ETHIstanbul Conference 2025 | Gas to Zero | Filip Pajic, Status Network

Transcript

[Music] Okay. Hello everybody. Thank you for the introduction. So um I'm engineer in status network. Uh we are a first uh guestless rollup natively on a blockchain level. Um, and I want to talk uh to you about how it's possible to actually have a blockchain that you don't have to get on. So, as I said, I'm Philip. I'm a software engineer here.

Um, this is going to be uh not too complicated talk. Um, but I just want to do a little vibe check. So um who here knows how why do we even pay gas for on the L1? Can you please raise your hand? Perfect. Okay. So my first point is then going to make a lot of sense to talk about uh and after it I want to talk if it's even possible to remove it. Uh and I want to introduce you to something that we call karma that's very unique to our network. So what do we even need gas for on

blockchains? Um so this is a general definition that you would get if you uh googled. So it's some uh unit of computation that you have to pay for in order for the network to actually run whatever you want to do in it. Let's see if it's something that's inconvenient simply for the sake of it because it seems like in this space we are kind of um masochistic. We like to over complicate things. Um but my argument is like there is a reason for it on L1's. So I want to introduce you

to someone. Um this little fella here that's Pumpy. He's our dragon. uh he wants to use Ethereum blockchain and he has his private key ready. Okay. So uh he opens his wallet uh he selects uh how much money he's ready to spend on his transaction and how fast he wants it to be included. So he sends some money to the network. We wait. It's a 12 second block time on Ethereum. It's kind of slow. I can walk through the whole stage while waiting for it. But once completed,

our uh transaction is definitely included. So Pompy is a very happy dragon right now. But what would happen in scenario where Pompy doesn't actually pay any gas? He doesn't pay any money and there's bunch of pumpies who don't pay for anything and they just start sending their transactions to the network. So thousands of transactions at once, no one paying for it. Well, suddenly you'll have a very unstable network which is tired, which is not able to pick up new transactions, uh where you you cannot simply rely on it. This is something we call a a denial of service attack. So,

uh if in a case that there's no protection on how many transactions can get into the network, it's very easy to actually attack it. So, I hope I prove you that it's not this is not the case. We don't like inconvenience for the sake of inconvenience. Um, but I think it's kind it can be a bit different on roll-ups. But first things first, um, I'm not sure how much people in this room know about roll-ups. Uh, but from perspective of of a user, rollups work pretty much the same. So we

have uh our L1 Ethereum, we have some L2s, bunch of them, linear status network, scroll, arbitrary, whatever. We have our Pumpy the Dragon. And on all of these roll-ups, currently you pay some money to get your transaction included, which is later committed on L1, right? It's much faster. The block time on uh roll-ups is usually two to 4 seconds. And um Pump is happy. He's got uh he paid much much less money. His um uh transactions got concluded much faster.

But uh in a scenario where he wanted to not pay anything as we can see here bundled with that uh very fast block time. It's actually even a worse scenario your network can get uh attacked even more easily. Uh it can fail much quicker uh and you need a much more performant machine. So your network gets tired very fast. So how we go? How do we go from this to this? So let's see. But before we we move, uh I just want to establish two things about roll-ups.

Uh I hope nobody kills me for this. Uh but uh you need to remember an Ethereum equivalent L2 its client is very very similar to E1 client. So it's very similar to get and all eat is usually sitting on a smart contract on L1. That's when we consider something a rollup. Um the security of the funds is protected by its validation mechanism and it's simply sitting in one place which is going to be important for later.

So, is it even possible to remove gas? Are dental school? Look at this. Look at this. Of course, it's cool. Yes. Yes. Guys can be removed. Um, but I want just take a step back. Um, I want to tell a bit uh about who we are. So, uh I am in status network. That's a team. We are part of large organization called Institute of Free Technology. Uh we've been in the space since 2018 and we've b built bunch of uh tech to make all of these things possible. Uh we are uh we are makers of Vaku a P2P message protocol, Codex P2P

storage, Nimbus, the third largest E2 client, Keycard. We have hardware vault status our super app that has messaging and that's actually something I want to talk a bit more about. So um what's happening here? So we have a fully decentralized chatting application. Every phone device is talking with each other. So there's no centralized server like Telegram or Signal or anything like that. It's very censorship resistant. Uh but to to uh to do that and still have free messages, so

for someone to not pay for their messages to be sent while still being a decentralized network, um we had to develop something we call RLN to protect the messaging uh from DOSS attacks. And we've come up with an idea. Hey, uh, if it works in messaging, why wouldn't it work on a blockchain level? So, quickly, RLN is a zero knowledge system designed to prevent uh, spam. Uh, and it replaces economic incentives via fees with cryptographic proofs.

And, uh, how does that work? Um, we use something called Shamir secret uh sharing and nullifiers where if Pompy he decides to spam the network, his secrets are going to get exposed by everybody else. So, he's going to be sad and people will be able to take funds from him. Uh, and if he's a uh bad actor, uh, not only is he going to uh, lose money, he's going to have to uh, pay higher cost for gas in the future, and he's also going to be included on the denial list. So, he will not be able to participate in the network anymore.

Okay, so how does it work? Now, here's our Pumpy. He still has his private key. Um, but now instead of sending money, he sends cryptographic proofs that he's able to make a new transaction on the network. And just quickly for more technical folks, uh I know the quality is not the greatest of this image, but basically you the user, you send a transaction to your RPC uh which sends a request to the prover to prove to get to to create a proof for your new transaction uh to be included for RLN.

uh and it sends uh that transaction to the pool into the sequencer which checks um if you're eligible for those free transactions and if you're under the spam limit. If everything is fine then uh you just get included into the network for free. Otherwise, you may pay premium gas or you may be declined completely. So we've solved DOS protection right but that's not the only thing the gas exists so we need to have revenue for the network so in context of L1

um you're not just protecting uh from spam you also need to pay the miners to actually operate the network same for rollups someone is running those sequencer provers et etc. Um but long term in roll-up space fees are a raised to zero so quickly in a rollup what do we even pay for on L1 simple we pay for execution and that's it gets included but on an L2 uh we need to pay for settlement so we need to run that prover which is going to make the zk proof for your transaction to be included that

needs to be posted and all of the transaction data uh that that allows for the rollup to be rebuilt later that also needs to be committed on chain. So there's actually three things that are being paid by gas here. We cannot just eliminate them. They simply have to exist. Um and those are the uh things you have to pay for. So those are these two um and lots of rollups. uh you'll see they'll uh optionally charge some fees to for spam protection to increase the stake you need to actually use the network.

Um they'll actually charge to get um more profit for them and potentially if there's uh current congestion in the network they'll charge higher fees for you to be included. And you'll see uh they've been making uh a lot of money. Um it's been a very good business. Uh you can see base chain operating very successfully with uh net margin of profits being $1.11 million. Um but why um why cannot that be shared with rest of the uh network with rest of the users? Um

especially uh especially now like uh you see actually uh up fees uh so most of those money made was uh before EIP48 844 um that happened sometime around uh uh first half of 24 and it's even smaller now afterra so actually execution fee settlement fee is still pretty cheap. So it makes sense now to actually introduce a rollup which operationally is doesn't need much funds to run on um and simply charge zero gas. Actually we

have test net which you can use it's live and you can see here uh this is simple uh eat transfer transaction where zero gas was actually charged and you didn't have to pay for anything. So imagine a rollup which actually shares all of its funds with everybody. Um but we we just saw like the profit is um like almost zero now. Um how how can a rollup actually still make money to pay for other things? There are actually few uh other revenue streams that are going to be becoming

increasingly more popular. One of which is the native field bearing bridge which we we've seen uh more popularly with blast uh and now as of recently with Katana native apps revenue sharing um L L2s which prioritize having um their own ecosystem of apps uh which are endorsed uh they actually uh charge fees on using those using the DEX using CDP using the NFT marketplace whatever uh and those native apps can actually have revenue sharing so that one more stream income premium uh gas sequencer fees so some

rollups are still charging this profit margin um and in our case um if you're outside of the uh your limits under RLN you'll be able to use the network but you'll just have to pay premium gas which is which can be again shared with rest of the network to pay operational fees. So um it seems like it's possible right? We solved two problems. We solved DOS protection and we solved the funding of the network. Um but we still need to manage it somehow.

We still need to decide uh how much fees someone is eligible uh to spend. How much transactions can someone actually send out to the network? Uh we need to to have a way on how to allocate these funds. So let's see how um introducing Karma. Karma is a non-transferable soulbound fungeible token. Um and it's used for gas steering. So for deciding how much uh transactions is user going to be eligible for it's used for networkwide civil protection and

something called public funding pool which will uh which I will talk about soon. So here's um here's how you'll see your karma in your uh in your hub. You have some uh karma crude. uh there's a point tiering system for each tiering system you have uh more and more rewards like on a gas station for example. So uh if you're level one you'll probably have one transaction per few minutes. If you're level two you'll have few transactions under a second. If you're level five you'll you you're a power user you'll be able to uh do high frequency trading for free.

Um, and here's here's our little dragon which now sends uh proofs and sends uh karma. I mean he doesn't send karma. Karma is his karma is just a pointing system uh which is going to be used for deciding if he's able to use the network for free or not. So Pompy here is a level three. He's sending us V 0 hotel fivago of course uh and he'll be able to get his transaction validated and included. Uh but in a scenario where karma is zero, his tier level zero and he's trying to uh spend zero money on

gas, well he's simply not going to be included. So uh I just need help with an experiment. Follow my lead, please. [Applause] Okay, thank you. So what we just did was a coordination mechanism. So we've all now successfully uh without saying anything we're able to just clap our hands and coordination mechanisms are very important uh in any uh in any structure in any ecosystem. uh there simply needs to be a way on how to uh coordinate

funds for example how to coordinate uh what's going to happen uh the direction of everything and uh we here doing that with something we call the public funding pool. So if you remember previously um public funding pool uh we have all of these revenue streams and all of those revenue streams they are going to be sent into the public funding pool. Uh so native decks uh native fees uh LP uh provision uh anything made from staking eat on the bridge um uh NFT marketplace fees whatever all of

those are sent into the public funding pool and the allocation of the public funding pool is paid by is uh allocated by karma holders. And how does one acquire karma? So uh by using the network, the more you use the network, uh it makes more sense for you to be to have more ownership of the network to be able to uh say, "Hey, um I want the funds from the public funding pool to go to pro this protocol, that protocol, whatever."

And it also makes sense for you to actually have be able to use the network even more by providing liquidity. Uh when you provide liquidity, you're actually uh directly benefiting the network. So it's again it's getting back to you. You provide some value, you get value back. um staking SMT um if you if you're uh patience patient and you support this uh ecosystem long term well you're going to be rewarded for that right uh and there's going to be many more ways to come um so yeah thank you for listening to this talk um I hope uh you now have a glimpse of the gasless

future uh and I'm ready to take any questions Yep. >> Hi. Uh basically I think that uh can you explain the difference? Uh I think that the the scenario in here is similar to the scenario in the when we pay gas. Uh so in this scenario we need liquidity for karma and uh we need karma for transactions. Uh if I need liquidity in sand chains uh I can stake money and guess got uh some uh staking rewards and

I can pay gas from this. So uh if we if if we need uh some liquidity for transactions, I think this is the same scenario because in in the in the other scenario, we also with liquidity we can get money and we can pay our gas cost with this money. In this scenario, we get some karma from liquidity and uh we can get transactions with karma, right? So, uh, yeah, but it's not the only way for you to acquire karma. You actually, uh, you can just actually, uh, just do a capture and we're going to give you your

entry karma. So, we're making sure that even if you don't have any funds, you're able to enter the network. So, that's also the part where civil restriction comes in. So, um, yeah, of course, if you provide liquidity, you're going to get more karma and you're going to be eligible for more. Uh but the whole point is is uh making the UX as simple for someone who doesn't have any funds. So we you do a capture, you get one karma and that's enough for you to do one transaction per minute for example. >> But but in the in the capture case uh an an attacker can uh build a DOS attack.

He he can with artificial intelligence he can solve he can create thousands of uh thousands of uh users artificial users and they solve the capture and they make synthetic uh transactions to to make denial of service. >> Yeah. So that's why we make sure to that entry point to to keep it of good quality to prevent those attacks. I agree like if it's gamed >> I I think that the capture uh >> I just gave it I gave it as an simple example like >> capture can solve the problem at some point we need liquidity >> I think and when we need liquidity we came back to starting point

>> if you enter the network and you used it that's also one way right yes >> to get your karma and uh you can actually uh come to same number of karma uh as someone who just stake money. >> Um, but yeah, that's just one of the entry points. >> Thank you. >> Uh, thank you very much. Um, I have a couple questions quickly. Um, number one, can we have more stories about Poppy? >> About Pompy? Um, yeah, he's a fun little dragon. I he he started existing I think in April this year. And this is his friend Santi. Okay, thank you. Um, so you also said you use Shamir secret

sharing to expose the the private key of is it the private key or >> so not the private key of of a wallet. Um, but sorry, let me just go to I think I have some better slide. Uh um >> because I'm curious about how do you expose whatever it is you're exposing if it's um done several times within a minute. What's the mechanism there? >> So uh in karma contract >> yeah I mean >> there there's a there um >> okay is in the contract.

>> So karma is a contract and uh it's able to be slashed. So, it's non- transansferable, but it's able to be slashed in case you if in case you spam the network. ZK uh the sequencer determines, hey, he's spamming the network. He went over his rate limits which are also defined in a in the smart contract based on tiers of karma and your uh proof gets uh invalidated. Your key gets exposed and uh with that key I can slash your current karma. But how is the key exper I mean where's the shmeir secret sharing being used exactly >> the smart cont >> okay but you don't have more details on like the mechanism through which

>> I don't have a proper slide to explain it >> um >> okay that's fine I can ask you afterwards um >> yeah yeah >> any final questions >> I don't use m >> this is going to a general question but where do you think Sorry, can you repeat that? >> Where should a student start if they want to pursue what?

>> Uh if they want to pursue a degree in this field. um if they want to become like more of an expert in this as a student, what should they study? >> Okay. Um >> so what are you majoring in? >> Uhhuh. Okay. So uh depends what you want to do. Um if you want to do uh in any you're going to do general computer science like enter that degree but now classes which you're going to be focusing on uh depends on in which direction you want to go. So if you want to go more into protocol side into distributed development uh take those classes and that's uh general blockchain development. If you're more interested into ZK into research into science um >> take more

>> take more math classes because that's going to be very very uh powerful for you later on. >> Yeah. And of course uh joining to local communities like uh amazing it Instabul like there's you'll be surprised how many developers uh and people in the web3 community are all around the world and in Turkey like there's actually a booming uh community maybe there's not so many companies explicitly doing web 3 uh that are lucky that there's bunch of indiv individual contributors in Istanul.

>> Lovely. Thank you very very much. Thank you. [Applause]