Lightspeed Cross-Post: The State Of Solana With Carlos Gonzalez Campo

Transcript

A quick shout out to today's sponsor, Katana. We'll hear more about Katana and their ongoing pre-eposit campaign later today, but for now, let's get into the episode. Nothing said on Xerox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Pocachio, Ryan, and our guests may hold positions in the company's, funds, or projects discussed. Hello and welcome back to another episode of Lightseed. I'm your host Jack Cuban joined today by my good friend Carlos Gonzalez Compo, analyst at Blackworks Research, kind of our Salana expert in residence here. Carlos, thanks for

coming on the pod. >> Thanks for having me, Jack. It's always fun to be here. >> It is always fun. It's been a little bit since we've had you, but you do um these monthly reports on Salana that are on the Blockworks research platform that folks reading this should check out. They're they're generally just a really good way to stay on top of everything that's happening. Um you're probably working on July's right now, I would say. >> Yeah. >> Uh can you give us any alpha on that report? What's what's top of mind as you try to summarize the past month in Salana? I guess the most interesting things are the network health section where you have like JTO's BAM which is like one of the most significant upgrades in Sena's history and then you

also have like the block limit increase to 60 million uh compute units and then you also have like a signaling to get to uh 100 million CUS like in the next few months. So, that's kind of interesting from the network uh upgrade standpoint. >> Those are both subjects I'm planning on touching on today. But before we do any of that, I want to uh be a little crass here and just talk price for a little bit. We uh we don't tend to talk about price a whole ton on Lightseed. You know, as we record Salana's, if you're looking to buy one Salana, you can get it for around 186 87 bucks right now, which is the highest Salana's traded since, you know, right after the

uh inauguration of Trump and the memecoin that sent Salana to its all-time high. Um, I find that pretty interesting. What what do you make of but but uh you know one other piece to put out here is soul ETH the ratio of one Salana to one Ethereum is below 0.05 which is its lowest point basically in the past year. So Ethereum has had a lot of momentum recently and basically wiped out a year of sole growth against ETH just basically in the past three months which is a trade that I think you would have missed if you spent too much time on crypto Twitter but it looks like a lot of the problems that we have outlined

with ETH's value capture uh have been priced in and maybe Tom Lee going on MSNBC constantly has helped the asset as well >> um in the in this weird treasury company world we live But with those pieces on the table, Carlos, what are you making of of Salana at 186 187? >> Yeah, I mean it's an interesting point because like it has been up significantly like in the past month, but at the same time as you mentioned like it doesn't feel euphoric just because it has actually been underperforming like ETH and I think a lot of people like including me miss that like revival of the ETH narrative. I I think it does have to do a lot with like the treasury

companies and like the stable coin narrative of Tom Lee like just going on CNBC and shilling it to like Trafi. Uh but yeah, I think like um I I kind of like was surprised to be honest also by Sena's move to 190. Uh, and the reason for that is we had the point that like the pump ICO like a few weeks back and I think like consensus on crypto Twitter at least was that pump was going to get all the liquidity and it was going to be bad like for soul and other assets within the ecosystem and you kind of saw the opposite of that where soul has been like almost only since the pump ICO and I think it's like in retrospect it kind

of makes sense like you kind of saw this like pivotal moment in soul's history where like it outperformed like centralized exchanges during that moment and it kind of like signal like how good it has become like from a fundamental perspective. Um, so I don't know. I I I wouldn't like I wouldn't be confident giving out like predictions on on price, but I do think like soul going up is good for the ecosystem at large and for like other uh DeFi protocols like I don't know like money markets like Camino or like uh Dexis and so on so forth.

>> Yeah. you um in your piece on uh Jetto's marketplace, you had this uh section on the price of different Salana tokens. And I think one interesting piece to note just you mentioned Pump and it got me thinking was Pump is actually still kind of underpriced relative to other Salana apps if you look at uh price to sales or or market cap to revenue. I forget exactly how you were measuring it but >> yeah I was doing a price I was doing a price to sales and pump was like kind of trading at like 3x which is extremely low but like the caveat here is that um like that is a backwardlook valuation in the sense that I'm looking at the revenue in the past 90 days in the piece whereas I think like people are selling

pump or were selling pump in recent days because you have declining revenue like and declining market share to bonk. So on a forwardlooking basis like you cannot just like assume like the revenue they made in the past is going to translate into one year like forwardlooking. So I think like that's kind of what like you're seeing like uh declining market share overall and like people just discounting memecoin activity on the chain. And then the other thing is like uh they raised like a billion dollars, right? And they have like this equity like token uh kind of dual structure. So I think a lot of people are just asking like does the token actually acrew any value or is the equity just taking all of the future

cash flows generated by the protocol. >> This episode is sponsored by Katana. If your assets are sitting idly, they're dead. Katana is built from the ground up to bring your bags back to life. Get started with Katana by joining their pre-eposit campaign before mainet launches at the end of this month. Follow the links in today's show notes to get started. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. What I'll say as to the sole ETH question is, you know, we had a guy from Standard Chartered uh Jeff Kendrick on the show a couple months ago and he gave his kind of Salana versus ETH as like an outsider banker perspective and he basically said a version of this

argument where he was saying that I think on like a 5 10 year time horizon soul ETH maybe perform similarly if not Salon outperforming Ethereum. But on a closer time horizon, he was actually more bullish on ETH. Basically making the case that yes, you can say that the growth of L2s means that Ethereum is giving up a lot but not actually acrewing a lot of value to ETH the asset um based on the trading activity that's going on on the L2s that's been kind of shuttled off of the L1. That's true, but it's kind of been priced in at this point. Like that's not a new argument. It's uh it's commonly known that this is an issue. And look, you know, Ethereum is a hundreds of

billions of dollar market cap asset. >> Um it I guess can compete on the stable coin narrative. Uh and um and and you know, I think you kind of saw that this play out um where it was all priced in. You needed Tom Lee to start uh shilling for ETH on television. And I I think some of his arguments were just wrong, which is a little bit frustrating where he kind of said, you know, uh Robin Hood launched on Ethereum where it didn't launch on Ethereum, it launched on Arbitum. And that's a very notable distinction. But to the Wall Street less in the trench in the weeds of crypto Twitter person, it looks like a pretty

convincing argument and maybe that Ethereum was underpriced relative to Salana. So you can definitely paint a clear picture for why this is happening. It'll be interesting to see, you know, what Salana's next pitch is. I don't know exactly how well Salana competes in this like treasury company world. >> Um it seems like maybe some of the leaders in the Salana world are less uh gung-ho to get involved in treasury companies. You haven't seen like a Salana Foundation treasury company yet.

Maybe we will. Um, but a lot of the focus is on internet capital markets and tech upgrades and BAM and the these more technical things that uh don't work in the kind of meme stock world we're living in this summer. But maybe if you're a a Salana fan, you'd say that a few years down the line, many assets come onto Salana and you know, you win long term for that reason. Yeah, I guess like there's I would say there's some sort of truth to the ETH narrative in the sense that despite Solana's improvement in the past like five years or so, like it is still been very hard to attract like stable coin liquidity on chain and

like despite some Solana DeFi apps like being incredibly good in terms of like security, UX, they still like are a fraction of what Ethereum based applications like on the DeFi side like generate in terms of revenue and in terms of like TBL and borrow activity and so on. So I I do say I I do think there's some stickiness to ETH that is worth like that I don't think like we can just like shrug off like I I think there's some truth to that. Like for instance a it has like more than $50 billion in deposits. I was seeing some statistic the other day like it placed it places it like in top 20 banks or something in the US if you were to like

just like rank it by deposits whereas on Sena you have like Camino as the largest one with like four billion or something. So it's like still like onetenth like even less than what the largest money market on on Ethereum is. So I I do think like from a DeFi perspective especially like Solena is still like lagging in terms of like maturity and that kind of uh don't doesn't resonate like with Trafi like like Trafi sees okay where are stable coins like launching and they see Ethereum with 80 plus% of the market share where are like money market activity taking place they see Ethereum like with the market share

so I think that's kind of like what we've been seeing in the in the past few weeks or months. Yeah. >> But does stablecoin liquidity really matter? Because like you bring up a and yes, a is an incredibly impressive protocol. I think there's a lot of effort being put in behind the scenes to create something like it on Salana. I mean, Jupiter launched its lending app, I believe, in May. I I I actually haven't really seen what the uptake has looked like there, but it's something that people want to do. But all that to say, it's not like a like people are, you know, financing mortgages on a or whatever. Like there's not um productive real world activity happening in either place. So is there any reason other than just the kind of convince a dumb banker

to buy Ethereum reason that stable coin liquidity really matters? >> Um yeah, I guess I guess that's a good question, but it like I I think that's a good point. Uh yeah, you kind of like left me with no argument there, but like um but I I I don't think it's like you're like I wouldn't say it's not productive, right? Like like why why would you say like it's not productive like like AB or Camina today? >> Well, I'm I'm not saying that uh first of all, I'm honored that I left you speechless, Carlos. It's a first time in these episodes I've done so. I'm saying stable coins maybe are pitched as this

serious real world real world some people call stable coins real world assets right it's it's not like a memecoin which is what a lot of salana defi activity is centered around but people on a are not necessarily using finance to accomplish things in the real world which I think is what you would think of rwas as right like um can I get can can can we democratize access to some uh asset class. So, so like I think of um there's there's that one on Salana that lets you buy like mineral rights, right? That's like a difficult to invest in asset class that DeFi makes it easier for you to participate in this

thing in the real world. I mean maybe it's not what you see like like yeah obviously like the most popular use case in money markets today is probably like just looping like the native assets so you just loop like against the stake but you also but that's just like what most people do but it doesn't mean you can't do the other things right so you can like deposit Eve take down take a stable coin denominated loan and then just deploy that in the real world like There's nothing preventing you from doing that. It's just like not a lot of people do it, right? But like you you fundamentally can can do it if you want to. Like Camina for instance recently on boarded

X stocks which are like um tokenized uh equities like US-based equities and then there's more than a million dollars of X stocks like in the in that market. So like yeah it's like it's not the most popular use case today but I think like we're seeing that kind of like shift toward most productive use cases if you want to call it that way and then you always have like the option of doing so like even if most people are not doing it like if if you could today you could do it like you could deposit your soul take down a stable coin denominated loan and like spend that in the real world like there's nothing you preventing you from doing that I Yeah, I point taken. I'm not saying that

these can't be used for productive reasons but >> I think when you talk about things like the stable coin market cap on a network, it's like great, but why? What are those stable coins being used for? >> Yeah. And >> I agree with that. and and a lot of I think a lot of the ETH based stable coins are just sitting like I don't have the the data so I cannot like speak to the actual numbers but a lot a huge percentage of that is just sitting on centralized exchanges probably so that's that's one point like in your favor yeah >> I mean and um I just pulled up the Ethereum chart here the market cap of stables on Ethereum passed 100 million in 2022 and it's currently at 130 or 100 billion I

should have said it's currently at 130 billion. So a large amount of that growth happened you know years ago and a lot of those stable coins just never left even through the bare market. But that that doesn't necessarily >> mean and and listen this argument goes both ways right um Salana saw tremendous growth in its USDC supply um suddenly in June which is not because it suddenly became so much more useful for real world activities. It's because the Trump memecoin was paired with USDC and so a bunch of people you know bridged USDC onto the chain. So, >> I yeah, I just think that um it's it's kind of an annoying uh it's it's a bugaboo for me that Ethereum is seen as

the the major winner of the stable coin uh >> yeah, >> meta, whatever you want to call it, which maybe speaks to just the fact that this is a very clear uh clearly lucrative trend and outside of the circle IPO, there's just very few good ways to get exposure to it. And so any whiff of it, it's kind of like AI, you know, in venture capital a couple years ago where it's like if you can somehow attach this moniker to your asset, you'll draw a bunch more investment. That's sort of how stable coins and Ethereum feel to me. You know, Salana is just as good for stable coins as Ethereum and it's layer twos. I would I would argue.

>> Oh, I I totally agree with that. Like two thoughts from this. Like the first one is I'm interesting to I'm interested to see like once plasma launches which is which is kind of like framed as this like tetar back chain like real stable coin activity like move significantly to there and then the other thing is like on the Ethereum point like one last point is like if you look at yieldbearing stable coins which is kind of like very interesting like not just like stable coins that don't do anything like yield bearing stables most of them are issued on Ethereum and I and I do think like that's an interesting like trend to look out for like Athena for instance like USD is launching Ethereum

like makers uh USD is obviously or sky is launched on Ethereum like most of Maples like syrup USDC supplies on Ethereum as well. So like yeah like sure like USDC USDT most of that is like from years ago but like you also see that new yield burning stables are also like mostly issued on Ethereum and like when Athena tried to launch on on Solena or expanded to Sena it saw basically no no traction. >> Okay Carlos I want to talk REV as well. This is uh a metric that you know maybe gets posted about a lot in the Salana world when things are good and doesn't get posted quite so much

when uh activity on the network is a little lower. Um so Salana finished the month of June at 62 million in rev which for those who are unfamiliar blockworks research pioneered this metric and it measures tips and fees paid to transact on the blockchain. So you can think of it as a proxy for demand to access Salana or Ethereum or Tron or whatever. >> Yeah. >> 62 million in June. Since February of 2024, there has only been one month lower than that number, which was September of 2024, which obviously came right before activity picked right back up because of uh Trump's election. It looks like July is going to top that.

It'll be closer to 70 or 80 million. >> But nonetheless, the point stands. um rev on Salana is unmistakably like lower than it has been in some time and in June was lower even than it had been in mid 2024. So is that a is that a reason for concern if you're a Salana investor or do you see this as kind of a short-term blip and things are going to turn around? >> Um I would say like a mixture of both. Like it's concerning in the sense that you kind of like had this narrative that soul price was driven by REB and then now REB is down. So can how can you justify like the price going up like if you were solely valuing based on that?

And I think there's some portion of it like it's just like memecoin activity like not being as uh prominent as is as it was in like the past few months. Like if you look at RB it mostly comes from trading activity and especially like highly contentious transactions where you have like this uh urgency to get like fast transaction inclusion on the chain. So most RB comes from just like pom pon let's let's spawn fun like axiom phantom this kind of trading focused applications and if you have a decrease in that sort of activity on chain then you also have like a decrease in RB like

looking forward like what I'm most interested in is just like jet's bam because that like new upgrade is going to internalize some portion of the MEB that previously used to go to like Jet Tips and the Jet Block engine. So, I'm just curious to see like what I think will happen is that we'll see applications earning multiples more than validators and stakers. And this is kind of like a trend you've already seen on chain where if you look at the ratio between application revenue and reb it has been up only in terms of like applications will continually earn more

and more as a percentage of just like what you see validators and soul stakers make. >> Shout out to today's sponsor Katana. Katana is a D5 first chain built for deep liquidity and high yield. No empty emissions, just real yield and sequencer fees routed back to DeFi users incubated by Polygon Labs and GSR. Katana is launching with a notable ecosystem of primitives, assets and partners like Morpho, Chainlink, and more. Be early to Katana by joining the pre-eposit campaign for mainet opens at the end of this month. Follow the links in today's show notes to get started. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Maybe that's a good segue just into you know GTO unveiled BAM which is

um I don't think it's hyperbolic to say probably one of the most consequential upgrades to Salana's transaction architecture ever. >> Um you took a deep dive into this. You did a research note on it and it ties into kind of yeah Salana's value acral and a lot of those conversations. So, we're actually, I think, gonna have Lucas on the show soon, so I don't want to go too too deeply into it, but Lucas, the CEO of GeoLabs, but >> to your understanding, just give us a quick, you know, couple sentence overview of what BAM is and why people should care about it.

>> Yeah, I mean, Lucas is probably going to do a much better job than me on explaining this, but like, uh, in basic terms, like from my understanding, it's just a new transaction processing engine. like it uses an encrypted mempool inside of a trans inside of a TE. Uh and so what it offers is block building for Sena that is private and verifiable. So like applications that weren't previously possible on Sena uh are now possible by improving like the micro structure and the design space via plugins which are kind of like these like if you look at unis swap before they kind of had like this hooks architecture. It's kind of like that but

for block building where you can have like kind of like a custom sequencing of transaction on your applications via plugins. So imagine drift kind of uh implements a plug-in for like priorit prioritizing cancels for market makers, right? So you kind of like remove this huge barrier that you previously had and now per are now possible on Sena or like order books are possible on chain. Uh also applications that require privacy such as darkpools are potentially now possible on the L1. So, I think like it's a really like it's a really cool upgrade, a really interesting like development and I'm curious to see like

these launch partners like Drift for instance, how they leverage plugins and if they can actually deepen the liquidity on chain, have more trading volume and like compete with other like uh centralized exchanges or like other per exchanges like Hyper Liquid that have gotten the most uh volume so far. Totally well put. I think it's an interesting upgrade for a few reasons. I think maybe a good headline. One is if you're Salana, Hyperliquid is a a pretty scary competitor. If you're going for sort of just the retail trading segment of the market, there are onchain per exchanges on Salana. You

have Jupiter. Uh Bullet is is coming out. Obviously, Drift has been around for a while. None of these do anything close to the amount of volume that Hyperlid does. So if I'm Salana, I'm pretty concerned about that if I want to be competitive as a blockchain and especially a blockchain for traders. And I think that BAM, yeah, by by allowing for apps to do things like prioritizing cancels uh and and sort of helping market makers um not get picked off quite so often. Um, you allow for that to happen.

>> Yeah, 100%. I I I think like I don't know if my explanation was very clear. I think Lucas will probably do just a much better job at this, but like yeah, it's like the design space. It's like it's open to experimentation, which is the cool thing, right? Like it's not just like prioritizing cancels. Like with plugins you can do like basically anything like you can like want to do with your sequencing of transactions or any cool experiments you want to run like you can do it now which is kind of cool because it's like opening up a competitive landscape for like applications to come in and just like experiment with plugins to see which one delivers the best results and I think like that kind of like flexibility like

just for developers is really cool. uh for like improving like uh or unlocking that new use cases on the L1 and 100% like one of the things that I was thinking about when I was reading about BAM is just like over the past few months you've seen a lot of Sena native teams like get frustrated and like kind of launch their SBM chains like I'm thinking about for instance uh the Ellipsis Labs team is launching Atlas as an L2 uh the SATA data team launched Bullet which is kind of like a this network extension and then you also have like Fogo which is another like SBM uh chain. So I'm just like I'm I'm really

curious like how this changes the outlook for these type of SBM chains because it seems to me that if now it is possible to actually do this on the L1 then these kind of SBM chains lose their their edge you know like their distribution and their differentiating factor which was kind of like we we're able to do this which you can't on the L1. >> Huh that's fascinating. Yeah. Uh, Fogo went live on testnet recently too, right? >> Yeah. >> Okay. Yeah, that's that's an interesting uh implication as well. I hadn't thought quite as much about because there's quite a few SVM chains at this point which it's a narrative that doesn't get looked at a whole lot but um there's there's a number of these things. Um I

thought the other interesting point here is involves sandwich attacks which >> are this somewhat hard to measure very much still present problem that Salana has been dealing with for I like in an official capacity at least since early 2024 right that's I think when Jetto got rid of its memp pool because too much sandwiching was happening. Um, if you remember, longtime listeners of the show, mid mid 2024, the Salana Foundation and Jetto take some steps to, you know, identify people who are sandwich attacking users, which basically just refers to front running and back running a trade at the expense

of unsophisticated users to profit based off of how much you can move the price while they're trading. um they identified people who were doing this which is extractive to users in the Salana world and just tried to blacklist them uh wouldn't allow them into the stake pool wouldn't give them a delegation of the Salana Foundation stake but obviously in crypto you can always spin up a new validator node under a different identity and just get right back to sandwiching so it was always kind of a whack-a-ole game and a difficult problem I think BAM takes a more interesting approach And yeah, Lucas will probably explain this much better if and when he comes on the show or whoever from GTO may may come on the show, but my understanding

is you have these TEES, which is sort of an off-chain secure computing environment that allows the BAM nodes to not leak transactions. And so you don't see what's going to be in the GTO bundle or however these things are submitted until they've already made it to the blockchain. And so this just allows um less time for sandwiching validators to like see transactions which is which is kind of the whole ball game. Interestingly I've been learning recently. You know, we had Max Resnik from Anza on the show and he was mentioning and and the stats I think bear this out that Salana sandwich attacking revenue has actually decreased over time because as the Salana network gets more efficient, there's less need

to spray a transaction super wildly. And so fewer validators are seeing each transaction on average and there's less opportunities to basically see a lot of order flow and try to find orders that you can sandwich attack. So >> um it's it's also an interesting continuation in that direction. Yeah, it's like a very interesting architecture because it's private in the sense that you cannot see what's going on in inside the meool but at the same time like these things called BAM nodes they sign an attestation like when they schedule like a transaction like and send it to the validator they also sign an attestation and that attestation goes to the entire

Solana network for everyone to see with the ordering of transactions. So if the validator that includes that block did not follow that ordering of transactions, then everyone is going to know that they committed potentially a sandwiching attack and you kind of kind you kind of have like this social pressure where if you behave badly as a validator, then everyone's going to know about it basically. So it's kind of like this social pressure for validators to actually sequence transactions in the way that BAM nodes uh like transmit those like uh messages or bundles or whatever you want to call it.

>> Okay, I think that's a good overview on BAM. The other piece that you mentioned at the top of the episode, Carlos, that I want to ask you about is the block limit. So within every Salana block, there's a certain amount of compute that can be uh you know held within each block. I think it began the year at 48 million. We're now going to push it to 70. And um Anza has promised to double block space. to to up near 100 million by the end of the year. But as as you've looked at this most recent proposal and maybe the impacts that the block increases we've seen this year have had, what are your thoughts?

>> Um I I think it's great. I I'm looking forward like they just for context like we started the year at 40 million 48 million like compute units. They did a small 4% increase to 50 million like in April or something like just to test things out like just to see if everything was all right like with the parameters in the chain. They then did a 20% increase to 60 million cus and now they're proposing another increase to 100 million cus which speaks to like AN's goal that you mentioned of doubling block size uh this year. I think like it's great because it it's just like

this IVRL thing like it's just like increasing bandwidth for the network and allowing like more transactions to be included on chain. I think it's going to lead to an increase in TPS. Um if you see like our chart on successful transactions like on the block works analytics page you see that this week was an all-time high in successful transactions for the network. And I I think that speaks to like the like the increasing block size limit and more people being able to like put that on chain. It also enables the chain to be more resilient in periods where transaction activity is really high or you have these huge spikes in demand.

Like for instance, think about the Trump uh memecoin launch or think about the pump ICO. If you have higher block limits then you're better able like to handle such demand in the network and yeah like looking forward I'm I'm really excited like people talk about doubling block space but I'm more excited actually about reducing latency and like eventually decreasing block times below 400 milliseconds and with Alpen Glow I think that's something like you can realistically target in the next uh months after helping glow goes live >> and block times I believe on average already are below 400 milliseconds

>> because I I did some I I I did a piece on there's this kind of interesting slow validator problem on Salana where >> um sort of uh through a meta that fired dancer maybe popularized or brought to light it can be profitable to wait as long as possible to pack your Salana blocks because then you get uh access to more order flow um and so this was slowing down the network and it it seems like some of the worst offenders of this have been shamed back into you know quickly processing blocks but it it already is below 400 milliseconds. Alpenlow reduces the time to finality a lot. So the the time because you have the optimistic confirmations basically on Salana currently but with Alpenlow

stuff is actually you know finally confirmed on the network I think 100x quicker is the the number that gets thrown around. >> Yeah the time to finality 100 times quicker. I think Alpenlow will get rid of boat uh of voting costs, which is kind of like the biggest uh barrier to decreasing block times like officially today. And the reason for that is that imagine if you reduce block times like if you have them from where they are today, you're effectively doubling voting costs. And so it's a huge like strain for smaller validators. If you just double their voting costs like and

so if you kind of like reduce that barrier, you you open up like the the floodgates, let's just say to reducing like block times in the future. >> This episode is brought to you by Marinade. Marinade is focused on developing staking technology that strengthens the Salana network and connects soulh holders with the best staking rates available with solutions for both DeFi and Trady, including liquid and native staking as well as direct enterprise integrations. Marinade's high performance staking delegation platform brings billions in liquidity and security to the sole market. To learn more, follow the link in today's show notes. And thanks again to Marinade for sponsoring today's episode. As always, investments in blockchain technology involve risk.

Terms and conditions apply. Do your own research. I think one question that that may arise from raising like doubling block times and it was actually interesting, you know, we did a Fire Dancer episode recently that I thought was quite good and Michael from Fire Dancer basically said get rid of uh of uh block limits entirely. Um just let the market decide what basically like how full blocks can be to still succeed on the network. because that'll like make Salana as performant as possible. But to my understanding, the downside of that is it becomes quite expensive to run the hardware necessary to participate in

validating Salana transactions, right? So is there a centralization or you know only corporations basically are able to you know have the capital to run to be Salana validators in that world. Yeah, I think you you have to ask yourself is that really a bad thing where you have like is is it really bad like if you increase like the barrier of entry to validators? I think like when it comes to centralization, you also have to think about like what does decentralization mean and maybe it just means like being geographically distributed and if you still are able to have like this geographic like distribution of validators like even if like the requirements are really high

maybe that's kind of like good enough from a decentralization standpoint and kind of like the tradeoff you get in terms of like an increase in performance is is worth it in that regard. Um that being said, I'm just like not technical enough to understand what are the risks if there are any to like just saying there are no limit to block uh to block size. Um maybe it does bring on some challenges that we are not aware of like uh that are potentially harmful for the network.

>> I think you could put it slightly differently too as not letting the perfect be the enemy of the good. >> Yeah. where if the point of Salana is to create these internet capital markets as everyone loves to say these days where you know anyone can kind of get access to and verify financial services that are happening on blockchain rails instead of traditional financial rails and this again gives more people access to you know US equities and maybe hard to access financial services but that's only unlocked through a world where there's a couple hundred Salana validators and they're all run by the Coinbases and the galaxies and the

temporals of the world. I don't know why I said temporal, but um you know some of the just the popular validators RPC nodes on Salana continue to to run validators but you know you're kind of at home just some guy who got some uh server you know access um in a data center somewhere can no longer participate in validating Salana. Maybe that tradeoff is worth it to you if that's what it's going to take. Yeah, I would say like for me it's it is worth it. Yeah, I don't think like Sena is going to be any less censorship resistant because some guy in his basement cannot run like the valid area.

>> And I I think so a lot of this is like the same kinds of arguments that were being had with the Bitcoin uh >> block size wars back in the day. And when you think about stuff like that, you know, initially, like in the very beginning, people could mine Bitcoin on like a laptop, right? And no one is validating Salana on a laptop. Like it's it's not that decentralized to the point where like truly anybody can participate in being a Salana validator. There's still a significant amount of overhead. If me as Jack wanted to create the Jack node, I would probably have to go through some some third party who's going to handle

the whole technical side and you know find me some server racks in a in a data warehouse and do all of like the necessary overhead and would probably take a fee. So >> yeah, >> I don't know. It's it's it's not like things are so decentralized that truly anybody can be a validator today. Like I I I guess technically anybody could be a validator, but it would it would not be profitable or worthwhile for just anybody to run a validator today. And so maybe those that tradeoff of higher hardware costs, um less participation is worth it for what it unlocks in terms of you know actually bringing a a much larger amount of the financial

world on chain. >> Yeah, exactly. And I I think like you also had like previously like the Salena Foundation delegation program was kind of subsidizing a lot of these smaller validators that would would not be profitable if they did not have this like delegation like and and so I yeah I think I I think it's it's a trade-off that it's worth like like like if if you tell me like Solana is going to be a 100 times more performant today but we have to like cut 20% of the valid like, yeah, let's like let's do it. Why not?

>> Okay. Um, last question I have for you today, Carlos, before we get out of here, but if you talk to liquid funds or more Wall Street types and you say, "Hey, what are you interested in in Salana or in crypto these days?" Odds are they're going to say treasury companies. I've seen this many times in recent weeks. I find treasury companies incredibly boring. It's a nav play where for some reason the market values a hundred million of Salana being issued by a public company at more than hund00 million and they'll you know pay for that premium investors will um and we've kind of seen this especially during this summer become like the meta the thing

that you have to compete on in the crypto world. uh assets will randomly pump and then a few days later it will be revealed that somebody has you know done a large uh pipe offering or some kind of spa or something to uh go public with a crypto treasury strategy. So seeing that this is the world we live in, how do you think Salana stacks up as like a uh material for treasury companies? Is it uh at a disadvantage in that world or at an advantage relative to other crypto assets?

>> I first of all I I kind of agree with you. I find it incredibly boring and like like just this meta of like just buying like a bankrupt company and just turning that into a treasury vehicle for holding soul or ETH or whatever asset like pick your favorite crypto asset. Um I don't think soul treasury companies are going to be as successful as uh Bitcoin or Ethereum treasury companies just based on market cap. Um, I remain more excited to be honest about uh the ETFs um especially like the staking ETFs um and if they go live later this year,

I think that has a lot more potential to attract institutional flows and actually create meaningful buying pressure um or sold the asset. And it it's just a much more attractive vehicle. Like like maybe I'm midcurving this, but I I I really don't understand why you would buy like u a vehicle instead of just holding like the underlying asset or like leveraging like the underlying asset itself. Like it just doesn't make sense to me. Like it never clicked. But I don't know.

Maybe I'm I'm just like I just missed this meta. Maybe I'm midcurving it. I don't know. But it it just seems like incredibly stupid to me. Um hopefully we see staking ETFs go live later this year and it takes like a a larger portion of the flows. >> Yeah. I mean, you know, we could bring people on this show and we have that would fullheartedly defend this trend and say that it's a better way to, you know, buy and get exposure to crypto. I'm not necessarily a big believer in these things and I do think that you need to operate under the assumption that at least one if not multiple of these treasury companies are going to go to zero and shareholders are going to be

uh harmed in the downfall of these things. And so I think that it's encouraging to see that the official Salana world at least has not gone so much into Salana treasury company land. That remains to be seen. Who knows? Maybe Tuli and Raj are cooking up a uh a treasury company. I have not heard of such a thing. But I, you know, you talk to people behind closed doors and I think it's kind of the thing where it's like this trade of doesn't logically make a ton of sense, but it is profitable. And a trade can be wrong, but still profitable over some time horizon. And if you look at a lot of these things, the the amount that um you

can profit just from this really stupid uh uh pitch of a company that is probably going to get delisted from the NASDAQ soon buying and holding a bunch of, you know, some random token is profitable right now. And so people are going to make that trade as long as it is. But when that trade becomes unprofitable, I would think it will become very unprofitable quickly. And you'll see some of these things blow up basically. And you need to operate under that assumption of how are people going to think of me when this all blows up. And so >> it's maybe encouraging to see that Salana is not >> quite so worried about competing in the treasury company meta.

>> Yeah, I totally agree. I mean there are some rumors like in recent weeks of like new treasury companies like spinning up. But let's see like yeah hopefully doesn't take like the front page in term in terms of narrative. I think that would be incredibly bearish if like the bullcase for your asset is just treasury companies buying the underlying asset. That that just seems incredibly bearish to me. I I would agree with you. >> Exactly. Well put. >> Yeah. >> Well, Carlos, that is all the time we have for today, but thank you so much for coming on the show. It's been fun getting to talk shop with you, my friend.

>> Yeah, absolutely. Likewise. It's always fun being on Light Speed. >> And thank you all listeners. If you made it this far, if you enjoyed the episode, we'd love if you give it a like, a fivestar rating, a retweet, wherever you get your your podcasts, follow us, subscribe on Spotify, do all that good stuff. If you enjoyed this episode, we'd love if you shared it with a friend, and we'll see you again very soon. [Music]