liquidations that's another Revenue stream for the daps so we focus on ways that these daps can have their own vibrant ecosystems and by the way since these containers these app chains on the layer one itself so to speak they're not actually different chains they just have their own execution environment or or execution capacity or space rather that's that they they can own um since it exists on our layer one you can have the app chain experience while having these apps be composable and uh share liquidity and you can say you can have control the access policies and also you get the benefits of native Oracle native Crossing communication native automation

launching Randomness built-in you don't have to you know otherwise you have to have a external network Boost validator Set and get an external Oracle pay for for it pay for another Bridge so it's really expensive actually to boost trp a nap chain from scratch um so Step One is new Revenue models that help them become more sustainable number two we also have um an ecosystem fund we put aside 10% of our tokens and $100 million doll worth of tokens that will be um just deployed over the next three four years to incentivized the winners of our super dap competition so we're running these competitions we want to do it every quarter the first are about to end I think at the end of March where we'll select the first you know um maybe top

six applications uh EXC me Dev uh yeah apps and and projects and protocols that are launching and deploying we'll give them some of the ecosystem fund we'll also introduce them to VCS that backed us and and others and and we also have a Launchpad and other things that we can you know help them with we already have uh before we launched stpro we had actually created our own gamified learn earn program called we call it project blastoff we kyc 500 12,000 people so and our email list is like a million people actually so what we can do is we're basically the winners of this dap will get part of the ecosystem fund we'll introduce them to VCS we'll put them onto our launch our project blast soft platform and we'll kind of move our ecosystems to try out their application

help them launch um yeah but really longterm so you know uh but ultimately longterm I I believe as we kind of boost W the ecosystem get the engine going uh sustainable Revenue models that can potentially be quite lucrative is really I think going to be the biggest draw uh for for your applications to consider Supra in addition to the native capabilities that that application developers really like it it's like well their their mind goes like wild it's like automation with Oracle and you know crushing communication fast layer one multiv VM support they can do so many things they can't do Elsewhere on a single single infrastructure and uh yeah I mean yeah that's kind of kind of our our point of view here and we we're gonna we're going to pretty much really

try to spend some time to work with these the winners of the applications even though folks that don't win the competition we want to spend some time with them and help Foster them try to build the right relationships and make the right connections for them it's going to be pretty Hands-On you know and then we're we're GNA try to scale this and to really give a white Club approach to these these genius developers frankly that are leveraging our tools yeah Josh how uh this was the first time we discussed the container um you know module that you guys have here how how should listeners think about containers relative to something like a roll up on ethereum or honestly the thing that popped into my head when you were describing that is maybe like a subnet on Avalanche where you know they've got their own sort of execution environment

but you have native interop um as well so how how should how should listeners think about containers relative to some of these other you know sort of Concepts that they might have heard across other L1 yeah yeah sometimes I forget about promoting containers because uh I'm so focused on the other infrastructure components but containers is a big deal they they're like your subnet or your pair chain or your app chain or you know your Cosmos zone or your Layer Two on the super layer one we have so much computer capacity that we can actually give you your dedicated execution space on the super layer one you can basically Reserve this much execution kind of auction or Buy in advance and then and then uh you know once again in your container you can have you can set your

own policies you have your own governance you can say uh you can decide what type of governance you want to have you can say which other containers you compose with or not you can have access policies have the key one for developers after speaking to developers is you can have your own gas token instead you're own gas fees right so it's like having your subnet or pair chain or app chain or Layer Two but you don't have to boost up the node operator set and you inherit Supras layer One Security the Oracle The Crossing communication the automation uh onchain Randomness you get it all uh and you can go to market very very fast you can start with it's like hey you know I'm just starting I just need like three transactions per second execution capacity and maybe you only maybe it's

only 100 bucks you know a month you know but then as you scale you can you can acquire more execution capacity for your application but the cool thing about this is that you already priced up in that example the transaction fee might be one tenth of a penny on Supra you have to pay in Supra as a cast token uh but you've marked it up to two cents for that transaction so as you scale up you're already knowing you're already making 20x margin on that right so it's very predictable on your expenses uh so it's way cheaper in in to go to market way faster um this is still in development this is probably going to be towards Q3 of this year uh but we've we've been working on this as a concept in the paper and you know for like over a year and a half but there's just so

much to build at Supra but we're very excited about this because you can have your Layer Two your your app chain experience but it exists in the layer one because of that these app chains can quotequote containers can compose with each other you have Shar liquidity you have Shar security Shear liquidity the performance of su L one built-in um external services like oracal Etc and uh you can go to market a lot faster a lot cheaper instead of millions of dollars you can go to market for a couple thousand probably and uh you you you know like like I said you can have any form of governance you can have your own gas token Etc and we're going to be working towards uh kind of an AI assisted container Builder like a Dr drag and drops like okay I need this type of governance maybe it's like a

compound governance maybe I need some sort of uh you know decks here you know amm or lending protocol and you can just imagine you can just drag and drop it and AI helping you parameterize it like these are the parameters you need to do and you just deploy quickly that's what we envision um and yeah we're working towards that and we think that uh you know um we think this is strictly better than kind of rolling your own chain because it otherwise you have to worry about the economics of your token and and incentivized node operators but also if you need Oracle Bridge automation you have to pay these other ecosystems many of which will require 500,000 to a couple million dollars so it's very tedious and expensive so we we're

excited about this as well cool um all right Josh well this has been a great technical exploration of supra is there anything um well I want to if listeners want to find out more about you or follow uh you or the work that you're doing at Supra or apply to maybe any like programs that you guys have open What's the best way what's the best way for people to do that yeah follow us on Supra suore laabs on on X our website is supra.com um yeah you can find us there we we we're constantly looking for you know higher engineers and researchers and we have different roles for different things um yeah I mean we're really excited we're kind of the uh we're trying to really break out into America John and I are co-founders we're both

Americans but we started this like four years ago this particular project and back then we did not have any regulatory Clarity so we did it all uh Although our development company is dwc Corporation we have like a Switzerland nonprofit you know Etc uh we were just very uncomfortable to promote hard in America but now that the tide is changing you know John's moving to the states I'm in the states right now um we do really hope to tap into the US and um you know really kind of get more known because actually we're doing a lot of really great things and I just want to be clear that you know we are all kind of as web three movement in this together you know and we we need to learn from each other and yes there's going to be competition and I hope we can compete with class but

ultimately I hope the best ideas win you know and that we we ultimately strive for uh once again execution quality for the end consumer let's benefit the end consumer it's the only way we can go to mainstream that they can't be fleeced constantly fleeced they have to get the execution they expect and then uh ultimately um you know we do think that the the vertical integration of these services will give developers a lot of tools to do things they couldn't do elsewhere that are going to lead to applications I mean for example Supra stack with you know smart contracts and Automation and a stable coin you can basically build stripe like that you build subscription payment platform gateways um there's many things you can do here and the final kind of point I'd like to drive home is systemwide auto

Arbitrage and Auto Liquidation executed at the end of every single block we think will be the largest revenue driver for any layer one ever and number two we think that the automation tasks that retail and anyone can do um will also be the largest gas consumer of any mechanism in web 3 more than human activity we think that these onchain strategies these automation tasks that are run every single block will be the largest gas consumer mechanism ever so we're that's our point of view and we actually believe this and we think that this is going to be um we're just entering a new era of blockchain uh Evolution and design and this would not be possible without Bitcoin first ethereum after that salana avax so on so forth we had the privilege of studying

everyone you know and we will continue to study everyone and uh yeah it's really great to be here excellent thanks Josh this was a lot of fun uh we will uh have to do it again sometime soon thanks Michael appreciate it cheers [Music]