Why Solver Rebalancing is An Untapped Market For The Intent-Centric Future

Transcript

I clear is now a rollup itself so a roll up to help rollups so what we've seen is that the projects that have done that have not really lost it but there's no exit from there's no there's no I don't know how you going to take that what's going on guys welcome back to the rollup today's video is from Singapore where I sat down with arjent bani of Everclear formerly known as connect to talk about why solver rebalancing is an untapped Market in the intent centered future we talked about intent based Bridging the challenges of cross change interactions and transactions and how Everclear came to the idea of building out the clearing layer we talked about the future of solving for longtail chains and the opportunities there that we've been harping on the impact of AI on Cross

chain transactions as well as the new token model which is a voting bonding model for ever this is a fun episode and Arjun is a very well spoken and deep thinker I enjoyed this 45-minute conversation think you will as well let's Jump Right In after a quick word from some of our awesome Partners welcome aboard on our journey into the singularity this is the endgame roadmap for frax and fractal the new L2 out of the frax ecosystem that is totally based on fractal scaling frax the modular L2 blockchain built by fra with modular and fractal scaling in mind fractal scaling is based on the mandal BR set of fractal

IM and it explains how l2s become l3s and the entire app chain life cycle goes through its Evolution the FRX ecosystem is made of some of the top builders in the space and has stemmed from its OG days of the frax stable coin it is now in the LST space the LRT space and this frax L2 joins the existing Suite of frax products including fra Swap and frax lend you can see frax fairy the bridge to go from any chain arbitrum optimism or main net into the fra main net Bridge

your tokens and bring your FRA assets into the fraxel ecosystem join today to get the best out of fraxel you are still early join today take part in our Expedition into the singularity welcome to to the ignition Mantle's newest campaign to liberate the growth power of Bitcoin fbtc ignition has officially beun with a total token supply of over 2,000 fbtc with a tvl of over 150 million right now you can go on the fbtc website to see all of the featured campaigns saking opportunities and liquidity pools where you can utilize

fbtc on chain today for some of the best yields available on l2s the ignition Sparkle campaign can be found at fbtc ongoing dampa wow welcome to Singapore yeah crazy to be here my first time mine too dude that flight was insane where' you fight I fle from Florida I got it Monday morning 6:00 a.m. straight to the podcast studio just didn't even know to have nothing yeah oh my God I flew from Portugal and it was like a Portugal to UA UA to flight which is like a full 22 hours of traveling which is it was intense yeah it's been great though actually yeah I mean I I've been in

token London in like 2022 and I thought it was super commercial actually FTX went down during that event and then I was turned off my token but now I'm back I'm like okay it's very good to do kind like BD and chat and know historically I've been kind of aers to token because it's always had this like reputation of being like very sort of like institutional VC like and then also unfortunately like chill focused um and uh and i' I've been like really pleasantly surprised it's been a lot more Builders it's a lot more like like quality here right now yeah it's been good not M event me either I saw fomo group or something there and make some I don't know there's always something going on there who knows but um congrats on Main that though right thank you so

much yeah ho it's been a while it has yeah I mean it's um there's always like I guess like when you when you start kind of working towards getting this stuff live like there's always you go from like this research period to where like things are super exciting because you're like constantly discovering new things and then eventually you get to a point where you're like okay we know how this should work we know like what Market we're going after we know all of these things and then you have this like kind of frustrating period where you're like okay now we have to go build it and that's always frustrating because like you know you're you're suddenly in this place where you're like okay like we're kind of in limbo we can't we can't get any new market signals we already know everything we know about about like

about this thing we just have to just have to wait and and like it's it's always like a stressful experience because you're like well the faster we get there the more we can like the sooner we can like ship and the sooner we can start getting feedback again but like um of course like because it's crypto like the faster you get there the more likely you are to make mistakes and things of that so like there's a there's a bit of a trade-off space around like okay how do we make sure that this is done right um while you know not ending up in the pitfall that many other projects end up in which is just like taking two to three years to get anything out of the door yeah I realized I said it's been a while and I didn't know how you were going to take that

yeah I mean it has like we first um we first had the idea that kind of contributed to basically the Ever Clear design like almost a year ago like November of last year October of last year um and then the like the design itself the kind of key breakthroughs like that ended up being the design happened in like March yeah um and so it's it's like it's been a process like it's been like and you know there's several like maybe almost like six months worth of research before anything else uh that went into like how exactly should this work and even even after that on an ongoing basis we've been like working really closely with a bunch of like data scientists and things like that to model out okay like under what conditions like what happens under different conditions in terms of system performance like what kind of pricing

should people expect like what kind of weat should people expect because again like you you're kind of like marketizing liquidity across chains and like the Dynamics of that are up to the market right like whenever you Market marketize anything you can't you can't know very precisely exactly how it's going to behave but it's cool because then that means it can respond to a bun of conditions too yeah so let's talk about kind of what midet means then you know you alluded to Market this this kind of cross chain uh ecosystem that is really expanding now I mean it's I think you know back when Ever Clear was Conex it was maybe like a couple l2s a couple chains and and now it's like I mean the amount of of solving necessary for longtail chains is just growing exponentially I think I think we have a

couple hundred rollups now Ever Clear is now a rollup itself so a rollup to help rollups so T so what is maget from the tech side from the problem space the design space like what is this mean now that mayet is alive for this Frost sh ecosystem yeah um so you know if you're especially if you're you're kind of a newer person that's like tuning into Ever Clear for the first time you it might help to kind of know a little bit of the context behind the project um um so before before ever CLE before we kind of rebranded ever ever was called Conex um Conex is a fairly older project in the space probably one of the oldest projects still surviving at this point um um is we were sted in like 2017 era um and uh and we'd always had this Focus around like scalability research and

interop like basically from their interoperability there two sides of the same coin um and in 2021 we were very very lucky to kind of like happen upon be the first real organization in the space to happen upon this idea of intend R RM um and it was just sort of like a natural like evolution of the work that we were doing in scalability in the past um and uh and it's awesome to see the way that that has gotten just picked up the realing space it makes sense like there's there's just like inherent limitations to trying to get like um like with the the traditional sort of like bridging model of like trying to get some like validator set or some multisig or some you know ZK proof to like validate some for validated transaction that costs money ultimately like you're paying for security in those

cases right so um if you're doing like day-to-day user transactions you can't afford like most users cannot afford to pay the actual cost of security there um projects subsidize this because they have to but like most users cannot actually pay this um and so we kind of happen upon this idea of like intents where within within intent what you're doing is you're not sending arbitrary information across chains what you're doing is you're doing almost like an toomic swap you you're sort of like you know you might for instance be a person that is like uh that wants to you you have like funds on arbitrum and you want to get them over to optimism and I can be like a as a solver um or you know like effectively like a market maker or effectively somebody that's just holding funds on optimism um and as long as you

tell me like hey I I want my $100 on optimism um and I'm willing to pay like a fee for it I can just give you like $99.97 or something like that on on optimism instantly um and the nice thing is like you can do this in a totally trusted Ser like I you get your funds right away in like in the case of things like a cross it's in like seconds right which is incredible user experience um you pay almost no fees um and uh and then your funds that you have deposited in the protocol only get unlocked after I prove that I have actually given you funds on optim which is super cool so like you have you have the maximum amount of safety I take on a bit of risk in that like I need to like not risk but basically I need to know that you've

deposited funds and I take on a bit of risk that like there's no like reords or things like that but that's as a as a as a as a service provider like as a business it's sane for me to do that because like um because like I can I can account for that um The Challenge though and and this is this is very specifically the problem that we ran into with with like building our intas for is like I as the solver um what's happened for me is that I have given you money on optimism and I'm receiving your money from whatever change you came from say for instance it's ARB see ARB is like a fine case what if you were coming from like DJ or if you were coming from some some just like totally random L3 that like nobody's ever heard of well

now as a solver as a as a person that's like trying to actively provide liquidity my funds have ended up somewhere totally random so I haven't you haven't like gotten rid of bridging you've just you've moved the onus of bridging from you the user over to be the solver right but now I as the solver have to deal with it um and what we realized when we when we were doing this in like 2021 2022 was we we like started scaling out this like intent based system um we grew to like maybe I think about like 50 solvers which is pretty awesome at the time right we were working with like sticky service Riders like funds a bunch of other people um and it had about $50 million T so everyone was averaging about $1 million T um what we found when we actually like

looked at the data was of the $50 million of TBL maybe like 2 and a half to five was actually theed everything else was just sitting around because the solvers were like okay I either don't know how to rebalance because I don't know how to get my money off this chain because there's no infrastructure there yet um or like it's just too painful and I don't want to think about it or it's too expensive right it's just like I don't want to have to like Bridge back to ethereum and then Bridge from ethereum back to this chain like it's going to cost me more in gas than I've earned in Fe so um and uh and we kept running into this problem like we keep every single time we try to like make intense work we keep like iterating on different designs and we kept running to

the same problem where solvers were like yeah like I have to actually actively manage this Capital um So eventually we we kind of realized like okay this is actually the problem this is the real thing that that we need to think about um and we spent the last like 3 years really thinking about that problem um now you know initially we were kind of building a solution to dog it for our own intent protocol but uh you know something really amazing happened about a year and a half ago where like um everybody started to realize that intents are actually this is the right way to do like Fast cheap cross chain interactions um and then Unis swap X's paper came out and like once that happened we just sort of were like okay everyone is going to do this and that's and that's basically what's happened

like every single just about every single Bridge today is like pivoting into intense um there's like a few exceptions but generally speaking most people are realizing this is the optimal mechanism and then many dexes like uh you know like Unis swop um Dex aggregators like 1 in um they are all heading towards intens as well because they're realizing the future of trading is also going to be cross chain right of course it has to be it just has to be on every chain yeah um and um and so we kind of saw that there's this there's just this problem that we were facing and everyone was going to run into the same problem at some point any protocol that wants to run s inted inter exactly so that was kind of where the ever Fair idea came from like it about a year ago we were like okay we trying super hard

to solve this problem for ourselves we spent years researching it if everybody else is going to run into this as well maybe this is actually the thing we need to be focusing on because like we can't accelerate intent adoption unless this promise solve not just for us but for um and so Everclear as a system what we so we we spend a bunch of time thinking about like how do we solve this problem um and what we realized was like well the problem is really it's it's an economics problem right the problem is just like rebalancing inventory is like operationally difficult but it's also just like two Capital intensive it just costs a lot of money especially if you're like a smaller solver with like like 100k or 200k right um a user makes 100K transaction now you need to rebalance your Capital like so you're

not really getting a lot of like fees before you have to do that operation what we kind of realized was like well this actually SK skews everything strongly in favor of really large solers this why today like you know we there's this like meme around like okay well winter mut is basically solving all these things and that's not exactly true like there's actually more people that are running solvers or some Indies things like that but like the reality is like yeah in the cases where Winter mut is participating like they're dominating because they have hundreds of millions of dollars in capital and they have a team the literal business is built on this idea of like man Inventory management right um and so how do you compete with that as a as like an indie solver that's like just a person running some infrastructure and like manually

rebalancing music Bridge you don't um what we realized though was that like if everybody's facing this problem right what what is the benefit that winu gets from having lots and lots of capital they basically do this thing called medic where it's like I have $100 million on a bunch of different chains I I've like facilitated $10 million of volume from here to here I can just kind of sit on it and not rebalance it because and then just hope that like at some point in in the future like there's going to be volume going the opposite direction because you have so much money it doesn't really matter that much right um and the you know what we've kind of realized was like well this sort of thing happens all the time like you have flows going in opposite directions canceling each other out a lot and we

when we we like pull data for this you realize actually it's like on a 24-hour rolling basis it's like over 80% of flows just cancel each other out completely and so then that begs the question of like why even rebalance right why rebalance all of that money you could just rebalance 20% instead and it would be fine if you could between solvers right um and that is the the kind of key idea behind Ever Clear is ever CLE is this like it's not a it's not a bridge um it's kind of like a bridge you can almost think of it like a bridge but it's a it's a very very targeted system that allows for solvers and also market makers such exchange basically anybody that is moving large amounts of funds between chains to coordinate with each other to settle the the like transfers of funds between

chains in a way that it's provably optimal right uh and uh and I think something that's really important here to understand is that concept of netting which is like if I'm sending you know uh like good example like Visa right so like visa when you do card payments um Visa like you know executes those transactions with with like the merchant so like that's kind of like filling your intent right you're like I want to buy these groceries Visa fills that intent and let you buy groceries and then and then you're on the hook to pay money later and what visa does is they take all the transactions that happen in a period of time in the world and they like bad they like net them against one another they back them down um and so what they're doing is they're taking like millions of transactions that are

going from like Bank of America to Chase and there millions of transactions that are going from Chase to Bank of America they're turning those into like two transactions you know one final sum of value that's going from B Chase or F you know I mean I guess really one transaction right um and then they're giving instructions to both Banks to be like this is how you should update your account yeah um and that is just that is just how actually all Financial systems work and there's a good reason for that right it's so much more efficient to just settle like one transaction then rather than Millions um that's kind of where ever clear sits now what you noticed is as this Market has expanded we've and as we started to talk about this more and more people have just come out of the woodwork being like yeah

actually I I kind of have this problem like we we're trying to deal with like like lrts for instance right a lot of the lrts are trying to uh enable the ability to restate from anywhere but all the restak infrastructure live on ethereum if you're an LRT project and there is like millions of dollars sometimes tens of millions of dollars of capital a week that you need to move from L2 to L1 do you want to put that through the conical Bridge ideally not right because like if you put it through the bridge this is eth that is like outstanding that's technically backing your LRT um but if if you're if people start selling your LRT on on amm or trying to like exit the exit their positions um all of a sudden that eth is technically still locked up right so you can you can actually just dpeg these

assets if if they're if it's just in the bridge for seven days um and so ideally as an LRT you're you're you're getting a much shorter time right you want within like within a few hours ideally you're going from L2 to L1 um but because these are like big you know 10 mlion Bridge transactions you there's not really any bridge that can even service that today right um that is something that is like uniquely soled by ever right like ever CLE with ever CLE like those LRT products can say like okay I have $10 million of flow I need to move from L2 to L1 and when there are users in 10 protocols or really anybody else that is like moving moving flow from L1 to L2 those things can cancel each other out and the LRT protocols can get you know $10 million out at almost no like almost

zero cost which is kind of crazy yeah yeah so I have a lot of points I think the most pressing one to make and to ask you about is I was on a podcast with Jim from Catalyst and he basically made the claim that uh one of the biggest opportunities right now that's still the Wild Wild West in onchain crypto is being a solver for some of these longtail l2s and l3s where there are more Niche markets that aren't really currently uh being filled up by the winter mutes the ambers of the world so there's kind of these opportunities to get this APR and I think he quoted and I'm not going to quote him but somewhere but above 20 20 to 40% uh potentially right now on some routes over the course of a year annualize of course you know as things as things mature that changes

but basically there's this opportunity and no one's really doing it so I have 20 grand in eth usdc every clear is on Main net and now I want to go solve using something like colani or using some sort of like ux that I can kind of like uh make this solver like I really understand how do I take my money how do I go solve l 3es l2s how do I use Ever Clear like do I need to be like super Dev focused how do I how do I become a solver is like a question that I could getting and now it's like how do I become a Sol with Ever Clear to take advantage of this opportunity that is here in these long tail chains yeah for sure so I guess first off let's let's talk a little bit about long CH chains because I think there's there's a lot of

really interesting stuff coming out like about long kill chains that I think I'm starting to think about a bunch so the current Paradigm right is that there's like and and this has been the Paradigm for a little time is there has been there's like a a set of you know 10 chains that have a lot of tvl that are worthwhile to be on as like a as like any sort of like service Rider like as a as both an exchange a solver a market maker whatever um and um and you know it's it's sort of the same as like what what happened like in you know 2019 where everyone was like yeah there's one chain that everybody wants to be on that's ethereum like why would you why would you go anywhere else right um and um and we we live in this Paradigm partly because of this issue where it's

like it's hard to just like go and support many many different chains and because there was not a reason to just copy paste more EDM compatible chains or more general purpose chains personally very bearish on general purpose chains going forward um what's happening now though is that there's a shift in the space like big applications even on the big general purpose chain like on arbit for instance right like the biggest applications are leaving to create their own chains everybody's realizing that verticalized which means like you don't have this like Noisy Neighbor problem of like oh someone else is running like a Ponzi scheme on the chain and all the rpcs go down like that that just doesn't happen anymore which is awesome um you also get to capture sequence reviews um and then you get like 100% control over us exp I'm learning that like the economic

stuff is like is powerful but it's like the customizability part is is is becoming like the most powerful yeah like uh you know persuasive angle for this idea exactly are just AB specific sequencing stuff that's happening now as well where it's like you can still be on a general purpose L2 and sequence yourself and like these like Glo uh local consensus mechanisms and still get the revenue but it still be on the L2 which is I'm still kind of battling with you need to go on all that that's the ass Paradigm yeah but uh but yes generally agree and this is how these longtail chains come about longtail meaning like newer less CV less notoriety less Bridge infrastructure all this stuff and look like for what it's worth the things you should include in

that category will be things like a chain right and things like FR and like yeah like exactly like dydx like Unis swap when is long tail L2 so like at a certain point these things are not going to be long tailmore they're going to be the actually value right it's like like arbitrum one will become a longtail chain if all of the major ABS leave and go and build their own chains and and that's fine that's like it is right that but that's that's like what arbitr ecosystem wants because or chain right exactly like that's that's the end game for them right so um yeah like that's that's I think that's a that's an important change that is happening in the space that I think like we we sort of are not doing enough to account for because everybody's mental model is

still like stuck in this old Paradigm um and that actually is is that's why I actually really like this question of like how do I solve for longtail chains I I completely agree with Jim like I think like there is there is a decent amount of value that you can get from solving for longtail chains right now um a big part of the reason for that is that a lot of these like longer taale chains they're like very heavily incentivized to get people to solve for them they like pay you to be there yeah yeah Jim said just like hit them up exactly they will literally be like please like take our money just like fill transactions to my chain I need to onard usar right um and uh but like I think that this that that's going to grow quite a bit as well it's not just

like oh this is like a niche thing where you you know there there'll be a small amount of volume and like it's it's like it'll get you know over consumed and tapped out very quickly it's like we're going to continue seeing this over time every but I still I really strongly believe that like we're going to most things most applications will just become um then this brings up this question of like okay well how do I then solve for these longtale ecosystems right um this is actually one of the things that ever really uniquely enabl so like when you're a solver like say you're in independ protocol we we were in independ protocol right the big big problem we would always run into when we were expanding new chains was like okay there's just like added coordination overhead once you get to a new chain you

have to figure out how am I going to provide a good experience to my solvers to be able to rebalance to that chain that was like the biggest blocker that was getting that was stopping us from getting places right like we tried a bunch of different options we had these like liquidity pools on each chain that we were using to like rebalance solvers but then then that meant we had to go boost up liquidity on each chain um we had initially just sort of been like no you know what like we're just going to let them figure it out and then we would do that and then they would get stuck there and they' be like hey this is a experience they would then stop servicing the chain then we'd have we would have to stop servicing the chain you know so like that has always kind of

been the blocker and like I you know you go and you talk to the 10 based protocols today they are scrambling to figure out ways to be able to expand more quickly by fixing this problem specifically right and so with evercar the idea was like okay let's create this like base like rebalancing liquidity layer and if you have this base layer um that is largely like open right and uh and this kind of D Tails into our new kind of token model announcement that that talk about in a minute but um if you have this like longer like this like base layer that is largely open um ideally eventually completely permissionless then chains can go and just like press a button on like a roll up as a Sur r or something like that get you know get Ever Clear um and then Ever Clear once ever clear is there it

becomes really easy for any intent protocol to just go and deploy and once an intent protocol is there you can go and solve right um uh how do you run a solver for these ecosystems well like right now you are bottleneck by which you know it's like if you're if you're solving for a cross you're bottleneck by the chance that a cross is on but if a cross is then able to expand into any ecosystem really quickly they can make it permissionless too right they can just be like look you can anyone can go and deploy across if you're a solver you can go and deploy across yourself to a certain chain if you want to be there and like if ever clear is there too it's sensible for you to do that yeah so if I'm like so if I have this this capital

I need to run some sort of program or something to be a solver for a cross or to be a solver for yeah like like what's the it's you're running like an like basically infrastructure you're running like a a like a solver is like a Noe right you're sort of yeah exactly you're sort of running it's almost like it's actually like in some ways like aside from the Capital Management um it's actually like easier to run than like a sticking validator because there Val but like what we need is a ux like be able to spin it up and I think that's what that um col team is kind of working on exactly like once we have a solver as a service like up as a service and I can just be like conect my wallet with the capital choose the routes that I want to

solve for and then press go and pay them a little bit of money to like upkeep it yeah I mean yeah the amount of usage on Ever Clear would be massively massively skyrocketing and then also the yeah exactly that whole Market just blows wide open I mean we we actually kind of experimented with this because again we were we were sort of like when we when we when we first were going we like our bottleneck was liquidity and getting to many chains right so um we were we were simultaneously trying to like solve this problem of like rebalancing and then in parallel we were like okay let's make solving super super easy and so we we kind of did a lot of this where we um for like the V1 of connect we were like okay let's just make it so that's like setting up a

connect router which what we called it at the time solware terminology just didn't exist um setting up a router we just make it like a push button yeah you know and like we we had this like very very simple flow where you just basically like push a button um you know like set up like a config file push a button and then like it would just deploy and you would just like put in your key and and it was ready to go um and we and you know we it unfortunately was not that easy because of the rebalancing piece because of the inventory management but on testnet when we did this we were we opened it up to like the community and we were like hey guys like look like incentive I tnet also like in in general separately from incen tnet just like try running this

infrastructure and see see if it works great we had like we had like 600 people run run solvers yeah it's insane that's like like 10 times the number of solvers in the entire space right yeah it feels like the opportunity is going to is going to like like the apy and the yield is going to dwindle but the experience for like I think that's like I think the current Paradigm like let's let's you know get this yield let's be the first ones there but once that kind of uh gets more mature and even out we'll we'll just see more Niche routes being filled consistently and then I think like I'm starting to put the the like the vision together in my head how if we have a a wallet experience without abstract something like a particle a Zion a GIC Mir any of these wallets right these

kind of like chain abstracted wallet yeah interfaces or count abstraction in your faces that with the a intent based operability layer underneath powered some in some capacity by every clear amongst other solvers is like boom you can go anywhere any chain any app anywhere any kind ofuse very quick very cheap without even really like needing to even think about a bridge because you're just going to the apps and the wallets and and it's just moving and you have so putting the vision together in my head but the question now it's actually even more like fascinating than that because like um and I I've actually been talking about this a lot here a token and and I'm probably going to start being on a soapbox about a lot

more but I think people are really underestimating like what the impact that like AI is going to have on this okay uh because like when you're when you're typing something to chap jpd what is that that's that's an intent right you tell chap jpd like hey help me optimize my portfolio um right now I can give you recommendations on how to optimize your portfolio but you have to go and execute it yourself dude we're going to get to a world where you can literally have an agent you can be like and yeah you're just putting in ch ch G is like cool um I can optimiz here here is my recommendations if you agree with these recommendations I can broadcast this out and then broadcast it out as an intent and then other AI based other basically AI based solvers are just like yeah you know you want to do these like

extremely complex operations that are like Swap this asset Bridge it do this here then deposit then take the take like the the D you know like all the like y curve whatever like the the same kind of like extraordinarily Ponzi not Ponzi but extraordinarily like looped uh like compx yeah multi-step transactions yeah all the stuff that right now it takes like Sor autism to do on your Ledger and then you're like bridging you're switching your network on rabi and like exactly yeah um yeah so like I think a lot of that it's going to blow that whole like DJ space wide open because it's going to you know it's like right now as a d gen you have to be like extremely well versed in all these Primitives to like stack them up in the right way to farm things very optimally and like an AI model is just going to be

like yep I know how to do this and and just give me a recommendation you know based on like here's the level of risk you'll get and here's the level of like reward you get yeah it's going to be interesting so ically speaking how so you guys are going and launching this arbitrum orbit chain and through gelato is is what you guys did you guys are launched launched LA today yesterday um and so you guys are using arbitrum any trust for da or have you guys made up your mind on the da side or yeah we we basically so at launch it's using a I think it's using a DC availity committee where're we're we're uh we're using Igan da but um we were waiting for the IG da arbitr orbit integration to finish we just got a message yesterday from them

being like hey this is now up and running so I think we're going to follow up on that and it's a it's a fairly simple migration cool okay so You' got now this this rollup that this shame this um optimium if you will yeah which does not matter but kind of does but kind of doesn't like in our in our case we don't need to give the same kind of guarantees that other RS do like things that we oh yeah so like so how does so how do transactions happen on Ever Clear chain like talk to me about okay so I have I'm trying to I'm a solver I'm pushing I'm pushing out um I'm moving my inventory around Ever Clear is rebalancing it how does those transactions settle what is the kind of economic model of ever CLE as well with as the token there for sure yeah so in a

nutshell like what ever CLE is doing is sort of like it's like a computer to figure out the optimal Pathway to settle like a bunch of people's slows right so like you know 100 different like market makers solvers Central whatever like they all put their money in the system and they're likeit like or put their money into like the the kind of contracts that live on any any chain and they're like I want to get to this chain or this or this set of chains with like this kind of pricing over this kind of period of time or whatever right um effectively those are those are also intense everything is kind of intense technically um and what the system does is like the the Ever Clear rollup has logic that lives on top of it that is just written in smart contracts um uh that is just trying to compute based on

like a like a like a first in first out queue of like when people put stuff into it is just Computing how do I settle to all these people based on the available comp and anything that's left over how do I then incentivize people to go in my Garb right um the idea here there's there's couple a couple kind of key points there one is all of this core logic lives a smart contracts in World why because then it's verifiable um all of these different actors that are using the system they're not I mean they're like they're incentivized to collaborate but they're definitely competitors right like I don't think like the market makers really like necessarily trust each other they like know each other and like work together but they don't trust each other um they're hyper capitalist financial institutions Mak sense right um and so you know you we have to kind

of give very strong guarantees that like okay every actor in the system is going to be paid out fairly according to the rules of the system and the nice thing is that because these are the rules of the system the entire system is described as smart contracts on this arbit m rollup if the system Mis orders transactions or basically like pays out some people unfairly that is very easy to prove okay and you can then just do a normal like rollup dispute right you can just dispute the rollup the rollup polic SL sequence or um everybody can exit the rollup using like the the arbitrum like escape hatch mechm um so that's that's like a really really valuable like piece of this the other piece of this is like the the logic because this is logic that lives on a rollup that is you know it's

TVM compatible of course it's very application specific but before because it's like living on this VM this logic can also be like changed and iterated off very quickly and we want to turn it into sort of a more broader Marketplace the long term where like there's just you know solvers can kind of opt into like hey I want to use this kind of pricing I want to use this kind of a model for settlement because I believe that this is the best mechanism for me for this use case um you know how they there's the there's been talk about rollups as microservices this is like like a very clear example exactly a verifiable micr of just a service a single service based chain like there's only one purpose here that there's one goal and like I mean as you can expand to kind of you know as you as you you

know play around and figure things out but this is like a very clear example like a blockchain that is meant to to help facilitate other blockchain interaction but it's just for one thing so how does the how does the token come in you guys just Rel an interesting model I think oh actually you know what first you're a very ideological guy you're not like in the space to get rich quick you're definitely not like a fan of of centralization and I think this is like come back to like maybe like be like come back to like bite you a bit or like maybe you haven't been as like greedy or haven't been as like Cutthroat as you needed to be at times as a founder me to just throw you on the spot here but like so how are you thinking about kind of taking care of the token

taking care of your community and like you know making sure that that this system all kind of economically flows together and then if you have any like philosophical takes on like being a Founder in the space and not like being a bit of a then I'd love to hear that too birex Edge is now live on say Network say users can now trade 50 plus spot and C markets with the unified order book liquidity of vertex Edge across arbitrum blast mantle and say the next 6 weeks 850,000 say tokens will be up for grabs as trading rewards every single week exclusively on say join vertex onay Network now on vertex Edge

that's vertex protocol.com U yeah I mean I guess at this point it's like indisputable that like I am not really that motivated by money because like you know uh over the course of being in this space for almost like 10 years there were so many other things that I could have done like uh so many ways in which like like I personally could have like you know enriched myself um um and I I think there's like a category of other people from that period that are like that too were just like yeah like ultimately what was the point of this whole Space right like I'm not really in this to like build Finance 2.0 I'm in this to like build like I I joined this space because I want to try to find ways to build infrastructure that let people resist

authoritarian governments and like reduce power of like large scale centralized web to tech companies right like I and I I still really truly believe in that like ultimately I don't like getting rich is fun but I think it's like more interesting to do these other things um and uh and but at the same time I think that it's it's obviously really important to like like to build systems and build organizations that have like positive Financial outcomes for its participants that's part of what makes these systems work right like we need to create systems of incentives that actually like help Propel this stuff forward and have it be sustainable um I think for us like uh you know part of the reason why it's sort of like taken a long time to get here is because we we've been focused on building things the right way um and I

think that that's something that you know it's it's a hard call as a Founder especially in this space right like you can you know there's ways there's certainly a lot of ways to kind of take shortcuts in the space to be able to make money um generally what we've seen is that the projects that have done that have not really lasted um and so this like whole Space has littered with the corpses of like you know like the the kind of the graph that looks like this and then immediately like that um and then in all those cases right those people like it's like the founders make money sometimes the founders make money the investors make money and like but that's it and that's that's not great you know that's that's like that's a symptom of a the exact kind of broken system that like in that exists in trafi

that we're aiming to face um um so how you going to do this yeah for me I think like a big part of our philosophy with with Connect Now Ever Clear was always like we want to build this system for the long term right you're building we're building foundational infrastructure for the internet the Internet isn't something that just like appeared overnight it didn't take like you know four years to scale to being a multi-billion dollar company it was like something that took like decades to build and that is that has been our philosophies like let's let's figure out like obviously we want to be successful obviously we want this project to be successful we want token holders to be um to be in a position where they feel happy that they aligned with the project and and they like believe in it um but at the same time our philosophy has

always been like look like we're not building for 6 months for now we're building for like 10 15 20 years from now um and how do you take the right set of decisions to make sure you still survive to that point um I think like uh you know token stuff is always interesting like there's um you know there's there's this like interesting tradeoff space where like we we kind of we know that tokens are a really awesome way to be able to drive Financial incentives for public goods um but there're also like we don't have the best models yet to figure out how to do that and so it's a lot of it is just experimentation right and with token experimentation it's like especially difficult because the right kinds of token models can like carry you and and lead to a huge hugely successful outcome

for the project but the wrong kind of token model can like either lead to just implosion of the project or can lead to just like just malicious activity right it lead exactly yeah um and uh and so for us I think a big part of a lot of this is just like really really taking the time to think through like okay how should this work let's be like conservative let's make sure that we understand very deeply how this space like um how how like the like the like make sure we understand very deeply like what problem we're solving and like how the token model can dob tail into that and not just shoehorn something in because we want to like pump a price right um and uh and I think like um the other big part of it was that we we also sort of felt strongly that this is the

ctive has to be like a collaborative effort like it needs to come from like a coalition of organizations within our community that is that are mind on this idea of like let's find ways to create an optimal outcome for like all the different stakeholders and not just for like one entity or one set of of token holders um um that's something that I I I this is the reason why I'm super excited by like the the like token model announcement and things like that so um for context basically that you this this may have kind of gotten missed in the announcement because of course main announcement is like the big piece of news but as part of this um the Dow basically voted for a new token model um called vote bonding it's entirely novel mechanism um that that sort of maybe not entirely it's it's a novel mechanism

that acts as like an evolution to like Bas um uh this model was proposed by an organization called vending machine they're fantastic definitely check them out if you haven't already um they uh basically like uh worked really closely with the Leever clear foundation and a bunch of other people in the ecosystem to figure out you know what are the different levers that are going to be important as part of Ever Clear to grow and in particular how can we solve some of the secondary problems for solvers that are not necessarily um you know just this like core issue of rebalancing because like what we realized was like okay well you know you can help solvers rebalance inventory but to your to your point right like um if you're if you're a solver and you want to go to a longtail chain you want to start solving for longtail chains how do

you know which longtail chains are the ones that are worthwhile they whole liquidity on right how do you kind of get over that initial bootstrapping problem of like I have some capital and I want to go work with this brand new chain but because it's a brand new chain there's no there's no users there there's no volume there but at the same time there's not a way to get users there without an intent basers exactly it's a little bit of a a crazy crazy situation so these chains are obviously like willing to give incentives they're willing to kind of like help subsidize that but that is also up to a point right they don't they want it to be a sustainable system they don't want to end up in a in a world where they're just paying tokens forever um and uh and so we kind of like looked

at the market and like and notice that this is this is a similar very very similar problem to like what happens when you when you kind of initially launch a token where there's like you need to uh you need to bootstrap liquidity for a token on index but there's no incentive to bootstrap that liquidity until there's enough fees coming from being generated from the decks in order to actually like have people leave Capital there right um and uh and what we noticed was like you know there's there has been obviously over the course the last few years this like focus on like Bo esing which was initially proposed by curve um and then has like had several iteration Evolutions to get to some stuff like V and Aerodrome today um and the really cool thing about that token model is it's a really effective like B2B token

model right it's like a uh it's a way to basically uh like like almost like have organizations like companies or or I guess like token issuing projects um be like B2B businesses that the that the Dex is sort of like selling to and those organizations are like uh that like provide an initial set of incentives but then those incentives taper off and that over time like bootstraps if like protocol not not necessarily protocol o but basically boost liquidity for the protocol token um against like main assets um and um there's something really powerful there um that's sort of the same kind of problem we want to solve but we realize that there's there's limitations as well um so vending machine has ort of done this really awesome analysis on like B esing and they they kind of like pointed out

all these challenges that exist with the model today um one of the big ones being that like B esing today is like fairly like inflationary thing right um it's a it's like a basically up only supply model where um all you you're like locked into this for every game where the the actors in the system you're you're sort of always incentivized to continue going and like locking your tokens um and you you're incentivized to do this because if you don't lock your tokens eventually the supply is going to grow to the point where you you just have nothing right and and so it creates this like it's like a you know all successful token all successful assets are pones in some way right like US dollar is a Ponzi uh for that reason and like and I think the um um I think like the the Ponzi aspect of this is that

everybody's sort of like playing this game to race to like continue to lock more and more to get more and more ownership but there's no exit from the system no end game there's no end game and this is like one of the big challenges that you're sort of seeing with a lot of like V escra Systems today is that like locking rates are dropping because people are like well what happened like I lock up for 4 years but then what like how do I actually get anything out of this you know how do I get out of the system um and then similarly like if it's just inflating forever like when does that end right it's a good way to bootstrap like could it and get going but like at what point does the system sort of become self- sustaining and no longer need like

continuous incentivization to to work um so that those are the problems that we thought about a lot and like vending machine had this like these like really awesome ideas about ways to mitigate where we discussed a lot of things around like you know well one thing one big thing was around like giving people exits from locks like allowing them to like exit the system like early um at a discount right basically penalizing people for exiting their locks early but allowing them to have that exit such that you know they have the safety of knowing okay I'm I'm okay locking up my tokens to be able to earn like a revenue share and things like that but I don't necessarily uh I'm not necessarily locked into that forever if I want to exit I can do that and and what's what's interesting is that's kind of already

happening in cases like fellow and eror where like those tokens are being sold they're just being sold in like a private OTC market and not public um and so so like you're just you're just kind of protocolized that thing that's already happening which is kind of cool the other thing that we we spent a lot of time thinking about was like Supply and um and ideally kind of what something that I was personally really interested in was like I think like the best kinds of economic systems are ones where you don't just have this like you know one runaway mechanism of like okay we're just going to inflate this thing forever like the US dollar for instance U you know there's there's like I like models like eth where okay like the way that eth works is fascinating right eth Supply increases and decreases to keep

up with Market the market structure so like as um if during times of like uh like lack of usage the supply will inflate in order to incentivize additional security so then so that ethereum as a blockchain becomes more robust and becomes more attractive for development to build on top of but at times of surplus where there's like a lot more fees being generated extra fees are burned um and so that you're just burning you're decreasing the supply and this is great because this this means that like um you are creating more space to inflate later if you need to and also it's great because it incentivizes people to sort of be more aligned with the protocol um um incentivizes holding asset which is which is really cool in E case um and it also also like um uh it just also kind of like changes the

economics you're just taking instead of having this like Surplus Capital flow into miners' Pockets or validator Pockets which was kind of what was happening with the eth earlier where like validators are rning ludicrous amounts of money and it was like it was like okay like it's great for the validators but like is is it really good for the ecosystem that happens instead you have this like more sustainable outcome um and so the the vote bonded token mechanism Works kind of similarly where because we have these like unique dynamics that from the fact that like you know like every clear is not like a pool based mechanism there's no like passive liquidity all of it's like active liquidity um the the um um there's not an easy way to kind of just like have people dump tons and tons and tons of capital in there like you like

you've kind of like people have been able to like capture governance in the way that you know R and other folks have been able to um and at the same time additional because there isn't going to be that kind of an outcome Revenue that is generated there is a possibility to have Surplus revenue and surplus revenue is used to basically repurchase V next repurchase bace like like uh Des Supply next to the market to create additional tokens that can then be used for future future inflation right future emissions um and so you you ideally like should have a supply curve have a system that looks more like ethereum where like during periods where we need Market expansion we want to like grow to many many chains we like ever CLE wants to like support many ecosystems and there are solvers that want to go and support

more ecosystems you might have like inflation because um uh you're incentivizing these solvers to go to these ecosystems and hold liquidity there but once they're there and they start generating Revenue because people are starting to use the system use use like use the solvers Surplus fee that is fees that are generated for rebalancing these solvers flow back into the system and are used to decrease the supply and so during periods of high usage you should actually see reductions in supply of of nextx um I think that's like a honestly that was like when they when they proposed this it was it was awesome like it was incredible I was like this is such an incredibly sick token model because it's like a like I like models like this that are kind of like elastic and changed under different conditions that actually react to the market rather

than being like this is what we're going to do and you're going to just do this to until the until the project dies basically [Music] yeah cartey is your home for app specific rollups at the Forefront of developing new tools and platforms that enhance the capabilities of block chain technology Cy 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 cy. that's cy. iio to learn more about building your own app chain

today my only last question on this model is like I don't know how you guys are thinking about the revenue generated from like sequencing transactions and being like a rup operator and how that's going to come to the system yeah um yeah that's a good question so like there aren't going to be at least in the initial phases there's not going to be a ton of like Revenue gener imagine so yeah so the the reason for that is that like the system is basically hosting a bunch of core logic but uh the that logic is not being like paid for by users right it's like the system itself is just like operating that logic on in Cycles like every Epoch there's like we have like gelato Bots that just doing this so um so the revenue that is that would be generated would actually be

fees that we're we're paying so we're basically just sort of paying it to our un sequencer so yeah exactly so yeah it's like a it's there's no sequencer fees right now now in the long term there's an argument to be made that you can actually like build more interesting things on top of this and that's something that we' been thinking about a lot is like you know like you have all if you any instance where you have like like value that is locked for a period of time so like think of like invoicing in in like supply chain right like you when you have value that is locked for a period of time that's an asset right that's like it's a it represents a commitment to receiving some money in the future you can financialized that and I think there's like a really interesting like class of defi

applications that could be built on top of this um that we are starting to think about and I think in the longer term would be something that would be interesting to to create and which can make more St exactly cool well yeah that token model sounds really interesting I'm excited to kind of participate see in the wild and also just see this go live it's going to like not going to be able to feel it at first but as the as ecosystem grows and as kind of more solvers can come online as the Shan exraction uh projects come out and just kind of builds up this stack we're gonna feel it in the user experience in the future which I'm I'm excited for so um thanks for coming out congrats on Main and thank you so much we have a fire side shot now awesome yeah I appreciate it thanks

for having me on yeah cheers