Ep. 638 Layer 1 Sei's State of the Union

Summary

CRYPTO 101 Episode 638: Layer 1 Sei's State of the Union

Hosts: Bryce Paul & Brendan Viehman
Guest: Jay Jo, Co-Founder of Sei Labs
Release Date: January 28, 2025

In Episode 638 of CRYPTO 101, hosts Bryce Paul and Brendan Viehman delve deep into the evolution, challenges, and future of Sei Labs, a prominent Layer 1 blockchain platform. Joining them is Jay Jo, co-founder of Sei Labs, who provides invaluable insights into the project's journey, technological advancements, and the broader crypto ecosystem.

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1. Introduction to Sei Labs and Jay Jo's Journey

Bryce and Brendan kick off the episode by introducing Jay Jo, highlighting his extensive experience in the crypto space since 2012. Jay shares his personal journey, from his early exposure to crypto during the 2017 bull run to his professional tenure at Robinhood, where he witnessed pivotal moments like the GameStop saga.

Jay Jo [02:59]: “That was the kind of initial inspiration for us to be like, okay. This system where everything is super opaque, nothing's transparent... and turn off buys or something.”

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2. The Genesis of Sei Labs

Jay Jo recounts the founding of Sei Labs, inspired by frustrations experienced while working at Robinhood. The unpredictability and lack of transparency during events like the GameStop short squeeze motivated him and his co-founder to build a more transparent, on-chain alternative.

Jay Jo [08:17]: “We started building something like Robinhood, except building it on chain.”

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3. Challenges in Building a Layer 1 Blockchain

The conversation shifts to the technical and financial hurdles Sei Labs faced. From fundraising during tumultuous times like the Terra and FTX collapses to the initial struggle of attracting developers to their mainnet, Jay emphasizes the resilience required to navigate these challenges.

Jay Jo [18:27]: “Fundraising has been consistently one of the harder parts for us.”

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4. Embracing EVM Compatibility

A significant turning point for Sei Labs was recognizing the dominance of the Ethereum Virtual Machine (EVM) among developers. This realization led to the development of SEI v2, the first paralyzed EVM, enhancing both performance and compatibility.

Jay Jo [14:56]: “We realized that the EVM is here to stay... the EVM is also much more than that. It's an entire ecosystem.”

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5. SEI's Current Position and Community Growth

Despite being a relatively middle-tier project in the Layer 1 landscape, Sei Labs has made commendable progress. The introduction of SEI v2 revitalized community interest, leading to an influx of applications like NFTs and meme coins, thereby strengthening the ecosystem.

Jay Jo [37:41]: “We have a very real community and I'm just honestly very, very thankful for that.”

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6. The Giga Upgrade: A Leap in Performance

One of the episode's highlights is the discussion around Sei's latest Giga Upgrade. Launched in December 2024, this upgrade redefines SEI's performance metrics by increasing its gas per second capacity from 105 to an astounding 5 gigagas per second—50 times higher than existing mainnets.

Jay Jo [42:45]: “With that we're able to get, right now we're able to get 5 gigags per second. So this is 50x more than anything you see on mainnet right now.”

This monumental upgrade positions Sei Labs to handle complex, high-throughput applications, paving the way for "killer apps" that can drive mass adoption.

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7. Future Vision and Regulatory Landscape

Jay Jo elaborates on Sei Labs' aspirations to ascend to an S-tier Layer 1 project by fostering the development of groundbreaking applications. He underscores the necessity of clear regulatory frameworks to legitimize and propel crypto forward. Notably, he mentions potential policies like zero percent capital gains tax for American crypto companies, which could revolutionize the sector.

Jay Jo [31:06]: “If something like that happens, I think crypto will quickly become the hottest sector in the United States.”

Brendan adds that regulatory support, such as the proposed Bitcoin reserve, could further integrate crypto into mainstream financial systems.

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8. The Importance of Ecosystem and Community

Reflecting on Sei Labs' growth, Jay emphasizes that technological advancements alone aren't sufficient. Building a robust ecosystem with active developers and innovative applications is crucial for sustained success.

Jay Jo [36:45]: “The only differentiation that you're able to get is tied to the ecosystem and the community.”

Brendan concurs, highlighting that Sei's advancements in scalability open doors for projects that demand high performance, thereby fostering a vibrant and diverse crypto environment.

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9. Closing Thoughts and What's Next for Sei Labs

As the episode concludes, Jay Jo reiterates Sei Labs' commitment to enhancing blockchain performance and building an ecosystem rich with transformative applications. He invites listeners to engage with Sei Labs through their Twitter and Discord channels, ensuring the community remains at the forefront of their journey.

Jay Jo [48:48]: “You could just follow Sei Network on Twitter. They'll have all the announcements and then you can also join the Discord.”

Bryce and Brendan express their excitement for Sei Labs' trajectory, anticipating significant milestones following the Giga Upgrade.

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Key Takeaways:

• Transparency and Decentralization: Sei Labs was founded to address the opaque practices seen in centralized platforms like Robinhood, emphasizing the importance of on-chain transparency.

• EVM Compatibility: Recognizing the dominance of the EVM, Sei Labs ensured their platform is EVM-compatible, facilitating easier adoption among developers.

• Scalability with the Giga Upgrade: The recent Giga Upgrade significantly boosts Sei's transaction processing capabilities, making it a frontrunner for high-performance decentralized applications.

• Regulatory Advocacy: Clear and supportive regulations are pivotal for crypto's mainstream acceptance, with Sei Labs advocating for policies that benefit the ecosystem.

• Community and Ecosystem Building: Beyond technology, fostering a dynamic community and attracting innovative projects are essential for long-term success in the Layer 1 space.

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For those keen on staying updated with Sei Labs and their groundbreaking developments, follow them on Twitter and join their Discord.

Transcript

[Jay Jo]

Foreign.

[Bryce]

Everybody. Welcome back to another episode of the Crypto 101 podcast. I'm your co host, Bryce, as always, joined by my good buddy, Mr. Brendan Beeman. Brendan, how are you doing, my man Bryce?

[Brendan Beeman]

I'm doing good, I'm doing good. It's a great time to be in crypto and you know, we've had a lot of requests for this very project. I've seen the chatter in the community, so I think everyone's going to be really excited for what we got in store.

[Bryce]

Yeah, this is, this is a really exciting episode. We're bringing on the co founder of say Labs, Jay Jo J. How are you doing today?

[Jay Jo]

Life is good guys. It's been a past few months have been incredible. I would say chaotic in many ways, but things are good and thank you so much for having me on, guys.

[Bryce]

Awesome. Yeah, chaotic I hope. Yeah, like you said, in a good way. Hopefully with just with the business and with growing but everything. Personally, two thumbs up. You had a good holiday and all that?

[Jay Jo]

Oh yeah, holidays are great. I'm actually in SF right now and I haven't been in SF for a while and it's, it's crazy just to see how the city is coming back to life right now.

[Brendan Beeman]

So.

[Jay Jo]

Yeah, been a past week as well over here.

[Bryce]

That's really good to hear. Yeah, things have been pretty dismal over there for the past couple years, which is sad because it used to be such a, a bright light, a beacon of hope. It's good to hear the boots on the ground. You're over there, things are looking brighter.

[Jay Jo]

Yeah. So we actually got started with say back in SF and I think at that time it was kind of reaching its like pico bottom. So I remember 2021, it was kind of nice and then it just progressively became worse and worse. So nice to be back here in a way.

[Bryce]

Yeah. Was that, where was that when you were at Robinhood in San Francisco? Because I seem to remember you and your co founders got your start. Tell us a little bit about the genesis of say Labs and everything you guys got going on here.

[Jay Jo]

100%, guys. Yeah. So my story is that I grew up in the Bay Area. I lived in different parts of the South Bay, East Bay, and then I ended up going down to college in la. So I've been basically in California most of my life. I ended up meeting my co founder through speech and debate back in high school. Did you guys used to do debate at all?

[Bryce]

I didn't do speech and debate. I did like comedy and like Improv and stuff though, believe it or not.

[Jay Jo]

That's a lot cooler. That's a lot less nerdy than debate was. Um, but yeah, like that. That's how I met him. We went to competing high schools and I've known him since, I guess this is when I was 14. So it's been around 14 years now, I guess. Yeah. Crazy that I've known him at least known him for half my life. Wow. But yeah, since then. Yeah. I went down to college to study computer science. Afterwards, I ended up. Well, I guess there's like the story of how I got into crypto and then there's the story for how we started today.

[Bryce]

Yeah, I love both, actually.

[Jay Jo]

Yeah. Yeah. So I initially got into crypto back in the 2017 Bull Run. So I was graduating college, 2018, but my friends, they were graduating 2017 and a lot of them were joining Facebook at the time. So for anyone that might not really be as familiar, like these Silicon Valley companies, they tend to give potentially large signing bonuses to anyone that is a new hire that's joining full time. So my friends, they were getting $100,000 signing bonuses for joining Facebook back then. And I mean, they give a big chunk of it right when you sign. So I think it's like 50, 60k you get immediately when you sign the offer letter. So they had this money, they're like, what should we do with it? Well, given that there were like these 21, 22 year old kids, they're like, okay, let's just dump it all into ether. And they dumped it all into ether when it was like $40 a token. Which, I mean, it was incredible to, um. Looking back at it, it's incredible foresight that they had. I think back then I just thought that they were gambling addicts. And I mean, potentially both of those were true. But yeah, they. They dumped it all into ether. And then they just. I mean, everything started picking up back then. Right. So I saw them write it up. They then decided to start like trading alts. And if there's anything that I guess you can learn from that is don't start trading alts if you don't really know what you're doing over there. So in their case, they ended up losing all the gains they had. They ended up breaking even. I think they learned some life lessons from that. I was watching them learn some life lessons from that, and that's kind of how I initially got exposed to crypto. Afterwards I graduated, I was working full time at Robinhood, and at that time I was living in Menlo Park. So Menlo park is right next to Palo Alto, really close to Stanford campus. And my roommate at the time, he was one of my friends from my last internship. He was getting his master's from Stanford and he was starting a crypto company. He was actually going through Binance Labs at the time. So I was like, oh, shit, you're doing this cool stuff. I want to learn more about it. And that's how I got exposed to smart contract development and actually learning about the technical parts of crypto. Because 2017, I didn't really understand what a consensus algorithm was. I just knew what tokens were and where you could buy them. 2018, I learned a lot more about, oh, these are the different consensus mechanisms. This is how a smart contract works. Like, all that kind of stuff, Right? And then afterwards, I like, that's my kind of intro to learning about the technical side of crypto. I spent a few years at Robinhood after that, around three and a half years in total. And I joined as an engineer. So a new graph software engineer eventually became an engineering lead over there. And it was wild to see the company scale. Like, when I initially interviewed for Robinhood, it was two houses across the street from each other in Palo Alto. In one of the houses, they literally took the bedrooms. At that house, they put standing desks over there, and that's where the engineers would work from. It was very scrappy when I initially met the team.

[Bryce]

It reminds me of the Silicon Valley TV show.

[Jay Jo]

Exactly. Yeah. I feel like all these great companies get started from these really scrappy initial garages or bedrooms, whatever. I think in many ways, Robinhood was quite similar over there. And I think their story before they had the entire GameStop saga was just. There were so many interesting tidbits that story, like how they got started. They initially weren't even working on a trading app. Like they were doing something entirely unrelated. And they just ended up getting really lucky from Hacker News with that. But anyway, so, yeah, I mean, I worked at Robinhood and I was there when the GameStop saga happened. So for anyone that might be a listener that doesn't remember, in 2021, there were, I want to say, around a dozen meme stocks that people on WallStreetBets, which is a subreddit, just became extremely enthusiastic about. So these meme stocks, they were basically people were buying them without really thinking about the fundamentals. So these meme stocks, they just kind of started shooting straight to the moon. And a lot of sophisticated hedge funds are like, this makes literally no Sense. The fundamentals over here don't make any sense. So we're going to start shorting it. And shorting is like, when you're betting against the market, you think the price is going to go down on that asset. And mechanically, when you're actually shorting an asset, you need to borrow that asset from someone, then you need to sell the asset. And then when you're closing the position, you need to buy the asset back and then return it to whoever that person is. So when you actually close a short, you need to buy the asset. And what this means is if the price starts going up a lot and someone needs to close their short position because they've lost a lot of money, they then need to buy the asset, which leads to the price going up even more, which causes this phenomenon called a short squeeze. So that makes the price go up even more. So it was just, like, really incredible moment back then. 2021, these meme stocks were doing really well. Hedge funds were losing a lot of money on it. And then just out of the blue, Robinhood turned off buys. There was one day, I think it was like, January 28th, Robinhood people woke up. They're like, oh, shit, I cannot buy GameStop anymore. I cannot buy. I think BlackBerry was another one of these meme stock. You can't buy any of these anymore. The entire world was just super upset about that decision. And as an insider, you feel super shafted when something like that happens. Because before then, you're kind of representing Robinhood to all your friends. You're bragging about it in a way, like, oh, look at this cool company that I work at, for sure. And then when things go to, it's like, okay, well, I didn't really do anything about that. Like, I don't know how they made that decision, but my friends were getting mad at me. Like, people that I actually hadn't talked to for, like, two to three years were DMing me. Like, one guy, I had an intern.

[Bryce]

Turn the buy button back on. You're an engineer. You could do it just for my account. Put it back on.

[Jay Jo]

Exactly. Like 2015, I interned with this guy. I hadn't chatted with him for, like, at that time, six years. And he hit me up again. He's like, yo, bro, what the hell is happening inside Robinhood? And, yeah, I mean, you just feel so powerless when something like that happens, right? Like, your reputation on the line, and then you can't do anything to change it. So that was the kind of initial inspiration for us to be like, okay. This system where everything is super opaque, nothing's transparent, we have no idea what's happening behind the scenes. We don't think that this is the way that things should work. And that was the kind of inspiration for us to start building something like Robinhood, except building it on chain. So that's how we initially got started with this entire journey. And I'll pause over there for you guys to ask other questions.

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[Jay Jo]

Hey, mom, you seen my toothbrush? Yeah, I'm almost done with it.

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[Brendan Beeman]

Yeah, you know, the cool part about that story in a way is the fact that that can't happen in crypto. You know, you can't have someone come in and say, nope, you're not going to access your account. You're not going to be able to trade this. That's the cool part about decentralization and self ownership, is that you're always going to be able to log into your wallet. You know, assuming that you have the keys and you actually control the thing, you're always going to have the option to have access to those funds, you know, deposit withdrawal, trade, connect it to a decentralized exchange and do as you see fit. And, you know, maybe that's kind of what you're getting at here. I don't want to spoil the story, but, you know, that was a real turning point for a lot of people and they kind of witnessed that for the first time, being like, hey, I'm really not in control. And just because my money is in this account, you know, I'm really not the person in complete control of my money at the end of the day.

[Jay Jo]

Exactly. I think there's just so many things that can go wrong with decentralized systems. Like if a bank wants to prevent you from accessing your money, they can. It's your money, it's your life, hours from your life. You work to earn that money, but you cannot access it because they decided not to let you. I think it's like it really takes away power from you to be able to have agency over your own life. You're like extremely dependent on other people. And yeah, I mean, if Robinhood had been built on these transparent crypto rails, there would have been several steps that would have made the kind of outcome that we saw impossible. Like, one issue that went wrong over there is there were capital requirements that Robinhood had with these third parties and no one really knew about these. If this had been built on chain, then you would have seen the dependencies just on the block explorer. You would have been able to audit the smart contract yourself. You would have seen that, okay, this is happening because these third parties are requesting more collateral. And then in terms of decision making, there would have been a dao, so you would have been able to see how decisions were reached from the DAO in order to turn off buys or something. So I think there would have been a lot more transparency and it would have just been a much better outcome overall.

[Bryce]

And with, you know, with this whole self ownership, you know, obviously of our money, that's the first obvious sort of use case. And then we kind of had, you know, all these smart contract platforms which then extend it to your own personal online data, your health care data, you know, your personal information and kind of, you know, whoever controls the private keys to that could kind of access that. Do you see? And kind of where I'm going with this is like, do you see SEI network now evolving beyond just sort of a decentralized Robinhood?

[Jay Jo]

Right.

[Bryce]

A decentralized trading platform and some of these use cases expanding to more generalized use cases outside of trading?

[Jay Jo]

Yeah, 100%. And I think we've actually seen this happen over the past couple of years already at this point. SEI is a fully general purpose blockchain and one of the biggest sources of activity right now on SEI is, is gaming. It's not even tied to financial use cases or trading. It's just people building games and that's leading to a lot of network activity. So I think anything that can benefit from having a performant blockchain makes a lot of sense to build on say, and we can kind of dive into say as well.

[Bryce]

Yeah, and I'm just curious, is say an EVM sort of compatible chain or is it its own thing?

[Jay Jo]

Yeah. So I guess the one liner for SEI is we're the first paralyzed EVM blockchain. So it is EVM compatible and it's also entirely its own thing. So you can think of it like Solana, except supporting the evm. In terms of how we got started with this, I mean, initially, as I said, we were trying to build the decentralized Robinhood. This led us down this entire journey. We're like, okay, let's try building an on chain order book based exchange. And then we realized back in 2021, we realized, wait a minute, this is not possible to build anywhere. There wasn't really any chain that would adequately support this. For example, if you looked at serum on Solana at the time, serum was like the Alameda created order book exchange. It was super clunky and there were a ton of limitations on that. And outside of that, there really wasn't anything that even came close to being a usable on chain order book based exchange. So we're like, okay, let's build our own chain. And then we went through this kind of learning process where you were like, okay, building a chain that only supports one application doesn't really make much sense. Let's build a general purpose chain. So we went live on Mainnet with SEV1, which was a general purpose Cosm WASM based chain. So Cosm WASM is similar to how the evm, the Ethereum virtual machine is an execution environment that Ethereum created. There's other ones. One of them is called Quasm wasm. And the chain that actually had the most success with Cosmos is Terra. And for anyone that might not remember from 2022, Terra was one of the biggest blockchains in existence at the time. And then it just completely imploded. I think there was like $50 billion of value that was lost in a couple of week time frame. So in hindsight, after Terra collapsed, supporting the EVM or supporting CosmosM didn't make as much sense because you would have to kind of bootstrap the developer community yourself. And that's probably the biggest issue we ran into. Like no one was building on Seb 1 when we went live on Mainnet. What ended up happening is the chain was live. There was some excitement about the project, but developers weren't really coming because crypto native developers are basically all EVM developers. And that's when we built up our core thesis. Kind of after going through that entire episode, we realized one core thing, which is that the EVM is here to stay. Like regardless of what we've seen happening in the past few years with Solana Sui, all these like alt VM based chains that have started getting at least more price action and some activity in terms of killer apps on chain, most developers are still EVM developers. There's that report from Electric Capital earlier this year where they're like around 70 to 80% of crypto native developers are still EVM developers. Which I think speaks volumes about how it's really difficult to get people to move off the evm because it's not just an execution environment, it's also much more than that. It's like an entire ecosystem. It's all the tooling, the developers, the mindshare, everything that's already been built around that. So that was kind of when we realized, okay, we need to be supporting the evm. And that led us down the entire kind of Discovery journey for deciding what to build after that.

[Bryce]

Yeah, that's interesting. And, you know, one of the questions I. I kind of had queued up that I was going to ask you, but you might have just answered it was kind of like, what was the most challenging thing launching your new L1? And maybe it was, you know, finding out that everybody's just an EVM developer and so kind of catering to that. But was there anything that was surprising or challenging along the way?

[Jay Jo]

There have been so many just excruciatingly difficult parts of this journey, I think. So there's stuff tied to fundraising that I think has just been extremely difficult for us because we just started to raise money at all the wrong times. The first time we raised was the end of May 2022, if you guys recall, Terra Luna collapsed, start of May 2022.

[Bryce]

Yeah, capital was collapsing in May of 2022.

[Jay Jo]

Exactly. We started raising right after the collapse, which in hindsight was a terrible idea because everyone just starts kind of investors just want to sit on the sideline, they want to see how things cool off and then they want to start deploying capital because it's just risky to be deploying when prices could fall another 50%, like two weeks from then. Totally. So our seed round was. It was tough. We ended up getting Multicoin Capital to lead the round, which, I mean, we got extremely lucky over there. I mean, Multicoin, their primary fund behind Solana. So I think they've had a ton of experience that has been helpful for us, but I think we would have had a very different outcome if Multicoin had decided to not really get involved with sei. And then afterwards, our second round, we initially tried raising two days before FTX collapsed. We started having initial conversations at the time, this was November of 2022. Two days after that, FTX collapsed, we're like, oh, shit, this is such a terrible time to be raising because FTX collapsed and then it's the holidays afterwards. So I think fundraising has been consistently one of the harder parts for us. I think the second bigger low point was exactly what you were mentioning before, which is we launched mainnet and then no one was using it. And I don't know, it just really sucks. As a founder when you put your all into something and then people don't really care if people feel negatively about something. That actually, in a way is better than just being irrelevant. And I think that's one of the hardest things in crypto. How do you maintain relevance for any project after it's gone live? On Mainnet and especially after the token has been launched. So that's something we really needed to think about from a first principle standpoint, like why is no one using sei? What can we do to help better facilitate the ecosystem there? And that kind of led us down this journey of SEI v2.

[Brendan Beeman]

Yeah, I think a lot of groups that try to launch layer ones run into that issue. And it's hard, right? I mean, you're fighting against some of these larger protocols, these larger legacy projects that have kind of founded layer ones and it's hard to steal market share away from them. But you know, what we've really seen is a huge advancement when it comes to layer ones like the ones that we're creating today. Even SEI is numerous times more advanced than Ethereum, especially when it was created. And so what we started to see is this kind of adoption or this change in how people are using them and all the use cases. And so, you know, my question here is, you know, how do you see layer ones being used on a more global or maybe like traditional scale in the future? That's outside of crypto natives.

[Jay Jo]

Yeah. So I guess there's two parts to this. Like one is what is it being used for right now? And the second is what will it be used for in the future? Right now I think there's three things that crypto is used for. The first is stablecoins and I think this is a very real use case, a very tangible use case. It has actual product market fit. And I think stablecoins being built on chain is better than any of the centralized alternatives it allows for. For example, if you compare it to like the US banking system with like ACH, for example, or even wire transfers, it's just so much technologically better. Like money moves a lot faster. International payments are, I mean if you guys have tried sending money internationally, it's like even slower and clunkier. So payments I think are just better right now.

[Bryce]

And it costs a second too. I mean I'm booking a trip and working with a foreign travel agent and like, well, let's not use your credit card because there's going to be exorbitant fees and all that stuff. So let's figure out a way. I'm like, can we just use crypto?

[Jay Jo]

Yeah, exactly. I mean, if you use say for example, you're ping on the order of cents and it's going to take like less than a second. If you're using other, like if you're sending a wire transfer several dollars, if not Tens of dollars, and there's additional time tied to that as well. So I think payments have found product market fit on crypto and we will start seeing that expanding because in the United States it might not be as relevant. Like, if you already have these financial rails set up. Well, in a country, then crypto might not be as useful. But if you're in a country where the economy is kind of collapsing due to poor decisions made by the government, then having access to stablecoins is a complete game changer. So I think stablecoins are just going to continue having more and more traction going forward. Sorry, go ahead, Brandon.

[Brendan Beeman]

No, I was going to agree. You know, I saw Chamath from the all in podcast saying the exact same thing he was saying in 2025. He thinks one of the biggest changes, or even just one of the biggest beneficiaries is going to be the stablecoin market. And he said all the same reasons that you just kind of listed off. And he said, like, look at the way that this can change the markets. And it's so easy, I know, you know, especially us here in the States, it's so easy to say, well, this might not affect me as much because I have a credit card and I have access to a tier one banking system at Chase or JP Morgan, when in reality, you know, we're in a really blessed position to do that. But not everyone's in that same boat. And so that's where the market share, the addressable market rather really comes in.

[Bryce]

Yeah. Even if you look at like, we're kind of running out of, you know, sovereigns to buy, you know, U.S. debt.

[Jay Jo]

Right.

[Bryce]

But like, all these stable coins are backed by U.S. debt. And so to spread and like everybody in, in theory, all around the world would love to like trade in the US dollar. And so it really is, you know. You know, there was an article in the Wall Street Journal on op ed. It's actually by Paul Ryan, the former, like one of the former speaker of the House. And he was like, yeah, stable coins are how we could, like, stave off a U.S. debt crisis. That was like the title of the article. And so it's like crazy how much it's flipped on its head from like, hey, these are going to collapse the banking system. Right. With operation choke point 2.0. And now these might save the banking system. It's just crazy.

[Jay Jo]

Yeah, 100%. I think stablecoins are extremely synergistic to American international economic policy. You want other people to be using the US dollar. You want that to be the default currency that is being used for exchange. I think recently a lot of countries have tried to push away from that. But even if the countries are pushing away from that, individual citizens from other places, they prefer the USD compared to their own local currencies. And as a result of that, if people are able to use stablecoins more, I think that just reinforces American hegemony. So I think from American policy standpoint, it's kind of a no brainer. And that's why I think it's really exciting that President Trump is as supportive of crypto as he is. Because I think beyond just helping crypto get more adoption, I think it just ends up being beneficial for America as a whole. So yeah, I think stablecoins are a no brainer kind of use case. I think the second use case we're seeing right now is tied to the exchange of assets. And I think that is a very kind of blockchains are really good systems for enabling parties that don't trust each other to do stuff in a cooperative way and having verifiability. And I think exchanges are one of the very clear use cases over there. Unfortunately right now I think a lot of the use cases for exchange is tied to speculation where people are creating meme coins for NFTs or something and that's what people are trading. I think in the long term there will be more sophisticated types of assets that are being traded on chain. And I think once there's clear crypto regulation that is defined, it'll become much easier to have things that are more sophisticated financial instruments that people are able to permissionlessly engage with on chain. Examples here would be like, let's say you're able to have tokenized treasuries that people can make use of. First of all, it's just really easy to be able to transact with them on chain compared to logging into whatever your brokerage or bank is buying it over there. And then there's like composability that it's enabled on chain as well. You can have this token that is collecting treasury yield use as collateral for something very easily. So I think there's these Legos that are enabled by crypto that you can connect more easily that'll allow more sophisticated use cases. I think the third category right now is just all these unrelated types of use cases. So stuff like gaming, depin AI agents, all this stuff right now I think is still very early. I think longer term it'll start to get a lot more adoption. And I think flavors of all of this, they benefit a lot from blockchains. So we'll start seeing all of these benefiting from layer ones as well. One thing that I think is just fundamentally true is you need these blockchains to be performant. Because if you have a blockchain that is as a great vm, let's say Ethereum virtual machine, but with low throughput, which is exactly what Ethereum is right now, you can experiment well with it, but you cannot scale an application. You're never going to be able to get global scale, like Google type scale for any application if you don't have good throughput. So I think the next generation of blockchains which say spearheading, they're all going to be extremely high performance. And that's kind of a requisite for. Prerequisite for getting any kind of global adoption.

[Bryce]

I love it. Yeah. I mean, there's a lot of things we could dovetail off there. But I was just thinking like, you know, from, from your vantage point as a founder of a layer one, you know, you're a builder if you know, and we're going here into this next, you know, four year period of a new administration, what would be kind of on your wish list? I don't know if you've thought of, you know, if you know, as a L1 founder, here's the three things are the one thing that would make life easier. You know, capital, you know, access to capital and good, you know, things, you know, it'll make it better. What would be on your wish list?

[Jay Jo]

Yeah, so I think from a wish list standpoint, there's a few things that come to mind. And then from actual policy standpoint, I'm starting to see the writing on the wall that some of these things might actually come true. From a wish list standpoint, I think legitimacy is probably the biggest thing that would be helpful for crypto. Because right now crypto has kind of been in this gray area where there's been a lot of investor money going there, some politicians have been supporting it, but it's also like Operation Choke Point, for example, and how Gary Gensler from the SEC has been taking enforcement or. Yeah, what's the term for it?

[Bryce]

Enforcement.

[Jay Jo]

Exactly. Yeah, that's not great. So I think it's been kind of this gray area and because of that, a lot of normal people are more skeptical of crypto as well. I think if the administration fully embraces crypto, it adds a lot more legitimacy to it and I think that'll just lead to a lot more people that are both Open to developing in this space, investing in the space, and then also making use of the primitives that get built. So legitimacy is probably the biggest thing. Second thing will be more investor capital. And then third thing will be more developer interest. Developer interest. Like whenever any space is more legitimate, more people basically like me, that have these technical backgrounds that can build in the space, they come in and they start experimenting and playing around with it. And I think this will then result in more investors coming in to invest more money to support whatever these experiments are. In terms of actual policies that I've seen being discussed, the first thing is more clearly defined regulation around what is a crypto asset, what is not, and how should these crypto assets be treated? I think last year or the year before then there was the fit 21 bill that made its way through House, but not the Senate, if I recall. So something of that nature, where something that is actually able to get through Congress that better defines cryptocurrencies. I think that'd be a good starting point. Once there's clear regulation around it. I think that incentivizes developers to come in, that incentivizes investors to come in as well, because it removes a lot of uncertainty. Another thing that I think would be honestly pretty incredible if it happened is President Trump has proposed the 00 capital gains tax rate for cryptocurrencies that are launched by American companies. If something like that happens, I think crypto will quickly become the hottest sector in the United States.

[Bryce]

That would be crazy.

[Jay Jo]

It would be absolutely insane. I mean, I don't know if that'll happen or not, but, yeah, if something like that happens, it'll just lead to so much more interest, and I think that'll just lead to a lot more kind of development in the space and people that are actually making use of the primitives as well.

[Bryce]

I could definitely see radical policies being introduced. I mean, that would be certainly radical. But I did see earlier he's proposing to have the xrs, the External Revenue Service, in tandem with the irs, the Internal Revenue Service. But the XRS is going to be basically, you know, exercising, you know, all these tariffs and basically import taxes on other people outside of the US and, and maybe that would be able to bring the US Taxpayers bill down at the end of the year. So, hey, hey, I might be in support of that. I gotta look into it a little bit more. But would definitely be in support as well of zero capital, zero percent capital gains for American companies dealing in crypto. I mean, that would be. That'd be crazy.

[Jay Jo]

It'd be a total game changer. And I guess just last thought over here is the bitcoin reserve. I think this is something that has been floated a lot. I didn't mention it before, but yeah, I think that would also be a game changer. It'll obviously be good for legitimacy if the US is supporting Bitcoin in that way. I think it'll also just indirectly benefit every other cryptocurrency by resulting in more people becoming interested in building and investing in this space as well.

[Brendan Beeman]

Yeah, I completely agree. I've seen some stuff floating around here in recent days that, you know, he wants to act on that fairly fast. You know, there was talk yesterday on Twitter that, and that might be one of the first things he does in office, you know, maybe like a day one signing. So we'll have to wait and see. But I think a lot of people are looking at that and we've already started to see other countries try to front run this. You know, I even saw that meta, I, I think it was yesterday afternoon, was saying, hey, maybe we should explore the possibility of bringing Bitcoin onto our balance sheet. I think they have $72 billion in liquid assets and they're saying, hey, you know, why not explore the, the possibility of having a microstrategy like approach with, with a fraction of that. And I think we're gonna continue to see more companies look at that. And again, it's not going to be probably as extreme as microstrategy where they have a near 100 allocation. But I think this realm of possibility where we see, you know, a half a percent, 1%, 2, 3% is something that will become increasingly popular, especially if we do get the reserve. But you know, for the time being, there's, there's a lot of things that will need to happen in order for us to get there. But it, it looks like it's, it's becoming a reality. And I do want to circle back to this discussion that we were having earlier about layer one scalability, because a lot of these layer ones really are becoming so scalable. Do you think that that simply. Or do you think it's going to be enough to simply just be fast and cheap? Because there are projects out there who, that's their whole spiel and you know, it's been their spiel for a while, is just saying, hey, we're fast, we're cheap, therefore you should use us. But now it seems like everything that's been created in the last couple of years, in the last cycle or so well, everything's fast and cheap now. So do you think that that's going to be enough for projects moving forward? Just saying, hey, we're fast and cheap. And if not, you know, what else is there beyond that?

[Jay Jo]

Yeah, I think that's a fantastic question. The most candid answer over there is, Well, I think the core answer to your question is no, it's not enough to be fast and cheap. I think the most candid answer over there is that there really are no technical differentiators in crypto. And what I mean by that is you can spend, let's say, hundreds of millions of dollars building really great technology. It has to be open source. If you're not open source, then I think you're not really going with the core ethos of crypto. And if you're open source, other people can just fork it and then try to build the same stuff that you're building. And even if it's closed source, there's like some, let's say you put out a white paper about what kind of tech you're trying to build, other people are going to build that anyway. So I don't think there is any long term technical differentiation in crypto. The only differentiation that you're able to get is tied to the ecosystem in the community. It's basically the people that are tied to that project. They're the real differentiation. And I mean, I don't think that's like a controversial thing to say at all. Like, if you take bitcoin and you try to fork the bitcoin code base, run your own fork of bitcoin, no one's going to be using it. Like, you're definitely not going to be able to get the same kind of scale that bitcoin has been able to get. That's because all the people that are tied to bitcoin, and that kind of is why I'm really surprised by all these projects that are like trying to create Alt VMs and try to get adoption with that. Because right now what is very clear to me, and that's kind of the baseline for a lot of the decisions we made, is that all the mind share is with the EVM right now in terms of execution environments. That's what all crypto developers are basically building with right now. And it's really difficult to get crypto developers to move elsewhere. So as a result, really hard to build an ecosystem, get killer applications and really get these people to support a new project if it's not making use of the evm. That's Why a lot of these alt VM based chains, I don't really think there's going to be as much adoption in the long term happening for them. The approach that I think you need to take is support the evm, understand what's wrong with the EVM and then make it 100x better. And if you're able to do that, that's how you can really differentiate yourself as a project in the long term. And that's exactly the approach that we've been taking. Would say.

[Brendan Beeman]

I think it's a great point. And you know, earlier you were saying, kind of in lines with. Earlier you were saying that when you first got started with SEI and when the mainnet launched, there was a little bit of a struggle kind of bringing builders in and retaining users and doing all that. And it's a hard thing to do, you know, I guess what helped you build and keep a community because, you know, fast forward now, we're now a couple years in the future and I saw an article the other day that was saying, hey, SEI's crypto network just hit record highs in terms of user activity. So you've clearly found a workaround to arguably one of the hardest questions in crypto, which is taking market share from other layer ones and then not only building it, but actually retaining it. Because you all have been here for more than a market cycle now and you all have not only survived it, but you've kind of thrived in it to these all time records.

[Jay Jo]

Yeah, when you phrase it that way, it seems like we've done a pretty good job. I definitely think there's a huge amount of. Well, the way that I think about SEI right now is we're probably. If you wanted to add different tiers to projects, there could be S tier projects like Bitcoin, Ethereum, Solana, there could be like A tier projects, B tier projects, all the way down to whatever, CD tier. Yeah, I think SEI is kind of like middle of the pack right now, to be completely intellectually honest with you. And I think a lot of it has to do with the ecosystem that exists on the blockchain. In order for any blockchain to become massive, there needs to be killer applications that are built on top of it. And I think that's probably the biggest thing that we need to start seeing more of in sei. We need to start seeing more killer applications that are emerging on sei. Now in terms of, I guess what you were talking about before, how did SEI kind of go against that trend? Initially there was no community members. People were not really that enthusiastic about SEI after the token generation event. And how did it kind of grow from there? I think a lot of it was just based off the first principles approach that I described before. We realized, okay, reason no one is building right now is because we do not support the evm. What is missing from the evm? Well, we realized that the biggest limiting factor at the EVM is a lack of throughput. The throughput is the amount of transactions that you can really process per unit of time. And if you look at the say, Ethereum L1, it's not really able to process that many transactions at any given time. It's really slow. As a result of that, there's two things that happen. The first thing is that you end up having really high gas fees for users. I don't know when the last time you guys played around on Ethereum L1 was, but anything that you try to do it costs on the order of dollars. And during periods of congestion it can potentially cost hundreds of dollars to perform any meaningful action on chain. Yeah, you just price out most of the human population when it costs like $100 to do something on chain.

[Brendan Beeman]

Yeah.

[Jay Jo]

So I think gas fees being high is terrible user experience and it just makes crypto completely inaccessible. The second thing is it restricts the developer design space. If you're trying to build something in Web two right now, you can build it however complex you want to. Let's look at Google. Google needs 100,000 transactions per second. And in web two there's not really any limitations around the kind of performance you can get. If you're trying to build in crypto right now, Ethereum is only able to support 1.25 mega gas per second, which translates into roughly 60 transactions a second. If you're trying to build in that 60 transaction per second kind of constraint, you really can't build super sophisticated applications with that. So what you end up having is you end up having developers take anti patterns. So you start seeing things like automated market makers, which they don't exist in traditional finance because they're not capital efficient. And then instead they exist in crypto now because they're able to fit the limitations of what the EVM is offering. So we think the biggest problem right now is lack of throughput. And that's why we started building sev2, which is what went live in 2024. But save2 is the first paralyzed EVM and that's what really got the community excited. We put out the announcement that that's what we're focused on building. And everything just went ballistic after that. People became really, really excited. There started to be a lot of activity that happened on V1 as well as a result of that. So people started launching NFTs, they started launching Meme Coins, there started to be applications were getting built and I think all of it just ties into people being excited about that vision that ultimately ended up going live in July of 2024. So around six months ago from the time of this podcast recording and it's been honestly incredible, once we went live on mainnet with the paralyzed evm, we started seeing a ton of new applications getting built on SEI that you really can't build on Ethereum L1. And we've also started seeing just more and more community members come in as a result of that excitement. And yeah, I mean to your point, around like SEI's been around for more than a cycle. I think it's really easy to have a strong community before any kind of token generation event for any project. Everyone's always bullish on any project that's pre launched. The real test for a project is seeing what it's like around 18 months after the launch. 18 months is roughly when the TGE is gone. That's when a lot of unlocks and stuff have started as well. So that's when you can really see how much real community project has. And that's right around where today is at right now. I think we're at the 17 and a half month mark since mainnet launch right now and we have a very real community and I'm just honestly very, very thankful for that.

[Bryce]

Yeah, no, we're, we're excited and we're seeing the growth and you know, before we let you go, we want to make sure that we sufficiently cover the latest upgrade that was I believe, just unveiled in December. Correct me if I'm wrong on any of these facts. It's called the Giga Upgrade. Can you walk us through this and what it means for sei's future and really what's going to be most affected on the SEI network and what participants?

[Jay Jo]

Absolutely. Can I share my screen for part of this?

[Bryce]

Yeah, I believe you can.

[Brendan Beeman]

And for all the listeners out there, make sure you check out the YouTube so that you can see the screen share.

[Bryce]

Yes. If you are on Spotify or Apple podcasts and you don't have access to the visuals, we apologize for this. But join us on YouTube.

[Jay Jo]

Yeah, I will narrate it while we're talking about it cool. Okay. So we went live with V2 in July of last year and we started seeing congestion even on V2. And that's when we realized that, okay, we're at a good spot right now, but I think we can become even better. And performance continues to be like the biggest area for improvement on the EVM more broadly, even with where we're at with V2. So just for a little bit of comparison, there's a chart that I'm showing right now, and it shows the gas per second the different chains are supporting. So mental model for anyone that isn't familiar with gas, when you have a car, you put gas into it, the car moves and it consumes the gas going different lengths. You need to consume more gas. Like if you're going SF to, let's say Oakland, that doesn't need as much gas. If you're going SF to Las Vegas. Similar concept with blockchains. Gas is like the amount of, basically the amount of compute that it takes to perform a transaction. And you get charged based off how much computer the network is going to need to process your transaction. So the more gas you have, the better. That means you're able to enable better performance. Ethereum L1 is able to process 1.25 mega gas per second. Now, that roughly translates into 60 transactions you can process a second as the upper bound, which is not really that high. Most chains that are Ethereum L2s, let's say they're OP stack L2s, they get somewhere between 2.5 to 5 mega gas per second according to this kind of this table, that paradigm the VC firm put together. And then on the upper end you have chains like opbnb, centralized sequencer that are getting 100 mega gas per second. That's kind of the upper bound for what you see on the industry. SEV2 is actually around 105 mega gas per second. So it's a little bit better than opbnb. And savi2 is completely decentralized with the decentralized validator set. Now the issue is this still isn't enough compute to really enable applications like Google to get built on chain. So that's why we went back to the drawing board. We're like, okay, we're currently at around 105 megagas per second. How do we go even higher than that? And what we realized is we need to rebuild every single part of this, every single part of the stack. So that's when we started working on say, Giga. We have completely rebuilt the execution client. We're Changing the way that state works on say, with say, Giga. And we're also completely changing the way that consensus works. And with that we're able to get, right now we're able to get 5 gigags per second. So this is 50x more than anything you see on mainnet right now. This is in an internal devnet that we got working December 31st of 2024, so a couple of weeks ago. And the next step is now to start productionizing this. So decentralizing it, getting it working in a public devnet and then eventually getting it live on mainnet.

[Bryce]

Wow. It's going to be incredible. I mean, we're really excited about it and I guess. Yeah, the last question I had was just to mention earlier, you said intellectually honest. You think say is middle of the pack after the Giga upgrade, are we going to be top of the pack, front of the pack?

[Jay Jo]

We'll be able to enable entirely new types of applications to get built. And I think fundamentally I would like to see say become an S tier project. The way that you get there is by getting killer applications built. In the case of Solana, for example, right now there's pump fun, there's AI16Z as well. Other chains like Polygon, I would say actually they don't have the best reputation in crypto, but I think they've actually been able to get killer apps like Polymarket built on it. You see Virtuals, for example, OnBase. So there needs to be an example of that on sei. Um, and yeah, I mean, I, I think that's the biggest thing that Safe Foundation I know is working towards from their side, just getting that first killer application built. Because once there's the first killer application, it becomes this very virtuous kind of loop where developers are then more excited to start building that ecosystem and it leads to more color applications to the result.

[Brendan Beeman]

Yeah, I mean, well, what this does is this opens up the opportunity doors for some of these projects that are building. They need something more scalable, they need something that can handle a lot more. I mean, you talked earlier about the scale that, that Google would need if they were to come into this. And there's projects that might be, you know, not on the same ambition level or requirements as Google, but they're still really high up there and they're going to say, hey, we can't build here, we can't build there. And they need a very specific set in order for their project to even be functional at a base level. And so what you're doing here is you're opening up the doors to projects, being more creative and doing things that we haven't done before. And I think that is what can inspire the next poly market, the next pump, that fund the next. You know, you fill in the blank. You mentioned AI 16Z and, you know, hopefully we see that. And I think that if there's any time for that kind of stuff to get built, the two requirements are having the infrastructure in place to actually make it possible, and then the second one is having a regulatory environment that actually encourages instead of discourages that. And it looks like this year we're going to get both of those. So we're excited to see what happens. And, you know, when some of that stuff starts getting built, you're definitely going to have to keep us in the loop.

[Jay Jo]

Yeah, that was very well said. And yeah, I mean, I think that's exactly right. Like, you need to have the core infrastructure, you need to have the right environment in place in 2025. I mean, the writing is very much on the wall that that will be the year where we start seeing a lot of this come together.

[Bryce]

Yeah, couldn't agree more.

[Jay Jo]

Yeah.

[Bryce]

Brennan, very well said. Jay. Thank you so much for your time and for joining us here at the Crypto 101 podcast. If people want to join the movement, get involved, get connected, where would you recommend that people head over and we'll have that linked in the show notes.

[Jay Jo]

Yeah, yeah, you could just follow Stay Network on Twitter. They'll have all the announcements and then you can also join the Discord. I think there's a lot of discussions happening there. You can go follow the link tree from they say Twitter that awesome.

[Bryce]

Well, thank you so much, Jay. And we're excited to keep tabs on everything Sade Network is developing and we'll have you back on again soon. Take care.

[Jay Jo]

All right, thanks for having me on, guys.

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[Jay Jo]

Hey, mom, you seen my toothbrush? I'm almost done with it.

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