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- [00:03]
David
Bankless Nation. We are here with Shuyao and Lei, two of the three co founders of Mega Eth on the day of their token launch. Big day. Are you guys, you guys nervous?
- [00:12]
Lei
Yeah. So we shouldn't supposed to say. We shouldn't say nervous because when the podcast is out it's no longer nervous. But yeah, for now, yes it is.
- [00:21]
David
Yeah. We're recording this a day and a half ahead of actual token release date. So we actually don't know what the conversation is at the time. But this, the quick timeline here is you guys have done a series of just like kind of like private token sales. You guys did an Echo sale, you guys did an NFT sale. And so there are some like token holders out there that are awaiting the tge. And then the really the thing that the Mega Eth project did was it did these KPI locks. Can you just talk about the philosophy about, about the KPI metrics that you guys put yourself behind before we could ultimately get to this day? Why do that in the first place? And then seemingly since there is a TGE date, we've hit them. How did we hit them? What's just the health of all the KPIs? And talk to us about just the road so far. Shuya, I'll throw this one to you to start.
- [01:12]
Shuyao
You know, I was going to say that I'm so excited that we're finally tge. I think unlike most project right, you launch the main net, you tge, you kind of just get it over with and your baby is out in the public. I think for us it's like the baby is there but no one is able to see it. And then we're finally able to reveal the baby via this token, which I believe token is not a product. Token is part of the infrastructure. I think the TG itself kind of marks the completeness of Mega as a protocol. But to answer your question directly, why did we set up these KPIs? Right? And the more often I say the word KPI, the more like a weird feeling I have because they're like just sounds so strict, but they're really celebratory milestones instead of KPIs. The idea was rather simple. I found it really odd that insiders can just get 60% or 50% of a protocol's token at launch without doing much or metrics to prove that they've done the work. So from our perspective, it's 2026 and I've been in crypto for eight years. I think just the old game is not worth playing anymore. And we want to exercise this philosophy of building public, have the public monitor exactly what's happening with Mega. And that's why we set the KPI and basically hold everyone accountable. Right. And it's not just the Mega Core team, it's also our applications. We can't launch unless they launch and if they want to get traction, they better like integrate and going live on mainnet. So that is the original philosophy of KPI which is like game is different. Let's do the best of our work. That's why and how we can prove Mega deserve to exist. I can go deeper into how we set up the three KPIs if you want to, but I will pause here.
- [03:06]
David
Yeah, the KPI that was checked, the box that was checked was the 10 apps that are live on Mega Eth. But to my understanding there are this is 10 unique apps, not just like another AAVE deployment or like another Uniswap deployment. So talk to me about the 10 apps. I mean you don't have to go one by one by one, but just like the philosophy of like you guys actually had to like choose these apps do count, you know, aave. Much respect to aave. AAVE did not count. Talk to me about that like philosophy
- [03:36]
Shuyao
defi united the Our criteria has always been very simple, which is Mega Eth brings out novel application to crypto and unless you are really novel and it's even better that you can't exist anywhere else then I think Mega as a protocol deserves to exist. So I will highlight some of the apps that I am personally really excited about. So we can start from Dex, right? I think since day one we just knew that Mega is not going to create another hyperliquid. In fact, I don't think we need another hyper liquid. I think Dex is also need to differentiate themselves. So we work with the world market team to create this like fully on chain dax. And you know, they don't have backend. The protocol is their backend and anyone can deploy front end. That's something we're really excited because it's, you know, it's only possible. Omega used a cheesy term, Omega. And then if we consider, you know the type of wordmark which is fully on chain DAX as this like right curve app. Right. Very sophisticated. It took the team five years to build it by the way. Like I'm not sure people understand how difficult it is to build a Dex. And then we also have a bunch of what I call them the left curve apps. The left curve Apps are really the goal is to bring order flow, is to bring novel experiences to users and I'm sure your audience are familiar with the euphoria of the world the hit one of the world. And by the way, even these apps are difficult to build because every single financial experience involves market makers, involves settlement, it involves user experiences that needs to feel real time. So the reason the KPI took two months to hit is precisely because it was a little hard for all of them to get together and integrate in time.
- [05:30]
David
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- [08:51]
Lei
Yeah, 100% I think composability. So I think we question ourselves a lot. Why, why do we need to build a new train? What's the, what's the point of having really beefy chain that can host all the Applications you can think of on a synchronously composable substrate. And yeah, composability I think is the ultimate reason monolithic chains need to exist. So there are, I think to me the most interesting combo is Hit one and wcm. I think you can draw a very interesting parallel to how traditional finance markets form. So you have NYSE and NASDAQ of the world and then on top of them you have brokers that face the retail, for example Robinhood. So kind of a fundamental structure here is that you have exchanges as the ultimate settlement layer and then you have different brokers that cater to different kinds of users. And so on Mega Eth, Hit One is one such broker that caters to people who wants to probably I would say YOLO a little bit open a kind of a high leverage position per position on blue chip tokens and then they pass users positions down to wcm, open a position there, a one to one mapping and in some sense they are kind of a proxy or they're kind of a broker, a kind of a curated experience for specific group of users to trade on WCM. But then underlying their tap into WCM's liquidity because it's kind of a one centralized piece of market infrastructure that in addition to hit one other market players can also, other market participants can also play with. So, so I think this is just one example of defi composability but with lending being bootstrapped right now we, we also expect to see just the normal defi composition between lending and, and yield bearing tokens and stuff. So yeah, yeah, I found it to be quite exciting. So yeah, you're right on the point.
- [10:57]
David
Yeah, WCM World Markets, this is a project on Mega Eth that when I talked to the founder I found pretty like uniquely compelling. And this is another thing that I want you guys to check me out. It's like it seems that world without like it seems like they do sort of represent some app center to all the other apps because of what it is. And maybe I'll describe what it is for the listeners just because I'm sure a lot of them are just kind of tapping into just like the depth of the mega ecosystem pretty recently. And so like World, it's a fully on chain centralized exchange as a dex and it has all of the features and products that you would expect in a centralized exchange, but as a dex. And so you have like margin accounts, you have spot markets, you have you know, perps markets. And the reason why they put so much stuff on chain is because Mega Eth has the room for it. And because it puts like Shuya, you mentioned that the whole state of world markets is on chain. Like there is no backend. The back end is Mega Eth. There is no extra data or extra computation happening. The whole system is on chain and we haven't seen that ever before. And that's like, that's the cool new thing about World. But that is, is, is that app operating as infrastructure for the rest of the Mega Eth apps. So like Lei, you just talked about how, you know, Hit one is the retail oriented, kind of like gambling consumer app uses world markets as the backend. But not just, not just hit one, but also bricks. Bricks is tokenizing a lot of emerging market yield opportunities accessible on world markets, as I understand it. So it seems to be like World is kind of positioning itself as kind of like the universal market front end, at least for the current state of the mega app ecosystem as I see it today. Like you guys are both nodding your head. Is that kind of how it's shaping up to be?
- [12:51]
Lei
Yeah, 100%. And this is where I think composability really shines because if you, yes, you can of course build say Hit one and Bricks each as an app chain, as an app on an app chain, but then liquidity between the two apps would not interplay. Right. And yes, you can have. I think nowadays cross chain transfers, cross chain transfers are becoming faster and faster. But I think a few weeks ago we just saw the, like the other side of it.
- [13:19]
David
Right.
- [13:20]
Lei
Because you're also still sustaining a lot of centralizing risks. Yeah, so exactly. Right. World is kind of becoming a, like a central. Yeah, when I said central, I didn't of course didn't mean centralized exchanges. Exactly. It's like a hub of liquidity, of liquidity on Mega Eth.
- [13:38]
David
And yep, let's talk about M USD. Every single app that I've talked to so far, Euphoria user, USDM. USCM. Excuse me, USCM. The Mega ETH native stablecoin is every single one of the apps that the 10 apps, the 10 out of the 10 apps that unlocks the TGE, they are all integrating USDM.
- [13:59]
Shuyao
So for audience who are not familiar, I think let's zoom back. Right. I think when Mega comes out, we basically redefine what a blockchain is. I think the idea of blockchain as a just a chain database is just gone. Right? You, you, you build a fast chain, but then you also have to build the economic engine on top of it. You also have to facilitate Liquidity hub, which is the world market. And I look at our stablecoin as part of the infrastructure. And the goal is very simple. Right. The goal is if you are part of the ecosystem, we rally behind a protocol, native stablecoin that gives everybody comfort and ease of familiarity to use usdm. But in the meantime, usdm, the yield generated from, you know, the stablecoin is going directly back to the token holder. I am a very strong advocate. People are saying token is dead and everything's equity. I just think they lack imagination. I think Mega is a token business and USDM is our first revenue stream which we're collaborating with our ecosystem rally behind it to make sure that people who believe in MEGA and taking risk in participating in the ecosystem are getting compensated and rewarded and we're not abandoning them. We love our Token more than anyone else.
- [15:22]
David
And part of this was downstream of the fact that the whole point of Mega ETH is to like not charge chain fees. Right. And so because Mega Eth has such high throughput, the, the chain fee revenue model is kind of just borked from the get go.
- [15:36]
Shuyao
Right, Exactly.
- [15:38]
Lei
Yep.
- [15:39]
David
Yeah. Okay. So that, that's, that's one of the 2 revenue models that I'm aware of, USCM, the yields, the, like the treasury yields, the interest rates that you get with being a stable coin. The other one is colocation. Talk to me about the colocation vertical and like the state of that whole project.
- [15:54]
Lei
Yeah, the colocation oracle is the colocation protocol. Sorry, not Oracle is kind of centered around the question of how can we capture a fair share of value for the volume for the transaction volumes on the chain. So if you think about USDM and the colocation protocol, USDM captures money's value at rest and the colocation protocol captures value when the move, when the monies are moving. Or like actively participating trading. Yeah, yes, exactly. So it's mainly centered around our whole architecture of having a few beefy sequencers being the servers processing the transactions. And around them we can build a semi exclusive cohort of servers where we can rent out to interested traders and market makers to enjoy low latency. And Mega ETH is uniquely positioned to build such a service because of the low block time. Because if you think about say Ethereum or Even many other layer 2s and of course other layer ones, their block times are on the order of at least several hundred milliseconds. And if you put that within the respect of the network latency, the network latency is not actually too much, say from New York to Tokyo, the Round trip is maybe 150 millisecon. So compared to that, the 200 millisecond block time might dominate the entire end to end latency. Whereas on mega eth, because we have 10 millisecond block time, suddenly the network latency becomes much more important. So then it's kind of the incentive for market makers and for serious traders to want to minimize that network latency so that they get an edge in trading. Yeah, so this is kind of the whole motivation of having this protocol and the mechanism is basically people can participate in biddings and we, I think we have multiple tiers designed, I think the closest tiers, the tiers that are closest to the sequencer will be a bidding process to, to determine who can get access. And then we have like an outer ring where people can just pay some upfront predetermined amount to participate. And once they got the seat, they will be able to hold the seat for some predefined, predetermined amount of time and they can set up their infrastructure. We also plan to provide them with low latency RPC and low latency data. Indexing is kind of an all in one suite of services so that even individual traders who are just interested in say market making or maga, if they do not need to hire a like a 10 person team to build out the data pipeline, they could just come and connect to our pipeline and start trading. So yeah, so this is kind of the paradigm and again as I mentioned is just to kind of, we're, we're kind of designing it to be very coherent with, with USDN so that some value is captured regardless of say the macro, whether the interest rate is high or low lei.
- [18:49]
David's Co-host
This idea of colocation in this revenue model, how would you compare this to sort of mev? Is this essentially like block ordering?
- [18:57]
Lei
Yes, well, it is very similar to mev, but we're taking a very different approach. I think MEV is trying to do microscopic auctions in the sense that they try to do an individual round of auction to determine the individual transaction ordering of every individual block. And if you have a block every, say 12 seconds, this is somewhat doable. But I do know that I think even Ethereum layer one is trying to reduce the block slot length. So I think having an auction per block, as you decrease the block time, it will be problematic because how can you say gather information, gather bits from all parts of the world, say every few hundred milliseconds, if not every tens of milliseconds to determine the transaction ordering within the block so our approach is to not do microscopic auctions or to determine the transaction ordering for every single block, but rather we consider this kind of predetermined amount of time. For example several weeks where we host an auction or we rotate the participants in the proximity protocol and once determined they hold the seat for several weeks so that we do not have to run so many auctions per block. And then they compete on say physical, they compete on physical time, for example, time to, to finish an order, time to kind of to compute and response to a market event and of course compete competition between the different tiers of the product of the proximity market. So this is the kind of the slightly different approach we're taking. But overall yes, this is kind of taking is kind of making profit from the same pool of money as mev, but we are just, I would say distributing it or allocating it differently. I think for mebs, I think it's very easy for individual searchers to get semi monopoly. But in our case we have built in mechanisms to make sure that within each tier the profit is distributed more evenly and more fairly, for example by adding random jitters.
- [21:10]
David's Co-host
So let's complete the circle here and talk about how these two revenue drivers, I mean, you know, go get to token value accrual. Because the nice thing I think about Mega ETH and, and what you guys are launching here is that many blockchains don't think about their business model, have never thought about their business model. But Mega ETH comes baked in with like revenue drivers which is, that's new for crypto. So how do these sources of revenue then at the top line get back to some sort of value accrual story to the token? How does it make its way all the way back to token holders?
- [21:47]
Shuyao
Yeah, I think getting business model right was when we started Mega we were like okay, just producing block space is not a good business. And we also have some big news coming in May that. Yeah, so we, all I'm saying is we've been building a lot of things beyond just a blockchain in terms of, you know, token getting value back to token holder. There are many ways to do it and I'm not certain how much I can say based on depending on you know what my general counsel tell me what I would, what I'm super clear is the dollar that MEGA takes home, right. Whether it's from proximity market or from USDM that is going to buy back mega. In terms of the mechanism we are deciding the best and the most fair way to the market given the Past experiences. And you guys have seen it on Twitter. There are different ways to do it and then there are ways we can disclose it from our perspective. We just want to assure everyone that, you know, the money is not going to go to the core team's pocket. The core team is very incentivized to have the token go up. And the primary reason is that the core team only took 9% of the entire token pie chart. So for us to also get, we are also incentivized to get more mega to hit our KPI to continue to earn tokens. So everyone, I think the mega token is so beautiful because it just aligns people who are naturally not aligned historically, right? The retailers are complaining, the VC is dumping on them, the VC is saying, hang on, the founders also dump on me. And then everyone is just like pointing at each other like Spiderman. But what we're trying to do here is like, look, the core team took solitaire. Look, we gave retail allocation at very low valuation. Look, this thing has a revenue stream. And look, everybody earned token by staking to earn KPI. And look, by the way, we love Ethereum so much that one of the KPI is Ethereum decentralization. So yeah, I think things come into a nice place because we just spend hours trying to again apply imagination and creativity to token because we don't view tokenized equity.
- [24:07]
David's Co-host
You said One of the KPIs is Ethereum decentralization. What is that? For those not familiar, what are you measuring there?
- [24:14]
Shuyao
I can share the rationale. Because we are an Ethereum layer two and we took performance trade off. It is to our interest that Ethereum layer one to be as decentralized as possible. So instead of just shouting it on top of our lawn, we're like, we're just going to allocate token toward that KPI and everybody wins if that KPI is getting hit.
- [24:39]
David
So the two business models that I see out of Mega eth, one is the MEV markets, which I see like you guys have a, not, not a decentralized blockchain, but like some of the infrastructure is actually quite centralized. And that's the advantage that you guys have. And so what you guys did with that feature is you really just formalized and structured the MEV markets around me, around Mega eth. And MEV is something fundamental to blockchains. There is no such thing as a blockchain that does not have some notion of transaction ordering. And so it just makes sense take, take the thing that's fundamental and make a business model around it stablecoins aren't like technically fundamental, but in 2026 we look at stablecoins on all the chains and it seems like if you are an alive blockchain, you have an alive stablecoin ecosystem along with it as well. So technically not fundamental, but it feels like it is. And so you're taking the two most seemingly fundamental business models and you're kind of just turning it into revenue for the token. Are there any more? Is there a third that you guys are ideating or if I'm just putting on my investor hat and I want to look at the long term potential of mega. Is this kind of. Are these the two that I should focus on?
- [25:48]
Lei
I would say we're a very focused team. So that's also we kind of try to pick. So it's all about kind of deciding how to allocate a revenue within the ecosystem. Right. I think the chain team should be a bit restrained, I would say so that there's an vibrant app ecosystem. They can get their fair share. But meanwhile, yeah, we also need to. Yeah, we also need the tokens to do well. So it's a kind of a delicate balance, I would say. So what I can say is we are very focused and we are thinking about something that I think is equally fundamental as the other two. But yeah, no detail to share right now.
- [26:26]
David
Let's get into the actual TGE details. So TGE tokens alive and trading. I'm an investor in the pre sale. I think I have a one year lockup. So whose tokens are trading? Who's the first party of people that gets their tokens and what's the supply? And so talk to me about the release schedule of the token. Who gets how many tokens first? Who gets how many tokens second? How does the token actually come into the ecosystem?
- [26:54]
Shuyao
I think our token is like a super transparent. I think to start with, everyone had a cost base. Everyone who gets MEGA invest in a mega. There is zero airdrop farming. I think when we started this no airdrop farming, we got basically hated by everyone. People thought we were being arrogant or some sort. But I think now looking back, it was just the right decision. There's no hidden airdrop, right. As we all know, a lot of team play around with their tokenomics. That just like doesn't happen with us. So day one we have obviously the Fluffle and ico, those people who chose not to log. We actually surprise unlock 20% of echo participants. It's funny, we have this telegram group called the People's Chat and then we have all of our just different phase of ICO investors. And a lot of them were like, oh my God, like Echo Bros. We invest so early. Where's our token? Blah, blah, blah. And then after a while we were like, actually, you know what? These people believed in us before we were even a thing. Like before any of the apps went live. So we decided to unlock 20% of them so at least people can get some of their money back.
- [28:07]
David
So the people who bought the fluffle NFT, they, they are 100% unlocked. Those are, those are the supply of tokens coming online day one, 20% of the Echo sale people, the people who elected to lock for a longer time term, for better. For longer time, for a better terms. 20% of those are also unlocked. And those are the two pools of people that are unlocked day one.
- [28:32]
Shuyao
And then also the ICO participant who chose not to lock.
- [28:37]
David
Okay. Oh, right, there were three sales. So flufflesale, the Echo sale and then the ico. Was that the correct order of time that ICO happened most recently?
- [28:47]
Lei
Okay, correct. The first is Echo.
- [28:49]
David
First is Echo. Okay, what's the total supply of the tokens that'll be online at the end of the day? Do we know this?
- [28:56]
Shuyao
You can do the math. The math is pretty straightforward.
- [29:00]
David
Okay, we'll leave that to the listener to.
- [29:03]
David's Co-host
No, we'll have Claude do the math afterwards.
- [29:04]
David
We'll have Claude do the math.
- [29:05]
David's Co-host
Leave it in the show notes.
- [29:08]
David
What happens next? So then with regards to just the token release or anything related to the token, are there incentives?
- [29:15]
David's Co-host
Will.
- [29:16]
David
There are. Will the lack of an airdrop continue to be a lack of an airdrop which is. Or what are the next milestones that anyone interested in tokens should know?
- [29:24]
Shuyao
Yeah, I mean we're recording on Tuesday, so we just announced our portal, which is called Terminal today. And the goal is to surface applications that's being built Mega and then we have program. It's an incentive campaign around it. And the goal is very simple. Right. Like there's like, we don't like points airdrop farming, but we think people should get rewarded if they're actually taking risk with their time and then capital to support Mega only applications. So we have that coming up today and then actually on Thursday we're going to unlock another wave of novel applications. So there will be a few waves that's coming in and every app has been curated by us. We have make. We've made sure that they've done their audits, if not just one audit. We know the people we, we make sure that, you know, they, they're real. And then we were able to like go to market with them. So I think Terminal is very interesting. We also have the program for our kpm which is called Flux, that's also going to come live on Thursday and it's basically allowing people to participate into our kpm so you can get your token and basically, you know, people need to make the decision, right, do I want to sell my token or do I want to participate in Flux? And then for me to earn more Mega Token. And the idea is, you know, the earlier you participate in Flux, the better the term is. So, so yeah, that's another product we're very excited about. And the last one in May we have another brand new product where we're launching.
- [30:59]
David's Co-host
So it seems to me that Meg Eth is breaking a lot of the conventions in crypto. Like, I mean this in a good way, right? So shipping with a business model, that's new, that's different post chains don't do that shipping without kind of doing the airdrop thing where every token holder has a cost basis. Even the architecture, of course, which is just like maximizing centralization, but within the boundaries of Ethereum's decentralization. I mean these are conventions that are kind of new and have been broken. I was actually thinking about you guys the other day when I saw a tweet from the new VP engineering of polymarket, which of course bankless listeners are familiar. Very successful app within crypto, maybe the most successful app crypto has actually built. So they're launching perps and doing some other things. And one of the things that the new VP engineering said is we need to scale and the current infrastructure that we have today is not necessarily going to scale with us, so we need something different. I immediately thought of Mega Eth because that's how you guys are architected, that's how you are built. But if a polygon, sorry, if a poly market was going to migrate to Mega Eth, let's say that would be a pretty large successful application making that migration. And I guess my question is like, can Mega Eth support that, the size of that sort of an application and does that fit with the thesis? This is a way of asking like what's the role for kind of the app chain type of model in crypto and where do you see that evolving? Is someone like polymarket better off with their own app chain or could you see them finding a home in, in a highly performant chain like Mega Eth? And what are the trade offs There.
- [32:55]
Lei
Interesting. So I think we kind of touched on that point a little bit a while ago. So it's about what's the benefit of a monolithic chain with high performance than can host many apps and to have them compose Synchronicity. And the key here is composability. So I think we, we made a, we went through a few examples and if like a hypothetical application can come and there are a bunch of existing primitives on Mega E that are thriving and with lots of liquidity, lots of interesting existing users, I think this is a major benefit to these new applications. And this is also one of the north stars. When we curate our ecosystem, we just keep asking ourselves, can we cultivate a cohort of applications such that when new applications are kind of shopping around for change to build on, they can immediately recognize that okay, hey, megaeth has everything I already have, not just in terms of performance, but also in terms of building blocks. And they might realize that it takes very little time or effort to build what they want to build on top of Mega Eth. So this is kind of our ultimate end game in terms of ecosystem. And then kind of coming back to a more technical perspective, I think building on a chain that already exists, I think it just saves a lot of headache. Xuyao and I went to New York for a micro offset and we also got to meet a bunch of mega mafia founders. I think we kept hearing from them that, we kept hearing them telling us that yes, we know there are app chains, so many stacks to choose from, but we just want to build apps because it's such a pain in the ass to get all the infrastructure ready for an app chain. Think about on, ramping off, ramping, bridging security, getting the servers, paying for the servers, thinking about gas tokens and, and yeah, and all sorts of stuff, right? So rpc, for example, it's, I think each individual ticket is not a big effort, but combines. You cannot imagine how much time and energy we have to burn on just getting all those infrastructure projects and infrastructures lined up for a chain. So I think building on a monolithic chain also saves that headache from, from app founders. And then I think composability or asynchronous composability or cross chain transfers, however you want to call it. I think there are fundamental limits. Light clients are not there still. So without light clients for layer ones, it's I would say almost impossible for people to build fully trustless, fully decentralized cross chain transfers. And I think that's a big headache. So Just technical wise, I don't think you can get as seamless or as secure of an application if you just build an app chain. So yeah, and I guess finally the brand, the distribution channels a modality chain might have. It's more like people banding together into some sort of a nation or some sort of a. Like a federal federated states, some sort like that. I think these are the main benefits, I think to build on a chain. But of course I think some applications that does not. There are of course applications that do not care about or do not care a lot about say the cost of upkeeping, the infrastructure. They have their own distribution. Yes. And I would say yes, it's probably more beneficial for them to build an app chain just because they control the entire app stack. Sorry, the entire tech stack. Yep. So I think there are pros and cons.
- [36:43]
David's Co-host
Would Mega Eth have the scale to support a poly market? I mean, I know this is a very precise question that's probably like between you and another engineering lead, but just like off the cuff. Right. We kind of know what they're doing on, on their existing chain today and say that they want to 5x or 10x that. Does mega Eth support that?
- [37:04]
Lei
Yep, that's. I am pretty confident and I think actually one actually Brad from our team, I think he did a calculation and I think Mega Eth can host some 300 polymarket instances right now. So yeah. Wow, he made a tweet.
- [37:20]
David's Co-host
Yeah, 300 polymarket instances.
- [37:23]
Lei
340 something.
- [37:25]
David's Co-host
Can you remind people how you're able do that? Like what's kind of the Mega Ether architecture and short secret sauce.
- [37:31]
David
The X factor.
- [37:32]
Lei
Yep. So yeah, actually not too much secret source, more like an interesting architecture. So as you mentioned, we have a few very beefy sequencers that process transactions and that saves us a lot of say consensus, the cost of consensus. And yeah, we have a new state trie, which is basically the data structure that allows Ethereum to compute that Merkle root, that state root in block headers. It turns out that that particular data structure used in vanilla Ethereum or many other EVM compatible blockchains are accounting for over 90% of the overhead when building blocks. So we got rid of that and replaced it with a in house designed data structure plus implementation and that completely eliminated that bottleneck. We're at least 10x faster if not more than the millennial data structure. And then optimizations here and there. For example, a new database backend to speed up state read and write. We heavily cache state slots in the memory so that you enjoy the speed of your computer's memory, not your computer's ssd, which are indeed fast, but not fast enough. And we have a whole new RPC infrastructure built by ourselves, by our engineers. It pushes data from the sequencer to the edge of the Internet. In other words, some data center that is maybe a hundred miles or less or closer to our home so that your access to the blockchain, they all go through the RPC service. It's fast because you are actually talking to data center that is maybe 5 or 10 milliseconds away from you.
- [39:17]
David's Co-host
Something we've seen, of course in 2026 has been the rapid adoption of AI. You guys have a highly performant, I would imagine, AI optimized chain. What are you doing to prep for this wave of AI agents? And how do you think that's going to manifest?
- [39:35]
Lei
Interesting question. So yeah, I personally do you use AI to code? And so I think one and I also tried to automate the company using AI but I failed because I have big trust issue. So for example, yeah, really. So I have big trouble trying to connect OpenCloud or any kind of cloud hosted AI to our company Slack just because I don't want some other company or I don't want information to be transmitted to yet another company. I know Slack is cloud based, so I'm kind of a paranoid, but anyway, so I think the same paranoia can be applied to blockchains because if you think about AIs, they are great machines that can propose solutions that are 99% of the time perfect, but 1% of the time catastrophic. So how do you make that work for your chain's users? So my mental model has been to comparing AIs or AI agents with very talented intent solvers. They work very similarly. So we'll tell an intent solver in say an intent protocol. Hey, please find me the best way to swap say USDC into Ethereum into Ether. You care about a quote and also of course you care about security. For example, the intent solver should not be able to just take your money away, but you do not really care about how they arrive at the amazing quote they actually materialize. Right. I think same goes for AI. When you tell AI to code, I think people start to care less and less about what actual code was written. I don't think I check the diff AI works out anymore. I just care if it works like if it kind of adheres to some kind of spec I give the AI. So I think the same can be said for on chain transactions, we envision that AI agents will help users make sense of contracts, hidden and public ones. And we expect that AI agents will help users to transact and to actually achieve their, say, our financial goals or whatever they want to achieve. For example, swapping. Right. So what we're working on is trying to put the necessary boundaries to AI agents. It is almost similar to intent protocols. We want a way for users to specify the end goal they have for their AI agents and also what the AI agents can do or cannot do. I just make an example, right? If I want to swap from say a thousand dollar of USDC to, I don't know, maybe 0.5, maybe 0.25 ether, I can state that this AI agent can at most withdraw this amount of USDC from me. And if they withdraw the money, they have to at least repay at least, for example, 0.5 ether to the same address. And then the AI agents can go all crazy and do whatever they want as long as they do not break my constraints. So we're thinking about how we can optimize the chain for this kind of use models kind of compartment and adding restrictions to AI agents. And also we think Mega Eth is a great place for AI agents to use as a playground. Because if you let AI agents go crazy, they burn a lot of tokens. They also have many failed attempts, right? So if you try to use AI agents to automatically send transactions on your behalf, on an expensive chain, maybe the transaction cost they can add up. But on a chain like Mega Eth, this is not an issue. So this is kind of a snippet of what we think about AI agents. We do have something that is very interesting that we're trying to announce next month. So yeah, stay tuned.
- [43:37]
David's Co-host
Okay, we'll be on the lookout for
- [43:39]
David
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- [45:15]
David's Co-host
One other thing that's relevant is the recent KelpDAO hack. And I'm wondering if you could test sort of a thesis David and I were playing around with, which is basically so we had kelpdao. Everyone's aware is listening to bankless. Kelpdao was hacked. Some of the funds ended up actually on a layer two. It was the arbitrum layer two. In this case there's stage one, layer two they decided to freeze the hacker's account. Is it likely the Lazarus group and essentially reimburse the funds from the hackers. So steal from the thief in an act of, you know, I guess retribution for the ecosystem. This caused David and I to be thinking about how L2s are going to, you know, take some form and there some of the idea is that the center may not hold here where L2s will have to sort of make a decision as to whether they go fully decentralized kind of stage two. We don't have the ability to do any of that or whether they implement processes and automation and stay with kind of like stage one and below they maybe like automate freeze functionality, become a little more fintech in that, in that role and in that way. And it's unclear really what users might prefer and every ecosystem might make a different set of decisions on this trade off landscape. What's your take on this? Has the events of Kelp Dao arbitrum freezing some funds due to nefarious actors on chain. Has that changed your outlook for Mega Eth and what it intends to do? Like are you guys going full stage two or are you going to ease into that decision? What's the thought process?
- [47:00]
Lei
It's a very hard question to answer, so I'll break it apart. I think the Cal Dao hack itself is more like a validation to my belief that centralized cross chain transfers at some point they're going to break, it's just a matter of time. So I'm very happy that my conjecture was validated well, but it's really, really bad event. So yeah, it's really unfortunate. Then I think, yeah, I think the Arbitron freeze, I think it caught me a little bit off guard because first I, I was not really tracking the, the movement, the flow of the, of the 30 money. So I was a bit surprised that it flew to it, it went to Arbitron. I mean I, I, I can, I can, I totally understand why or how the team or the governance body made that decision because I mean everyone is supposedly living in some for sovereign countries and I think they are, they are, they are, they are subject to the law and order of the said countries. So I think sometimes there's no option but to do certain things. But I do think the beauty of blockchain, the beauty of decentralization is this notion of yes, like code is what we trust in ultimately. Right. Code is the ultimate specification of how say smart contracts or say on chain finance should behave. So I think there is some beauty in that. And in terms of whether Mega Eth will go to Stage two, I don't think we should make any promise as advised by our General Council. But I would say personally I find it a really promising, a really inspiring end game for us or for any Layer two I would say. And I would even go as far as saying if you are building a Layer two on Ethereum, if you do not want to be stage two, ultimately you are not ambitious enough.
- [49:03]
David
So did anything about the layer 0 Kelp Dao event change your philosophy or direction about anything else? Or is it kind of just like yeah, we had our attitudes about things prior and we're still going for them and no change?
- [49:20]
Lei
Not really. And I can totally see how it can be a trick question because yeah, we, we talked about our performance oriented sequencer a lot but like centralization or monolithic sequencers does not really conflict with the goal of being Stage two. Right. It's all about having an immutable piece of code that validates the layer two state sitting on the layer one. And that code being the ultimate say of what can and cannot happen on the layer two. And I think again, that's a really inspiring goal for every layer two. So I would say no. And actually just funny enough, I was in New York and I was chatting with the founders of World wcm. So I was asking if. I was asking. So hey, if your end goal or even if your current architecture is to be fully on chain in the sense that there is no backend server supposedly, you can also make your contract immutable. Of course the current contract is not immutable because yeah, God knows when you need to do an emergency upgrade. Right? But their goal is also to make their contract immutable. And I felt good. I think there was some good synergy between their thinking and our thinking. What I want you to say is with great power comes great responsibility. I think layer 2s inherently have more power than layer 1 size. And I think that's also the reason that the Arbitram team faced a decision and I think they took one particular option. To me, my preference is I do not want the power. Yes, it's interesting that now you can arbitrate between returning the money or not returning money or not freezing the money, but I would rather not face that question because I mean, who wants to be caught up to serve jury duty every other day, right?
- [51:21]
David
That's a great answer.
- [51:22]
Shuyao
I have a bit of more practical answer to this question. I think the incidents first of all made us very much alert of the application security. So we deployed two or three engineer, one of the business person to go to basically every single app and be like, yo, these are all the tools you guys should use to really do the homework and audit and have security Railguard. The second thing is we inserted a sequencer native monitoring tool with the security farm. So we're able to identify abnormally and anomaly ahead of the time to able to alert our application founders. And then the last one, we've hardened the security of the bridges and that's both for our native bridge and also third party bridge. So these are the things we've been doing behind the scene for the last two months in addition to, I think with the goal of being immutable and then being very secure. And in preparation for this, I listened to a bunch of blockchain founders going on podcasts and all the layer one founders, their opening line is layer twos are bad. It's like how you justify your valuation, right? I kid you not even with Defi United. Our good friend, I mean at Avalanche was like, oh, we're contributing to Ethereum is like the layer too. So I think it's our responsibility to correct the Name for layer 2s viables, technical contribution and economic contribution. So yeah, I think security is like a forefront of all of these.
- [52:55]
David
Well, I definitely appreciate your guys answers. You guys have absolutely no shortage of ambition on the Mega Eth side of things as we just bring this episode to a close. What are you guys doing on TGE day and the day after and then the week after. Just in the short term, what is, what is a life in the day of the Mega Team look like for the short term?
- [53:17]
Shuyao
Yeah, short term. Our goal has always been so freaking consistent, which is supporting applications. We've done that for the last two years. Things do not change tge nor does it change a month, a week or a month after tge. Our applications require more go to market support. And by the way, we have three, three more Mega Mafia team that's gonna come out a week after TGE and then we have a big product launch in May as well. So you know, I write this weekly memo to the company every single week and to, to me and the entire firm, my message has always been like, you know, TGE day is day one. Now the baby is out. Everybody's watching you. Every single thing you do has an impact that's just straight in front of your face. Nothing has changed for our company. We have a new product launching. We're very excited about AI we don't talk about it because I think talking without showing anything substantial is cheap these days. So yeah, I hope our action can speak for itself.
- [54:20]
Lei
Yeah, I have a different version so I would take a good nap on the weekend and I will make an E Ink dashboard showing mega token price and I'll hand it in front of my desk and. Yeah, and I'm I'm just. Yeah. And probably onto the next project. Probably onto the next, the next product. So I think our engineering team has been sprinting for so many weeks tirelessly. Yeah, I think everyone is looking forward to work on a new fresh set of problems because I think we do have a culture of being tireless as long as there are interesting problems to solve.
- [55:02]
David
Well, as a Mega ETH token holder, I do like the idea of you having the price of the token on your desk at 24 7. That is good motivation.
- [55:10]
David's Co-host
Be prepared for some ups and downs though.
- [55:15]
David
Shuya Lei, thanks for coming on. Congratulations to getting to the starting line. I wish you guys a good race.
- [55:20]
Shuyao
Thank you so much.
- [55:21]
David
Bankless Nation. You guys know the deal. Crypto is risky. You can lose what you put in. But nonetheless, this is the frontier. It's not for everyone. But we are glad you are with us. The Bankless Journey. Thanks a lot.