Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
#18 Blockchain Innovations & Token Extensions with Solana Foundation's Head of Strategy
44 Plays8 months ago
Austin Federa is the Head of Strategy at the Solana Foundation, and a seasoned expert in blockchain technology. In this episode we cover several blockchain innovations including Token Extensions.
Austin's entry into the crypto world was marked by an early setback during the infamous Mt. Gox incident, which temporarily deterred him from the industry. His return was sparked by a project at a fintech startup aimed at developing a borrowing and lending token on Ethereum. Although the project never reached fruition, it was a pivotal moment for Austin, aligning his career with blockchain technology's potential.
The Evolution of Blockchain Use Cases
The conversation delved into the evolution of blockchain applications, from simple transactional uses to complex smart contracts and decentralized finance (DeFi) solutions. Federa highlighted the shift from viewing blockchain through a narrow financial lens to recognizing its broader potential for creating automated, transparent, and secure systems across various sectors.
Solana's Approach to Blockchain Architecture
Austin is particularly enthusiastic about Solana’s approach to blockchain architecture. Unlike Ethereum, which has explored sharding and layer 2 solutions to scale, Solana aims to maintain a single, global state that ensures composability and high throughput. This vision, according to Federa, not only simplifies development on the blockchain but also maximizes its efficiency and speed, addressing some of the most critical challenges faced by competing blockchains.
The Regulatory Landscape and Its Impact
A significant portion of the discussion was dedicated to the regulatory challenges and complexities within the blockchain industry. Austin argued that while regulation is crucial for the healthy development of financial technologies, it often lags behind innovation, creating barriers that hinder the potential growth and adoption of blockchain technology. He cited examples from different regulatory approaches worldwide, discussing their impact on innovation and consumer protection.
DeFi and the Future of Finance
Austin is bullish on the future of DeFi, seeing it as a transformative force in the financial sector. He compared the current state of DeFi to early internet companies, suggesting that while there are risks involved, the potential for DeFi to streamline and democratize financial services is immense. According to him, the challenge lies in balancing innovation with consumer protection, ensuring that as DeFi evolves, it does not replicate the exclusivity and inequities of traditional finance.
Looking Ahead: Solana's Place in a Decentralized Future
As the conversation wrapped up, Austin reflected on Solana's role in the future of blockchain. He emphasized Solana's commitment to high transaction speeds, low costs, and an architecture that supports robust, scalable applications. For Austin, the goal is not just to compete with other blockchains but to contribute to a decentralized ecosystem that offers real solutions to real-world problems.
This podcast is fueled by Aesir, an Algorithmic cryptocurrency Trading Platform that I helped develop over the last 2 years that offers a unique set of features.
Recommended
Transcript
Introduction to Cryptocurrency Landscape
00:00:00
Speaker
How do you count transactions per second so sui was proposing for a while you count database? Interactions which are basically reads or write operations that take place You know on that metric Solana is already pushing hundreds of thousands of transactions per second in terms of database Interactions if not millions of transactions per second because of the way that network is constructed there are also ways of basically saying What can you do with a transaction because not all transactions are created equal?
00:00:30
Speaker
you
00:00:38
Speaker
Hello and welcome to Proof of Talk, the cryptocurrency podcast where we invite leaders and builders into the space to come on and talk about their experience in the industry, as well as the projects and products that they've been
Andre's Journey in Crypto
00:00:49
Speaker
building. My name is Andre and I've been in the cryptocurrency space since 2017. I've also helped co-found algorithmic crypto trading platform ACIR that enables users to quickly and easily automate their trades while managing the risk. I'm here today with Austin Federer, who's the head of strategy at the Solana Foundation. Great to have you here, man. How's it going?
00:01:07
Speaker
Good, good. Thanks for having me on today. No, my pleasure. Let me just say that we've had some incredibly bullish last couple of weeks and the market's been going nuts and it's amazing to see it that way. And it all just kind of happened without the hype of the mainstream media that was there in the last bull run. So to kind of see this where we are right now and everyone's like quiet about everything, it's just fantastic.
00:01:36
Speaker
Yeah, it's great. I mean, this is kind of one of those, uh, everyone loves the bear market from a builder perspective because, you know, there's less noise, there's more signal, the ratio is good. But, you know, I think this, this sort of time when, um, sort of the retail craze has not hit the sort of, uh, you know, the big brands are still sitting stuff out for the most part. Like this is honestly, I think one of the best times to be a builder and to be involved in the blockchain ecosystem.
00:02:06
Speaker
A hundred percent, yes. And you are completely right about the bear market, kind of helping flush out all the hype and kind of get people focused on building. I think that's super important for a bull bear cycle, for the entire crypto industry as a whole. By the way, how did you get into crypto? What was your first moment that kind of clicked in your head?
00:02:25
Speaker
Well, I mean, I got some Bitcoin back in the day and completely got rugged by Mt. Gox. As I think a lot of us had their original experience being. And that honestly washed me out of the industry for a little bit. And then it wasn't until late 2017, I was working for a FinTech company and they were trying to, you know, basically create some more revenue. It was a startup that was kind of failing at that point. And they were trying to build a borrow lend token on Ethereum.
00:02:55
Speaker
Back before we would have branded this as DeFi. This was just you know, oh, maybe we can do this via smart contracts Project never went to you know fruition Company sort of pretty much wound down a few months later but I'd sort of been bit by the bug because I was never particularly taken with the
00:03:17
Speaker
the bunker boys vision of Bitcoin that like, you know, oh, the only thing that's going to be valuable in a, you know, Mad Max world is Bitcoin. And it's like that could be true. That could be not true. Probably not. But yeah.
00:03:32
Speaker
Yeah, but sort of setting that aside, that is not a world I personally care about planning for. If that's the world we end up in, so much has gone wrong that the last thing on my mind is Bitcoin. But the Ethereum vision of smart contracts for a while was just not that compelling because these were purely theoretical. No one had built anything on them yet.
00:03:53
Speaker
But then, you know, in 2017, like having to sit down and start working out, like, okay, what would the architecture or something like this look like? You know, for me, it clicked. And I finally saw what a lot of people had seen way before me, which was the power of these smart contracts and, you know, what the world five, 10 years in the future could look like. And so, you know, I went to work for Republic, running Republic.
00:04:16
Speaker
and launching Republic Crypto with them, which was an awesome experience. You know, we did this was right, right during like the run up and then crash of the 2018, you know, Bitcoin bubble. And yeah, so it was quite a time, but I got I got bit by the bug and I've been working in this space ever since.
00:04:35
Speaker
No, that's fantastic. And actually, your story is very similar to the way I got into crypto as well, because I first heard about Bitcoin in about in 2013, and I was looking for ways to mine Bitcoin. And it was just at the time where these new ASIC miners like the BitMate Ant miners, like the S9, the original S9 was created onto the market.
00:04:55
Speaker
And it was super expensive at the time. So I was just, I was trying to figure out like, what's the profitability? Do I need to move to Iceland for cheap electricity? Now I was trying to calculate all these things and eventually I didn't buy an S9. I just ended up mining some on my GPU and buying some. And I didn't get dragged by Mt. Gox, but I lost that wallet.
00:05:16
Speaker
And I've never recovered it. And then that also pushed me out of crypto up until 2017, up until Ethereum started, you know, kicking a little bit and kind of exactly like you said, understanding the power of smart contracts and what they are and what they can do.
Challenges and Growth in Crypto Industry
00:05:33
Speaker
That's really interesting.
00:05:34
Speaker
Yeah, it's funny, and Tolley's got this great story about buying a Bitcoin miner, and they kept delaying shipping and delaying shipping for nine months, and they were just mining on these things before they shipped them out to people because it was so profitable. It's like this was the early days of the industry. It reminds you of the wild west of trust companies in
00:05:56
Speaker
you know, like literally the Wild West in the United States in like the 1890s and stuff of just like all this crazy stuff going on with like corporations. And yeah, it's been really, really interesting to see how quickly the industry has matured since those days.
00:06:12
Speaker
Yeah, a good a good portion of it. I feel like there's still some sections that are kind of Wild West in DeFi. Like DeFi is still not at the level where you could just take someone who is completely outside of crypto and put them in DeFi and be like, OK, now I figured it out because there's still a lot of unknowns there. Yeah.
00:06:29
Speaker
To be fair though, I don't think the stock market is in that place either as Robin Hood showed is if you just open the floodgates to a bunch of people they will some of them will make great decisions and make Generational wealth and trades and others will lose their life savings So, you know, I think there's always a question when we talk about like the risks in d5 like what are we really grading defy against right cuz like I
00:06:52
Speaker
Yeah, you can put your money in a bank account and yes, there is no risk and there's also no reward In fact, there's negative interest rates right and in all of your bank deposits And you can do stuff in the stock market But also if you don't know what you're doing there it is it is quite possible to make bad decisions and lose a bunch of money and so I think a lot of the times there's a there's a sense that defy is more dangerous than it actually is
00:07:17
Speaker
Is right and I sort of like you know the analogy is very much I would say like when it comes to anything else that involves money is like Yeah, you can you can totally buy a house in a bad area for too much money And you can lose money on that on that idea right it can be a bad financial decision and
00:07:34
Speaker
That doesn't mean we have to change the way that people necessarily buy and sell houses to make it harder for people to do something like
Regulation and Innovation in Crypto
00:07:43
Speaker
that. This is just a process of anything that involves money as you have to understand what you're doing before you do it.
00:07:49
Speaker
Yeah. No, I completely agree. And I agree that it's in fact human nature that needs to adapt to some new technologies. It's not the technologies themselves. I feel greed has always been part of us as humans. And if there's something that allows you to express that greed in a way, then you will probably make a silly decision if you can't manage your own emotions. Yeah.
00:08:14
Speaker
This is the genius of regulated capitalism. If you take natural human greed and you don't put any constraints on it and you just put it towards the destructive side of greed is corruption. That is sort of the classic polls here. On one end of the spectrum you have unregulated greed, which is just corruption and warlords and fiefdom and all the things you see in failed states.
00:08:43
Speaker
And then on the other end of the spectrum, you have regulated capitalism, which has been the greatest driver of wealth innovation and lifting billions of people out of poverty that we have ever seen. The global poverty rate has just catered in the last 20, 30 years, largely due to global capitalism. And yes, there's lots of bad externalities that have come with that, but on the whole,
00:09:09
Speaker
harnessing the power of human greed to produce systemic advancement for the majority of people all around the world is an incredibly powerful force.
00:09:19
Speaker
Yeah, and I feel like gambling is actually, you know, it's sometimes perceived that it's more okay to gamble in an actual casino than it is to get into, you know. I have to stick, I have to get started on this. Like the US, right, gambling is larger than all other entertainment spending combined. People spend more money on gambling than sports tickets, than concert tickets, than music, than movies, any of that stuff combined.
00:09:48
Speaker
And that is an industry where you're mathematically guaranteed to lose money on every opportunity that's possible. It's proven that you will lose money, yeah. It's literally programmed in. Yeah. I keep saying this on my podcast, and I'm terribly sorry if I'm boring anyone, but I'm not sure if you knew. And this is just an example of how sometimes regulation, it just goes completely off the charts, right? I'm based in the UK, so I'm subject to UK regulations when it comes to cryptocurrency.
00:10:18
Speaker
Well, recently, I would say recently, it was a few months ago. Binance's knowledge base is no longer accessible in the UK unless you use a VPN. So the one thing that lets you learn about investments that you're potentially going to be making, the government says, no, no, no, how about you just go blind? We don't want knowledge here. We don't want information because that's dangerous and you might actually buy something that you know what it does.
00:10:42
Speaker
Yeah, and it's tricky because like I will say at my heart I actually believe that regulation is a very important part of a healthy and vibrant ecosystem and that there's very much a role for you know a lot of people in the space would be like oh all the government lawyers it's like no government lawyers are doing God's work like a lot of the time what they're doing is actually really important work and
00:11:02
Speaker
But you look at something like the accredited investor laws in the United States that say pretty much the only richest 10% of the population can invest in private companies, which includes things like private token sales. And that has been a real barrier to wealth creation for a huge number of people, not sort of the bottom poorest section, which have more basic living requirements that they need.
00:11:27
Speaker
People who are solidly middle class and they have an extra $5,000 they could invest in something, they're barred from investing in a lot of these types of asset classes. That is done out of a sense of consumer protection that I think is probably misplaced.
00:11:43
Speaker
These people are trying to do good things and sometimes you just get too far removed from the impact of the work and things can go off the rails. But the great thing about democracy is we have methods for self-correction that lots of other types of government systems don't have.
Solana's Evolution and Impact
00:11:58
Speaker
Yeah, and that's very well put. I think in time, if something goes too extreme in one direction, it inevitably goes back to a nice balanced state. And you can see that if you're actually looking at financial markets, if you're looking at politics, if you're looking at everything tends to follow an average. And whenever something goes too far away from an average, it eventually corrects
00:12:23
Speaker
Anyway, I can just keep going about this. There's so many things about regulation that I think could be improved and should be improved, but I'm sure that in time, we'll just see common sense. When did you first start working for the Solana Foundation?
00:12:39
Speaker
So I joined the Solana ecosystem in January of 2021. Before that, I was working for Bison Trails. I was working on product marketing and platform and product for them. They got acquired by Coinbase, which was awesome for the founders and the folks over there. I thought going to something like an L1, getting closer to the actual blockchain itself, as opposed to at the infrastructure layer.
00:13:04
Speaker
was a really great next move for me. And some folks I'd worked with at Republic previously actually had gone and joined Solano Labs. And so they got me connected in here. And it was one of those classic things where I was one of those people that thought I was missing something about the sharding roadmap.
00:13:27
Speaker
and the layer two roadmap in Ethereum. I had questions for myself around like, well, how does liquidity work? How does composability work? And then I was like, oh, we'll figure it out with bridges and things like that. And to me, that felt counterintuitive. It felt like probably an approach that seemed more predictable and was more likely to sort of return from a UX standpoint.
00:13:50
Speaker
was building things in one global state machine, which is the way that the Ethereum L1 sort of had always been built before this sort of charting and then eventually layered model came into place. And so, you know, getting on a call and talking with Anatoly and Raj, like two of the co-founders about what that long-term vision was for Solana scaling, which was one global state machine
00:14:11
Speaker
with parallelization built in and at the base level, you know, synchronizing as close to the speed of light and trying to push for as high transaction throughput as possible. The lowest cost possible for transactions with really fast finality, that vision really spoke to me. And, you know, I have been one of those people that all of my career, I have to believe in what I'm doing or else I'm not
00:14:35
Speaker
particularly motivated employee and you know this is one of those quite frankly and this is one of the things I was like oh yeah this vision I completely get that this to me makes computer science sense it makes social science sense and even if the
00:14:50
Speaker
The vision of Solana ends up being too big and it doesn't end up working out because you got to remember this was Solana Network have been live for about nine months at this point and had very few users. Regardless, I will learn a ton from this experience and never looked back since then.
00:15:06
Speaker
Man, that's an awesome story. And I feel like that's exactly what creates great projects is seeing that you resonate with the core mission ideas, the big vision, like the blue sky thinking. And then that just motivates you in a way that no other job can motivate you. And Solana did grow a lot in a very short amount of time. I think it resonated with a lot of people. I think a lot of people
00:15:32
Speaker
realize the power that such a high transaction throughput has. And it's been, when did the base chain go live? March of 2020. March of 2020, so four years old. Happy birthday. Yeah, and right as the world was going into lockdown as well too. This is sort of one of the, I was not around for this part of it, but this is one of sort of the unsung success stories of the Solana network was,
00:16:00
Speaker
At that time, this is what Solana Labs had done. I think a 50% layoff of employees running up to the launch of mainnet. The idea was the network didn't even launch with smart contract support. This was a real do or die moment because you got to remember that they were fundraising in the bear following the collapse of 2018. I think they had 75 meetings with VCs before someone finally agreed to write a check.
00:16:30
Speaker
There's all these memes about networks that raised a ton of money beforehand. Solana was not one of those networks by any means. This was a network where it was scrapping pennies out of the couch to try and get by and get to Maine that launch.
00:16:48
Speaker
And so launching in March of 2020 right as the world's going into lockdown as the markets are in freefall You know that is a really hard time to try and launch a new network But you know this was this was some of the power of the network too is that this? Incredibly fast very interesting brand-new architecture launched right as a lot of people were stuck at home without much to do and so a lot of developers from web to who had been curious about blockchain and
00:17:13
Speaker
One way or another they found their way to the salon ecosystem and they started experimenting and building really cool stuff on the network
00:17:20
Speaker
Yeah. And I think that's an integral part, just getting developers to be interested in your product and to build on it. I would consider myself one of these developers because I was doing a lot of coding during, even coding as a hobby during the COVID times. And that's when I discovered, I always wanted to understand the technical aspects of how NFTs work, how smart contracts work.
00:17:44
Speaker
How do you go about creating one? How do you go about buying one? What is the marketplace? How does the data flow through all of these systems? And I was initially looking at Ethereum and Solidity and I was like, well, I could do it on the testnet and it wouldn't really cost me much. But then if I really want to do it on the mainnet, then I don't feel like spending $50 for a transaction. So I was like, okay, let me have a look at Solana.
00:18:09
Speaker
And there were already a couple of solutions built at the time that would allow you to create NFT marketplaces. There was Metaplex that you would create your own NFT marketplace and you could also roll out your own custom solution if you wanted. So I just got into that and I just got stuck into it for a little while until I created a collection just for the pure, you know, like science behind it to see how it works.
00:18:32
Speaker
Yeah, and you bring up Metaplex, which is a really great example of how Solana is built on just a very different architecture than other networks. So in most networks, when you want to deploy an NFT, you have to deploy two different things.
00:18:47
Speaker
you have to deploy the data that will become your NFT, your photo, your traits, your rarity scores, all that stuff. But you also actually have to deploy the minting contract. And this is part of why minting NFT, as you know, this is part of why minting NFTs on EVM chains is so expensive, because you're not just deploying the NFT, you're deploying a contract to govern the NFT.
00:19:09
Speaker
Solana you know and this this really comes from a lot of the founders coming from Qualcomm and embedded systems where you had very very little compute not like embedded systems like an iPhone like yeah flip phones right the Motorola razor like these these really constrained compute environments where you had to squeeze every ounce of performance out of every you know iteration of a cycle you could possibly get and
00:19:32
Speaker
And so this concept of program reusability is really core to the Solana thesis. And program reusability means that there's an on-chain program that you can feed data to that'll output something.
00:19:44
Speaker
And, you know, that is sort of your classic programming model, but that's something you feed into it can be data to maintain NFT. It could be a swap transaction. You want to run all these sorts of things. And so what this means is that when you're deploying programs on, you know, very few people actually deploy programs on Solana unless they're building a net new program.
00:20:05
Speaker
Everyone else is just deploying data via one of these contracts whether that contract is a minting contract like the token metadata contract that Metaplex is built or you know the compression contract for compressed NFTs or something along those lines that program reusability has been really key to Solana's scalability and success and quite frankly composability as well because it it produces a lot more interoperable programs and protocols and
00:20:32
Speaker
Oh yeah, 100%. And it's great to see that the performance aspect of Solana is consistent throughout the entire ecosystem, which also goes to speak to the smart contracts and the language behind the smart contracts, which is Rust, which is known to be a very efficient memory safe language to use.
00:20:51
Speaker
Yeah, and one of the cool things here, there's a lot of talk today about modular architectures versus integrated architectures, or monolithic if you want to use any of these marketing terms. One of the great things about Solana is under the hood, everything actually runs on Berkeley packet filter.
00:21:08
Speaker
And so what that means is that you can write programs in a ton of different languages and frameworks, and they'll all compile down to this one common layer. And so, you know, people often say, oh, Solana programs are written in Rust. That is true that a lot of people write programs in Rust, but you can also write programs in C,
00:21:27
Speaker
There's a program now to write programs in move. You can use anchor, which is this programming abstraction framework on top of Solana for this. There's Python compilers now, too, where you can write stuff in Python. And you could even add support for pretty much any language you want by writing this front end to LLVM.
00:21:46
Speaker
And so the advantage of this here is you kind of get a certain amount of modularity within the Solana system, but it's not multiple VMs. It all runs in the same virtual machine. So when you're writing code in move, it's not like you're using the move VM, you're just using the move language to be able to write code that'll run natively on the Solana virtual machine.
00:22:04
Speaker
And, you know, on top of that, you can even see things like neon EVM, which is an EVM emulation layer on top of Solana. That is not an L2. That is simply a smart contract that emulates the Ethereum virtual machine. So what that means is you can actually have Ethereum virtual machine native programs on Solana that are able to atomically compose with Solana native programs, because again, they're all running in the same state in the same virtual machine. Wait, that's crazy. Let me unpack that. Yeah.
00:22:34
Speaker
Okay, so you would be able to write EVM compatible programs on Solana and run them on Solana essentially. Yes. Interact with them from EVM chains or from Solana. So for example, if you take Aave or something like that and you deploy it on neon on Solana,
00:22:54
Speaker
you can actually run a transaction that hits up a borrow lend pool on Solana and then goes and does something on Aave and then actually comes back and does something else on the Solana virtual machine as well. And because that all exists in the same global state, that can all be composable because all it is from the network standpoint is different programs are interacting with the same piece of state.
00:23:19
Speaker
But it doesn't matter. Is that piece of state now talking to the Orca program? Is it now talking to the Jupiter program? Is it now talking to AVE via talking to NEON? So there's a lot of composability there that gets unlocked by these things being all in one global state. I think a lot of times people think of something like the NEON EVM.
00:23:38
Speaker
as an L2 on Solana. And it's not an L2, it's running in the same state that Solana is running in, whereas in an L2, you have the base layer, and then you have a second layer on top of it, and programs run on top of that second layer. But if you want to move from the layer 2 to the layer 1, that is a bridging operation, or at least a proof operation, because they're two separate pieces of state.
00:24:00
Speaker
That is not the case with Solana. And that is part of what the long term vision is, is that Solana becomes and continues to be one global state for the execution environment of blockchain. Right. So that goes to say that there will never really be a need to have an L2 on Solana. Is that accurate to say?
00:24:19
Speaker
I think that is, it really depends. And the reason I say it depends is because if we get to a world where six billion people in the world concurrently transacting on blockchain, you don't necessarily need layers there. But you may need things like multiple concurrent block producers, which is something that the team's already working on. The ability to build two blocks at the same time and then execute those blocks either in parallel or in a process where you basically
00:24:49
Speaker
bring things together and work from there. So there are also maybe need for layers on Solana at some point for very specific types of applications. Now, these are not layers necessarily for scale. These are layers to say, like, oh, I want to build an AI system on Solana. And so we need really beefy validators to be able to run on-chain AI models.
00:25:12
Speaker
So maybe that quote unquote L2 is just a subset of validators that have all spent $20,000 on a super powerful GPU so they can run these types of models. But at that point, we're really talking more about a committee or a subset model than a proper layer.
00:25:29
Speaker
And even if layers are needed at some point, you always want to minimize the number of layers, because each layer is a point of centralization, each layer is a middleman that'll extract tax, each layer is a point of failure. And so even if we get to a world where, you know, it's like, okay, maybe there is a need for a layer or two on Solana, it's going to be one or two layers, it's not going to be 47 layers, and each layer is going to have 10,000 times the throughput of the base chain.
00:25:54
Speaker
Because right now if you go from a layer one on Ethereum which does about 14 to 20 things per second to a layer two, those layer twos are doing 70 to 90 things per second. That is still a fraction of what the Solana mainnet can process today.
00:26:09
Speaker
So if you have a mainnet on Solano that's producing a million transactions per second, which is the benchmark that Firedancer is shooting for, they're not going to hit that at launch, but you know, over the next few years to get the network up to a place where it can handle a million transactions per second. That means a layer two is going to be at least 10 million transactions per second. Right. And that is the sort of entire thesis here is as few layers as possible, which is ideally one.
00:26:34
Speaker
Yeah, and that makes a lot of sense. Is Solana still on about 65,000 transactions per second right now? So transactions per second, I think this is a nerdy enough podcast we can get into this. This is a very contentious thing when you push into the technical space of blockchain, which is how do you count transactions per second? So Sui was proposing for a while, you count database interactions, which are basically reads or write operations that take place.
00:27:02
Speaker
On that metric, Solana is already pushing hundreds of thousands of transactions per second in terms of database interactions, if not millions of transactions per second because of the way that network is constructed. There are also ways of basically saying, what can you do with a transaction? Because not all transactions are created equal.
00:27:21
Speaker
A transaction where I send you one soul is a much computationally simpler transaction than a transaction where you mint an NFT using money you've borrowed from a marketplace. Those can all be one transaction, one signature and one fee payer to do a certain set of things, but the fees are different on them and the amount you can get done in that transaction is different.
00:27:46
Speaker
So, you know, on simple transfers on those sort of one sole back and forth. Yes, that's where that sixty five thousand number comes steady state. You see the Solana network at about four to five thousand transactions per second. Right. Bursting up to about twelve thousand transactions per second. Right. And so, you know, but this really depends on what work you're trying to get done on the network as well. And this is true for all blockchains.
Enhancing Blockchain Usability
00:28:10
Speaker
This is not a Solana specific thing. I think you saw
00:28:12
Speaker
For example, when inscriptions became all the hype a few months ago, there were networks that crawled down to single transactions per second because inscriptions just were a different type of transaction with a different type of data problem that these networks weren't built for. You actually saw it halt several networks because of the difficulty of handling inscription data.
00:28:35
Speaker
And that sort of is proof that like, you know, TPS is sort of like how much horsepower does your car have? Like that doesn't actually tell you how fast the car goes, right? There's all these metrics used like brake horsepower and traction and aerodynamic profile. But it is one metric that I think a lot of people hang their hat on to say, you know, or GDP is another one, right? GDP does not tell you anything about how rich the people in the country are. It just tells you how much economic activity there is in that country. That could be,
00:29:04
Speaker
five Jeff Bezos's and a bunch of people who are just getting paid $5 an hour, or that could be a perfectly egalitarian, beautiful society. You can't tell just by looking at GDP.
00:29:15
Speaker
Oh, yeah. 100%. And it goes the same for market cap. You can't judge a project's adoption by market cap. There's a lot of things that go into market cap, even if you just consider the, let's pretend there's no wash trading or anything under the board. If everything's completely above board, there's still a lot of things to consider within that. So is there a unique metric that accurately represents TPS, maybe something like
00:29:42
Speaker
compute per second, like an actual, hey, it consumes this amount of tera, you know, Hertz per second or something.
00:29:52
Speaker
Yeah, totally. I mean, so this is tricky because then Bitcoin would be the highest performing network out there, right? And like we all know, Bitcoin is great, but it can do basically nothing, right? Yes, there's L2s and Bitcoin coming. Set that aside for a second. All Bitcoin can do is send Bitcoin, right? So are we really going to say that Bitcoin is the most performant blockchain out there? Like that obviously doesn't feel accurate.
00:30:17
Speaker
And this is the place you always get to whenever you do these metrics, right? I think this is, you know, transactions per second ends up being a little bit like pornography. It's very hard to define, but you know what it is when you see it. And from this perspective, what that means is like, can I go on a network and pay
00:30:34
Speaker
a reasonable amount of fee, which is ideally very small, and do the things I want to do without being constrained by the usability of the network. I think that's how a user defines is a network scale. A great example of this is CloudFlare.
00:30:52
Speaker
Cloudflare is the CDN layer for the web 2 internet. And from a user perspective, YouTube is scalable. I never have buffering problems on YouTube, or if I do, it's on my internet connection. But on the back end, there's all this crazy stuff going on to make that happen.
00:31:11
Speaker
You know or Cloudflare, right? It's like when there's a massive big streaming event like the Super Bowl or everyone's trying to download like a new thing that came out You know, does it actually matter to a user how you know, those are not actually read write operations That's just read data operations All the user cares about is am I able to do the thing I wanted to do from a developer perspective? It's very similar, right? It's like I
00:31:36
Speaker
Do I really care where Amazon has its data center? Do I just care that I can build the type of applications I want to build on AWS for a reasonable cost? And if they're doing their job correctly, I don't really need to think about, oh, well, is this data center in Cincinnati or Tokyo, right?
00:31:54
Speaker
And so I think that's sort of the problem with all these TPS metrics is we try and boil it down to one number that's going to tell people, is this network good for users and good for developers? And the only way to figure out if the network is good for users and good for developers is to actually go talk to users and developers. And I think what you'll see is like most developers are very happy with Solana and they say they can't build
00:32:17
Speaker
what they want to build anywhere else. Most users say that Solana has an incredible user experience. It's fast, it's cheap, it's snappy, it feels, and this is like one of those weird compliments, but it feels just like using Web2. What we mean by that is there's none of that sort of Web3 baggage and Web3 overhead of like, okay, well, I sent a transaction and it cost me $30, and now I have to wait five minutes to see if it actually worked.
00:32:41
Speaker
And that is sort of one of the big visions there of like, how can this technology compete with centralized technology? It has to offer a user experience that is at least on par with what a centralized solution is able to provide.
00:32:56
Speaker
That's a great way of putting it. I haven't heard it phrased in quite that way before and I feel like comparing web3 to the consistency and the familiarity of web2. It's super important because I think it's all
00:33:13
Speaker
It's all starting to get more easier for people to adopt new technologies and interact with new technologies. So you want to be at a point where you expect things to just be familiar and work without thinking, oh, am I going to get this transaction? I'm going to send it again. I'm going to just bump up the nonce. Yeah, we've all been there. And look, to be fair, there are still a lot of optimizations to be done on Solana to make it
00:33:38
Speaker
the first class user experience it needs to be. There are still too many times when a user has to bump a priority feed because there's some bugs right now in how the scheduler schedules transactions that are getting fixed. But this is not to say Solana is a finished product in this regard at all. It is simply to say these are the goals that we all
Future of Decentralized Infrastructure
00:33:57
Speaker
have to set. And I think Solana is the closest of any network, but we're not there today yet.
00:34:03
Speaker
Yeah, no, a hundred percent. And by the way, congratulations on announcing chapter two, a hundred thousand pre-orders. That's fantastic.
00:34:10
Speaker
Yeah, so the Chapter 2 project is the next generation of the Solana saga, which was the Solana mobile phone. This is not done by the foundation. This is actually done out of Solana Labs. They're a totally different company. I don't know what the Chapter 2 looks like. I had to preorder my own. I haven't seen it. They won't tell me. So these really are like very independent operations, but it's really awesome to see them taking that forward into the next iteration of the product.
00:34:35
Speaker
Oh yeah, definitely. I think it just builds up that confidence and I'm pumped to see it. I can't wait to get mine just 2025. A little while left to wait on that. Yeah, I think they're trying to ship in like a Q1 of 2025 is sort of the goal there. So there's still a ways to go. It's a much cheaper device in terms of price point, which is really the goal. I think the first device launched in a bear market, it was hard to get initial success with that thing.
00:35:05
Speaker
I think one of the real theses there is we want crypto to go mobile. We want crypto to go mobile because there's no trend in any type of technology since the advent of the mobile phone that has not been a global success without having a mobile platform. It is actually astonishing how far blockchain has gotten without having good mobile experiences yet.
00:35:29
Speaker
And so that is really the goal behind this. The whole salon of mobile stack is actually fully open source. So any manufacturers of Android devices can just take that software stack and implement it on their own devices. Also, if anyone wants to add support for another network, again, it's all open source. Go ahead and submit a pull request. We'll rename it to be the Web3 mobile stack. We can add support for other networks as well.
00:35:52
Speaker
That's amazing. And going back to the fact that the initial one was expensive. I had a buddy. I don't have the first one, the saga. But I have a friend who ordered the original saga. And he's told me that it just ended up paying for itself in time. He got so many airdrops. And he's just using this application, which is basically making about $3 or $40 a month. I don't remember exactly what it was. But he pays for his SIM and data usage of that month.
00:36:21
Speaker
Yeah, you're talking about Helium Mobile. Yes, that's what I'm talking about. Yeah, so we should talk about this too. So this is probably the world's most successful decentralized physical infrastructure network. And so decentralized physical infrastructure, very similar to, I would say, generalized decentralized infrastructure. So the original decentralized infrastructure protocols are like Filecoin and Arweave.
00:36:46
Speaker
Yeah, and you know Akash these are you know sort of the the web 3 cloud providers if you want to put it that way where you have sort of abstract storage and abstract compute That's available in a decentralized cloud Decentralized physical infrastructure networks are a very similar concept except where the physical location is of the equipment matters deeply to the network
00:37:08
Speaker
I don't really care where the Filecoin servers are, as long as there's enough of them in enough geographic locations that I can be sure my data is secure. With deep-end networks, what we're talking about are networks that provide things like cell phone service and IoT wireless coverage.
00:37:27
Speaker
And so where that physical node is physically in the world matters for the quality of service that it can produce. So Helium Mobile is actually a cell carrier built on top of the Helium decentralized wireless network. And so the Helium network has thousands of nodes all over the country, specifically with the country on the 5G network system. They're building out overseas as well. But what this means is I have a cell phone plan on my phone that runs on the Helium network.
00:37:54
Speaker
and so my phone will actually connect to these towers that are just put up in people's apartments and houses and you know my monthly bill
00:38:04
Speaker
goes to those individuals in the form of credits on the Helium network, and this is what the mobile token is. Additionally, my phone is, since we're in the early days of the network, my phone is mapping coverage. So every time my phone connects to a tower, it sends data back to the Helium servers, and I've opted into this, you don't have to do this, about where my phone's location is and what the signal strength is, and it helps them build out a coverage map for the entire system. And so in that way, I get more money every month
00:38:33
Speaker
than my cell phone bill is because that mapping service is something that otherwise Helium would have to pay people 70 bucks an hour with probably $10,000 of specialized equipment to go out and map each street corner like something like Verizon does. And so it's really cool to see sort of how these systems work.
00:38:51
Speaker
No, it's fantastic. It's, it's, it's been, it's mind blowing. I don't know nearly enough about it as I should. Um, but I will definitely read more about it and kind of familiarize myself with the process. There's always so many new things in crypto that you feel like no, no matter how much you read about things, you're kind of lagging behind.
00:39:09
Speaker
Yeah, I'd say one of the really cool things about crypto in general is it usually strips things down to their barest economic relationships. And it reduces the friction to ideally as close to zero as possible for economic activity. So this is sort of where I think there's a whole, the whole deep in thesis is an incredibly strong one, which is that right now,
00:39:36
Speaker
our infrastructure and our data usage is tied indirectly to monetization services. So today, what happens when you pay money to your cell phone carrier? It goes to them. They spend it on all sorts of marketing-y, infrastructure-y things. But generally speaking, not much of it goes to actually providing you service.
00:39:59
Speaker
This is sort of the secret of cell phone carriers is like the amount they invest in infrastructure every year is not that high. It's usually, you know, a single digit, if not low double digit percent of their overall revenue goes to actual infrastructure. So most of the rest of that is some form of profit or some form of overhead. And if you've ever gone to a cell phone store and tried to get something changed on your plan, you know, a hell of a lot of it goes to overhead for bad software systems that really should be redesigned.
00:40:28
Speaker
So by starting from zero, there's a ton of optimization carriers are able to get just off of that. But let's look at something like the HiveMapper network. So HiveMapper is a dash cam network, where as you drive down the road, it takes photos. And it uses your phone, and it uploads those photos to HiveMapper. And what it builds is basically a decentralized Google Street View.
00:40:51
Speaker
Now, each of those photos is much lower quality than the Google Street View car. The Google Street View car is outfitted with probably half a million dollars of sensors and cameras and all this fancy stuff. But even if you're in New York like me, it drives down your road at most once every two years.
00:41:08
Speaker
That data is not particularly fresh. And sometimes it's the winter, sometimes it's the spring or the summer and all you can see are trees because all the leaves are out or it's in the winter and you can't really see what these things look like. And so Hivemapper's whole vision is...
00:41:23
Speaker
We're going to have lower quality image data, but we're going to use AI to build compilation images from hundreds of thousands of different photos of the same street in tons of different weather conditions, in tons of different lighting conditions, and suddenly you can start answering questions like, how likely am I to find parking on this street? How well is this street plowed?
00:41:47
Speaker
If I'm looking at buying a house on the street or something like that, I'd like to know what it looks like in different times of the year and different seasons. All of these types of geospatial questions ended up getting answered with high frequency data that you cannot answer with low frequency, high resolution data. And suddenly we get to a world where the Uber driver with this dash cam is getting paid just as much from their photos and from their data analysts
00:42:15
Speaker
as they get from Uber. And suddenly, if they have a Helium mobile hotspot as well, we get to a world pretty quickly where we are able to sort of take these components of our economic system that are currently super inefficient, right? And the analogy here is UPS and FedEx. If you went back before UPS and FedEx existed and you wanted to send a package from one part of the country to the other, you basically had to hire a courier.
00:42:45
Speaker
Right, and this was a guy you were gonna give your box to. Sorry, this was a guy you were gonna give your box to, and they're gonna go bring it somewhere else in the country. It's gonna cost huge amounts of money to do that. What if instead there was enough latent demand and enough routing in the system that we could build a network that could get packages anywhere in the country in about two days for about $10. And that's the world we live in today because you're able to start building these economies of scale.
00:43:14
Speaker
And that is really the long-term vision of D-Pen. And you need a fast blockchain like Solana to be able to do that. You need fast finality, high transaction count, and really low transaction fees to be able to make any of these decentralized physical infrastructure networks possible.
00:43:28
Speaker
Yeah, and that's just mind-blowing. I wasn't aware of this application. And you could totally get around the low-quality with AI upscaling if you really wanted. AI upscaling is at a point where it's pretty good at upscaling images. You can give it a low-quality image. You would turn it into a high-quality image. And to your point about having
00:43:52
Speaker
mediocre or even low quality data, that's almost real time versus good quality outdated information. I'd pick the first one any day of the week, 100%. Yeah. And HiveMapper just released a new camera a few days ago that now has depth sensors. Well, it has two cameras far enough apart that they can do differential depth math on stuff. And so you get to a place where, again,
00:44:18
Speaker
One sample on that depth camera six inches apart not very accurate a hundred samples They can tell you exactly how far that houses setback is from the street They can tell you exactly how how fat that tree is right? They can tell you all this types of information about these types of things when you get enough data through the simple systems
00:44:38
Speaker
And so this is, you know, I just I love the deep in future, because I think it's an incredibly compelling vision and use case to show people that decentralized systems can actually outperform centralized systems. And that same model can be applied to finance, that same model can be applied to AI, that same model can be applied to all these different areas. It's just easiest to see through the analysis of deep in.
Solana's Compliance and Security Features
00:45:02
Speaker
Yeah, I'm actually making a note of that right now. Hive mapper. I will definitely be checking that out. Thank you. Yeah. So what are some of the new things that you guys are building at the moment, specifically with Solana Foundation? Do you want to actually talk a little bit about token extensions?
00:45:19
Speaker
Yeah, yeah, definitely. So token extensions, I will say they're not built by the foundation, but we have had a big role in shaping how they've come together. They're built by the great folks at Solana Labs and Anza. But token extensions are a new token program for the Solana network. And the goal of this program was to give token issuers greater control over token issuance and token operation and token experiences.
00:45:44
Speaker
And those are a lot of amorphous words, so we can get into exactly how these things actually work. But, you know, one of the things that blockchain has always been based on this idea of optionality and freedom. And we've really heavily indexed on the permissionless tokens that can do anything mindset. And that piece is super awesome and super vibrant and doing great. And I think we all want to see a world where the rules and regulations governing how tokens can be minted and traded and used are relaxed over time.
00:46:14
Speaker
But we don't live in that world today. Today, if you want to tokenize things like securities or equities or real estate offerings, you need to maintain things like a transfer record of who owns all of these types of things.
00:46:29
Speaker
And today when people try and bring things like real world assets on chain, they're usually forced to go to private blockchains or private subnets or private forks or private L2s where it's effectively one centralized company running the entire network. So they're able to issue compliant tokens on that network as well. So the goal of token extensions is so you never have to launch a private blockchain again.
00:46:55
Speaker
Token extensions bring granular control down to the token program level. So an issuer can say, I'm in the minted token, and only wallets that have passed KYC are gonna be able to hold this token.
00:47:09
Speaker
Right. But that token will still exist on the Solana mainnet in a fully decentralized permissionless environment. You can trade that, you know, that regulated token with Bonk or some meme coin as well. Right. And this is really the power and promise of token extensions. So there's a ton of features built into this. What is transfer hooks? Transfer hooks are basically a program called in between the transfer.
00:47:33
Speaker
that can allow or deny the transfer. Now, a stablecoin issuer can use that for sanctions compliance. A degen can use that for all sorts of fun use cases as well that says, well, you actually can't buy my meme coin unless you own one of my NFTs. That could be something someone could program in.
00:47:51
Speaker
Or they could say, actually, you can't buy this meme coin if you own this NFT project, which I don't like. So there's really fun use cases here where you can create all sorts of different types of incentives and forces for folks.
00:48:06
Speaker
There are other things built in here like permanent delegate authority, which allows stablecoin issuers to comply with freeze and seize authority for tokens they've issued, and a lot of other types of things too that are really designed to meet the needs of businesses that want to build stuff on blockchain, but haven't been able to because of a lack of compliance and optionality.
00:48:29
Speaker
Yeah, just to go back for one second to transfer hooks, because I think there's a lot in there. So those are fully programmable intermediate pieces of code that run before the transaction happens. It runs a check, whatever that check is, and then it decides, okay, am I going to continue with this transfer or not?
00:48:50
Speaker
But what are some of the cool, I'm assuming the transfer, I'm assuming transfer hooks are live. And what are some of the cool use cases that you've seen so far with transfer hooks? Yeah, so you can use transfer hooks for all sorts of things. And there's also an extension that's very similar called a transfer fee, which people are already using today. So transfer fees can do really cool things that can say, you know, 5% of your transfer is burned.
00:49:16
Speaker
And then suddenly you've got an automatic burn mechanism built into every token transfer. That's pretty cool. There's a lot of applications for things like that. For transfer hooks, though, I think the main way people are using them today is for sanction compliance, is to basically make sure that they don't run a foul of some sort of rules and regulations there. Or you could even say something along the lines of, well, there's a wallet that's, we have a,
00:49:46
Speaker
And no one's using it this way today, but there's very cool applications for proactive security.
00:49:51
Speaker
Like, for example, someone creates a wallet drainer contract and, you know, for a fake NFT mint and people start accidentally doing it. If you're the token issuer, you could just add that to a list of like, no, you can't transfer anything to this wallet drainer address. And suddenly you've blocked a wallet drainer. Right. So there's lots of safety and security features that can be built into this as well. I will say that I think a lot of people are probably rightly saying like, wait a minute, but blockchains are all built on permission lists. You know, this feels like it's not in keeping with that.
00:50:21
Speaker
All these features are optional. They're not required for anyone to enable. And they all have to be specified before a token has been generated. So you can't just add a transfer hook after the fact. You can't just add in these extensions to an existing token. They all have to be spelled out. You can upgrade the program and you can do all sorts of things like that. But all of the extensions have to be initialized at token creation. So someone will never be in a situation where something is done to a token that they didn't expect.
00:50:51
Speaker
Right. Yeah. And that just makes sense. You don't want to have that level of, hey, let's just suddenly change the way this token functions. I love the fact that they're made for compliance with KYC and AML in mind. I feel like that part of the process cannot be understated how important it is for organizations today.
00:51:12
Speaker
I also work as a product lead for an art gallery, which we have an NFT marketplace as well. So we're in the process of creating this workflow where we check, we do VAT and AML at the point of purchase.
00:51:31
Speaker
We've been looking at different solutions on how to do this. I wasn't aware of the token extension at the time, which is fantastic. We are on Ethereum right now, but we're considering moving to or supporting Solana as well. So we've discovered this tool called Proofy, which pretty much does just that. It takes your KYC status, stores it on chain, and then in the future you can reuse the status. But the fact that a chain as big as Solana is offering this out of the box, man, that's just fantastic.
00:52:01
Speaker
You know, this is one of those things where one of the big advantages, this is all in one token program. And so that means that, you know, like some of the stuff has been possible in other networks before, right? Not all of this is truly only possible on Solana, but it's always required custom work. It said, oh, we have we've assembled two or three smart contracts from two or three providers.
00:52:22
Speaker
Now we have to go out to all the wallets and get them to support this. We have to go to all of the infrastructure providers and the explorers and get them able to understand how this stuff works. By doing it on token extensions, you get all that support out of the box. And so you can do something like use a transfer fee that instead of having it be a burn mechanism, it can be your VAT.
00:52:42
Speaker
Right. And your VAT can automatically be deducted at every transfer. You can put several transfer fees on it. You can have a royalty built in for the artist and perpetuity. Right. There's all sorts of these things you can do. And because they're built in at the token program level, they can't be bypassed. And that's one of the main advantages is you get out of the box support, but you also get out of the box security that these features are going to be respected because it's at the token program level, not a smart contract level.
00:53:10
Speaker
Right. And this would basically save engineers time trying to roll out their own solutions or move to side chains or other private chains like you've mentioned. There's also more there than just the transfer hooks, right? There's also one feature that I thought was super cool to see was the confidential transfers. The fact that you can still keep the ledger and the information, but
00:53:37
Speaker
hide the amounts of what is actually being transferred. That's again, another very like in feature there. This is, I'm glad you brought this up because, you know, these get conflated with actual private transfers and they're not private transfers, right? If you and I had a confidential transaction, you could still see that, you know, we transacted and you can even see the token type, you know, USDC or something like that. But the amount transferred would be hidden.
00:54:04
Speaker
This is really cool for a few reasons. The first is it actually has to be enabled by the token issuer. So the token issuer has to say, I would like my token to be able to be transferred confidentially. Additionally, both you and I would have to opt in to confidential transfers. And so this sort of solves the dusting problem. This also can solve a lot of the legal issues around mixers and those sorts of things.
00:54:28
Speaker
But additionally, the token issuer can appoint an auditor that has the ability to audit and decrypt these types of confidential transfers as well if they want to do something like that. So we think these types of transfers are really important for a few use cases. One is business to business payments, where you may not want the details of an agreement between a business and a creditor or something like that to be publicly known. But it's fine for people to know they're transacting.
00:54:56
Speaker
Another big one is on-chain payroll, where I think we really, I would love to see us move to a world where a lot more people are getting paid in stablecoins on-chain, but it could create some odd questions in the office if everyone knows how much everyone else is being paid. And so this is where something like confidential transfers with confidential balances is a really, really cool technology to help address some of these problems.
00:55:21
Speaker
Oh yeah. And it just helps adoption. It brings adoption just a step closer. Exactly. It's undeniable that institutions will eventually start onboarding on chain. Some of them have already. More will follow. And I think giving them the set of tools to kind of help with that, it's definitely a move for the future. And that's an amazing thing to see. Yes.
00:55:42
Speaker
What other features or plans do you guys have for the next, let's say, couple of years in terms of adoption, in terms of functionality? It's pretty impossible to plan a couple of years out. What I'll say is like this year, one of the main things we're looking forward to is the launch of Firedancer on mainnet.
00:56:01
Speaker
This is the first time there's an independent validator client built for the Solana ecosystem. So this is a totally independent code base. It's built in C as opposed to being built in Rust. Ethereum is the only other network that has multiple validator clients and independent languages. This is a really big piece for security and stability of the network over the long term.
00:56:25
Speaker
The odds of there being a bug in two independent clients at the same time in the same place is functionally zero. So that's a really great advantage there. You actually saw this on Ethereum last summer where you had a bunch of finality incidents caused by a bug in one client, but the network was able to stay up because there were multiple independent clients.
00:56:45
Speaker
So I'm really excited to see that launch on the Solano network, plus the FireDancer client. Again, as I said, they're aiming for a 100x performance increase over the current client over the next few years. And so there should be some pretty massive performance increases that come with the launch of FireDancer as well. Damn, that sounds awesome, man. That sounds incredible. Yeah.
00:57:04
Speaker
Um, well, listen, this has been an incredible conversation and I feel like I've learned a lot during this time. Um, is there anything else that, um, you'd feel like you want to announce or you'd like to add to, to, to this, uh, for people to be aware of? Yeah. I think the only thing I'd say also is sauna.com slash developers. If you've sort of been inspired and you want to check out how to build stuff on the network and what people have built, um, that's a great place to go and get started and sort of see a bunch of the work that's going on.
00:57:34
Speaker
Nice one. Nice one. Well, thanks Austin. It's been a pleasure and I look forward to maybe checking in next year or something like that. See what the latest developments are. Yeah. Sounds great. Great. Thanks everyone. Thanks Austin. Bye. Thanks.