Lightspeed Cross-Post: The State of Solana DeFi With Kyle Samani & Chris Heaney

Transcript

Hey listeners, I spoke with multicoin Capital managing partner Kyle Sani and Drift co-founder Chris Heeney on stage at Drift's Defy Day during Salana Accelerate last week. It was a fun wide-ranging conversation on Salana DeFi that came as competition heats up in a bunch of different Salana sectors from trading bots to market making. It was a really interesting moment to have this conversation. This also continues what is quickly becoming a tradition of us hosting Kyle for live light speeded episodes. I hope you all enjoy. Quick shout out to Permissionless 4 coming this summer to New York June 24th through June 26th. We'll have speakers from all across the industry including Hayden Adams, Kyle Sani, Guy Young, and more. Get your tickets today by

following the link in today's show notes and make sure to use code Bell 10 to save 10% on your purchase. See you there. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on bell curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds or projects discussed. Hey everyone, this week's episode is a crossost from Lightseed. We sat down with Kyle and Chris to discuss the current state of Salana DeFi. Enjoy.

Hello everyone. Uh welcome back to another episode of Lightseed. This is the coolest venue I've ever recorded Lightseed from. Um, we're a Salana podcast. Come out twice a week. Go check us out. Um, I was forced to wear this QR code shirt. Apologies for that. Um, if you want to scan it, I'll uh I'll I'll take this guy off. Scanning a QR code is obssec risk. So, you might get wrecked if you scan. It's actually Yeah. gonna drain your wallet if you scan it. No. Um, it was not my decision, but I'm sitting here and I have to deal with the decisions I've made in life. So, we're going to make the most of it. Um, as mentioned, I'm joined by Kyle and Chris of Multicoin and Drift, respectively.

And we're just going to chat a little bit, jam about Salana DeFi. Um, it's I don't know, a really interesting time in in DeFi. I think there's a lot going on, a lot you could say about it. Um, you know, some of these interesting prop amms coming out, a lot more going on in the lending space. Drift, I think, just uh announced an institutional product. Hopefully I didn't uh leak that. That that that was already announced. Yes. Um so more in institutional interest in DeFi. Um Kyle, I think I'll just kick it off to you to start. Um when you think back to like a year and a half ago and it was sort of the Salana DeFi Phoenix is rising from the ashes. We're now further into the future. The the phoenix

is is kicking. He loves memecoins. Um like how would you describe this period in time we're living through? like like lay the land for us in the Salana DeFi world right now. You know, the the most interesting thing happening I think kind of like across a lot of DeFi is just like the market structure is changing and and kind of like at all layers of the stack. Um obviously we have Fire Dancer coming. We have new consensus that was just announced, you know, a day or two ago by Anza. Um you now see a bunch of new aggregators, Dflow, Titan, obviously Juke's been around for a while. Um, we continue to see uh improvements in in JIT liquidity combining on and offchain liquidity. I know we'll talk about Swift here in a

minute with with the Drift folks. Um, and you we we just see um we've called Max and Totally just announced um application specific sequencing otherwise known as AS um and that's going to have a huge impact on on market structure. And so um there's like the number of uh forces like acting on the kind of core system has never really been higher and it's you know Ethereum had some evolving market structure maybe a couple of years ago. Um I feel like at this point actually Ethereum's market structure is fairly settled. Um but actually I think even the degree to which that was dynamic a few years ago was actually far less dynamic than

what's happening in Salana today. And it's very cool to see so many smart, talented people approach the market structure problems from so many angles. Yeah. Chris, how does it feel for you? Because I I know Drift has been around for years now. Um, and I think there's a lot more competition in the DeFi world than there ever has been. So, does what Kyle's saying resonate with you or like what's it like to be a founder in the Salana DeFi world right now? Uh, yeah. I think um on the Salana front the biggest advantage right now is very much just trying to push and innovate on uh making sure execution and trading experience is great on Salana. Um I think the issue with holding institutions come like

holding back institutions coming on chain is the fact that you know institutions don't want to get uh sandwiched or have crazy slippage etc. So the fact from like the the you know from tolli uh at the super core understanding like we need to push application specific sequencing to drift and other defi uh teams pushing for JIT liquidity RFQ models etc. um just from like the core to the all the app developers consensus on we need to make sure that this is the best possible place to trade is uh super important and is like the reason why I'm confident that we'll keep seeing more institutions more RWAS etc come on chain so it's uh

definitely exciting time um let's maybe dive into market making then uh you mentioned like RFQ system that Drift uses um and I think there's a lot more competition in the market making space than there has been and I guess in the aggregator world as well which doesn't apply quite as much but um yeah we're we're seeing a real professionalization I think of market making with uh like Ellipsus Labs has Sulfi which is dominating a lot of soul USD volume right now um how how has that world kind of changed in recent times I mean historically trading on chain is like an adversarial place to trade. Um, obviously started with like Mev on

Ethereum and then as Salana's grown, um, Mev is a thing that can stop people from wanting to trade on chain. Um, so a lot of it is just like people are working backwards from how do we provide good liquidity on chain. So something like Sulfi where they're pushing oracle updates like really tightly and super optimized for uh making sure they can update their quotes on chain. And then um on the drift side, we've always been pretty cognizant of making sure that there's a good uh micro structure for market makers. So the way drift works is every order ends up going through an auction and market makers compete to fill them um as fast as they can at good prices. So we just launched Swift to

make that even easier, more reliable. Uh soon we have our new DLP uh passive liquidity improvement mechanism, etc. coming out. So, we're just super focused on making sure users can get the best prices. And I think um if we keep doing that, more and more institutions will want to come beyond chain and obviously have the regulatory backdrop to make it happen too. What what's um what's adoption for Swift looked like because we uh we spoke I guess right around the time you were launching it. You released the white paper, but um how how's kind of the expectation compared to the reality as as you've rolled that out?

Yeah, so far it's been really good. All of our market makers are integrated on it. I think the feedback from users is that they love that it's faster, uh, gasless trading, etc. Um, so so far it's actually been uh really well received. Um, there's still more work to do. I think Drift's focused on a combination of like uh active and passive liquidity. So, we just made a big upgrade to active liquidity. We're going to do another one to passive with the new DLP token over the next month or two. And then um yeah, the great thing is like while we're innovating at the app layer, uh Salana is still like pushing improvements. So things like Alpenlow are going to make the user experience even faster. You

know, as blocks get bigger and block times get shorter, like drift automatically kind of inherent that and the experience gets better. So um yeah, there's a lot of good things coming up. Do either of y'all have immediate thoughts on Alpenlow? It's it's not something I've dug into too much yet, but seems like um I mean day one of the conference that was announced and I I think it's a huge deal that maybe even isn't being talked about enough as far as like how big of an upgrade that is to Salana. Yeah. Um I'm no consensus theoretician so no like nuanced views about consensus algorithms but to me one thing stands out which is the Salana kind of core engineers decided to kind of violate a core rule of consensus algorithms or I

should say BFT consensus algorithms um everyone all the other ecosystems I'm aware of when they if you do BFT in any proof ofstake context the key threshold is 2/3 to finalize and um the Salana guys were kind revisited that assumption from first principles and said well a third of the network being Byzantine is is like an pretty insane scenario. Um what if we relaxed that assumption a little like what additional can we get additional performance gains? Um and so they relax that assumption to 20% Byzantine and 20% just like faulty or offline but not actively malicious. Um and and when you relax that assumption a little bit um they can get to even faster. I I don't appreciate the nuance

of why that leads to, you know, lower latency confirmations, but but it does. Um, and that strikes me as like an incredibly pragmatic decision to make. Um, and to not be caught up in academia of like, uh, it has to be perfectly Byzantine, fault tolerant. Um, so that's the kind of decision that I I love to see. Today's episode is brought to you by Ledger, the global leader in digital asset security. Celebrating 10 years of innovation, Ledger is trusted by 7 million users, secures 20% of the world's digital assets, and remains the most secure hardware wallet for your crypto and login. Follow the link in this episode's show notes to grab your ledger today. As always, investments in blockchain technology involve risk.

Terms and conditions apply. Do your own research. Um, speaking of academic considerations, what do you make of some of the critiques maybe from like the Ethereum world that you know these core engineers at Anza are changing like at a real base level how Salana works and there's like this is essentially a centralization vector or something like that. I mean great like they did the merge they were going to do eof then they're not going to do eof and now they're going to scale the yellow. I mean dude it's same like you know look in the mirror man.

Um, yeah, go ahead, Chris. Yeah, I think I'll just add to Alpenlow. Um, cool thing about it, I think just from a user perspective should lead to feeling like your transactions are going through faster. Um, like for app developers, there's sometimes issues with like, you know, which fork is the your transaction on, what's what's actually happening. So, that'll be big. And I think the longer term second order consequences of uh getting rid of voting transa uh vote transactions should make running a validator cheaper and um potentially paves a way to like reconsider the the inflation curve uh for Salana, which I think is also pretty interesting when we think about Salana becoming like uh more

in like institutional grade asset with like less crazy inflation. So, um, overall I think it's, uh, pretty positive, uh, outcome. Yeah. Chris, uh, we I don't think we ever spoke about 228, but I Drift runs a validator. Um, did did you guys vote and like what is your take on should there be some kind of quote unquote left curve 228 where it's not a market-based mechanism like I think Galaxy Research proposed recently? Yeah. So 228 was a proposal to reduce Salana inflation. um Salana validator or drift validator voted yes for that. Um I think a lot of the inflation is to kind of cover this really long tail of

validators that like without it potentially wouldn't be able to run their business but um didn't really feel like they were meaningfully contributing to the decentralization of the network. Uh I also think the inflation is kind of a like it is a tax on people that for whatever reason can't hold or can't stake. So definitely was in favor of reducing that just in you know making it a mature asset. And um yeah I think we're I think you think about soul as like this core asset in Salana DeFi. You definitely uh just want to make it like um you know more reliable, more predictable. So in terms

of left curve uh 228 as a dev, it's like if you can make like a oneline code change to do something and move you in the right direction, I think that's a smart move. So I was in favor of it, but um obviously you also want to push to some more ideal long-term outcome. So Kyle, where do you stand on all that today? um continue to want to see 228 or something like it um ultimately get implemented. Um for the primary reason you said it's kind of a a tax um and the specific tax that I'm most frustrated with is just like a large number of service providers and ecosystem a lot of the validating validators and service businesses custodians etc. they're just market selling all of their commissions

kind of in real time. um and that I'm just like I don't like I don't want Coinbase to make money from selling you know soul at a 10% commission like that that's very frustrating to me. Um so I think we'll get there. Um to me actually the more important part of Multicoin proposed 228 and although I was not the lead person on it at the firm um 228 was intended to be a a step one to a larger vision which is ultimately to get to what we internally talk about as long-term staking. Uh my my partners Tashar and Vashall have written a blog post about long-term staking I think a year or two ago on the multicoin blog. Um but ultimately what we really want to see is we want to see a native yield curve um in in Salana. It

strikes me as very dumb that people who like I've been holding my soul tokens for seven years now or well network launched in 2020 so 5 years and I don't intend to sell them anytime soon and I would I would like to be able to earn um more economics for committing to to you know not selling for a longer period of time than a guy who's going to plan to sell in two in a day or two. Um, and so there's a lot of ways you can design a yield curve system and there is no one objectively right answer. I know internally we've played with a whole bunch of mod a whole bunch of models on on how to do that. Um, but I I think as Chris was saying is like we kind of institutionalized this asset and as the

asset of of soul matures having a native yield curve is going to be an incredible thing specifically for large pools of institutional capital around the world. Um, obviously we have treasury markets today. um the way you would handle a yield curve here year would be different but uh I think ultimately makes this a more enticing assets to capital market participants around the world. What's the consideration of long-term staking for like DeFi? cuz I know that one of the arguments that uh Multicoin put forward for why 228 or something like it should happen is that you um you if too much soul is staked it it discourages DeFi because the soul is just locked up and and may not be actually useful. So

if you institute something like long-term staking where people are incentivized to stake and never unstake, does that also depress DeFi activity? I mean it it it complicates DeFi in that like depending on how you do maturities and there's a whole bunch of mechanical details there. Um so it creates complexity to like deal with collateral of like well this soul unlocks in 2 days this soul unlocks in 2 weeks this soul unlocks in 3 months. Um so that D5 protocols will need to deal with that. Um it also creates opportunity which is you're now going to create liquid markets for all of those LST pairs between soul. Um and I think certainly as a long-term soul believer I actually

am very intrigued by the idea of someone you know is earning whatever 5% yield on their long-term stake soul. They need to sell it for whatever reason. If I can buy that and earn a 6% rate. Um so again as a as a greedy long-term soul holder I like I like this kind of a thing. It's a way to make free money for having well sorry it's a way to maximally profit on having long duration. Um and I'm I'm a big fan of that and big fan of market makers and market pricing and um just you know uh riffing on that I think things like exponent where they're trying to break out the principle and the yield on staking you can imagine that being like 10x more important if you did have this idea of

like a yield curve on soul. Interesting. Um, what do you guys make of Axiom? I think, uh, this is like a kind of out of left field question, but one of the more interesting breakout apps of the past, I don't know, 5 months of of 2025, I guess, has been Axiom, which um, it's like a Salana trading platform. I guess my very kind of uh, simple understanding of it is you combine Salana memecoins and hyperlid per, which are two very popular crypto products right now. And it's now um by Rev maybe past pump fun.

It's close to pump fun. I don't I don't know if that's uh someone can fact check me there, but um looking at that success, I mean it it uh is yet to be proven out over a longer period of time. Maybe it's points farming, maybe it's something like this, but why did Axiom work in in your guys's opinion? I'm I'm not in the trenches, so I I can't speak to the nuanced product decisions that the Axiom team made other than very clearly they made a ton of very good nuance product decisions that memecoin traders want. That was their their first product and then obviously those people said, "I want hyperlquid persp." And so they added that, you know, a little later. Um at the end of the day, they really understand their customers and how people do discovery and trading of meme coins. Um and as of

now it appears they understand that better than anyone else in the world. Um obviously Pump and Photon and all these guys are all very very quickly iterating. Um but you know really understanding how those people think um is the key to what what Axiom has done and well Chris do you have thoughts on that and then I'll follow up. I I guess I mean you are also obviously building a pers exchange and it's a difficult space or maybe a more competitive one than it had been two years ago. Um so what are you seeing from customers and what are users saying that they want of the per product right now and how are you trying to create features to make the drift platform more interesting to users?

Yeah, that's a good question. Um I mean the the amazing thing about DeFi is uh it's very much permissionless to come and build on top of it. So Drift's had over I think we have a slide later 60 different apps have been built on Drift over like this year. Um so it's almost like bunch of different companies come in and build uh use different parts of Drift's cross collateral risk engine to build different you know experiences. So, uh there are some like uh per UIs that are integrated with Drift like Ranger. There's also borrow lend aggregators. Um there's people using Drift as like a backend for their DeFi checking account, credit cards, etc. So, there's a lot of different ways you can

leverage uh perex especially one that's uh vertically integrated with the borrow to build out uh you know different different products. So, um, definitely one of the best things about building Drift is how many people can build on top of it. And basically what we focus on a ton on the Drift developer side is just like continuing to scale up liquidity. So, the number of teams that can build on top of Drift continues to grow. That's both on the per side with Swift, but then also on the borrow lend side. uh we rolled this thing called isolated borrow lend pools which is actually what's uh powering the drift institutional and the the new um a credit roll out. So it's um it's kind of

just like constantly ratcheting up this system and making it better so it could serve more users. I want to um jump on that last point like as an entrepreneur uh yeah launching this kind of private credit product um as a pers exchange is that a way to um competitively separate yourself um and is there something where like I'm riffing here but um you know maybe Axiom is very den and they just are going for the DGEN audience but if Drift can um drive revenue from per also have this like institutional side does that separate you in the per field What's the what's the competitive advantage maybe presented by having an institutional product? To say that more

straightforwardly, I would say um coming from the coming at it from the dev perspective, Drift as a platform can serve many different types of assets and it's been like battle tested. It's this first engine that works really well. So, it's a very easy horizontal move to support institutions that are basically enabling a sort of carry trade. Um, where they're tapping into DeFi liquidity. Um, and so when these institutions come on chain, they're just looking for a place like legitimate DeFi where they can, you know, deploy. It's just very natural for Drift. And because the Drift platform is already built out, it's like very

marginal cost for us to uh support. I wouldn't say it was like, oh, we're going to spend a year working on Drift Institutional. If anything, it just kind of like, you know, uh minimal amount of work to make it happen. Um and so when you build a platform, these kind of use cases just pop up. It's not like you have to uh do a lot of like uh crazy um like uh demand estimations or something. So it it it came out pretty organically just from the the change in regulatory landscape and now they can come on chain and we have a battle tested risk engine and it's just easy to uh to get it going. Uh to to zoom out Kyle, do you think private credit is like the next

frontier of tokenization or whatever? I think uh Yano at Blackworks has tweeted at some point like first it was bringing dollars then it was treasuries on chain and now it's going to be private credit which is this more recent very attractive kind of investment thing. So I don't know we had drift launch with um with Apollo I think um Kamino had some announcement yesterday as well. Is that is that a real thing? Like is that going to become the next kind of tokenization hotbed? Uh I generally think so. Um the the easiest tokenized product to sell is like higher yield on dollars. That's kind of like the most universally wanted product. Um and private credit can offer higher yields

than bank deposits or money market funds. Uh and most people don't understand risk. Um so it's like oh the treasuries are 4 and a half% and Apollo is 9 or 12 or whatever the AC credit fund is. Sounds great. Give me give me some of that. Um and and so uh the higher nominal APY that that is rooted in reality. It's not just like some liquidity farming nonsense um will attract a lot of capital. I mean you can just think of um like Circle and Tether is basically like the same like the same exact type of product except they offer 0% yield cuz people don't realize that there's yield being earned on the background uh on the back end. So it's like all these institutions are seeing

the money that Circle and Tether are making and they're like, well, you know, why can't we tap into this? So it's it's kind of just like everyone wants to tap into like the most profitable carry trade of all time. Yeah. Which is the all the people that are holding circle are just like funding basically this carry trade and then now institutions are coming in and they're giving that yield back to the users. Interesting. do um maybe relatedly like do either of you have a thesis for how stable coins evolve um tenuously playing with the DeFi like theme here, but I'm just curious like uh as you mentioned, Circle enormously profitable. A lot of that profit goes to Coinbase even um and a lot of that yield isn't passed back to

users. There's some regulatory questions, but I think there's a real sense of like everyone's bullish on stable coins, doesn't know how to get exposure to stable coins, and um there's a lot of like benefit maybe to regulatory capture in the US especially. So, how do we see that all resolving over the over the coming months? Um, oh, I I don't think anything will be resolved in the next few months. But I mean, look, if if you want to go long stable coins, like that the right way to think about that is to go Well, hey, Drift should add data futures for stable coin outstanding market cap. Um, I've suggested that feature before. I don't know when they're going to ship it, Chris. Um but um separately from from dated futures uh the like right way to

think about going long stable coins is uh borrow like systems that manage leverage on chain because at the end of the day whether it's a per or whether it's a a spot borrow lend um you need dollars, right? And so if you want to go long stable coins and you want to go long systems that manage leverage uh and Drift is obviously one of the the largest systems today that manages leverage on chain. Um, so stuff like that is is the way to go along stable coins. Is there any like weird DeFi stuff you're into? Like I think um you get a lot of the same answers when when you look at um Salana DeFi like a lot of the same incumbents have been pretty uh popular and around but like is there any

stuff further out on the risk curve or just like uh weird uh more real world applications for DeFi that you're excited about or hope to see growth in or something like this? I mean the other obvious one is is onchain equities. Um uh and a lot of people are working on that now. I think I think the Salana folks are announcing a ton of stuff at at Accelerate this week to that effect. Um and I think you'll see onchain equities pretty soon. Um I hope that they can become collateral in systems like Drift. I'm sure the Drift guys are are going to make that happen. Um and and then you know like from there getting to like Tesla per or Google purps or whatever. I think that we're a little further out on

that stuff, but uh I do think it's coming. The other really interesting area I think about kind of next frontier for DeFi is prediction markets. Um you know, most folks in crypto are familiar with Poly Market. Poly Market really isn't DeFi in any meaningful sense of the word. You just deposit USDC and then it all runs off chain. Um the the other kind of big big group in town is Kashi, which has less awareness in crypto circles, but is actually a much bigger um prediction market platform today. Uh I'm actually interviewing the founder of Kelshi on Friday at Accelerate. Um and I can tell you his name is Tark and he's super super excited about uh bringing prediction markets on chain and tapping into global crypto liquidity to make that happen. Is that true? Does Kelshi

have more volume than Poly Market? Way more. Interesting. I didn't Huh. I did not know that. Um and there there's some crypto thing coming if they're speaking at Accelerate. You would think that is a reasonable that that is a reasonable assumption. Uh Chris, what about you? I mean, uh I won't repeat anything. I mean, I I'm bring I'll bring up Exponent again because we just launched isolated pool for them. I think it's interesting that you're seeing um basically teams trying to like standardize how the the yield works for um Salana LSTs and kind of be able to pick them apart and people to speculate on different portions of the yield and the principle. That's pretty cool. And then I also um I like

this trend of more and more Bitcoin making its way onto Salana. I know Kyle hates Bitcoin, but uh there's a lot of people out there that like it. And obviously Bitcoin hasn't really been able to deliver in DeFi uh probably the way like people would have hoped. So I think Salana as the execution layer for Bitcoin makes a lot of sense. So um it's exciting to see more and more Bitcoin making it um on chain there. Ledger is the global leader in digital asset security, trusted by 7 million users and securing 20% of the world's digital assets. In recent years, Ledger has built a comprehensive ecosystem of products and services, making digital ownership more secure and accessible for everyone. Ledger's newest devices, Ledger Stacks and Ledger Flex,

introduced the world's first secure touchcreens, making it easier and safer to manage your assets. Alongside Ledger Stacks and Ledger Flex, they have also launched the Ledger Security Key app, offering a safer alternative to traditional password management. Follow the link in today's show notes to get started with Ledger today. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Yeah, Kyle, I saw you tweeted the other day that like Quantum is going to wreck Bitcoin. Is you want to say more? I'm curious what the reasoning is.

Um, I've spoken to a couple of startups recently that are trying to to t tackle the problem of quantum computers breaking bit. Well, when I say breaking, I want to be very specific what that means. Um, stealing large numbers of very old coins. Uh, and it is generally understood among quantum people that that will be possible. um uh if you go on Chad GBT or Grock deep research and extrapolate from Google and Microsoft's kind of announcements over the last few months um and dig into their papers, it would imply that we will have quantum computers that that can steal Bitcoin around the year 2030 plus or

minus. um a lot of assumptions in that could be faster, it could be slower, but that but that's kind of my base case as of now based on chatbt and grock and um and so then if you start to reverse engineer from from there, what does that mean? And it's pretty bad. Um like can they soft fork in postquantum signatures? Yes. Um does that solve the problem? Not really. um because that still means every single UTXO needs to get migrated over from old ECDSA system to new one. But then also the new signatures are 20 times as large as the old signatures. So like block

space just like Bitcoin's throughput would fall by 20x like and it's just like a lot of things I think are going to start to to get really funky funky in this world. Um, and then obviously there's also the threat of like, well, okay, you migrate your coins over, but then 20% of the Bitcoin, it's only older addresses that are really subject to this can be stolen, including like Call of Satoshi's coins, and it's like are are we all going to like is is Bitcoin actually going to be a trusted thing if it's like known that like someone somewhere just like stole 20% of the Bitcoin? Like that that also strikes me as like fundamentally not long-term like okay for the Bitcoin story. So, I think I think the whole thing is just totally

Um, and very very hard to reason about. Um, I am trying to talk to more people to like reason about the game theory of like how does this actually play out? Um, but it's the more you look into it, the more you realize it's an absolute disaster. Okay. So, if a large amount of the Bitcoin supply can be stolen, like don't we have bigger problems too? Like there's lots of things that are could be broken by quantum I guess in a similar way, right? Um sure. Yeah. Yeah. But like it's it's particularly problematic for Bitcoin because um the defining feature of Bitcoin is that like it

doesn't change. Uh and like Ethereum nor Salana made that promise to the world. They were like, "No guys, it's not perfect. We got a long ways to go." And all the Bitcoin people are like, "No, it's perfect. 21 million. We're good. Digital gold." Um and and so like Yeah, that that's a that's a really big problem. Um, I'm not really worried about Salana because like the the Salana guys are already working on getting the quantum signatures in the system. They'll probably go live in like a year or something. No one is even going to like know or care. And then you'll be able to just migrate your coins over whenever you want. And Salana has enough throughput that like everyone will be able to migrate their stuff over. I actually this is a funny thing for Bitcoin. If you took 100% of the block space of Bitcoin today, just migrating

UTXOs from ECDSA to the postquantum signatures, that would take 3 to 6 months of 100% of Bitcoin block utilization. So, it's just like even if people start wanting to migrate over, you also realize like, oh wow, that's totally And like that problem won't exist for Salana. Yeah. Um I have to go execute some trades after this pod. Um I I guess one uh one other thing I want to get into getting back to our uh main subject of today is just um you uh referred to app specific sequencing Kyle um by a crass name earlier uh but I I just want to like talk about the relationship that Salana should have with its apps. Um, I think that

something you could think about is like a world in which apps become uh start to take rev away from Salana maybe or or or search for ways to capture more value relative to the Salana L1 not in the same way but in a same like business consideration direction as L2 is taking value away from Ethereum. So, how do you kind of grow the pie for Salana DeFi and allow sustainable businesses to grow without um these these apps basically becoming parasitic to Salana? Yeah, I was actually I was talking with Max and uh Matt Sorg about this yesterday.

Um the vision of Salana was onchain NASDAQ and we've there's been a handful of attempts at onchain limit order books serum and then more recently Phoenix Drift has one as well and I think loop scale recently launched one for borrow um and like Phoenix today effectively is is dead. Um the ellipsus team more or less killed it and like has their soulfi thing running now. Um as a practical statement onchain limit order books are are not good enough yet to like rival CFI. They're not going to ever like maybe we'll get to like fully fully better than CFI one day, but like they're not close enough yet to to to compete with CFI as of now. And so as a result, we have mostly AMMs and

off-chain stuff as is the substitute we have effectively and Drift has, you know, both both of those live today. Um I want onchain limit orders books, onchain limit orders to exist. Uh and the only way to get there is with prioritized cancels. Um and so the the guys kind of designing um application specific sequencing have that in mind as as the the primary use case um and are you know going to try and make that happen. I believe what that net I think it's just actually net accretive because today onchain limit order books don't exist because it's people just market maker stopped quoting. So um if you add the application of specific sequencing uh that will make it possible to have

cancels at the top of the block which will allow market makers to quote. So I I just think it's like strictly accreative um to to Salana which and and to the applications as well. So I'm I'm like just a fan all around. Yeah, Chris, I I'll let you. Yeah, I think um basically summarize why we need it to make market makers better. I think more just high level view. I think I heard Toy talking about it and his view is like if we don't add this thing uh apps will eventually leave because they'll want to build order books and um that that makes me very bullish cuz fundamentally a blockchain is about getting app developers to build useful things and I think just the framing of like what do we not have in the protocol

that's stopping people from building valuable applications and then let's add that is uh super important especially versus maybe like older legacy players, it kind of like just gave up on that. So, uh I'm very bold up on um app app specific sequencing because it's just like an acknowledgement of what the problem is and where we need to go to keep making things better. So, I think it's a good step in the right direction. So, so to make this more concrete, let's say as like a hypothetical, Pump Fund says, hey, we've been driving so much value to Salana. So much rev is captured by Salana validators because of the business that we do. And so forget this, we're launching pump L2 and it settles

as like an optimistic rollup type thing to Salana. Um do do these kinds of fixes solve for that problem where basically an app gets so big that it just says we don't need Salana anymore. We can do our own distribution. we're gonna settle as as little data to the chain as or do as little onchain as possible because then we can like capture value to our own business instead. I mean, yes, it's certainly adding stuff like application specific sequencing um will will mitigate people's desire to do that. Um no, no questions asked. Um and obviously like the goal with Salana has always been a single global state machine and so uh you got to serve the developers though if you want to get there.

Yeah, my uh philosophy on DeFi is that users want to users and uh app builders/asset issuers want to meet on the place that maximizes this trade-off between decentralization and performance. Um you know, you bring up Pump Fun. If they're on their own L2, do I really want to issue my tokens on Pump Funds L2? Uh probably not. Um you want it to be a global platform that, you know, no one can turn off. It has all those properties of a global platform. So it's like uh I think Salon's threading that needle between decentral decentralization and performance that you need to like be the shelling point for users, app builders and asset

issuers. Okay. So, so then maybe um the place I'll end here is um there's a lot of pressure to do to to make those kinds of tradeoffs and uh not do the DeFi things and and um uh realize some of the kind of ideals of decentralization and and DeFi. So, um just as a closing statement, I guess I'll start with you Chris and then go to Kyle is just um why does DeFi matter? Like why why should we care about DeFi in the year of our Lord 2025? Yeah. Uh I mean I came into DeFi late 2021 and just was able to you know read open source code and start contributing and I think that's ultimately why I want

to be a part of DeFi. I wanted to be a open and permissionless global system that anyone can participate in. So it's important to keep pushing on that efficient frontier between performance and decentralization. So it continues to be like that. That's why I would rather keep building on Salana, building DeFi, than like uh just build some centralized L2 that you know maybe is a little faster in the short run, but like isn't as uh inspiring to me. Yeah. I mean the the we call it DeFi, but like I actually think it kind of misses the the key thing which is permissionless access. Um and that's what what matters in in these systems.

You can set up your own validator. You can just generate entropy on your device and have a private key and a public key. Uh and then you can access global markets 24/7. Like these systems are truly permissionless and like that's obviously what financial markets should be instead of all the regulated we have um today. So uh that that's my vision is to make take finance to its logical endpoint and that's only going to happen on permissionless rails. H yeah, great place to end it. Um, this has been Lightseed Live from uh from Drift to Defi Day. Kyle, Chris, thank you so much for joining me. Thanks, Jack. Thank you.

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