Taiko's Based Rollup Is Live, Now What?

Transcript

good morning guys welcome back to another episode of the rollup today's episode is with Daniel the co-founder of Tao Tao recently went main net with both its protocol and token and Tao is a based contestable rollup which is a really interesting design meaning that Tao uses the ethereum L1 as its sequencer this leads to a lot of interesting properties of Tao and what it means for the Dynamics of its nodes its validators and its users hope you guys enjoyed this video with Daniel before we get into it a word from our sponsors that help make all this possible thanks enjoy welcome aboard on our journey into the singularity this is

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of Tao to discuss the recent mainnet launch uh for Tao uh The Tao token base sequencing and generally just an update as to what's happening in this uh layer 2 ecosystem um so welcome in Daniel it's a it's good morning for us but I think it's a good evening for you so welcome in thank you Andy and Robbie um yeah really nice to talk to you guys again yeah this is my very late evening uh 10 p.m. but not very late for me but is yeah yeah well thanks for sharing some time with us I know it's been a busy a busy couple of weeks for you um with this main net and you know you guys have

put a lot into the culmination of this and for for for Taos it was particularly interesting because of your base sequencing design right it was main that coincided also with the launch of the Tao token um because of the incentive structures needed we'll kind of dive into that some of the uh statistics of the Bas sequencing um so far but why don't we just start off with some of your uh Reflections as a Founder pushing out mainnet and kind of how you feel things went and what the last couple weeks of your life has looked like then sure sure so um Tigo was uh founded like two years ago so finally we launch something all the investors are pushing

you know people uh they feel like we should launch something even earlier but um to be honest we we don't even think we are we were 100% ready when we launched the main night we are we always like 95% close to midnight lunch So eventually we told us ourself hey we need to make this happen even if there are like still small room for improvements we need to make it happen because that will push us to uh to improve things faster uh so yeah so Tao is prob to be the first base rollup and uh for us we not only want to make this a base roll up we also want to make sure this is a

per permissionless based rooll up because if you are based but still permissioned uh people still don't have a way to you know to withdraw money if you don't if you don't you know sequence their transactions so um I think one week after or maybe 10 days after the network is live um we remove the Restriction so anyone can now propose and pro blocks without any restriction without any uh W listing stuff um it's still very hard to be a proposer uh one one factor is that uh they don't have tokens um one of our partners ZK po they say hey we are ready to propose a lot of blocks uh but we

just have like uh 100K or something airdrop tokens and you know it's just we can just afford like a few maybe a few hundred uh blocks per per week you know so uh we we still need to make sure the tokens will be liquid um uh better you know so they they can accumulate some tokens to become a a real uh proposer improver so right now I think um I I saw this tweet I think we have like 15 independent proposers you can call them sequencers of course but they just want to give it a try uh it's still not it's not profitable um we did some uh analysis about the

cost because people say hey base roll up are expensive I would say basee roll up will be more expensive compared to centralized uh uh sequencers because there are like uh peral rules built into the smart contract unction right so there are more Logics and more like stories access so it will be more expensive but uh we still can be profitable if we have uh enough transactions on Layer Two and we just uh need to um lift the tipe that we require from users a little bit right now if you look at our transactions it's almost free right it's almost zero because we don't charge anything the

base fee is also zero that there are a lot of block space to be sold on l tool I was seeing that you guys were like pushing for like the blobs to be more more filled than like previously basically over the last couple months there's been so much blob space available but now that Tao's on Main net that's getting filled quicker yeah so for uh people ask why why don't you just wait for or enough transactions on layer to and then when you can fill a the whole blob then you post blob right the the reason is to guarantee the the livess of this network you still have to propose every for example 20 minut 20 seconds maybe one minute at most

otherwise people say hey the network is is down I don't want to transact at all so we are in this bootstrapping period where we are willing to pay more gas fees to provide a better experience especially a shorter confirmation time uh so people will try our Network um so yeah so the cost as I said is going to be higher we also did some theoretical analysis see how far can we push right to really lower the transaction so right now um when you propose a Blog we we write three stories and we can in you can you know get rid of one and just keep two uh when you Pro a block right

now it's like a six uh six or five uh uh um you know rights to the to to ethereum we can remove one or two but that will involve like more like changes which is not so compatible with the current one so we need a few iterations to make that happen so uh so in general I think there are rooms for improvements in terms of G cost um but no matter what we do in theory Bas R up will be more expensive because we have unchain protocol and other people may may not have unchain protocol uh I mean centralized a sequencer based rups uh but we are really optimistic I

think as I said if the blobs uh are better used if the gas will be sold uh more gas will be sold on Layer Two then we will collect more fees un layer to to cover the layer one cost that's totally possible so profitability is not a problem but profitability in early stage it's still very challenging right so uh we we may find some better apps some killer apps maybe to really bootstrap the usage of this layer to we are still um trying our best but if you ask me do we have a kater app right now we really don't have a kater app right now so that's why you know the first killer app

quotequote is the airdrop right so during the airdrop day um we we made like 80 uh 80 uh e uh transaction fees even if we charge very little on later two we still make 80 e per day on that day so you can see the potential of a base roll lab I think for the for the long run I still I'm still very optimistic about base rollup because by paying some extra uh fee on Layer Two and of course the proposer pay extra fee on layer one you get like permissionless decentralization of the layer too right so that's something that centralized sequencers uh won't be able to offer so

I would say maybe in the next two or three years you will see a lot more base roll up than centralized a sequencer based roll at you know so pretty op optimistic awesome yeah yeah that's that is uh very cool I love the analogy too that you say you're basically selling gas like that is the business model is you're trying to sell gas on layer two and that's the mode of profitability I uh I'm wondering if you could explain the the supply chain a little bit because you mentioned how I think I think you know most people are probably aware that a based rollup is one that uses ethereum as a sequencer and ethereum supply chain is

is still it still has very decentralized block proposers but the building is still somewhat centralized like there's only three Builders but then there's you know all of the stakers that do the proposing could you talk a little bit about like what parts of the ethereum supply chain Tao uses and then how do you how do you add permissionless to something like the ethereum block building um that's a good question so basically we buy two things from ethereum so we by uh data space of The Blob right now previously call data so that's for uh data availability to make sure everybody can download data and somehow convert the data into lar to blocks and execute those blocks the

second thing we buy is the settlement uh functionality on ethereum as smart contracts um we have block proposers we have users we have approver so users will pay block proposers um for the inclusion of their blocks uh their transaction the the proposer will pay the approver for proving the block and the propos also pay ethereum um basically validators for using blocks and the settlement right but this is what's going on right now the proposers provs and the L one validators but going forward I think those three different

roles will merge into one single role which is the uh L1 Val validator the validator will extend their business to say okay I'm not only going to participate in lvan mbv I'm also going to you know work with probably some Partners some some infrastructures to build L2 blogs to even Pro out my own blog so I think if you just build out2 blocks you you have to work with L1 validator you probably will be will not be able to compete with them directly um at least you have to work with them closely to share some Revenue

um beyond the fee the transaction fees you may say Okay L2 has MV opportunities why don't you you know we share this right so you can offer something like like pre-confirmation right so in the future I think the the Alan validator will somehow extend the business to uh further into the L2 space I don't know exactly how that will be how it will happen but I think it will happen because they are the the the power that controls the ultimate like L1 sequencing which basically controls L2 sequencing right now they don't care because the infrastructure is not there and the fees

collected from uh L2 block building is is negative you know it's not profitable right now but once become profitable then it's great opportunity and they they won't give it up so so right now it's approver proposer user and L1 validator going forward I don't know it's it's going to be centered um around the Alan validator yeah that's my that's my so so me or meon on layer shes is is coming it's going to happen if not already and it's kind of going to be pushed up from the from the base layer up to the l2s I think so especially when a base Ro lab is is

decentralized also ownerless right now Tao is decentralized is a I want to say decentral is not the red term it's it's a permiss less right but we still have um uh people as part of the multi to actually own the for example upper ability the the smart contract right and one of them so if all those signers are seized by the law enforcement you know we can do evil things right we can we can set down the network we we can set down the smart contracts right um ta will be really powerful if we gave up the whole control we say okay this is now controlled by the Dow somehow right and it's not up to us to decide what to

do we don't have the power and uh of course the precondition is the protocol should be back free and is pretty stable um I think we are probably maybe one year away from that but uh given that smart contracts are fairly easy if you look at a code it's not a lot of code so I think uh compared to a ler one network for us to to say you know to to give up control give up the ownership it's probably easier so that's also my plan I want to say you know I don't own this I don't control this uh in about 12 months so that's that's going to be like a second big milestone for this network

this this uh main night of course we are probably going to have another main night uh later gotcha yeah it's the uh it's like the progressive decentralization I think for for the optimistic rups they're trying to move away from this centralized sequencer model at least at some point um and at least like these next Generation rups that are launching are embracing more of like the shared sequence approach I'm not sure that some of the more like um kind of entrenched rollups on the optimistic side will want to move away from the centralized model but it's it's it's this continuous Progressive decentralization approach which kind of is is in the ethos of ethereum before we get too deep into kind of where you guys are headed next

because I know that there's like some there's more ZK uh components being added in as well as more of yeah this push towards decentralization I have a bit more of a broad question which I I know that you've thought about before right now the gas fees on ethereum Main net L1 are relatively low I'm curious what what is your what does the base sequencing uh model look like in a in a world where uh ethereum gas on M net is like consistently like 60 80 100 gay and you know the cost you have to pay for Block space is is more expensive how do you kind of adjust to that do you do you just uh post less um blocks or do you have do you have to increase cost or

like how do you kind of adjust that I actually hope the gas fee uh the gas price on ethereum uh go up so right now a lot of D5 still um see ethereum as the best place to for user to trade right Unis swap things like that so we need to force users to go to layer twos I think on layer one we should only see rollups or maybe oracles using uh ethereum uh all the other users they should all move away to layer tools um that would be fantastic right um so if more people goes to ler tool then of course we will make more money

on layer to and then we can pay uh the ethereum as the settlement layer ethereum will be the the the settlement layer not the application layer so uh so right now still a lot of people can afford transacting ethereum because those are like ogs they don't care about like $5 transaction fees right but $5 transaction fee $10 transaction is is it's abnormal it's it's not right it doesn't sound right right um so I hope there will be more layer tools to squeeze user away from ethereum to layer tools yeah so I'm not worry about that I think I I want to see that happen so uh the more the more expensive the the user

will feel like hey let's wait or let's just transact on tackle other their TOS so this feuture of ethereum that you have in mind is literally just for settling other other faster higher throughput chains onto ethereum and paying for security rather than like pretty much anything else I would say so otherwise this ethereum layer one plus Layer Two they will not scale if user can still compete with layer twos to buy block space on layer one then you know layer TOS are not paying enough right we need to pay more to uh to let the transaction not affordable by users that's normal right now it's not normal yeah and and then if there's more

rollups then the basically we need more rollup settle into ethereum which I think we're getting to like this app chain thesis this this uh rollup thesis this every app will be a chain idea we need more data posting to ethereum um which would get the which would make the block space in higher demand higher gas fees you know forcing the users off into these roles which would more or less fulfill the rollup Centric road map and that theoretically would have a consistently positive impact on eth the asset because of the burn and because of of these other kind of mechanisms which have been baked in so um how long until you think that we get to a world like this is it like a years away is it like a decade away like like what and like

what would have to happen I think maybe like five years will be sufficient to to make layer one expensive enough that user will only real OG really like will they they still say hey my asset are better secured on ethereum I rarely transact but I want to pay more fees just be there right it's just like big some banks I'm not familiar with with the Wall Street but um like if you are really wealthy you don't want to keep your money in a small bank right you want to go with uh chase you want to go with welsar or something like that so if you are you have enough asset you say just keep it on ethereum

that's totally fine but most users should not they should just move away right so I think five years is good enough uh if tomorrow someone say hey I want to build a layer tool if it is still centralized I don't think it's sexy enough really uh no matter what kind of proof you you use validity proof or fraud proof ZK or no not ZK if it is still centralized permission it's just not sexy you know no matter what you use so I would say um there will be more base roll up coming up very soon uh actually we have uh people talking to us say hey can we use your infrastructure to set up a chain for for my app because uh they

have a very successful app and they are considering to launch their action using a base rollup protocol so I I think people see uh the permissionless the charm the you know is it's cooler right although they know it's more expensive but feel like this is the future that uh you know optimization can can happen is still possible but if you build a centralized sequencer and you want to decentralize it it's it's hard to be honest especially when you are making a lot of money every day is really hard but if you are permissionless from day one then by Design it's permissionless you just need

to optimize prop performance I think that's easier so that's I think I think Tao's approach um has its benefits um yeah okay so the the idea here is that uh you know even though the centralized sequences are making uh quite a bit of money you think that they will transition over to decentralized sequencers or based sequencers because security and permissionless is more valuable than the revenue I don't think everybody is on the same page I mean if you operate if I operate a centralized sequencer I make like 10 million5 million dollar a year

maybe even more if I try to convince the you know the team to to go based not all people will say hey that's a great idea and some people will say let's do that let's tell the community that we are on it right but whether it will happen next year or the year after that people probably don't care I mean they don't really have strong incentives to do that but of course if the founders or the core team they have the their ideology their their they want to do something to like as a personal achievement say I build something totally quol and I don't really care about financial uh uh you know return they can try but you know as

a team is you you want to align everybody's interest so if if if if the founder can convince himself or herself to do that not the team may not follow so I'm saying it's it's hard and especially you feel like hey this is actually a pretty good business model right why why shut down your own business I mean why don't you just invite invest in in another team say hey go decentralized do that right and keep this Revenue uh uh stream so it's I I think it's hard even thinking in this way it makes you it makes you like question some of the designs that that uh that what we're seeing I mean always exciting to see e

experimentation but to me it feels like this like this base model is is the the closest thing to like ethereum alignment as possible basically uh in terms of really sticking to the core EOS and utilizing ethereum for sequencing um so yeah I'm I'm I'm gon to be curious to see if you guys can spin up like some sort of like stack where you can help other people launch base [Music] rollups cartey is your home for app specific rollups at the Forefront of developing new tools tools and platforms that enhance the capabilities of blockchain Technology ctei enables

applications that are flexible and built to scale build on a full Linux environment and use traditional software libraries but in blockchain development go to cars.io that's cy. to learn more about building your own app chain today we don't want to claim hey this is the best design uh we we want to show people hey is possible I mean base roll up as a solution is possible and if they want to study our code and you know uh try to clone the code make Improvement we are we really welcome to them to do that but we don't want to say hey this is the best thing we have you know um let me try to sell it to you right no no

no no that's not what I'm saying but yeah I from perspective you can't do I mean not like a like persuade right like like P go this you know um we are totally open for I I think I hope to see more people uh come up with different uh base roll up Solutions and we we try to learn from each other um yeah at least Tao is what I'm proud of is Tao is something different so that's good enough for me um if I think one one thing about ethereum is all the layer tools are different right so that's that's good for ethereum as an ecosystem because

even most of them fail if one is going to be uh successful and you know people can just learn from it and then improve so hopefully Tao is something people say Hey you Tao 10 years ago there's something called Tao and you know that'll be good right yeah I I think um something that that a perhaps like a a constructive criticism or some friendly fire that you guys have been Fielding is that you guys like Tao is is is known as like this base rup that utilizes ZK but in the current in the current state it's it's it's not exactly using ZK to the extent that you guys would like it to maybe we can talk about this progression

towards uh using more and more of like this verifiable computational ZK proofs and how you kind of see that playing out um over the coming years So the plan is to to launch DK um in Q3 um we used to work with psz ebm under code base but uh writing circuit is really challenging to be honest and I don't think it's even like scalable if we had have new featur we want to add something it's just take too long to write circuit and make sure it's it's Spar free so now we rely on DK VM so we write a a stess tyo client and we run those client into

that client sorry that CL into to uh dkbm so right now we are we have a deal with uh risk zero we also uh have a deal with uh um six synct like sp1 so we will probably try those two uh provs in Q3 but not uh have a 100% coverage we are not going to prove every block with ZK because ZK VM are still very expensive so we will probably have probably have um partial coverage but uh type uh protocal design we call it based contestable ruup in Sy you don't have you don't have to get 100% ZK to make it make sure it's is secure you can have

90% sdx 10% ZK or even 5% ZK right as long as you know we have enough time for people to challenge or contest uh lower lower tier proof which is SX and then reprove the transition with with CK so it should be fine uh so the yeah so we take the blame I think uh it's fair to say because some some time ago we say tao is a ZK roller right but right now we we we say tao is just a rollup it's a contestable rollup it's different from it's it's different from ZK pure ZK rollup it's also different from optimistic roller because we don't really uh have any fraud proof at all what we have is validity proof different

te so um um some websites the title is currently label as op optimistic rollup which is not correct yeah that's what I was saying like yeah yeah so it's it's okay because uh this design is actually as I said different from ZK and optimistic so they don't have that category uh and with our next Milestone the uh the other network we we we try to launch it's still another Beast so it's not in either optimising rooll up or ZK rooll up so probably they want to come up with some different some other labels yeah yeah yeah we we've spoken before about this hybrid model and how the

contestable nature happens when there is a dispute and then you can resolve that dispute with a higher validity proof in this case uh incorporating ZK into that um you keep alluding to like this new launch like this other network that you guys are going to launch could you kind of like tell us more about that oh uh it's our plan to to launch something we call bbr or a based booster rollup so that's something we shared uh in the ethereum research uh I think as a blog post um so our Focus was on uh this BCR based contestable rollup but for now we have Engineers available to work on the

bbr uh stack so our uh CTO uh bra is optimistic about the time to launch the first uh testet so hopefully it will happen later this year and ideally we can launch something on on ethereum midnight uh in about uh one year and a half so that would be the second main night um yeah so uh the the protocal itself the the bbr protoc itself is not ready to be honest so we can um we still need time to review the design and make sure the implementation

is good enough um yeah so and and and this network is still coming out of uh The Tao team and so I'm curious now about the incentives amongst all of these you know amongst these networks and and amongst the the participants in these networks you know the Tao token launched at the same time as the Tao main net could you could you talk about why it was important to launch the token or why it was necessary to launch the token at the same time as mainnet and then talk at a high level about the the incentive structures at play between these networks uh so basically the btrr bbr those two network will share the same token uh their

tokenomics design will probably be different um I don't know yet um but the the bottom line is we are going to share the same token as the governance token and also the utility token for uh for uh BCR the the reason to Launch wants the token as soon as possible or airdrop the token as soon as possible is to make sure that if someone want to try to prove Tao blocks uh they have something to use right otherwise they have to borrow things from us um so that's one uh important reason uh as I said you know we we planned to uh to make sure this is a permissionless network so if people don't have token and we have don't have token actually we uh as as a

the core team we don't have token Li liquid token at all we only have lock up token that can be used as the in the proposing process uh we need to make sure our partners they can receive some air job so they they can use the token to to propose blocks to to join the network um so yeah so [Music] so this even this airdrop is is um is planned a long time ago we we know we are going to be uh you know permissionless soon so um yeah so I think the token is something that we have to distribute to people uh to let them to try as we kind of come to a close here I'm curious exactly outside

of kind of this uh bbr design um you know what you guys are or what what you're personally most focused on within Tao for the rest of the year um and kind of what you would like to see from Tao as a as a ecosystem as a team as a chain um so I'm still uh going to focus on the BCR mainn night this current midnight to optimize gas cost to make sure we launch a doll as soon as possible so those two um things that I'm going to personally work on I also want to make sure you know we we reserve like um almost 50% of tokens um for ecosystem I need to make

sure those tokens will be distributed in a fair way the the air drob only account for like 5% of the total Supply and for the next year one year or two we are going to air drop like another 10% of the total Supply based on unchain data unchain stats so people use the chin more often um they will earn more Tao token so uh we are going to uh reward deps we are going to reward user we are also going to reward like proposer ands with main night I want to make sure that's um that's fair you know uh everything is verifiable on chain

um yeah so so those those three things are probably my current Focus yeah well Daniel thank you for coming on always a pleasure and uh congrats on the successful launch looking forward to some of these iterations coming out and also just you guys pioneering the way for Bas rollups and really really seeing if that's going to catch on Big Time with more and more Builders so yeah thanks for coming on Daniel and always a pleasure thank you Andy thank you Robbie it really nice talking to you again