How Jito Helped Put Solana on the Map Again: The Chopping Block - Ep.588

Transcript

yeah there's been a ton of new activity on salana there's a lot of new capital so if you look at the bridging patterns and things like that there's a ton of new activity coming into the space there's a ton of super high quality projects that have been grinding basically since like the middle of last year and you know I think a lot what happened with all the FTX stuff that really sucked for everyone but there's a lot of teams that kind of just kept grinding and building not a dividend it's a tale of two now your losses are on someone else's balance she generally speaking air drops are kind of pointless anyways un trading firms who are very involved e is the ultimate D5 Protocols are the antidote to this

problem hello everybody Welcome to The Chopping Block every couple weeks the four of us get together and give the industry insiders perspective on the crypto topics of the day so quick intros first you've got Tom the D5 Maven and master of memes GM next we've got tun the gigabrain and Grand Pua at gaunlet Aloha and it does look like I'm almost in Hawaii today although I'm not in Hawaii great and we've got Lucas special guest the CEO and salana Savant at GTO Labs nice I like that thanks for having me on excited to be here and I'm has the head hype man at dragonfly so we are early stage investors in crypto but I want to cave out that nothing we say here is investment advice legal advice or even life advice please see chopping

block. XYZ for more disclosures so we've been off for a couple weeks uh we're coming back in the swing of things now at the end of the year we just had our end of year review but it turns out it was a little bit premature because the end of the year was not quite the end of the year there was a lot more year to go um and it turned out that in the last couple of weeks one of the most notable things that happened is there's been a crazy Bull Run in alt l1s and most notably in salana salana I think when we were talking when we were doing the end of year review salana was at $670 it is now over $100 the entire network is over $50 billion in fdv uh I think like 60 billion FTV market cap is like in the 50ish billion and uh it's

basic it's it's near I think it's now the number four asset on coin market cap uh cementing itself now as being the predominant non- ethereum smart contract platform so as the as the guest for the show we thought we'd bring on Lucas so Lucas is known on Twitter as Bufalo is that how you pronounce it buffalo buffalo buffal buffalo buffalo um so Lucas is known as Buffalo and he's can we can we get the atmology like what what's the story behind the name oh probably not appropriate for this podcast maybe if uh if someone takes M drinks or something someone can get the full story okay I have a lot of trouble imagining now how that story uh goes but

okay yeah good to know um so one of the reasons why we brought on Lucas is that in his Twitter Alter Ego Buffalo he's he's one of these guys who I'd call like the salana reply guys that anytime anybody is talking about salana him or mert or Anatoli will show up and be like no no no no you guys you have no idea what the hell you're talking about here's here's here's the lowdown of how salana really works but unlike some of the other characters out there Lucas really knows his so he's the founder of GTO uh and so Lucas why don't you explain for our audience really quickly what what the hell is gito and why does it matter in the context of salana yeah Jito is a salana meev infrastructure provider and basically

trying to mitigate the uh negative impact of me on salana specifically uh spam and wasted block space and so you know I think a lot of people or a lot of chains have this issue that are High throughput um low fee chains where you just have a lot of Arbitrage um you know if there's like little micro arbitrages then um it's going to take up a lot of block space so J tries to build infrastructure to efficiently extract the me and try to kind of save some of the block space for users and some of the good bots on the network that are trying to make markets and things like that so A while back we had on Phil

Diane who's one of the co-founders of flash Bots which is the ethereum version of of what you guys are building how would you compare what you guys are building on to flash Bots which is the ethereum counterpart yeah so salana the main difference is speed on salana I think that's pretty obvious so ethereum you know there's 12C block time um 12 or 13 seconds and the throughputs way lower salana it's 400 millisecond block times um the leader bouncing across the world all over the place so the the systems that we run are very high performance very latency Sensi um you know multiple locations around the world I think I don't know if people

on um PBS do that so that's kind of the main difference from like a super like macro level when you like start to dig into the weeds a little bit the architecture looks a little different so on PBS they're building entire blocks on uh jto block engine we're building pieces of blocks essentially bundles so the unit that we're operating on is a little different than PBS um and yeah there's like the the transaction flow is a little different which uh we can dive into so I want to be mindful a lot of our audience uh is non-technical and a lot of our audience probably you know

they've heard these words before maybe one place or another but maybe a little bit hazy in their minds from the last time they heard it's kind of alphabet soup of different me related things yeah so so so just very briefly I would love if you could quickly explain just for our audience one more time what is me how does it figure into salana and why does the fact that salana is fast matter for making this problem different or harder or easier yeah so me stands for maximum extractable value and essentially it's the value that block producers can extract or like you know make by determining the ordering of transactions in their block so

you know I guess for maybe for people in the audience you know there's some networks with validators some with miners you can basically just think of them as the person who's collecting all these transactions figuring out the ordering of them proposing them to the rest of the network the rest of the network kind of takes these blocks looks at them it replays all the transactions they come to consensus on the state and when you're a block producer you are the one who is determining the ordering of transactions um so me is basically you can think of it like a building more efficient blocks and more profitable blocks so some networks like ethereum before flash Bots it was a um I

think it was what is it Priority gas and then time auction so you have this men poool you have all these transactions at the very top of the block you have the transactions that pay the highest gas and then kind of lower as it goes salana it's a little different there's a salana is a continuous block Stream So the leaders are processing these transactions live and sending them out to the rest of the network everything else is replaying it live and also um there's no uh there's no me pool built into the salana protocol like there is ethereum so transactions are going straight to the leader the leader is kind of prioritizing them so with the

introduction of me you're essentially the validators and Miners and things like that on the network that are producing these blocks are somewhat Outsourcing the construction of either the entire block or pieces of it to different parties that can run more optimized algorithms to make more money for validators and stakers so just just to make sure I I understand the details there so in in ethereum uh nothing actually gets propagated to everybody nothing actually gets confirmed as state until it's packaged up in a complete block and those blocks happen every 12 seconds more or less on the dot now with proof of stake um in salana that's not how it works in salana it's almost like streaming block production where yeah

it's sort of like we call them blocks for the purposes of consensus but really you know transactions as they're getting sent to the leader and the leader is the leader for like you know some number of epics or what I don't know how long an epic is I don't knowbe let's say some number of seconds a lot of a lot of blocks when the block time is like 400 milliseconds uh pieces is of blocks or I guess they're called shreds in salana they get confirmed and streamed out even though the entire block is not done yet it's like okay well the first five people in this block are these guys and then the next five are these guys and the next five are these guys and so in a system like that where it's basically streaming as opposed to these all-in-one block containers doesn't that make me just

totally different in a system like that yeah yeah it's super hard it's it's much different than ethereum um so every leader on salana every slot which is basically like uh a window that you can produce a block in it's 400 milliseconds leaders have multiples of four consecutive slots so a leader will have four 400 millisecond slots or 1.6 seconds and then it'll you know that leader is in Germany the next second next 1.6 seconds will be in Tokyo and you could be in California it's kind of just like bouncing all across the world and then also you have um the streaming part which you mentioning it's kind of like the video stream that we're talking on right now

where ethereum is kind of like choppy and you know it's you're sending the entire block at once the salon leaders are actually streaming the blocks out so it's basically like a fire hose of um shreds that are going out which are essentially reconstructed on the Fly by every other validator and RPC on the network they're replaying it and so on and so the me games is definitely way different I guess one of the main differences is that uh latency matters a lot more where the the blocks are streaming out so you can actually you're replaying stuff live and you can you can actually the leader can process a transaction send out the shreds your node can replay them and you can fire

off a transaction and land later within the same slot so it's um you know compared to ethereum where you kind of have this like 12C pause and and you are basically trying you know you'll kind see this on like PBS where the bids kind of ramp up closer to the end where people are kind of waiting until the last second to send their trades um maybe I'm getting too far in the weeds here but uh it's basically that the the latency matters a lot more on salana and I'm curious actually about so I think there there's a lot obviously about the consensus and block building process the between different between ethereum and salana um I'm I'm curious in particular about the difference is in architecture

that you've chosen between goo and and Flash Bots um as sort of a brief recap and summary um flash Bots um makes this software have Boost people run uh relays which are sort of this this matching um auction exchange that match people who want to buy block Bas with people who are producing block Bas or validators um and there's a bunch of these different Rel layers flash po runs one blocks R ones run a couple different you know SAS companies run them um but sort of make this software and people use it and um you know you can sort it's a very sort of General unopinionated uh piece of software Geo I would say is much more sort of app um in that you guys have your own liquid staking token um you I think went open source um some somewhat

more recently um I think you guys have your own uh relay and understand that's like most of the volumes go into your own relay and it feels like more of a clean vertically integrated sort of polished experience how do you sort of think about those different design choices between um The Flash Bots and and and yeah so I think salana m is kind of in the first ending and I think our infrastructure is maybe more similar to Mev so before proposer Builder separation all this stuff flash Bots created a fork of the go ethereum client called Mev and they were kind of the the only auction here basically there I don't think there was um they were kind of the block Builder and the relayer so

basically they were aggregating order flow and doing the simulation and um they might have been sending bundles at first and then move to full blocks is kind of a stepping stone to BBS I think jetto is kind of in the same state right now so jeto created um the jetto salon valid a client and there's the jeto block engine and it's it's kind of similar to like the early days of me on ethereum so um jeto runs the auction um we have a inhouse simulator that our engineering team has built that kind of uh does a bunch of crazy simulation to filter through all the bundles and whatnot and then the unit of operation

for US is bundles so we're kind of sending bundles to the cheeta salana leaders when they're up similar to like the early days I think that will evolve over time there's a lot of protocol changes that are coming to salana um you know there's like fired answers coming um there's a lot of talk on like Bank list leaders where basically the leaders aren't actually executing the transactions they're kind of just like packing blocks there's like asynchronous execution there's all this crazy stuff that's coming and you know it's like do we there's a lot of questions in my mind like what what are we building for and like un like a multi-year Time Horizon I don't know if it'll look exactly like PBS and like

suab and all that stuff um I don't think that architecture makes on salana but um it's definitely not the end state in the current form so right now uh what is the percentage of validators or leaders who are running the GTO client yes so there's currently 47% of the salon stake running the goto client and this is like large institutions like coinbase figment P2P to um in like staking facilities to like you know kids in like small businesses that are running it super easy to run right 47% of stake 300 validator or almost 400 validators so a natural question you know if you look at

the trajectory of flash Bots flash Bots started kind of running the only auction by themselves and standing in the middle of ethereum infrastructure and they were criticized pretty roundly as being like hey why do we have one company that's kind of sitting as an intermediary to this this protocol um and eventually they moved away and kind of decentralized the the relay such that Flash B is only running one of many relays now I can imagine that perhaps someday in the future you guys forceed the same thing that you know maybe there are going to be multiple different uh relays or auctioneers um sitting besides yourselves that said given the latency differences between ethereum and salana one of the common critiques that

salana gets is because of the Relentless uh latency sensitivity of salana because of the fact that not only are there these 400 millisecond slots but you have the streaming of blocks and and the fact that you know the leaders are moving from jurisdiction to jurisdiction really quickly there there's so much of a centralizing force in whoever is the fastest Whoever has the best infra Whoever has the the best software to run this auction is going to get overwhelmingly uh an advantage over other people who aren't running at the same scale with the same level of professionalism so do you see that as a concern uh that even if you do try should nominally decentralize and say okay well anybody can run an auction here's like the the the you know format RPC uh format whatever to do it that uh

you sort of end up in the situation where one party maybe yourselves just de facto are the auctioneers for all salana block space potentially I think I think it'll be interesting to see how the salana protocol kind of evolves like all the things I I was mentioning earlier I think that the way that our auction is currently designed you don't really have the those forces yet where we are uh the GTO block engine's kind of running it's kind of like somewhat discretizing these auctions into what today is currently 200 millisecond auction windows so that's like enough for basically someone in like someone in like New York could potentially be competitive in an auction

in like Tokyo or something and then we have services like shred stream which basically provides low latency shreds to anyone that signs up from all these leaders that are running this code and kind of like democratizing access to the the shreds and low latency feeds so in the current sense it's not necessarily that much of a problem I think it'll be interesting to see how the protocol evolves and yeah I mean I think it is worth something keeping an eye out I think some of the some of the Sexes and like uh or centralized exchanges in like Tokyo and other places can certainly they certainly have the potential to be like large forces of gravity where there's like a lot of sex de arm and you know those people are making a lot of

money and you know State kind of starts to congregate around there I think you know J has four block engines hoping to spin up six seven eight and like q1 of next year kind of separate stuff out move it across the world and decentralize it a little bit so just just to build the intuition here um if GTO let's say let's say let's say your guys server go down you forget to pay the AWS bill or whatever what happens to Salon block building so that that's actually a pretty cool thing where like the network will continue to operate as normal there's basically these things that we call relays not to be confused with flash but Rel layers they're kind of like transaction forwarders and the

validators when they start jetos salana they connect to these transaction forwarders and uh anyone can run forwarders jto Labs runs a few some of the valids are operating their own and basically it's kind of like a transaction forwarder that will kind of send transactions to the block engine and the block engine is really only sending bundles to the validators so if our block engine goes down unfortunately happens sometimes I got paged at like 1 in the morning yesterday because they went down had to uh debug some stuff but uh like the network keeps going as normal uh the functionality that you lose is basically the ability to send bundles so um we're not like you know we're pretty important to the

network in reducing spam and trying to automically capture me versus it kind of going to like the spam game but we're not so critical in the sense that if like we forget to pay a bill or there's a bug or something then the the like Network stops working there's also like a lot of like heartbeats between all these pieces um so there's like 500 millisecond heartbeats and you know health checks and all this stuff and I've thought about this a lot to to where uh you know if something bad happens then the the validator will kind of Disconnect from everything and like revert to normal settings and the normal transaction processing and the the way that our bundles work it currently runs

in parallel to the normal transaction processing code so um yeah got it okay so let's zoom out a bit from the the micro details of GTO and let's talk about your airdrop because your airdrop I think is probably one of the legendary aird drops in crypto history at this point it it's analogous in my mind to what the compound airdrop was or not the compound airdrop but rather but the liquidity mining on compound where it was the it was sort of the it was the moment that kicked off defi summer and my in my mind the GTO airdrop has kind of been the thing that brought salana out of the Ice Age and reanimated a lot of the animal spirits and the um the excitement around salana so why don't

you walk us through what happened with the GTO airdrop uh what what what was your guys experience of it and uh what do you think went well or went poorly in what what is now being called the GTO stimulus check yeah I mean it's cool to see how many people are excited about participating in GTO governance I think there's a lot of excitement around salana right now um there's been ton of increased activity and um interest level in jeta but also other salana protocol that are kind of like pre governance token and so it's really cool to kind of uh somewhat like participate in that I think the uh like you know the

foundation did the the jeto foundation did the air drop I think like my personal opinion is that I think it went pretty well I think if you want to there's definitely like a relatively small number compared to some of the other protocols that you're seeing and um you know I think think the game has definitely changed on salana in the past uh like what is it three weeks or something to where I think uh like you probably can't do what the jeto foundation did um but I think that it went pretty well and if you want because of the rise of cbls and inorganic Behavior yeah I assume you're referring to yeah right yeah I think that yeah if you want to I think you have to be

careful because there's a lot of people that are not necessarily long-term aligned with protocols and so you have to be even more careful now that there's a lot more attention on salana right so just high level numbers for the audience so the the the the air drop was in early December it was at present prices over $200 million worth of GTO to over 11,000 addresses on salana um you know many people got tens of thousands of dollars in in airdrop checks and uh uh it it it is it has created a huge amount of airdrop farming and the kind of anticipation of what's the next air drop going to be that there's excitement

around Jupiter around uh what some of the other uh products on Sal lot more know right right lot of anticipation now for okay what's the next air drop going to be and is the scale going to match what people saw with gito so I I think one thing that might be worth pointing out to listeners is is how salana airdrops in this cycle sort of differ quite a bit from ethereum airdrops historically um I think the the the notion of kind of Point systems where people have to interact with protocols and you don't exactly know what the distribution will be and you you know there's more of this like G almost game

likee aspect to how aird drops work now I I give the salana ecosystem probably personally like most of the credit for for really pushing that forward I think in ethereum people kind of still stick a little closer to passive uh liquidity based incentives so would be great to hear about like how you thought through this point system how you kind of view it evolving and sort of how you view the importance of these Point systems within the ecosystem yeah I I think points offer there's a lot of protocols that are doing points now in salana um so I think tensor might have been the first one or maybe margin fi there were some

goo points for a while we're seeing I think Camino has points now or they will soon parcel has points um I think it's a it's a good opportunity to kind of experiment with mechanism design and um kind of see how to like like how do you kind of quantify people's contributions to a protocol so like I think for for a lot of protocols it might be like tvl times time maybe there's certain certain things that you want to incentivize more

because your protocol makes more money on it maybe it's like volume or something like that so I think it's kind of a it's an interesting opportunity to kind of like play around with things and kind of see what people do and I think we'll see more of it we're already kind of seeing this on some ethereum protocols like I know uh I think doesn't igen L do they have points right now um they have like a billion dollars of tvl with points um saying like I think I saw something with rainbow wallet the other day where rainbow wallet's making a ton of money with points so I think it's you know you can kind of it's kind of like a playground that you can experiment in and see what people do do with different

kind of like with the leader board basically yeah I guess a question I have is like you know why why do you think that point systems took off on salana versus elsewhere because I do think there's some level of hey it's actually quite a bit more sophisticated so we have to have like a more complex set of contracts maybe that's the reason or you you know like there's clearly something that I think in the last six months is the reason that the gestation this kind of idea worked much better in salana and of course it gets copied but I'm curious like what what what do you think the things were that like led to that who who is the first protocol that created points was it blur it was blur

yeah I mean I think I think it's easy to see why people are doing it if you look at protocols that implemented points kind of before and after you can kind of see what's going on I think it's easy to look at other protocols and like kind of look at it before and after points and you see the growth um like I know I guess tensor and margin 5 were kind of the early ones in salana and you look at the growth margin fi and then you kind of look to see what happened to the jetos soul tvl and then you know if you're if you're another protocol in salon and you kind of see this it's like oh we should probably do this it's kind of like an interesting marketing mechanism yeah so you think it's more of a protocol Founders looked at it and

kind of implemented the Playbook more aggressively versus like Hey we're doing kind of more technically sophisticated point system because I I feel like if you look at the contracts in the code the code is much more you have to think through a lot more about reasoning about it than you do with you know your classic liquidity mining contracts wait true how many of these Point systems are even onchain I thought most of them were offchain most of them are offchain but they keep a lot of logic for like keeping track of actions that are done or like aggregating because like in some sense yeah and and I feel like it's actually like going to be a much richer you know I think in 2024 we're likely to see this

system evolve to be much richer than what we see in like the current liquidity mining universe and so that that's sort of why I think at least to me I I feel like there's something very interesting about the fact that it really took off on salana like I feel like blur points sort of worked but they attracted like three whales you know like they attracted the the a few small large nft players whereas the salana point system seem to have been much better at getting distribution and you know some of it feels technical some of it feels cultural so that's sort of where I was like where do you you know where where do you attribute that because because I can kind of see both Arguments for it

yeah I mean I think I'm definitely in like the salana bubble and I don't necessarily follow the eth L1 and all the L2 protocols super closely I think there's there's a lot of super legit teams building on salana and there's a lot I think that are you know relatively new within like the past year or two and I think that I don't know if that's necessarily the case for ethereum some of the l2s maybe I I could definitely be wrong here and so I feel like they are there's a lot that are kind of in the same path that decided to launch points programs and yeah I mean it's been super successful for a lot of protocols I've done it so I think it's going to keep going for a while um you're starting to

see some of the ethereum protocols that I mentioned earlier start to do it so okay let's take a step back again from GTO entirely and let's talk about salana so you've been one of the great kind of outspoken emblems of the salana community and now that salana is in the spotlight and it's gotten this incredible surge of activity and attention and excitement um I want to talk about you know one of the things that's going on in the public conversation which is this back and forth between ethereum shills salana shills and like kind of the the critiques and the strengths and the weaknesses of salana and the salana road map so one of the things that a lot of people talk about uh when they're firing pot shots at salana and saying like oh

what the you know why is salana pumping so much this is crazy is that uh there's a claim that not that much has really changed on chain relative to where salana was call it 3 months ago four months ago when you know salana was uh a fraction of what it's trading at today um from your Vantage Point where where you're sitting in GTO uh what do you see in terms of what's changed in terms of onchain activity from now to let's say four or five months ago yeah there's been a ton of new activity on salana there's a lot of new capital so if you look at the bridging patterns and things like that there's a ton of new activity coming into the space there there's a ton of super high quality projects that have been grinding basically since like

the middle of last year and you know I think a lot what happened with all the FTX stuff that really sucked for everyone but there's a lot of teams that kind of just kept grinding and building feels like those teams are finally like getting the recognition and adoption they deserve I think there's a lot of people that were kind of I think skeptical to use salana or that maybe they just weren't interested in it you know I got to like bridge I got to go through some sex or go through a bridge and get money on here and there's not really that much to do but I think uh there's certainly a lot of group chats that I'm in where people are people have been talking about salana more they've been trading more and you know using the applications a lot more um there's just

like bunch of crazy stats like uh it's like there's like mult like five or 6,000 tokens being minted every day um there's a ton of new volume on chain we're seeing there's a lot more people trading on chain there's a lot more me happening on chain uh jetah is basically 50% of all the MF tips have been captured in the past two and a half weeks or 50% of all Cheeto salana related meev tips have been captured in the last two and a half weeks 75% in the last four weeks so there's like a ton of volume happening on chain um wow and and so a lot of this uh a lot of this

Resurgence in trading has been these new salana meme coins if I understanding correctly um obviously there's Bon which has been around since the beginning of the year but it's kind of gone vertical over the last month and there's been this just panoply and there's also inscriptions now on salana I understand uh and so things are kind of just going crazy C can you talk us through like what you're seeing in terms of where the m is coming from is it mostly from m coins and inscriptions and this kind of thing uh yeah there's definitely a lot around meme coins um and even like uh just like normal trading like salon usdc and things like that um there's a ton of Arbitrage there's people that are getting to like some of the longer tale

me um like liquidity sniping and things like that um and yeah I mean you know on ethereum and other chains I think me is pretty closely correlated to volume that's probably the thing you can the most closely correlated with and so you have a ton of new tokens popping up um there's a ton of price discrepancies between all these tokens the fees on Salon are a 100th or a thousandth of a penny so basically any trade that happens is going to produce an Arbitrage so you're seeing a lot of that right now there's been a lot of like a lot of daps set in like protocol developers have been working pretty hard and they're starting to see more adoption I think

there's been a ton of changes to the salana core protocol as well that I think if this were happening like two years ago or three years ago like the chain would be struggling super hard um so like introduction of quick um there's a much better schedu are in place there's priority fees there's still a lot of work to do on all these things but they're kind of like the the base building blocks are getting much better to where the chain can actually handle it without kind of dying yeah yeah so actually maybe a question or like something that that's you know I think there's a lot of chatter on Twitter about is like um you

know should the dominant form of value that gets generated in the Sal Network come from me because transaction fees are low versus you know like there's kind of this philosophical divide of like me is actually parasitic to the security of a network or me is actually a very good source of revenue for Network how you know where do you where do you fall in that kind of dichotomy and I I know H probably also has some like well so but M on salana through G me doesn't get burned right me just gets distributed to stakers is that correct yeah so there's a few different forms of Meb on salana happening um one is like people people are still sending using

priority fees I guess I don't know if you want to count priority fees as like me or not you know depends on who you are but 50% of priority fees get burned there's a ton of bots and users interacting with the chain so those priority fees are getting burned the system that uh the jeta salon valid air client and that all that hooks up to um it doesn't burn the me so it basically collects the me and distributes it to validators and stakers so there's not um the main source of like any potential me burn would be from Priority fuse on salana I think um one of the main themes in sort of the evm ecosystem over the past

let's say year and a half in the realm of muv has not just been about sort of redistribution and you know Mev Mev boost and um your relays and uh your different block Builders um it's also been about me minimization and redesigning protocols um to reduce opportunities for me that's things like you know intents or moves to R RFQ systems for dex's do you see a similar kind of Trend in the salana ecosystem or you know how are people sort of rearching their daps um in slau to reduce me given sort of the different constraints of building on salana yeah I think we're definitely seeing that I think it's catching up to ethereum a lot I think if you like the most one could

argue the most valuable thing about Unis swap is the front end um you know they started charging the front end fee I think I don't know the numbers off the top of my head I think um if you were I'm guessing maybe you guys know and correct me if I'm wrong here but I would say there's still a lot of people on ethereum that probably aren't using aggregators Maybe I'm Wrong here I think on salana there's Jupiter and I would say majority of people use Jupiter it's kind of like the one inch equivalent and so Jupiter I think will SW it'll split your swap into if you're swapping from like usdc to Soul I think it has a limit of four or five swaps within that transaction so it'll actually pull and

gas is so cheap so it'll basically like pull from all these different dexes and so I think on that sense like I think you know Jupiter is an amazing product it's built anyone that adds some type of swap interface is going to uh put that in their app whether it's like any wallet or you know Phantom backpack other wallets um so I think on that sense there's a lot being done I think um um we're definitely still noticing some like slip UPS from daps and trying to reach out to them directly there was a uh I'm not going to name the DAP but there was a Dap that was allowing people to adjust their slippage but they weren't showing users price impact so

people were selling tokens in the DAP for and eating like a five or 10% uh slippage which was causing these like massive arbitrages and we saw it on the graph and reach out to them it's like hey you guys need to do this and they're like oh shoot we need to push out like an emergency update I think we're like starting to see it go towards the aggregator stuff um I think the nice thing about salana is that maybe rfqs because it's so cheap I think you can probably have more liquidity on chain and you don't necessarily need rfqs um but they do give you better pricing maybe they're like supplementary to onchain liquidity or something the the interesting thing going back to what tun was mentioning is is that right now

despite the explosion activity on salana fees on on salana are are pretty limited right it seems like much more value is getting captured by mbv which actually gets a a share of the economic value um that's being exchanged on salana compared to the fees which are more a function of how full are blocks and because of salon's enormous capacity blocks are my understanding would be that blocks are blocks are not full there's still plenty of capacity on Salona is that is that more or less correct and if so how do you think about the economics of Soul as a token given that so much of the value that's being captured by salana as an ecosystem uh is not actually getting getting burned or or affecting the supply of so but rather

just being paid out to validators uh or or to Stak Soul yeah and does that matter there's a lot of good questions and answers in there um yeah right so right now the vowers and stakers that are running Judo Salon are making roughly two and a half to three times more per block than Nono valair two and a half to three times more yeah holy so um yeah so like on to be clear that's like net of inflation that's includ that's not just two to three times more fees it's two to three times more including the block reward yeah so that's that's I'm just talking about the block reward here and then it's kind of

up to validators on how they want to distribute the me do they want to keep it all do they want to share with their stakers it's all kind of encoded on chain and all the the tip programs and stuff like that handle it so I think the average valid or not running jetos is making around like uh I think it's 01 so per block ones that are running Jeter making 03 and they kind of distribute it to stakers as they want um and they can choose 0% to 100% I think that that's incredible there there's a lot of um there are a lot of full blocks right now there's no Dynamic base fee on salana or like there's not really um like EIP 1559

is good no matter what you think about it you know some people love it some people hate it it's some type of economic back pressure on the system and basically your transaction has 0% chance of getting scheduled if your uh base fee is lower than the 1559 base fee it's like you know you're gonna if you try to build a block with that it's going to break consensus and you know gets rejected or whatever um salana there's static base fees and there's no there's like priority fees which work decently well um but there's not really like a really good back pressure for a lot of transaction spam I thought on salana

there was like a global fee floor that like rose and fall based on um utilization is that is that not correct no so it's uh right now it's 5,000 lamp ports per signature and then there are priority fees and the scheduler will will attempt to prioritize transactions based on the priority fee um I think there there's definitely a lot of room for improvement here but essentially there's no Dynamic base fee here or no floor and I think this is um it's a very heated topic in salana right now so okay because we because actually about a year and a half ago I think we

had an episode about salana where we were arguing pretty vociferously about Solana's fee Market being broken and this is before I think what's called State specific fees where you have uh fee Market based on particular pieces of State local fee markets I think yeah that's what they're called um where you know if you touch one contract or you touch an address and that address is uh particularly hot meaning it's getting a lot of contention a lot of people are trying to touch it those uh the fees on those particular um applications or addresses float and they may be higher than it would be touching a a cold piece of state that not many people are contending over um yeah those there there is that local fee Market such that if I'm touching Jupiter for example

Jupiter's contracts are going to be hotter and and that's going to be more expensive than if I'm touching some lesser used application right that does exist it exists in the context of theer but it's not actually enforced in consensus so if you are basically uh if you are a leader you can if you wanted to this this wouldn't really make any sense but you could basically pack a block full of low priority transactions and it's kind of an implementation detail that's up to the validator and it's per state but the default validator is going to do the logical thing and like maximize the total priority fees over the block correct yeah yeah right right so so in

practice we do have uh these local fees that get enforced by the validators such that some somebody touching a more expensive piece of state is going to pay more than somebody paying something cheaper so there is some uh yeah no okay give me the details help me understand it gets a little tricky when you start looking at the current scheduler and the fact that you're streaming blocks as your uh you're producing a block throughout the entire slot so um you can imagine a world where like the validator it had a super hot piece of State on the previous block does it get reset every block yeah like there's no there's no minimum there's no Dynamic floor that's enforced there's no

persistence across blocks of this was hot the last block so we're going to keep it hot in this block yeah so there there's no EIP 1559 equivalent or um however you want to call it there's a lot of um it's becoming more of a Hot Topic recently depending on who you talk to there's there's a few different proposals to fix this one is the program what is it program rebatable uh account whatever the name is it's PR I don't know what it is but uh there's one where it's like oh maybe the applications should control what the fees are per account and then there's also I think uh people are finally

getting over let me ask you this look how do you think fee markets should work on salono yeah uh I think that the ideally there's some EIP or like controller based account fee model where so like little e 1559 per account yeah and each of them has their own little curve that's moving up and down yeah so I think yeah like you can do like I think uh an to had a uh post or something that he wrote recently for like exponential moving averages where you kind of look at the the Past end blocks and it's above if he uses this many this much of the block space or

Rises and if it falls off then it kind of goes down I know uh tun's been like massively nerd sniped into looking at this so I'm kind of curious what he has to say about it yeah actually it's funny I'm writing a blog post about this right now so I I have it fresh and so an interesting thing about yeah salonus fee Market is um a the block rewards actually are distributed for voting uh it's not like the proposer gets the block of rewards and B the main incentive to the proposer is the fees so 50% are burned um but then there's kind of this yeah there there is this issue of of persistence but one question you might have is I have a bunch of different local fee markets right so

like maybe tensor is you know is hot and Jupiter is hotter and Camino is less hot than than Jupiter how do I decide whether these things should be increased in a correlated way or not so I think a lot of the local fee Market design initial design was sort of you could think of it as having been done looking at nft mints that caused issues on the network right where there's a single piece of state that 99% of demand is going to but the rest of State doesn't matter and I think the thing where these base fee adjustments these kind of floor adjustments help you with is when you have many parts of state that have

increased demand and their demand is correlated to each other so you need to kind of give a a a floor so that all you know those pieces that are correlated don't just take up all the block space immediately um and so it sounds like you're imagining as kind of global fee level as well as these micro local market superimposed on each other and so you know there have been many proposals for this people like me and others have written some academic research on this but there there's sort of this idea of like you have Global Control Plus local control and you have some way of synchronizing them over every block so there's sort of some Global floor but then there's also some local sort of like velocity like how

fast you increase the fee as a function of the amount of Demands seen in that block and the previous block and so you try to adjust the two of those such that you maximize some outcome like high throughput or you know minimum number of missed transactions um but another thing that I think is actually important and yeah disclosure G jeto investor so this is one of the things that made me most interested in goo in the beginning was they was that is that jto does sort of these state-based auctions so unlike meev and ethereum where you know you're collecting all the me across all applications putting it into single block and then submitting the single block here you sort of can think of the

auctions in jto as happening on a per uh con per program or per state basis like if there's different you know uh unisoft style pools that are uh getting different amounts of demand you could almost think of like their meev auctions run separately before they're merged um and that allows you to have more efficient priority fees from me than this kind of aggregated version and I think salana actually is a little further actually a lot further in in having that running live and ethereum is kind of getting to that point with all the l2s giving you like many different blocks people are starting to realize

they basically have to have some notion of like you know State dependent uh me and I think salana kind of pushed the barrier in that a lot further due to necessity and you know obviously Lucas knows better than anyone else well it seems like it's not just necessity it's also that the design of salana makes that a lot easier because of the fact that every transaction declares the state that it's touching in advance in ethereum you don't do that right you because everything is kind of uh uh at runtime you can have a transaction that says oh I'm not touching uh uniswap I'm actually an a transaction please schedule me at the top of the a auction you win the a auction but actually secretly you're also doing some Unis

swap Arbitrage at the end and you know it's hard to statically detect that is e EIP 2930 which is the optional access list um there's a lot of debate almost as much debate in the salonic community over EIP 1559 style like these kind of global controllers in the ethereum world there's a lot of debate over these kind of like if I can I add as almost a soft fork and access control list of like hey if you tell me which particular State you're touching like you're a roll up I'm only going to touch like these particular accounts I can schedule you more efficiently um and so we're we're actually starting to see some of that happened because of rollups because they're kind of inefficient you know

storage usage sometimes or the costs are are sort of like inefficiently being allocated and I I think I suspect my my prediction is that the ethereum model with many l2s will actually start to look more like the salana model over time where you you actually terms of the M auctions in in the M auctions yes I mean stateless clients have been a story in ethereum since forever they're I mean they're so far from ever actually getting shipped but in a stateless client world that would be true for ethereum as well that a transaction needs to specify what state it's touching and then you can kind of say great we're going to we're going to cord and off people touching this stage

versus people touching that state the difference of course in ethereum is that there is no parallelism in ethereum meaning that even if you're not touching the same contracts ultimately ethereum and the evm require a strict ordering so it always has to be transaction one then transaction two then transaction three even if the transactions don't uh interact with each other because there are just these bottlenecks in ethereum like these resources that every single transaction touches um one question that I have that I've seen many people kind of getting into Twitter arguments and you know telegram chats and all this stuff uh a lot of the ethereum or I should say a lot of the salana people will say well look salana right now you

know we've got like the four uh compute unit cores or whatever they're called uh but we're going to scale it up over time to like 16 then 32 then 64 and then you know whatever it's just going to go to infinity and it's going to be arbitrary levels of parallelism in salana land such that there's no limit to scaling salana uh uh performance and my natural thought is always surely there is some bottleneck somewhere um in salana that is like some kind of global some kind of global State somewhere that's getting touched when people are doing things on salana um my question is where is is that true and if so where is it like what is that Global bottleneck that stops salana

right now from scaling to 64 cores or 128 cores or or whatever it is that people are imagining salana is going to scale to yeah um I think that I don't know if I've seen people saying that it's going to scale infinitely I think there's definitely people that are saying it can scale a lot more and I think there's a ton of there's a ton of scheduler changes that I think will make it better um I think there's a lot of room for improvement in the actual replay as well um so like a few months ago I wrote a better replay algorithm um It sped it up like 50% or 100% I was kind of scared to ship it to prod but uh it definitely you know use less compute

ran faster I think there's just like a lot of these tweaks as far as like the actual limit I think this is probably where some the thing that tun was talking about earlier where you have this you have these like per account limits and then you kind of have this like Global limit floor that kind of Rises and I think you can take into in that Global limit you can kind of take a lot of different things into account so maybe the global limit includes uh like what is the what's like the max throughput that we're trying to Target for packets on the network basically how how big are the transactions in bytes and how much how much throughput and like uh how much bandwidth is are

required to spit that those transactions out and process them to like how much uh how much account state was loaded and stored in that block um so I guess like I don't know what the current limit is it's probably like memory or memory speed or something but I think that's something that you can kind of uh when there's a better fee model in salana I think it's something that's adjustable and you can kind of find where that Global limit is and use that for that Global limit floor in addition to these separate kind of bucketed fee markets what okay maybe let me ask the question a different way what are the

hard lines for salana in ethereum the hard line is that you have to be able to validate ethereum on a laptop right that's like the that's like the ideological Center that ethereum uses as a constraint when thinking about throughput uh if you look at binance smart chain binance smart chain their hard line as far as I understand is that uh you have to be able to sync the chain and uh there was a time when binance Mar chain was running at like I think 25 million gas per second and that was just so much that literally even like Enterprise uh typee validators who had you know huge boxes and were and were running the stuff as fast as they could they just could not sync to the state of the chain and so they lowered the total gas

throughput to about a third of that so that new people who were joining the chain could actually catch up to the tip um but that's about it basically as long as people can syn I don't really care I as as much as I can get out of like this kind of you know souped up uh uh throttle to1 evm chain that's what I'm going for with with bance smart chain yeah how does salana think about that is there a hard line on salana of what we will and will not do in order to get a faster higher performance chain what is the what is the binding constraint Beyond just what can we get out of raw Hardware yeah I don't want to speak for like salana Labs here I guess my or like

the foundation or anyone I think um currently the the hard limit is like 48 million compute units it's kind of a proxy for a lot of different things here and on ethereum I guess you know there's a 21 million gas per block I don't really know how all the things influence how all the different things that transactions are doing and block validation and whatnot fits into that but um you know I guess that maybe that's something you could view or people if they it's like gas per second or something where it's like 21 million gas and then you have 12C block times and there's bunch of signature

verification whatnot happening on salana it's 48 million compute units I feel like on salana it's probably um basically like what is the what's the lowest barrier to where 66% 66.6% of the chain can keep up so how fast can we go such that 66% of stake can keep up ideally 100% um some people they call them potatoes in salana there's a lot of validators that are running potatoes I guess for context our our servers are uh we're uh we're

running we're probably running like 20 or 30% compute usage right now so I think there's there's a lot of space and room to speed that up and there's also a lot of extra bandwidth that we can use as well I actually I just want to add one kind of thing to your question H which is like I kind of view the you know the ethereum model and the s model when you're talking about scaling compute like hey we have a lot more parallelism in synchrony as just different programming models for parallelism like in some sense right you know their limits to how fast particular algorithms can run when in parallel vers serial and you can't improve them beyond that

amount um and and there's a however how you represent your parallel computation impacts how easy it is to actually achieve whatever scale you want right like if you want the algorithm to run 10x faster well one form of parallelism uh might work better than another form and what I mean by that is like you know something like nvidia's Cuda works well for linear algebra parallelism because that's just like what it's designed for but Works bad for say sorting a list right it's it's sort of inefficient at doing certain things like that or things that have recursion and I think in general you should view the

ethereum form of parallelism of we have these multiple units that are uh running separate computation but infrequently synchronized with each other versus the salon version where actually they have a shared memory map or they have some shared context that they have to keep in locally at all times um as two different programming models and some algorithms will be much easier for one and some algorithms be much easier for the other and there'll be some that don't work on both right and you know the history of parallel Computing has had this happen whether it's things like NPI in the 80s things like Cuda now um and this this general idea that like the way you

represent how you parallelize your computation dictates what applications work well on it I think is going to be just the truth for blockchains for the next few years but I I think that's like that's maybe one of the reasons it's also hard to compare these things Apples to Apples yeah I think that that that that certainly makes sense um all right I I know we're running up on time um so I wanted to just kind of close out Lucas with U I guess getting a little bit more of the the kind of felt experience of what it's been like for you personally so and just what it's been like for people in the salon community so salana you know you guys have really been through the valley of darkness with the collapse of FTX you know salana

going all the way down to $8 and now you've had this kind of euphoric coming back into the light salana now surging to be number four on coin market cap you know over a hundred bucks everybody's super in the money GTO has been super successful um how does it feel being part of that cohort where you guys you know you guys are really toiling in in this um this this environment where everybody kind of left Salona for dead and uh what does it feel like now being on the other side of that do you have time to really Rejoice do you like feel like yo guys we made it like we were right we we believed what no one else believed or is it just like everything's happening so fast you're just trying to keep up with it what does it what does

it feel like within from the salana ogs right now uh I would say all of the above for sure I mean I think last year a break point super exciting um um the jeto Stak pool was launched the jeto salon of valid air client um I think it was out the jetos salon of valid a client was at like 3% of stake and to like FTX happening um and like a lot of a lot like a couple weeks after before FTX was breakpoint right or was it after FTX it was on the it was on the plane is was on the plane ride home that the rumor of binance buying FTX

was like popping up on people's phones and Twitter and I remember the internet was super spotty and everyone just like keeps trying to refresh Twitter to like get their get the newest news um so yeah it was pretty stressful um there's definitely a period there where it's like you know you you're doubling down but also like questioning yourself like is this like worth it but um I think like a lot of teams just kept building and I think you salana is just it's so much bigger than FTX like I think people associate the two so closely but if you actually like like do people actually know like the salon core Engineers like there's a lot of really smart people

there there's a lot of really smart teams and I think everyone kind of bonded together and I think the last like certainly the last few months and then the last three weeks is it's like some sense of like excitement Pride maybe like a little vindication for people that like made fun of salana the entire like basically the last year um I think there's also like a lot of there's a lot of excitement and hunger I think there's still a lot to build and a lot to do and I think a lot of people are kind of soaking it in and like making sure that they keep their servers running and things are going smoothly and all that but also like you know the

the things we're just getting started here and there's still a lot to prove there's a lot to build um a lot of like users and marketing and things like that to keep people on boarding so I think um you know definitely nice to like soak it in and kind of reminisce on like how crazy last year has been and how stressful but I think there's also a lot of opportunity and a lot of excitement and I think there a lot of people feel like that on salon right now that's great well it's um it's awesome to see uh that you guys getting to to see the fruits of your labor and getting Vindicated for having believed in something at a time when few other

people did and I think there's a there's a lesson for a lot of entrepreneurs out there any advice that you would give to somebody who's thinking about building in this environment that you've learned from from your experience going through you know the the the the peak the trough and then back to the peak again yeah oh man um I think yeah I think you have to you have to be confident in the choices you're making and make sure that you have that you you have the right team to support you and you have supporters there um I think anyone that's an entrepreneur is like kind of like messed up in the head a little bit especially in this industry

and I think having a good team on your on your side definitely helps a lot I think also making sure you're um I think there's a lot there's a lot of value and staying focused in the right thing there's a lot of um especially when prices start going up I think it's really easy to get distracted or try to catch the end of Trends and kind of like miss miss the trends and you're kind of always chasing and I think it's really important to kind of figure out how you are going to kind of attack something and grow and stay super focused on that and I think uh yeah those those things are definitely super important as a entrepreneur well the Solano ecosystem is very lucky to have you and uh

congrats on all the success and hope to see more of what GTO becomes as you guys uh keep evolving alongside salana thanks yeah appreciate it thanks for having me all right and congrats to you as well trun for having invested in GTO I guess you two are the you two you two both deserve all the success you've had it's really Lucas who deserves all the success okay great all right well we got to wrap uh Lucas thanks for coming on and uh until then I guess this the last episode for the year we'll be back next week and um hopefully more craziness uh will will come of our our way by then I think the thing that's needed is has whff hat that's that's the me coin that you

really is that right all right good good good to know good to know we can sponsor that for next year and then and we also got to at the end of year we got to go back for our PayPal bet so that's going to next episode will adjudicate how the PayPal bet played out um anyway we got a wrap thanks everybody