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- [00:00]
A
We scaled far further than what any L1 can scale, in our opinion. We just did a stress test on Mainnet so everyone was able to do it where we did 55,000 transactions per second. That was a mixture of univ free transfers as well as ERC transfers. And while that was happening, we were allowing users to play low latency games across the Fluffle with zero UX trade offs. Now this is only possible because we've chosen to build Layer two.
- [00:34]
B
Bankless Nation. I'm here with Namek and Lei Yang of Mega Ethnomic.
- [00:38]
C
Lei, welcome to Bankless.
- [00:40]
A
Thanks for having us.
- [00:40]
D
Happy to be back.
- [00:42]
B
All right, so some pretty interesting times to be a Layer two on Ethereum.
- [00:46]
C
This is, we're quoting the day after Vitalik released his Layer two tweet. A big moment to say the least. When you guys saw this tweet rocket around Twitter, it got so big that basically everyone on crypto Twitter was commenting on this. What was your reaction to it? Namik, I'll start with you.
- [01:04]
A
Yeah, I mean, thanks for the question, David. I think it was honestly a validation of our point of view for a while. We're called Mega if we love Ethereum. I mean, I gone to crypto because of eth, so it has a special place in my heart. But the reason why Mega uses Ethereum is not because of like, you know, fanboy ism, but because it allowed us to build the most performant possible blockchain. Right. So Ethereum gives a guarantee of sorts. Right? The guarantee, it's simple. It's the most decentralized, turn complete blockchain. And we take that guarantee and we say it's sufficient for us to build a hyper performant execution environment that we believe can solve for an entire new set of use cases. And that's basically the relationship between Mega ETH and Ethereum. Vitalik kind of points towards that in his like, what would I do if I was an L2 today? He says he would build a bunch of stuff which is not similar to Ethereum L1. He mentioned six strings. We do 50% of them off the bat. We scale. Buzzword, but it is a word. We scale far, far further than what any L1 can scale, in our opinion. Right. So we just did a stress test on Mainnet. So everyone was able to do it where we did 55,000 transactions per second. That was a mixture of unity free transfers as well as ERC transfers. And while that was happening, we were allowing users to play low latency games across the fluffle with zero UX trade Offs. Now this is only possible because we've chosen to build a layer two. So that's one of the things we do which Ratalica described. We've also built an ultra low latency environment, something that really can't be done with a, you know, traditional consensus based layer one system. And we've decided to do a bunch of unique wacky things on the chain, which we did because applications wanted us to. That's an example is our native enshrined Oracle of chainlink. So when I saw the article slash tweet, I was happy because a strong ETH is good for crypto. I think if ETH doesn't do well our entire industry, that is smart contract blockchains, we're all screwed. And I was kind of happy because it almost meant we can drop some of the traditional alignment games. You have to use EFDA and we can try build the most performance systems we can and hopefully capture new sections of the market. Lei, what do you think?
- [03:38]
D
Yeah, yeah, it's pretty much about differentiation because to us it's pretty uninteresting to try to build and replicate exact primitives provided by the layer one. Because then first of course you face the like the question why, why do I use a layer two that provides essentially the same service as the layer one, but also it's just technically uninteresting in like uninteresting a technical sense, in like an academic sense that you are basically trying to replicate things in a much harder way in the sense that actually I think to the contrary of I think common belief, it's actually very hard to build a secure layer two. And if all you want from a layer two is kind of just adopt Ethereum security as is, then I think you are better off like building an odd layer one. I would say I would go as far as that.
- [04:32]
E
Yeah. I do think in Vitalik's tweet there's definitely some validation of maybe I'll call it the barbell approach to Ethereum and to layer twos, which is like on one side of the barbell with one heavy weight you have Ethereum and that's going to be slow from transactions per second, but it's going to be max decentralized and that's good for lots of use cases including anchoring a layer 2, but also slow defi and that's getting faster by the way. So that's one side of the barbell, the other side of the barbell you have some extreme things that do things that aren't replicating what the Ethereum L1 does, but that kind of explore a frontier in an incredible, like, in a totally different domain. And so Mega Eth seems well positioned on the barbell strategy in that it's just like accelerating a number of things. One in particular is just like insane scaling levels that the eth layer one cannot do. But I want to maybe broaden this because. So there's so much to discuss with this Vitalik tweet. I feel like, like one is just that, like, this feels like a departure from maybe how Ethereum, how Vitalik, how the community, how even at one time, Bankless thought about the role of Layer twos. It was not too long ago, maybe three years ago, there are people like Pollenia talking about how Layer two scale. There was people like Justin Drake saying, hey, like, if you're on the L1, gas fees are high. Get off the L1 and go to the L2, right? And that was. That was oft quoted even on Bankless. We would talk about, like, the scaling strategy for ethereum was primarily L2s, and the idea was like, you take everything that worked on the L1 and it's expensive, and then you move it to an L2 and it should just work. In fact, Vitalik kind of acknowledges this. He says the original version vision is, is no longer working. Ethereum itself needs to scale in the original version. Basically, we were offloading a lot of this to L2s, and that's kind of no longer necessary because the L1 is scaling. I think of this as a pivot, not a values pivot, but I'm gonna use the P word, a pivot in terms of the roadmap itself, in terms of what was originally envisioned with the rollup centric roadmap and where we are now. To me, it's a very logical pivot. We were talking about this on Bankless probably 18 months ago when we're just kind of feeling out whether this made sense or not. But there was a lot of immune system attack on the idea of this, this tweet. And you can even see it. I think some in the Ethereum community are like, oh, we feel disillusioned by this. This feels like, you know, a departure from what Ethereum has been saying for many years. This feels like wasted time and wasted energy. That's a lot of different thoughts. But that's because there's so much to unpack. I feel like with this post, it's like, you know, three to five years of Ethereum history. Do. Do you guys have any thoughts on what I Just said, do you view this as a pivot? Is it logical to you or is it more of the same of where Ethereum was always going? What do you think, Nomik?
- [07:43]
A
I think for me it's, it's a sad realization that like Moloch won almost in some ways. Right. We have to be honest, everyone has different incentives. Right. Like I remember one of these points was there's been stage one roll ups that told me they did not want to become stage two point blank. And the reason is because it was the regulatory environment, they prefer to be more centralized. And you know, it's, it's like, it's a bit of a shame I would say.
- [08:13]
E
Right.
- [08:14]
A
But I also acknowledge that we are to blame as well.
- [08:17]
D
Right.
- [08:17]
A
There was another article that came out a few days before these tweet which was like Maggie, from the depth of the stage one roll up where the entire argument in that article was hey, like so far everybody who basically disregarded the traditional value sets of like following Ethereum L2 convention, they were not very serious people.
- [08:39]
E
Right.
- [08:39]
A
They were not trying to build really, really good product. While what our team did is like we were, we kind of for saw, we forsaked some of those value propositions trying to build good ux. And so I think we're to blame as well on my end. I think it's good that L1 is scaling. I think it is a bit of an overreaction to say that Ethereum will no longer need L2s. The reason why Ethereum is cheap now is because all activity moved to L2s. But like, you know, we will very quickly get back to a world where like there's $200 transactions on e file one so we need to scale the layer one. I don't think it's as easy as like boom, it's done. But I think Ethereum and the EF needs to take Ethereum's success into their own hands and understand that L2s are trying to build businesses or trying to build products that are valuable. And I think ultimately that's what we. Where we see PMF like institutions as layer twos. Right. They like that trade off.
- [09:41]
E
Lei, I'm interested in your takes on this too.
- [09:43]
D
Right. So I think first it's a logical, I would. Oh yes, it's a pivot. So yeah, it's a logical pivot and we kind of saw it coming from the gallico of mega Eth. So we are, I mean we're not surprised at all. And to like the narrative about Ethereum Wasting the last four or five years, quote, unquote, chase the Layer two roadmap. I don't think that's valid because first one has to consider, I think, the origin of the layer two of the Layer two roadmap. I think it's really just because I think back in 2018, the hot topic about scaling is sharding, right? Remember that. And then a natural evolution of sharding is layer twos, because you can basically regard each shard as a Layer two today. And I think the original idea is that Ethereum would run and operate all the shards. And I think then the question comes, hey, why does it has to be Ethereum? Why don't we just delegate it to a few teams so that we get some diversity, some competition, some experimentation? I think experimentation is one of the most interesting thing that came out of the layer 2 roadmap, because with the roadmap, I think Ethereum started to focus on really building the substrate that can support experimentation. I don't think many people in the community kind of realized how general purpose the Ethereum infrastructure has become in terms of supporting consensus less blockchains, which are Layer twos, the da, the dank sharding, the portal dank sharding and all the upgrades and the blobs, I think they all, I think they all are like critical in terms of supporting the Layer two infrastructure. So now that the infrastructure is done, I think it's actually fine that the Layer two is kind of back at scaling itself, which I think is totally logical because you also need a good coordination layer to Synchronize all the Layer 2s to serve as the hub. But I really don't think like the pivot. I really don't think like the energy we spend on this substrate is, is wasted or something because I think mega. It's only possible because Ethereum was chasing this layer 2 centric roadmap for a few years. I'm. I'm extremely grateful that it did so, so that we can have this interesting experiment we're working with and as well as many other experiments I think that are going to come. So, yeah, I don't think it's. I don't think it's a sunken crossword in any sense. It's actually pretty good.
- [12:20]
B
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- [13:16]
F
Few people in crypto put real skin in the game when they make public top or bottom calls. The Defi Report is one of them. The week before the October 10th flash crash, Michael from the Defi Report emailed his entire newslet saying he's going aggressively risk off and sold the majority of his book from crypto into cash. This is when Ethos about $4,000 and Bitcoin was 110. Michael runs the Defi Report, an industry leading research platform built on data cycle awareness, risk management, transparency and most importantly skin in the game. We like Michael at Bankless, we like his analysis and that's why you hear him on the Bankless podcast about once a month. And the Defi Report is giving Bankless listeners one free month of access to the Defi Report. So if you're looking for some sharp data driven analysis to make better informed decisions around your portfolio, you can learn why and how Michael called the top and what he's doing next all in the Defi Report Pro. Check it out, there is a link in the show notes.
- [14:06]
E
I think I agree with that. I mean Layer twos have been massively beneficial to Ethereum and the Layer two's alignment with Ethereum, both economic security wide has been beneficial to them as well. So it feels like a win. It's just very interesting. I feel like sometimes maybe this is, this is true of all different communities in, in all areas where so social groups have a tendency to kind of oscillate like pendulum swing in like you know, too far in one direction then too far in the other. And so what was happening was and there, there was this thought within Ethereum that L2s are Ethereum exactly the same thing and that they will solve all of Ethereum's scaling problems. And that was a naive perspective from the early days of the roll up centric roadmap and we were too far on that extreme. Now what I almost see, it's some reaction to Vitalik's tweet is an oscillation too far in the other direction as the pendulum swings. Which is like people now saying the, the L2 roadmap has failed, it's over for Ethereum. This is like, you know, five years of, of wasted time and energy and the project's done and all of these things without understanding the value that L2s are bringing to the table and have brought Ethereum and all of the various ways that those have contributed to Even scaling the L1 and projects like, quite frankly, Lighter and Mega Eth on the horizon, really differentiating what they can do, I guess. One question I have for you though, to distill this for the listener, because on that other side of the pendulum swings, um, people have said things like, well, why be an L2 at all? Like there's no such thing as like L2s, okay? Like everything is just a chain. And I don't think that's true either. But in order to get into that, I think we need to, to understand the security guarantees and the property rights guarantees that users actually get when they're on Mega Eth and just help frame this out. So I'm a user, let's say I have assets from Ethereum, I move them to Mega Eth, so they're sort of rooted in the security of Ethereum. Okay, what do I have? What property rights do I have? Do I have? Because you guys are using Eigen for da, of course. Right. So it's a different type of rollup from that perspective. And then I'm not sure what your kind of your stages are going to look like once this is all operational, what the directory there is. But like say in a year from now, if I'm a user on Mega Eth, what do I get in terms of inheriting Ethereum's property rights? Do I get censorship resistance fully the way I would on Ethereum? Do I get the ability to exit my assets? I feel like that's just hard for people to understand right now in this chaos and swirl. So help us with that.
- [17:02]
D
Yeah, of course. So if we're talking about a year from now, actually you'd get pretty much almost all the important features you would have, you would want on Ethereum with the caveat that you have to trust both Ethereum trust as in trusting that Ethereum will not reorg beyond some certain depth, especially beyond the finality and also or sensory or transactions. And plus you have to trust Eigen DA in the sense that whatever we as mega ethics submit to Eigen da, they make it available for anyone to read and they kind of stand by the claim, right? So again, so we're listing the trust assumptions. The difference between layer one and layer two, especially our sort, is that you not only have to trust Ethereum but also eigenba, which I think is a pretty valid trade off because of the immense throughput scaling you have from eigenva. And in terms of then with those trust assumptions, the guarantees you have. First, the layer two cannot censor you in the sense that if your transactions are being maliciously excluded from the layer two, if you just go to the layer two to try to submit a transaction, you can always go back to the layer one and submit their transaction there and the layer two sequencer will be forced to include your transaction. So this is like the classical censorship resistance. So it's actually pretty funny because we're having this frontier stage of our mainnet and we're doing a white listing on the RPC so that we only allow builders onto the chain so that regular users, they don't make mistakes and lose money. Right? I think that's a responsible thing to do. But we always know that there is this census resistance bridge, it's live today. Right now there is censorship resistance. You can now submit a Transaction to the Layer 1 inbox of our chain and it'll be forced to be included on to the layer two. It's been live for the whole time of the frontier stage, even if we're doing the RPC whitelisting. So I've always been a bit worried that users might just submit transactions onto the layer two through this mechanism. So censorship resistance. Second, the assurance that you can always exit the layer two whenever you want. And this in part is achieved by censorship resistance, because to exit you have to submit a transaction on layer two, and if the sequencer does not allow you to do so, you go through the mechanism I just described. And then the layer 2 will be forced to allow you to exit by proposing a state proposal certifying that your exit or your withdrawal is valid. And this is achieved by allowing anyone observing the layer two to provide such certification. So even if magazine decides to disappear tomorrow, anyone else can just come and submit those certifications and you can use this certification to claim your money. From the layer one end of the layer one, Layer two bridge to Mega Eth, right? You can just take your money and also a few other guarantees. For example, your transactions will not be miscalculated, it will not be erroneously executed because there is the fraud proof system. And with that we're actually using a ZK based optimistic fraud proof system in the sense that if the chain, if the sequencer ever makes a mistake, anyone can just permissionlessly submit a proof, a ZK proof showing to a layer one contract that the sequencer is doing something wrong. And at that stage the sequencer is going to be slashed and you can stay assured that no one can claim your money that does not belong to them. Right? So these are the assurances. So censorship, resistance, guaranteed correctness of execution and guaranteed ability for you to just escape whenever you want.
- [21:11]
E
So that's a great set of property rights basically. And the trade off is if I'm willing to trust it, Ethereum, which like already M and then Eigen layer and of course Eigenlayer, that's economically secure, then I get all of the benefit of scalability on something like Mega Eth. I gotta ask the question, where does Stage two fit in all of this? So part of Vitalik's comment was like, okay, L1s, they're only going to, like a lot of them are only going to stay with, you know, Stage one. And my understanding of stage one is basically like upgrading contracts and such, you know, requires a Security Council. What is that? It's a group of parties that can collude and they can update these contracts and update the roll up at any point in time. And so if they all did that, then they could actually yoink your funds. And that's why it's different. How about in your setup like, like you didn't mention Stage two once. I mean, is Stage two relevant for Mega Ethan? If so, how? Aha.
- [22:09]
D
Very interesting question and thanks for a reminder. Yes, you also have to trust that the Security Council is not going to misuse your power because within a year, after a year, we do see ourselves in Stage one. But actually it's not, probably not good for us to claim ourselves to label like a Mega Eth as a Stage one slash Stage two Stage zero chain. Because I think the stages only pertain to rollups and rollups. By definition they have to use Ethereum. Da. And we use Eiganda. Sorry for being pedantic, but yes, yes, you do have to trust the Security Council, which we are picking very seriously. And so where does Stage two come into play. I think stage two basically says get rid of the Security Council code is to govern you like for life immutability, right? There is going to be at least one part of the chain governance logic that is immutably enshrined on the layer one here. I mean like deploy a contract without a proxy, right? Just deploy the contract and the contract as is will govern say how and when you can upgrade your logic. And maybe you cannot maybe govern that, you cannot govern the fact that you cannot upgrade your logic at all. So because that is a huge commitment, because you are basically saying one piece of the design of the rollup of the layer 2 is going to be fixed forever for the lifetime of the universe, for the lifetime of Ethereum, which are equal. And so this is a huge commitment and it's a big risk because what if you find out a bug like a thousand years from now, right? You have to correct them. But if you are a stage two roll up then or layer two then I think it's pretty hard for you to do this correction. I think that's why I think also in Vitalik's post, I think there was kind of a realization that actually reaching stage two is a little bit harder, a little bit harder than what people expected a few years ago because you are really making a big bet that there's a piece of code in your roll up logic that you are never going to touch at all. So I think this is why it's pretty hard to reach stage two. I don't think it's responsible to claim that we will reach stage two within a year or maybe even within two years. But I think first it's a really interesting goal to chase after. I'm personally very interested in a form of application of software and I think it's a big cornerstone in us reaching Stage two, which means perfectly correct code. And I think with AI it's quite interesting because I think the thing that AI does the best is the stuff that is hard to produce but easy to verify, right? For example, proofs of software code. Like it's pretty hard for you to prove that a piece of software code is correct, but if you kind of draft up a proof, it's actually very easy for you to verify. So I think with AI, with form of application we are on track, but still there's a long way to go.
- [25:16]
E
That's the crux of this to me too is just like it's unclear whether I as a user actually want stage two on any of my rollups, to be honest, because do like what's worse to me? Trusting that, you know, the teams in place me over in the, in the Security Council won't screw me over or like trusting that there won't be any bugs in the contract. Like, you know, it would be a really bad UX is if there was some bug that froze all of my assets in a chain. And like what I. Am I celebrating stage two at that point? Hell no. I hate this. Like I hate what happened. Right. So like, I guess that's part of maybe the realization as part of this kind of pivot. And this is by the way, it's not coming out of nowhere. I mean this is just saying the quiet part out loud. Everyone has sort of already known what, what Vitalik was talking about here, but it's basically saying, hey, stage two is just like it's on this horizon. Many rollups, most roll ups may never get there. It's unclear whether we actually want that to happen. If it does happen, it's on the 5 to 10 year type horizon when everything is formally verified. And so if you're just going to be a roll up and stay stage one, you may as well write like add all of these exceptional features to your layer one that like make it truly differentiated from Ethereum. I think that's kind of the logic that that's happening here. It's basically the recognition that no roll up is going to get to stage two on any time scale. And so you may as well stay stage one and then like make it up for incredible features that you're offering to the community. That's how I'm thinking about this.
- [26:53]
D
Totally. Yeah. And I think when, when people really claim when, when people literally mean by like rollups being Ethereum equivalent, it has to be stage two because in Ethereum you don't have to trust a Security Council. Right. And I think that's why I think people start to realize that actually if we treat the rollup, the roll up scaling, the roll up century scaling roadmap as building a bunch of shards that are literally Ethereum equivalent, it's actually very hard task and I think five years ago people underestimated the difficulty of this and I think people also kind of overestimated the difficulty of ZK proving. So yeah, more efficient ZK proving. So that is a max. I think we made good bets and bad bets. Yeah.
- [27:36]
A
Yeah. I think there are a few teams that are working on making stage two roll ups and I think that's also exciting. So I don't want to invalidate all the hard work that they're doing. I think on our end it's just like this very, at least from my perspective, a very left curve brain is like, we should work on Ethereum. L1 needs to scale, but it also can't scale in a way where it compromises its value proposition to the market. And forget Maggie, you forget L2s, right? I think the reason why if Eth wins is obviously a, is platform economics. It's here, it has a lot of liquidity, has a lot of users. But I also think there is value in being the most decentralized tier and complete blockchain. And for a long time we were saying, okay, well let's just ossify the whole thing now and not touch anything because this is sufficient and we'll distrude all in L2s. And that was not the right answer, right? But the right answer was, is like, okay, we need to scale the L1, but I don't think we should scale the L1 in like an appropriate manner in which we lose our decentralization property. And I think that's where L2s can maintain a value proposition, right? Like if there are experiences or user flows or apps that are only performant or possible because of like the properties that come alongside not having like a distributed validator set, those should not go to like, you know, quote unquote, like Alta L1s with like close validator sets. Those should just go to their most logical conclusion, which is like these like, you know, somewhat centralized sequencer architectures that they are more centralized in like the immediate sensors of resistance, term of the word like. By no means is anyone on our team going to say that Magee is like more decentralized than Solana. Like that's just fake news, right? Maybe many years in the future they just become different trade offs that become things people are willing to make, right? Which is like, hey, the guys in charge can't really rug unless they give me a chance to leave, right? A couple days Security Council, some sort of variation, but I think the takeaway I have at least is, hey, Ethel, one needs to scale in a responsible manner. And for that portion of the market ETH does not capture by scaling responsibly. Those should be captured by L2s in the barbell thesis, right? And that's the way that I think Ethereum's design choices create the most value for the world, right? Like both economic value, but also, hey, we need to get users on blockchains. Or maybe not, but I think that's my gut feeling.
- [30:35]
C
Let's talk about that Barbell. As we were talking about, really, what are L2s really good for is delivering exceptional features. And there's something that was going on in the Mega Eth ecosystem last week that I think kind of underscores what the exceptional features that Mega Ether bringing to the market. You guys did a stress test. So the stress test of Mega Eth. You guys published a bunch of data about, about this stress test. Maybe you can kind of walk us through what that, what was that stress test for? What were you hoping to learn? What did you learn? Anything cool that you saw or noticed? And overall, what did this test, this stress test of Mega east capabilities do for you guys?
- [31:14]
A
Yeah, you know, I'll, I'll sort of like a small analogy, right? The past couple weeks have been like quite intense for all stakeholders, right? Market, blah, blah, blah. And I remember during the stress test or a couple days before the stress test, someone asked me, how are things going? You guys have taken a while to launch, blah, blah, blah. And all very valid points. And my takeaway was kind of like, I'm actually feeling great because I can't code, I'm not a developer. And for the past two years I just had to get on calls of Lei and the rest of the team and just like, take, trust me bros. Like this trains really fast and has like unbelievable compute and it can handle crazy levels of activity. And I'm just like, well it makes sense on paper, but where is it? And we saw it and that was really awesome. Like genuinely there was a level of, you know, obviously this is not organic activity. We, we made all of the transactions ourselves. But I remember like, you know, using chains like Ethan Soul, I would and you know, I would go trading and stuff and like when there was a lot of people playing the game, the game broke and it's just like, you know, I couldn't do swaps, I couldn't do anything. I remember back in 21, you know, I'd have to spend like 6% of my portfolio on, on to exit a position during a market downturn. It's like, oh, Jesus Christ. Like I've just been like 500 bucks. And like that's like, well, I hope I do well in the future because it's just craziness. We basically did an insane amount of transactions per second and we did it while letting people play these games which were low latency games on chain. So we had Azure xmons, who's the founder of Sudoswap, he built a fully on chain Pokemon game Our team took the crossy road game, made it on chain, put it onto the main net and people were able to play these things while we were just doing an egregious amount of spam on the chain.
- [33:14]
C
I like the egregious word.
- [33:16]
A
It's true, it's true.
- [33:17]
E
And it's just inappropriate levels, inappropriate amount of transactions.
- [33:22]
A
The block explorers died. They died. They were like, please stop doing this. But yeah, like it was cool. It was genuinely cool. And it made me feel like what Mega makes sense and we're seeing why it makes sense. And we did this while also having fees like you know, five, six times lower than chains like Mega that use EFTA or like Alt L1 chains that were like just like way more expensive. So it felt great from a non technical point of view. It felt like what we're doing makes sense and people could feel it. But maybe Lei has some actual data.
- [33:59]
E
Well, actually before we get to Lei, can you give us some numbers for people who weren't watching this stress test and maybe you can convert this to, you know, amount of gas, like giga gas estimates or transactions per second.
- [34:13]
A
Yeah, you guys can go on stress.megaf.com, right? And we have the retroactive information there. We did 11.4 billion transactions in 7 days. So that's more than like 11.4 billion.
- [34:28]
C
Transactions in 7 Days.
- [34:30]
D
Yeah.
- [34:31]
E
Yes.
- [34:32]
A
Average TPS was 15.5k per second. We had a peak TPS trans peak TPS of 55k. The average mega gas was 1.6. So yeah, it was, it was pretty cool.
- [34:48]
E
Wait, wait, average mega gas was 1.6 thousand. So 1.6, 1.6 giga gas.
- [34:54]
D
1.6 giga gas. Yes.
- [34:55]
A
Yeah.
- [34:56]
E
Okay. And, okay, and then so how, you know, we've all seen numbers from like test nets before, right? Or like I'm running these things locally and I achieved, you know, billion transactions per second, whatever. How closely does this environment emulate what we will actually see post launch? Because that's kind of the benchmark, right? You guys show these numbers in, you know, kind of, you know, pre, that's one thing. But can you, can you sustain these numbers?
- [35:25]
D
I would say yes. Because if we flip, flat, switched, it's exactly the thing we're going to run in mainnet. Same server, same IP address, same configuration, same admin keys. So exactly the same. Everything is the same. I feel bad because we're kind of spamming the chain a bit too much.
- [35:42]
C
This was a mainnet stress test, not a testnet stress test.
- [35:46]
D
Totally. Yes, exactly.
- [35:47]
A
The mainnet, we spent I believe, 200 ETH a day, which we recycled. Right. We're getting the ETH, so don't worry, we didn't go bankrupt. But it was taking eth from one.
- [35:59]
C
Pocket and putting it into another pocket.
- [36:00]
A
Bingo, Bingo. But yeah, so like when users use the chain, they have to use pay eth. Now it was very low, it was very cheap, so it was totally fine. And effectively it was the same as mainnet. Right? It is mainnet.
- [36:13]
E
Wait, with a 200 ETH per day, what's that going to. Is that all the cumulative average Token transfers of 0.1 cent just adding up? When you multiply that, it's like equates to 200 ETH per day.
- [36:25]
A
Yeah, approximately.
- [36:26]
E
Wow.
- [36:27]
C
We talked about the gas fees, right? So like 200 ETH per day of gas fees to make the 11 billion transactions happen.
- [36:34]
D
Exactly, yep.
- [36:35]
C
Yeah. How was 200? Was 200 times whatever the current price is. How, how much?
- [36:40]
B
What was the total economic cost of.
- [36:42]
C
The 11 billion transactions?
- [36:44]
D
Economic cost as in the cost basis or.
- [36:47]
C
Yeah, just like how much, how much did sending 11 billion transactions on Mega ETH over 7 days, how much did that cost?
- [36:53]
D
Yeah, so the token transfer is what? 0.01 cent per transaction and we can do a quick calculation.
- [37:01]
E
I mean 200 per day times the sad current price of ETH is 400k per day, something like that.
- [37:08]
D
$1.1 million, I would say $1.1 million.
- [37:11]
A
Over seven days, I think so.
- [37:13]
D
Let me check. So three zeros, one BK. 11.4. Yes, 1.14 million. Yes.
- [37:20]
C
They just did that and said I would never be able to do that.
- [37:21]
A
There's a quant joke somewhere here I'm not going to make.
- [37:26]
C
How does that compare to other chains?
- [37:30]
D
I think so we have actually a comparison. I think we are among the cheapest to send act on and I think I do want to highlight something which is it's actually pretty easy for you to build a chain and run a chain that is cheap when no one's actually using it or when the number of users is small, but is actually pretty hard for you to sustain that low transaction cost when you are pushing to what on average 15,5k transactions per second with all market dynamics. Right. Because if your chain can only sustain say a thousand TPs, then the moment the demand goes beyond thousand TPs, then the top payers are going to decide the gas price. But in our case, because the chain has actually the chain has more capacity, we really worried about like breaking our infrastructure partners. So we didn't really go full throttle but. And that's the reason even at 15.5k transactions per second. Yeah. Like the base fee, the gas fee, never, never fluctuating.
- [38:28]
C
Lei, a lot of this, the, a lot of the stress tests I feel like is just downstream of a lot of your just academic work. Like I feel like this stress test is also a stress test of Lay's knowledge and his Ph.D. in computer science. Yeah. So like how, how do you feel as just like kind of like your, your personal journey like downstream of this test. What does this stress test mean for you?
- [38:51]
D
It's, it's amazing. And also by the way, all the credit goes to our mastermind, Elon who holds a real Ph.D. in, in computer systems. My, my expertise was more like consensus which unfortunately it's not used in Mega Eth. But anyway I added those to him. Yeah, I personally feel pretty excited because I'm just very motivated by all the DMs flowing in telling me that oh my God, the chain is real. Yeah, it is real. It's been real for a year. But yeah, anyway, I'm just very happy that I think it's a nice. I also feel pretty much reassured because we now have like a real end to end stress test. I think you guys were asking perfect questions like hey, what's the setting of this stress test? Right. And I feel pretty comfortable right now because it's exactly the same service that we're going to run our mainnet on. I mean it's the exact same deployment. We're not going to do any redeployment or anything. It is the mainnet so it's a great validation. I think it lets me sleep better at night. And also I think it kind of stress tested our downstream infrastructure partners because I think it highlighted some issues with the infrastructure. I think some of them, I think the block explorers, they failed to keep up and we're now literally working on new RPC methods tailored to make them make their lives easier when they try to handle such low spikes in the future when it goes like really public. And we're also working with our app teams, the mafia, because they also run indexers, they post process those transactions and it also helped them identify the potential bottlenecks in their pipelines. So I think it's in general, I think it's extremely meaningful exercise for the entire ecosystem. I'm just very happy.
- [40:43]
C
What's the secret sauce that Megaeth has that really unlocks this throughput? What is the unique thing that Mega Eth has that Other blockchains doesn't have that allows 11 billion transactions over seven days.
- [40:57]
D
Right, right. So I think yeah, we have been talking about a lot of our optimizations, e.g. parallelization, JIT compilation and the peer to peer network improvements. But I think something we have not been talking a lot about is our new state try design. We call it SOD Small Authentication Large tries. So think of it as a direct replacement of Ethereum's Merkle Patricia tribe or commonly known as the Merkle tree. So the thing is with any EVM chain or with any chain that you want, I'm hope to like settle onto Ethereum as a layer two, you need a tree that authenticates to the entirety of the chain state. And here chain state is basically the list of balances, the list of account nonces, how much money each person have, how much ERC20 tokens each person has. Right. So these states need to succinctly go into a single hash. And this process is what we call managing or updating the state trie. And before our optimization, state trie management takes more than 90% of block building. In other words, if you spend seven days processing those hundred point, sorry 11.4 billion transactions, you would spend 77,0 days on managing the state tribe. So in other words, you are kind of only spending 10% of your time running the transactions and 90% of the time like doing post hoc management. So what we did, I think which is pretty interesting compared to what other chains have been doing, is we completely redesigned the data structure and I think many teams have kind of identified this bottleneck after we did. And I think what they did was they tried to optimize the database that stores this state tribe but they, I think not many of them has tried to just revamp and redesign the data structure itself. Right. So there's a difference between the mathematical structure and also the, and the physical database that holds these data. Right. I think most people are like rearranging the data in the physical medium, but for us we just completely redesigned the mathematical structure and what we optimized for was okay, so many people are trying to improve the database, but our goal has always been that let's just get rid of the database. So I think something that's very unique about our state tri is it takes so little space that you don't have to constantly update your database. Right. Because you don't have to store it in a database, you can just fit it in the main memory of your computer, which usually goes at most maybe 128 to 56 gigabytes and that's it. So it alleviates the potential bottleneck of constantly reshuffling data from the state tribe to the database completely. And now it's just a very quick memory read. So I think this, I would say, is one of the secret sauces, like just a complete revamp of the Ethereum Merkle tri state TRI data structure.
- [44:12]
E
Lei, you've done this in a way that still preserves full EVM compatibility.
- [44:17]
D
Very good question. Extremely sharp question. So I think there are too many words to describe, too many terms to choose from. So I, I would not claim Ethereum compatibility because I think someone kind of comment shouted at me. But what we achieved was, okay, so you can port whatever, you can just deploy whatever bytecode you have on any other chain as is, it runs on Ethereum. The only difference here is we are tweaking the GAS model. So some opcode runs a bit cheaper, some opcode runs a bit more expensive, and second, the state root is now computed differently. So in other words, for the same state, you can imagine, as for the same list of accounts and for the same list of balances, the state root, the hash that exists in the block header will be different from what it would be Ethereum mainnet. But the good news is almost, I would say no application depends on the particular way to compute the state root. And yeah, so I would say it's, I would say it's compatible because it's bytecode level compatible. But people may disagree. So I describe what I can describe.
- [45:28]
F
Hey, Bankless Nation, it's David. If you're hearing this, that's because you are listening to the free Bankless podcast feed. Did you know that there is a premium Bankless RSS feed? The premium feed has extra interviews that I do for my own personal research and just deeper questions that I want answered about the crypto industry. Questions that I want to answer so I can be more informed as an investor, both at Bankless Ventures and also just in my own personal portfolio too. Also, there are no ads, which means if you listen to the premium feed instead of the free feed, you'll get about 20 hours of your life back every year because you choose to support Bankless directly. So if you're interested in getting extra content all while skipping the ads, or you just appreciate what we do here and want us to keep doing it, we'd appreciate it if you signed up for Bankless Premium and there is a link in the show Notes to get started. Cheers to a good 2026.
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B
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F
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- [47:03]
C
Okay, so with this optimization, with this trust test, we learned that Mega eth can sustain 11 billion transactions over seven days for the low, low cost of $2 million or $1 million $1.1 million. Which tells me that chain fees is not a viable business model for Mega Eth. Like, I don't think, like it's cool that you guys can do 11 billion transactions per second. I don't think you guys are getting to a sustained level of organic 11 billion transactions per second anytime soon. So that implies that like economic sustainability for the Mega Eth system is not going to come from chain fees. So if it's not going to come from change fees, where is it going to come from?
- [47:45]
A
Yeah, so I can take this one. I think that the general thinking was there's this fundamental like misalignment of interests, right? Because as mega, we want, as we get more users and our block space becomes, I could say more valuable. We want to charge more fees because, you know, vendor lock in, we can make more money. Right, But I think that's actually short term thinking because the way mega grows is by letting everyone come and use Maggie for as cheap as humanly possible. I think that's one of the main reasons why Solana was actually able to provide such a good value proposition for users. Right? Like, you know, pump is initially in the blast ecosystem, but the second there's like a thousand people launching meme coins on last, right. Blast maybe would get expensive Again, I don't remember the exact blast configuration, but that's more or less what happens if you use like, you know, ETA and a couple other statements. Right. But yeah, I think our opinion was, hey, we want to be as cheap as possible and we want to get like cheaper over time so we can get more users as opposed to get less users as we become more successful. And in that scenario we basically said, well, we need to more or less find a way to make gas consistent and run it at cost, right? Not really make any money on it. I think the second point is like, well, okay, how do we make money as a chain, right? I think the error of launch a token for the sake of having a token and just like that's done. So you kind of need to build some sort of real business model. And we kind of came down to stable coins. That's what we have now. We plan on building more first party applications in the future. But a general thinking is, hey, we have worked on stablecoin, we've worked on building a bunch of apps or facilitating a bunch of founders to build cool apps. How do we find a way to have a win win where we can earn off of their success without necessarily A hurting their users by having fees that are expensive or B, you know, in any way, shape or form messing with their economics? And the answer there is the hidden tax of TBL yields that come in stablecoins, right? Everyone who has a dollar on chain, right, especially after genius, is not getting the yield for that dollar. So if you're holding USDT or USDC right, on like Ethereum L1, someone somewhere is internalizing a table yield, right, on your behalf. What we basically said is, hey, we're going to have like this native stablecoin usdm and when applications use usdm, we earn the table yield for that, right? That goes into the mega eth balance sheet, let's say. And what that does is it allows us to grow the chain, reinvest into the chain in a way that doesn't necessarily harm end users. You know, one can argue that end users should be getting their yields, right, but I think then you just have to ask yourself, well, what kind of reasons are people coming onto your chain for, right? Someone who's stablecoin farming should not be stablecoin farming on Negev, right? They should not be parking their stable coins on Negev. They could be doing that on e file.
- [51:12]
D
What?
- [51:13]
A
E1 is more secure than Mega, right? You're coming on the Mega because there's cool apps on Mega. You're coming on the Mega because you want to do something unique on Mega and then having to deal with this hidden tax, which you wouldn't have been earning anyways I think is a very reasonable trade off. So the way Mega makes money is via these people yields. It doesn't hurt apps, it doesn't hurt users. And in fact it's the opposite. If the app becomes more successful, Mega is able to earn more money and users are able to maintain cheap fees. So we think it's this almost like symbiotic relationship. Again, I think for better or for worse, we keep experimenting and trying new things at Mega, both on the tech side as well as BD side. Maybe it'll be a complete failure. I hope not, but it's possible. Just our general thinking is there's this famous like Einstein quote I think which is like definition of madness is to try the same thing twice and expect a different result. And we just kind of came to the conclusion well we have to try new things because what else are we doing here, Right? So yeah, that's the way we're thinking about economics.
- [52:16]
E
I think it makes sense, right? It's sort of a TVL or AUM type of revenue structure, right? That's passive, that's in the background, that still provides users value but with less friction. There is one other leg of maybe a three legged stool of where L2s and even chains in general can charge, let's say for their service, which is block ordering. So mev, and this is if you look at kind of Solana for instance, this is how Solana makes, generates the revenue that it generates. What about mev, is that like off the table from you guys? Like you'd be perfectly positioned running the sequencer to collect that base, collects it, you know, a lot of the L2s collect it today. Why not mention that? And like is that a factor in the revenue model?
- [53:04]
D
Yeah, it is. And yeah, we actually have thought a lot about it because me personally and I think the team by extension fundamentally disbeliefs is microscopic auctions. And microscopic auctions basically is what Ethereum layer 1 style tip based, priority fee based ordering because you can kind of think of it has for every block you are literally doing an auction. And from the person, from the people who pay the most to the people who want to pay the least, you kind of alter the transactions, right? It's literally like every single block, every 12 seconds you are running an auction to decide what's the block ordering on layer two, sorry on Ethereum layer one. But I think what it fundamentally breaks for us is because our block interval is so small because in our case the blocking interval is 10 milliseconds at the Micro block, sorry, at the mini block level. It's not, it's not constructive to imagine that people can run auctions at such latency because say I'm a trader in New York and the sequencer is literally is in Tokyo, then it takes me about 60, almost, I think 100 milliseconds to even have my like intention of how much I want to pay for this block transmitted to the Tokyo sequencer. So like running auctions as at this kind of fine granularity completely breaks down. So what we are trying to achieve, what we're trying to do here, I think we call it the proximity market is instead of microscopic options where you have to dynamically pick your ordering preference every block, you do it on a much coarser granularity like every month or every week, every quarter or so. So you run those auctions at this kind of interval and decide a bunch of people that will have the seat to co locate with the sequencer. And once you do that then they can take whatever algorithm they want to run and run them on these seeds which are basically virtual machines that are right next to the sequencer. So the quotes we get from our cloud provider is down to 1 millisecond and if people want to optimize they can even get down to 100 or even tens of microseconds which I think is right there with NASDAQ level high frequency trading. Yeah, so this is kind of how we want to collect quote unquote mev. But also I think for us to collect part of the mev, we really want to redistribute it to the community, we really want to reinvest in the ecosystem. But that's kind of a topic that Namiq should highlight. But I think just on the technical design, our goal is to have just kind of semi long term auctions every, every week, every month to decide who can co locate with the sequencer. And also it helps incentivizing people to move next to the sequencer. Because the, the reason for you to have a 10 millisecond block interval is for you to build efficient liquid markets. Right. What's the need of, what's the, what's the purpose of 10 millisecond block interval? If people are, if those really high efficient traders, which are really the people who are responsible for market liquidity are going to stay at the opposite side of the world and just remotely market make right, they should come to the sequencer. So this I think is both an incentive structure and also I think a more practical way for Us to have like efficient priority allocation when you have real time trading.
- [56:49]
E
Yeah. What's fascinating about that design is I guess it's, it's maybe also in the spirit of seeing the quiet part out loud. Right. And just creating a mechanism for handling this. Because when you look at very high TPS chains and including high, very high block time chains, you could see it sort of collapsing to that sort of thing anyway at the social layer, like sometimes I look at Solana and the amount of CO location that is happening.
- [57:15]
D
Amsterdam.
- [57:16]
E
Yes, it's Amsterdam. For those that don't know, Amsterdam is a massive hub that many of the Solana validators are located in. It's kind of like I don't, I, I don't know enough to say it's like what percentage of the network it is, but it is the place if you want to collect the max mev. And so you see a lot of validators, people running salon infrastructure, co located there, but they don't really talk about that so much. Right. It's not, it's not advertising in the marketing material. Right. So whereas with Mega Eth you're just sort of saying the quiet part out loud which is like. And designing a mechanism for it which is to say, hey, it's really valuable to be co located next to a sequencer. It just is.
- [57:55]
C
And also explicitly selling it. Yeah.
- [57:57]
E
And here's a transparent way to actually like take a Moloch type problem and sort of auction it at some level. Of course listeners can imagine different ways that this type of thing can go wrong, but at least you're taking a step of making it transparent, auctioning it and creating a mechanism to feed this back to the community. Now there's something like something I really like about that actually.
- [58:18]
D
Yeah. The transparency part is really important because I think as an independent trader, I think our mechanism could actually empower more independent curious traders. Because as an independent trader you definitely don't know how to navigate the maze of which vps, which server provider I should use to get the minimum latency to a Solana or to a chain validator. Right.
- [58:38]
A
Yeah. I think it's simply like these are controversial decisions but we think they make sense because it goes back to megatoken haulers. Right. Like if the bottom line is that we're trying to build systems that value like mega token holders, I think it's like fair, it's decentralized in its own way. It basically turns these private value capture options and turns them into almost like a public goods of sort. So the value goes Back to every stakeholder. The reason why it's not worth mentioning because it's, you need users, right? Like, no one's going to participate in Proximity markets unless people are using Mega. Unless there's apps that people want to participate in. There's a reason why, like David and Ryan are on Maggie. Not because, you know, they feel guilty after a podcast episode of us, but because they're saying you want to do. And you know, that basically means that like, realistically speaking, I don't think proximity markets are going to be this amazing story in the first day of Mega being live, because we're going to do a lot of the hard work of making sure that all of our apps go live. We find PMF of some of these applications and over time people actually want to co locate if they make Sequencer. And when that happens, instead of telling them like, oh yo, you know, send some money to, you know, a bank account and you can sit next to Magee in Tokyo or wherever we are at the time, we've rebuilt a system where you're like, this is how much it costs based on everyone else denominated in tokens and Mega tokens, and you create structural economics that benefits anyone who's choosing to hold the token. So we just think it's a bit more of an honest approach again, well, let's see what happens.
- [60:18]
C
I do appreciate just the understanding that the whole point of Mega Eth is to collapse the business model of selling block space, which forces you guys, it's a forcing function, to get a little bit more creative about how to capture value. And so, you know, creating usdm, selling colocation. Is there anything else? Is it kind of just like as good ideas come in, we'll throw spaghetti at the wall and see what sticks. Or like, is there. Do you guys have like a third or fourth product lined up or any. Any thoughts there?
- [60:50]
A
Yeah, I mean, I think that like our general opinion is like, hey, let's look at the EVM and say end to end. Where are there problems that we can rebuild from? First principles? So Elong and Lei did that, or at least they tried to with Mageev, right. As a blockchain and they've built like an unbelievably high performing blockchain. Right. What we're doing as Mega as we move forward is continuing to make Mage really good. But then also try and identify additional bottlenecks within the EVM or just the general how we understand blockchains to be today and try build first party applications to solve for those problems. Right? So, you know, I think we're really interested in like, you know, a lot of, a lot of that design space. A lot of it is to be announced over the following months. But yeah, I think our general opinion is, you know, we've, we built this great blockchain, we facilitated applications on this chain and we're going to continue to facilitate applications on this chain. It's been two years we've had. We have a few apps that we think will be exciting. There's been a lot of drama about apps on Megaev and there'll be lots of drama in the future about apps on Megaev, right? Like we will not stop trying to have cool applications on the chain and we're not going to stop trying to work with those applications on doing something that's unique. And anytime we progress into building first party applications or first party experiences, we think it's because it's net positive for Mega, even Mega token holders as a general group.
- [62:20]
C
Let's talk about, yeah, Mega Eth's app strategy. Because the other thing that I think is refreshing about Mega Eth is like back, back in the old days of blockchains, the, there was no app strategy. It was like credible neutrality, like, don't touch the app layer. Whatever emerges on the app layer is great, but we don't want to have a hand in that. And Mega Eth has kind of just taken a very different approach, which is like, no, no, no. We are going to directly foster our own app layer as aggressively as possible, which I, which I find refreshing. Namik, maybe you can kind of just like walk us through what the Mega Eth philosophy is with like incubating its own app ecosystem for sure.
- [62:57]
A
If an app, like the general thinking is like, we cannot end up in a situation where we just have a bunch of repeat applications that exist on every other chain. And there's two reasons. Firstly, like, well, why would anyone come and use the chain if it's the same apps, right? So that's the basic one, but then the second one is like, okay, like what is the point of us spending the past three years of our lives trying to build this thing if there's literally nothing new that can exist on this train? It's just like, I'm not smart enough to be able to just enjoy the complex technical problems that Lei is facing and that's how he enjoys his life. But like, we need to, this thing needs to exist for a reason, right? So what we did is we basically just started trying to find founders and convince founders to, you know, Quit whatever they're doing, take the entrepreneurial plunge and build cool shit. To be frank, you know, is everything cool? No. Something's really cool. Sure. Did some founders not be able to like, did they go bankrupt before they were able to go live?
- [63:54]
E
Yeah.
- [63:54]
A
Did some founders decide there's another chain or like another opportunity that's like, more enticing? Totally. So all of these things have happened, but we are, you know, cautiously optimistic and we're quite excited because in the end of the day, we're going live with applications which we think are cool, and we have a bunch of unique flows that like, I have not had in my life, let alone in crypto that will be on Magee in the months that follow. Right. So, like, the general opinion is that, you know, we should find founders, we should work with these founders to build unique apps. We didn't have a chain until, you know, well, we'll have a chain like five days from now. But like, for the longest, for the vast majority of the history of Mega, there was no chain for these app founders to use. So it naturally created like this question, like, okay, like, you know, we want to do this. We're excited, but there's like fundamental bottlenecks. We aren't able to iterate as fast as we'd like. Bunch of dependencies that we're not aware of. But what I'm really excited for is now we. And we were still able to push through and get a bunch of cool apps. Some of, you know, depends on what you like. Gaming, consumer defi, lending. I can start naming you apps if that's what you like. But what I'm really excited about is the fact that we will have a main net and we will be able to double down on getting way more unique people to try build unique apps. Because my general opinion is that we have a massive brain drain issue in crypto.
- [65:22]
E
Right.
- [65:24]
A
Unless you're in magif because. Unless you come to crypto because of deep, deep genuine interest in like distributed systems or like systems design. Right. Like, you know, I came into crypto because of the, you know, I don't want to be a pun, but like, you know, the promise of going bankless. Right. Like, I came into crypto because I did not like the idea of having to deal with like a sovereign who has control over me. I like the idea of permissionless systems, peer to peer networks. I think a lot of those founders that could have come and build awesome apps couldn't do it last cycle because the UX was garbage. And this cycle they just Left AI, right. And that's just kind of like a really shitty situation for crypto applications. And like, maybe the answer is it doesn't actually matter. We just need something like aave, which is global lending and we can call it today. But I think there's a massive design space which just hasn't been explored and its founders have been. They're not here anymore. So we have to do proactive work. We can be credibly neutral because that implies that there's abundance of developers. There's an abundance of founders and they'll all build stuff and you don't want to pick winners. My bigger fear is the developers are gone, it's scarce, no one's motivated to build anything. And you actually can be incredibly neutral because if you do that, we just don't end up with any more apps. We have to go in and we have to like, try things even if it ends up backfiring on us. Right. And this is backfired Omega in a couple of ways, don't get me wrong. Because the alternative is worse, which is we end up with nothing for sure. I don't know, that's kind of like a bit of a doomer point of view maybe, but that's kind of like how we approach the problem at Mega.
- [67:04]
C
Yeah.
- [67:05]
E
Yeah.
- [67:05]
C
Well, I mean, I appreciate like the level of just like agency and personal responsibility that you and just the Mega E team feels about growing and incubating apps. There is something resonant about having this app that can do 11 billion transactions over seven days at essentially zero cost per transaction, while also having this like incubator accelerator arm of it as well, the Mega Mafia. Do you consider that to be an accelerator? And like, how, how if that. Because like, you got. You guys have this like AUM business with usdm and so you guys are incubating apps that help grow the AUM of your business model. So like it's kind of an accelerator. So like, how do you think about it in terms of just like the value capture of the whole system?
- [67:53]
A
Definitely. So there's real answers. All we figured it out over time, right. The first thesis of megamorphy was just like, hey, let's just go find founders, you know, let's just get them to build stuff and let's just go live a bunch of apps, right? And then, you know, the apps took a while to build, Mega took a while to build and we had more time and we're like, okay, well we should get more apps to build on Mageev. And the thesis was always look, we're not going to take anything from the applications. That was initial thesis at least, right? We're not going to ask them for any equity. We're not going to give them any dollars either. Like, we don't give them money, they don't give us tokens, nothing. It was just like a trust me, bro, agreement to build on Mega, right? You know, I would say over time, and I think the reason why that was fair is because no chain existed, right? Like, I can't force you to come and like, you know, yeah, sure, we'll fly you to like a country and we'll sit together for a month and work together, but realistically speaking, I think it's just wrong to force someone to like, agree to build on a chain that does not exist. Like, dude, what if the chain doesn't work? Like, that's not very nice. But now that the chain's live, right, I think we're going to ask ourselves again from first principles, how does a Mega Mafia work? Right now the ask is to use usdm, right? And we've worked with a few of the key mafia applications and we've even worked on helping source some liquidity and try and make sure that they have just a minimum MVP amount of motion to be able to succeed and at least see if their PMF works. The ask on our side is just use usdm. As Mega goes live in a few days from now, I think we'll have a great opportunity to say, look, we actually have the chain. Let's figure out what's like 10 things we want to see exist on mega. Let's find 10 people to build those things and then let's, you know, let's make like, let's have them use USDM for sure. Let's potentially look at investing in some of these founders, depending on how Mega's going and becoming potentially even more opinionated. I think the general problem we have is there's just, there's just not enough founders in crypto and I, I, I'm less worried about like isolating founders than I am not even having founders. Now the edge case here is what if like the next meow, right, founder of Jupiter doesn't want to come to join Mega Mafia? And are we like, you know, making them not want to build on Mega? That would suck. It's something I think about a lot and I think the hope is that like, hey, this, this chain's very performant and you know, they myself were all still available if you have any issues to work and power through and like you want to build something amazing, build something amazing. I just think that like the day of being hands off is really over and I do this and I think our thinking is like that we don't really have a choice here but to try and force function apps and for better or for worse, you know, could not work. But we have to.
- [70:50]
E
One other possibility here that has more recently risen to my attention here is that the next like billion users might actually be AI agents. And so if that's the case then it could be that AI devx is a thing that blockchain teams really need to think about. One thing that's been interesting to me and sort of a bit of a realization is if you think, if you believe as I do that some of the reason we haven't had more crypto adoption has been the UX is terrible. The UX is really hard in crypto. That's only true for humans actually. All the UX problems we have are actually benefits for little software agents. Right? So the clunky metamask telling you some transaction, you have no idea what you're about to click. Guess who understands that perfectly. In like clear English language like it is could not be more clear to a software agent. What exactly is happening here? There's no confusion, it's very specific, it's very specified. It's software, it's software talking to software. And so if you believe that that all of the bad UX for humans becomes actually good UX for agents and you have abundant cheap block space and then you have these agents like starting to come online. I mean we've seen all the kind of the open claw stuff happening. Well maybe we should start really prioritizing agent users in some of our blockchains experiences. I know this is still somewhat early and like who knows it's there's a dependency here. Namiki said we lost some of our best devs to AI. Yeah, that's true. But we might actually gain some of our best devs from AI now in this agencic part of the cycle. You have any thoughts there?
- [72:28]
A
This is a late question. I don't talk about things I don't know. He actually.
- [72:34]
E
What do you know about this?
- [72:38]
D
Right, so it's quite interesting I think for I think to help agents.
- [72:46]
F
You.
- [72:46]
D
Need the blog space to be sufficiently cheap so that they can try and error. I think something that's very interesting that agents have immense amount of energy, I mean unlimited amount of energy to do that human do not are just try and errors like I get angry if Metamask does not work on Mega Eats for like after two tries I just throw my phone out of my window. But agents don't care, exactly as you mentioned. So I think being cheap enough for agents to work with second some inherent features. So one feature we have been talking about, what I've been thinking about is one, you can just imagine this user flow, right? A user wants to achieve something, right? Hey, I want to swap a thousand US dollars for what 05 ETH. I hope it's not 0.5 but thinks that the case. But so I want to, I want to swap a thousand dollars for 0.5eth. Okay, and just agent figure out like what app. Just get me $500. Sorry, get me 0.5 eth. Right? So now the agent will kind of try to use different path, different dexes, different aggregators. It's almost like intent protocols. I think with agent you almost have your own intent solver, right? So then the thing is as a user I would worry hey, what if the agent just goes crazy, right? There's always the possibility. I think the thing with any like human in the loop but now agent in the loop system is that there's always the possibility of just random errors. So I want to guarantee, I want to kind of govern the, I want to sandbox the behavior of the, the behavior of the, of the agent. So something we're thinking about is what if the blockchain can as a built in primitive lets user describe either in natural language or in very simple like drag and drop user interface describe the like what the transaction should achieve in order to be successfully included on the chain. In the sense that me as a user can literally just type in the whatever interface I use saying that okay, this transaction should at most deduct a thousand US dollars from USDC for example from my account and should at least give me back 0.5 eth. As long as this case is hit, I don't care what transaction it is, right? Just agent go go wild. Then the agent can just literally go wild. And I have my peace of mind knowing that whatever the agent do, I don't really care. I, I at least got 0.5 ether back and I spent at most a thousand dollars. I think this is something that can be very useful and we have, we're just very actively brainstorming similar features. We can help agents like this. I think there's a great parallel to draw between software programming agents like the agents that you run on your desktop and the agents that run on a chain or uses the chain because I think sandboxing and just establishing its trust boundaries, always the hardest part. And I think as an, I would say infrastructure company, I think this is what we should focus on. Of course we should also try to build our own agents, whatever, but I think there are a lot of interesting stuff that we can actually meaningfully do to make agents life easier. Right.
- [75:52]
C
So yeah, let's talk about the mega token over the arc of Mega eth history. I understand like you guys have just had a pretty like opinionated strategy with Megatoken. You guys did the NFT sale, you guys had the public sale on Echo and overall it's been kind of a departure from what I think the rest of the market has kind of treated their token in the past. There's no airdrops here. There's just like a kind of a unique fresh strategy with what it takes to get into mega tokens into the hands of people. Talk about your guys's like strategy here.
- [76:30]
A
Yeah, I think that the general idea was like, I remember when, I remember last cycle, like there were like many, like there was like the price discovery happened in public markets, right? Like, that's just the truth of the matter. I think it was pretty awesome. I think in. And then we learned about a lot of issues like the low float, high FTB issue, right? Like, you know, the number that you see on the screen, right? That kind of changes, but the number stays the same. So, you know, we learned a lot of things and a lot of people saw like a lot of money being made. So private markets decided to like, you know, bid a ton, right? So a lot of price discovery moved to private markets and the end result was like, you know, public participants weren't necessarily getting equal access to, to assets. Right? So I think that was a problem that we saw and we thought that it was just not ideal because, you know, you like, crypto is unique because a lot of users in crypto want to be owners as well, right? And I think this is not necessarily the case with like most industries. In most industries, you like, for example, like, you know, in like tech, right. Just because I own like I own an iPhone, right. I don't have any Apple stock. It's not because I think Apple's bad or anything. I just, I just don't have Apple stock because, you know, I have crypto. But anyways, so. And I think it's totally fine. That's not exactly the case in crypto where people have historically been like, I want to be an owner in the applications I use. It just it felt very unfair. So basically what we did is we said, hey, you know, we did this. We raised some money from like, you know, Dragonfly, funny enough, like the founders of Ethereum, Vitalik and Joe also participating around. And a year later we basically said, you know what, we just want to give the exact same terms to Echo users.
- [78:31]
E
Right.
- [78:32]
A
And if they want to participate, they can participate. If not, they don't have to sold out very quickly. I think like 80% of Echo users tried to participate, broke a few records on the Echo platform and we were like, oh wow, this, we're onto something. Like this is cool. I think there's a way to get people to be, to probably use the chain. They, they get equal access. And we basically just doubled down with that thesis all the way until most recently the Sonar sale where we started a million dollar valuation. We capped the 999mil because we didn't think it was fair to buy at Unicorn Val and from like, from the, from Mega. And yeah, it ended up, you know, over subscribing by like 25x or something. Obviously, you know, Bitcoin was not at 70k. And yeah, that's basically been the thesis. The thesis has been for better or for worse that we don't necessarily think airdrops make sense. We think that like if, if the potential users want to be owners, they can be owners and we basically gave them access and we tried to have price discovery be accessible to, you know, participants who aren't just VCs. Yeah, let's see how it, how it pans out when the time comes. But we do think that I, I mean, I'd personally rather have like 10, 15,000 crypto users as an investor base. They love crypto. They understand why this industry needs to exist as opposed to like a couple big VCs that are great, but it's just like two free people, less momentum. I'd say Reddit did something similar actually with their mods. Power users of Reddit were able to invest in, invest in the pre IPO for Reddit. But maybe we shouldn't, maybe we should get rid of that one. Securities laws, whatever.
- [80:17]
C
Okay guys, so this episode is coming out the day of mainnet release. So hey, congrats on getting mainnet out. We're recording this before, so we're assuming mainnet comes out on Monday. What does the next short term bit of time look like for you guys? What does an actual mainnet release look like for you guys? Is there like a, a war room that you guys are in? And what does the following weeks and.
- [80:36]
A
Months look like we're next to each other? We're in different phone booths, so we're, we're working.
- [80:42]
E
You guys have centralized sequencers then, even at the human level? Huh?
- [80:48]
A
I think the goal is apps, right? Like, we want to get some of these apps live and we want people using some of these apps and seeing what's special. We want to kickstart the USDM application Flywheel. And as that started work, we want to start building more unique applications that leverage Megae's block times and capacity capabilities.
- [81:11]
E
Very good. We're excited to see what Mega Eth does in the future. Good luck on mainnet. And I do think that this is the beginning of a second era, maybe of layer twos, not saying the mainnet release of Mega ETH, but you're certainly in that second cohort of layer 2s that have looked at the layer 1, layer 2's previous cycles and kind of done things a little bit differently. So it's a, it's a second generation. It's very exciting to see launches like this and we wish you much success. Bankless Nation, of course. Gotta let you know, none of this has been financial advice other than we know Mega Eth transactions are gonna be cheap, cheap, cheap. You lose what you put in, but we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the Bankless journey. Thanks a lot.