So we started out actually building the first with three
smart contract automation protocol on Ethereum and then of
course on all other EVM based chains.
This market is basically a subset of the overall block
space market. And as block space remains
scarce and limited, the market we need to, to automate stuff
and to treasury day stuff is inherently limited by this.
And so we were sort of like hitting the, the limits in order
to grow the pie of, of all the other things we're building, we
need to actually grow the pie of box space.
We need to get more chains, more applications.
This is then where we really saw roll ups as the the solution how
we can how we can get that and how we can then help projects
actually scale. Welcome to Epicenter, the show,
which talks about the technologies, projects and
people driving decentralization and the blockchain revolution.
I'm Frederica ANZ and today I'm speaking with Hima Odd, who is
the founder of Gelato, one of the leading role up as a service
provider. Before I talk with Hima, let me
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Hey, Ma, it's super nice to have you back on.
The last time kind of we had you on this pod was beginning of
2023, which was really different time.
Very different. Thanks for having me again, glad
to be here. So you are one of the founders
of Gelato. Last time we had you and your Co
founder Lewis on. It's been a while, so kind of
maybe give us a brief recap of the history of Gelato and what's
what's happened since early 2023.
Yeah, totally. So I think last time we were on
here, we we talked all about our shared history as well.
We're with you and the the other folks at at Gnosis, of course,
you were like early supporters of us at Gelato when we started
back in 2019 originally. And I think it 2023 was the year
for Gelato where we really started to endeavour on our
journey to scale Web 3 and go all into the role of centric
road map. And this was kind of the
starting point when we started researching and developing what
is now one of the leading role of the service platforms in the
space. And I think when we were on back
then, we, we sort of started on that journey.
And I think Fast forward to today and like 1/2 years or so
have passed, I think and then right feels like an eternity of
course. But now we have 4050 rollers
live on our platform, huge sort of change such as Risk or
Kraken's ink chain on Gelato, among many other really great
projects. And we really, so I think in
general as a space, this sort of roll up centric road map play
out with any larger ecosystem or project application now looking
into launching their own chain. And yeah, we of course
continuously trying to to find what is the best ways of
achieving this. How can we scale what 3, how can
we help scale these applications while remaining all the cool
guarantees that Etherium and other ecosystem sort of bring to
the table. And yeah, I think that's that's
a pretty much a good summary. I think we'll dive into kind of
like rollups and sovereign rollups and native so rollups
and kind of like whatever. So rollups kind of like in, in
just a second kind of back in 2023 and before that kind of you
guys mostly did relaying, right? Kind of it was kind of like a
relayer network. So is is that still going on and
what kind of what led to the shift to towards kind of this
roll up as a service platform? Totally.
So so we started out actually building the first with three
smart contract automation protocol, added release of got
traction on Ethereum and then of course on all other EVM based
chains. We are still sort of running the
service among our transaction reading service, which is used
by a lot of projects for the construction sort of bundlers
and and so forth. What we realized though, at some
point is that this market is, is basically a subset of the
overall block space market. And as block space remains
scarce and limited, the market really to, to automate stuff and
to, to, to relay stuff is inherently limited by this.
And so we were sort of like hitting the, the limits of of
these markets and we were like, OK, we need to, in order to grow
the pie of, of, of, of, of all the other things we're building,
we need to actually grow the pie of block space.
We need to get more chains, more applications, more block space
and meta system where we really saw roll ups as the the solution
how we can, how we can get that and how we can then help
projects actually scale. Because an easy example, if you
want to sponsor millions of transactions while it's still
retaining like the security and since the resistance of like an
Ethereum of some force, like you can't do this on Ethereum, but
you will go bankrupt. I think many people have tried
and so you need to get more blocks case you need to create
an abundance of block space in order to actually then achieve
these sort of user experience benefits.
And and yeah, this is sort of how we transitioned into into
solving this fundamental problem first.
That makes a lot of sense in terms of kind of like why you
decided to embark on on this endeavour.
So maybe let's set the stage by kind of talking about what you
actually mean by a sovereign roll up.
Because kind of like when, when we kind of usually talk about
roll ups, usually we, we think about kind of like full roll ups
or validiums and kind of kind of meaning kind of like you have
different parts of the consensus mechanism that kind of have to
check in with days layers or kind of in the foil roll ups,
it's kind of the state and the data kind of with data
availability. And then in the validium, it's
kind of just the state periodically what happens in a
sovereign roll up? Because kind of like even the
Monica Sovereign roll up, it sounds like a bit of a
conundrum, right? Totally.
And let me sort of as a disclaimer before I start say
all of this stuff, all of these definitions are highly complex.
It's like it took also myself like working on nothing else and
roll ups for over 2 years, a lot of time to really understand
this and their settlement layers and, and and and roll ups and so
forth. And so let me try to maybe
unpack and provide you with the definitions that I sort of.
I would love that. And a roll up for me is a
blockchain that posts it's blocks to another blockchain at
it's very core. And a blockchain really for me
consists out of and this has a roll up blockchain consists for
me out of a state. So it's a, it has state, then it
has a certain state transition function, which is let's say
like ADEBM. And then it's takes in
transactions through the state transform function to progress
the old stage to the new stage, right?
And this is all the the blockchain progresses.
Now the cool thing about roll ups is that day you don't need
to bootstrap your own validator set and come to consensus around
a certain ordering of transactions.
You can outsource this to another, a layer which we called
mostly the data availability layer, right?
You can use Ethereum for this. You can post transactions with
blobs to Ethereum. You can also use others like
Celestia for this, which are sort of purposely built to only
do that. And, and this is at the core
really what a roll up is. You just post your blocks to
another chain and they come to consents around its ordering.
Now if you think about it, this is really all you need to have a
roll up. You just need this sort of this,
this roll up, this chain, and then you need another blockchain
to do contents on the list of all those transactions.
Where it gets more more complex is now the bridging part.
And there's this nice saying it's like it's all just chains
and bridges at the other day when we talk about roll ups and
why people now get confused what like OK, isn't like like if I
talk about like a base right now isn't baser like a roll up?
Yes, it is a roll up, but I call it an an enshrined bridged, an
enshrined bridge roll up. So what does that mean?
It means it has a roll up. So it posts its data to it other
data availability that like Ethereum, but it also has an
enshrined bridge to Ethereum, which we in this case called the
settlement layer. And So what this means is that
you can bridge in assets from Ethereum directly to, to to
base, right? And you can use the the fans on
base. And then you can you move, you
can move your fans out again, we, we call like trustlessly
with certain proofs that you provide back to the, to the base
layer, which in this case is Ethereum.
And what that, that that's sort of like the unlock here.
What, what, what, what is important for sovereign roll ups
is that sovereign roll ups basically take this, take an
approach, which is OK, rather than having this worldview where
we need this enshrined bridge to Etherium, let's cut it out
completely. Let's remove this and try bridge
to Etherium. And let's only have the roll up
which posts it's blocks to a date availability there like
Celestia in the case of the ABC stack.
And therefore fully embrace like a more modular decoupled way
where we don't confuse and enshrine the bridge to the roll
up. We just detach it and we treat
the roll up separately. And then what we do is rather
than having this enshrined roll up, you can take any kind of
modular interoperability protocol that you would like,
for example, a layer 0A hyperlane or whatever you want.
And you can use that instead to bridge from assets, not only
from Etherium, but you can bridge assets and from Solana,
from base, from Abbott, from from Tom and the the unlock
here. I think why we have discovered
this as being extremely valuable and, and actually potentially
the future of how roll ups will be designed is that the current
roll up stacks like and, and this is where we think like what
roll ups are. They were designed back then
with this very Etherium centric world views like OK, with
Etherium, we need to scale Etherium.
How can we scale Etherium by building these network extension
around Etherium that looked like Etherium have a bridge to
Etherium, right? But the world has progressed
since then. And now there is there are
chains out there, base Arbitrum, even like a Solana a ton.
Who knows, right that have a lot of liquidity that and a lot of
users that people actually want to access as well.
So it's not just scaling Ethereum.
People just want to have a chain that scales but taps into all
sorts of users, all sorts of liquidity.
And this is what sovereign roll up sort of have.
They're like, hey, rather than having this enshrined world view
and Ethereum at the centre. And we are like the satellite
that hovers Ethereum, we, we switch it around, we put the
application in the centre. And then Ethereum is basically
the largest planet, like Jupiter orbiting the Earth, which in
this case is your application. And and this is sort of like
conceptually speaking how how I would view sovereign, Sovereign
all OPS. As a physicist, I can tell you
that Jupiter doesn't actually obey the Earth, but.
The Sun and this guys, of course.
I, I take your, I take your point, I think I have a lot, I
have lots of questions as to this.
So maybe kind of like, let's start from a very basic
understanding point of view. So kind of, I understand that
you post the transactions into Celestia's data availability
solution in roll ups on Ethereum.
Kind of you do two things, right?
Kind of like you do you post the data, but you also periodically
post a proof that kind of the data takes you using the the
using the VM. Kind of like if you kind of take
all the the the current state and all the data, all the
transaction data, kind of it takes you to the new state,
right? Does this function happen
somewhere in sovereign roll ups or whom?
Whom do I trust is my question. So, and that's that's the sort
of like unlock one has to have. So let's imagine, let's let's,
let's say for example, let's take an example here.
There is like a roll up on on our robust service platform
called Raya. They're they're pretty decent
DVL. They're like a prep tax.
They use the operational orbits like they're an L2 to a theorem,
right? They have I think 98 or 99% of
the entire TBL, what they have is bridged in by a third party
bridges on the roll up. So by the way that you see
abnormal stack, but all the funds, I think UCC is bridged in
by a socket because they wanted to onboard the users, not by
Ethereum, which is pretty expensive, but by a base
Arbitron and so forth. Right now in this case, what
they are still doing is they are still sending as you say, like
these sort of like hashes, these sort of fake commitments to
Etherium periodically because their stack is still built in a
way where they have to settle Etherium.
But Etherium provides them with 0 security because Etherium you
have a if you have a, if you have a roll up and trying to
roll up to Etherium, Etherium doesn't secure your roll up.
Ethereum gives you like consensus around the ordering of
transactions if you use it for data availability, right?
But the the bridge this select this, this, this notional
settlement layer, like settling to Ethereum.
The only thing what it provides you with is it provides you with
a trustless bridge for the assets that are bridged into the
roll up via the canonical enshrined bridge.
And if you have let's say 99% of the assets bridged in via other
chains such as base or Arbitron using let's say socket or a zero
so forth. Then you get 0 benefits and 0
security from this chain because what is like, like, why are roll
ups like, why, why, why do you, why is this like I say, you have
a solar roll up in this case, why would it be secure without
sending the state commitments to a theorem, right?
Because if you think about it, as I said at the beginning, was
a roll up. You have inputs, you've got
state, got a state transition function.
And then you have outputs, right?
And so the only thing you need is you need this ordered list of
transactions that everyone can follow, right?
You can just spin up a note. I can spin up a note.
We all look at Celestia in this case, we see what is the audit
list of transactions for this particular roll up.
And then we run a note. And then we know, OK, I know
myself locally that hey, this state transition function has
been run correctly. And so I know that, OK, I
received now $100 and you sent me $100, right?
Ethereum, the Ethereum only needs a proof like this.
This this bridge to Ethereum is like a light client, right,
because Ethereum cannot run a note for this roll up right.
So Ethereum doesn't know whether the state transition has been
executed correctly. So what we do in order to like
modify Ethereum to say, hey Ethereum, you can accept back
funds from this roll up to to you is we generate proofs that
we post to this bridge smart contract like in terms of like
fraud proofs or ZK proofs, for example.
And this then allows you to move assets back and forth.
But this is only adding any benefits if you actually have
funds in this bridge. And what is I think interesting.
I think Martin did a great talk at Defcon Martin Kaplman.
And if you look at L2 beat, for example, what you can see is
that for all the roll ups that exists, 60% of the funds of the
TVL on all roll ups are not bridged in by the canonical
bridge. What this means is like if you
if you sort of take this to the conclusion is 60% of the assets
are sovereign. So all the L2's on Ethereum
right now are already if you like, like if you think about it
60% sovereign, they only are 40% Ethereum roll ups or only 40% of
all the assets come actually from Ethereum.
They might use Ethereum as data availability, right?
But the assets in there don't inherit the security.
And this I think is a very important point to people need
to understand. And, and what we saw Gelato is
that we have a lot of chains that have 0% in these roller
bridges because they don't want to use it.
They don't want to onboard people from Ethereum.
They don't want to onboard assets that are issued on
Ethereum. And so for them, it doesn't make
sense. They just get overhead.
They just have to pay cost to Ethereum.
They have a bunch of legacy code that they need to use in these
lower up stacks that deal with all like Ethereum related things
like reorgs and so forth. And that's why taking this
current trends to the conclusion would mean that actually what
applications want is a way more sovereign construction than what
they usually have right now. So maybe if I reframe this a
bit, what do you think? Do you think it's fair to say L
twos as they currently exist are largely a meme and you refuse to
kind of pay for this memetic security?
That kind of doesn't actually secure a lot of the assets in
whatever roll up you're looking at.
Settling to Etherium if you do not use the bridge is utterly
useless and you only pay and you don't get any benefits from it.
And yes, this is then only a meme and you can, you can
generate as many ZK proofs you want to impose it to Etherium.
This doesn't add any security so to the funds on your chain.
So I fully agree with that, yeah.
OK. I, I have so many questions as
to kind of how interoperability could or should work, but maybe
kind of let's take it from from the beginning.
So maybe let's look at kind of how so kind of I understand kind
of what you mean by a sovereign roll up.
So kind of let's look at how your roll up stack works and
kind of how you achieve the pretty impressive throughputs
throughputs that kind of you are achieving.
And then kind of we can we can look at kind of like the wider
Ethereum roll up ecosystem later and look how we could kind of
untangle this to a certain extent.
You guys recently launched abundance.
So kind of the ABC roll up stack and what you can actually get
with it is A1 giga gas per second sovereign roll up
solution. First of all, maybe maybe kind
of can you reframe the one giga gas per second kind of number
because kind of like if you're not very, very hardcore in the,
you know, gas weeds, what what does that actually mean in terms
of what sort of applications that could support?
Totally for for let's say for the end user this this might
sound a bit cryptic, right? But I think the why we use the
Giga gas measure or unit to measure throughput rather than
select the traditional transaction per second measure,
I think that many people use is because it really like the
blockchain throughput is limited by like EVEVM blockchain
throughput is limited by basically or measured in gas,
right? So how much gas can we get into
a into every single block? And that's why the end Ethereum
and so forth. The Bitcoin has these huge
debates about like block gas limits and so forthright, shall
we do bigger blocks, right? There's like all these all these
discussions going on. And So what 1 gig of gas like, I
think the easiest one to explain how, how what an immense
throughput gain this is, is to put it into perspective of what
we currently have. So if you look at let's say base
right, which is probably the the the roll up out there with the
highest usage right now in terms of users and a gas consumption,
it currently has 0.017 giga gas per per per per second worth off
a throughput. And this is sort of also where
the current Ethereum centric roll up stacks clock out.
We have customers on our, I wrote a service part from a
Gelato which build like game and I like games as customers
because they're like, hey, I just, I have 100,000 users and I
just put everything I want on chain and then everything is
already full. Like they, they really try to
Max out these the, the software and they already clocked out at
0.0180.019 Kika gas per second was a throughput on some of the
Ethereum stacks that we're using.
And So what we do is we do 100 X improvement with ABC stack in
terms of throughput compared to what you currently can do on
like base or what this game could do.
So this is a is a pretty big one.
If you if you want to use like the transaction per second sort
of measure, we have some sort of like, I think it you can
translate to like 50,000 transactions per second.
But it it really depends on the transactions, what they do, how
much, Yeah. My in my head, kind of like a
small transaction, it's around 100K gas.
So kind of that's kind of, yeah. So.
It's like a small transaction app.
So you're kind of 50X ING the through books of.
They're like it, Yeah, one of we can go higher than one gear, I
guess, but like roughly 100 X. OK, 100 X OK that that is that's
a lot. So kind of that means kind of
you, you can kind of on board, you can onboard games as an
ecosystem because kind of that, that kind of commit a lot, a lot
more transactions on chain and kind of like can't pay the price
point that many financialized transactions.
Pay right, Yeah. So, so basically we believe that
we believe in a world of abundance or abundant block
space is necessary in order to actually create compelling
applications for like a large number of users, right?
And these games that we have, we are not talking about them
having millions of users, right? So it's still a probably like
thousands of users or something, but they're still already
clogging out. But the games, of course, one
big vertical that we also very bullish on that can actually
bring in more retail people. But what we are and we are like
very that we come from Defy as well as Gelato.
So we are always very focused on like, OK, how can we actually
rather than everyone trading on Binance, how can we bring
Binance really on chain? How can we really build like
fully decentralized sensitive resistant order box on chain for
example, right. And and this is right now, no,
like our, the current stakes are nowhere near close enough in
terms of throughput to actually facilitate this, right.
And I think this is, this would be for me the biggest unlock we
see like with hyperliquid and so forth, how successful you could
be if you actually sort of go in this direction.
And, and what we are mostly bullish on here is actually
enabling people without like having to horizontally charge by
a multiple instances for now, build like an unshamed Binance
on a roll up. And and and I think this is for
us the really exciting use guys that this enables.
Why do you use Celestia as a data availability layer?
Because kind of like if you look at, if you look at base kind of
they're clearly using Ethereum. So what's kind of limiting them
to .02 giga gas? So it's, it's really the, it's
really the lack of decoupling. And so if you look at the last
sort of centuries or the last couple of years and, and
software development, micro services architecture is really
like a dominant sort of trend that you see, right.
And what this means is that you decouple individual services
from each other. So they run sort of like in
silos and you can improve them in silos, you can scale them in
silos, you can make them resilient.
If one fails the IT doesn't impact the other.
And you just make them so much easier to maintain because yeah,
if you change one thing here, you don't always have to change
another thing here, right? The current stacks right now are
are are pretty, pretty couple. So every time you want to add
something on, let's say the execution client or, or or so
forth that you do improvements, you have to always look, OK,
what about the fraud proof? What about the bridge on
Ethereum? We need to upgrade it now in
order to actually encompass this change that we do here.
So you really couple bridging with the actual like execution
and the throughput, which is basically if you have an
enshrined bridge and you roll up, this is what you do.
Like the Ethereum roll up stacks, the enshrine, they
combine the roll up and the bridge into one.
Basically what we do is we decouple them from each other
and we make them isolated, which is what Sorano Labs do.
And through this, the coupling plus of course like a, a bunch
of improvements that we do to, to the stacks sequences and so
forth, you can really gain these massive throughput benchmarks
that we that we achieved. And, and this is really the
secret sauce here. So the coupling things from each
other and then optimizing each specific thing.
And when it comes to interoperability, the great
thing is you just use whatever interoperability layer that you
like. So many of the chains that are
on Gelato use for example, the layer 0 messaging protocol.
Others use hyperlanes permissionlessly deployable
messaging protocol. And these messaging protocols
are the cool thing here is that you can define your own security
and we are strong believers in that, especially for star like
you don't need to overpay for security if you just get started
as an application, right? If you just get started, you
shouldn't pay 10 thousand $50,000 per per year to prove
the general ZK proves for like $100 in TBL, right?
That doesn't make sense. So you, you this should be like
a progressive thing. You should have one modular
interoperability protocol and then the more TBL you get, then
the the the sort of higher the risk is on your chain, the more
secure it should be. And so another great thing that
we believe in as we believe that with like what ABC stack is
built for is we don't believe like we think fraud proofs are
sort of very weird sort of middle ground that we in right
now. You you sort of like everyone
uses the like not actually have like most optimistic roles
actually still don't use them today.
But it's kind of like this meme where it's like, hey, yeah, you
get in, but OK, you can't for getting out.
You have to wait seven days. And no one really waits seven
days themselves, right? Everyone uses like a an
operator, like a cross on something and across rebalances
by a crack and then other centrist exchanges.
And they then they are the only ones actually using the
canonical bridge to wait seven days and get out again.
And so no one really, really no one really wants to use them.
And So what allowing modular interoperability solutions to be
used means that you can instantaneously just with
attestations, bridge in from any chain to your chain in and out
in seconds right away. And one whenever ZK gets fast
enough from latency point of view and cheap enough from an
approved generation point of view, you can just like flip the
switch and go straight to ZK. So basically what we do is we
leapfrog frog proofs. We say hey just use for the
beginning at the stations and then whenever you have high TVL
and whenever ZK comes down you just switch because ABC stack is
fully ZK forward compatible. And we don't like as other sex
we don't have, we haven't built our own prover and our own ZKEVM
from scratch and some weird programming language and and so
forth. What a lot of other people do,
we just are compatible with succinct SP1, with risk zeros
proving system, with any other sort of Jolt CKVMS that will
come out of the market, you can use them directly prove the
entire ABC stack and they can. It's again decoupling, right?
They will work on the proving system.
They will make it, they will make it great.
Celestia works on the DA, They will make it high, high
bandwidth. We work on the client, we will
make it high throughput and combining all these things
together in a super modular way provides the highest throughput
because everyone can focus on what they are good at.
OK, I hear that. Let's talk about the security
assumptions here. So kind of like, I mean, what
you're rightly pointing out is that a lot of the security
that's promised by Altus is not actually delivered by Altus.
But I think kind of like what I mean, I'm paraphrasing a bit
meanly here, but kind of like if, if I were to kind of kind of
put, put, put my finger on the wound, I, I would say, OK,
you're not promising any security.
But you're also, I mean, you're, you're, you're not over
promising on security, but you're also not delivering
anything better than kind of what the tools who are over
promising on security are delivering, right.
So let's, let's kind of look at your security assumptions.
So say I want I want to send a transaction to a sovereign roll
up kind of I post that transaction to to Celestia.
What recourse do I have if for some reason kind of my data is
censored? And what recourse do I have if
my data is not censored, but somehow it's still not included?
So how I mean to kind of what what kind of like in the old
roll up word kind of would be I dearly kind of fraud proof and I
hear you that that only works for bridge assets and so on.
But what what yeah. So what are my security
guarantees? Yeah.
So back to the the previous point of what a roll up is,
right. So the security of a sovereign
roll up is exactly the same as the security of a enshrined
bridge roll up. So the security is OK you we
need to all agree on a set of ordered transactions, right.
And if we have the set of all the transactions, everyone who's
running a note can compute the new state based on these
transactions, right? And and it doesn't matter if you
post like, of course, you, there might be an argument to say
Ethereum SDA is this more censorship resistant than like
another DA such as Celestia, right?
And so this is this would be a security sort of trade off that
we made here an ABC stack because Ethereum could be seen
as what central resistance, I would agree it probably is due
to like Homestaker, like focusing on homestakers and so
forth, right? But why do we do this?
Why do we do this trade off? Because Celestia is basically
sort of what Ethereum wants to be in terms of it's road map.
It basically started from with a clean slate when it comes to the
roll up centric road map. Celestia is built for roll ups.
Celestia says, hey, we are optimizing for one GB blocks.
And as soon as you post these transactions to Celestia and,
and and of course still needs to scale as Celestia still also not
at the skate today to to handle like 100 ABC stack roll up.
So one giga per second. That is not the case, but they
have a clear road map to achieve this.
And I'm moving way faster than what the theorem is doing.
But the security is really coming from there.
And now, of course, the other security.
So the security is just the DA layer, right?
And then everyone running a node.
But then of course you have the bridging, right?
So, and then, OK, well, how do you actually secure the
bridging? This is this is you have to
decouple these two conversations and this is where like basically
ours our our whole point is that look at these bridges out there
today. Like blast is the 4th largest
roll up Ethereum roll up right with $1.4 billion in TVL and it
has 84. Two percent of the assets are
bridge invalid Ethereum roll up which is secured by the frog
proof. All of like 82% are externally
bridged in or actually not secured by the bridge itself.
For them there's like a caveat because they used to sort of
like vault system before that that escrows or the eve.
But basically the bridge itself is not even securing these
funds. So you always have to look at
who is securing the funds and only and how many funds do they
secure and and this is really the security you get.
And so yeah, basically most roll ups a day are already not really
benefiting from the security from a theorem.
And so we just take it to the full conclusion, say, then just
stop using it. Then who?
Who's securing the funds in a sovereign roll up?
So is it kind of the Celestia notes of who?
Who? Who would you point to?
Yeah. So they're like an interesting
point here is that who is the asset issuer, first of all, is
the question, right? For example, Ethereum issues
ETH, right? And, and, and the ETH who
secures ETH in general is Ethereum, right?
So if you would like to have ETH on your chain, then you will
want to have a bridge to Ethereum, right?
And if you don't want to have any other external dependencies
in terms of security, you probably want like AZK proof
based bridge to Ethereum, right? And then if the ZK proof is so
like secure and you trust it, then it's so like you have the
Ethereum security, right for USCC, for example, USCC on
Ethereum or USCC on base is actually issued by Circle.
So neither Ethereum nor base provides you with any security
for the USCC you hold on Ethereum or base.
It's solely a server somewhere at Circle, right that provides
you with that security. Now for sovereign roll up,
again, it depends who issues the assets.
So if you issue the assets natively on the sovereign roll
up, it's basically Celestia and everyone running the notes who's
securing these assets. So it's just a natively issued
asset that you have and there's a transaction that sent to
Celestia. It says, Hey, I want to issue
this asset. And there you see, now you've
got an asset on this on, on your son roll up and there's no
external Social Security depends that you have, of course, if you
want to bridge in assets from another chain, right?
Let's say you have a you have a your own base and there's a
natively issued asset on base. And I think base actually has
60% of all the TBL is natively issued on base, most of it,
right. So if you want to access these,
let's say meme for an on base, then of course you like the the
biggest security assumption here is like, OK, the bridge.
First of all, how how do you get the message across from base to
your chain? And this is it either like in a
tester, right? There's some notes that are
running full notes and they're like checking the state
transition on base and they're saying, OK, cool, it was done
correctly here. I give you the asset.
You trust those it's correct and multi stick or in the future, of
course, how it should be. And this is the end game.
Is it ZK? So you just have a ZK prove
that. That then proves that the state
transition on base has been happening correctly, and then
base in terms of security, of course as a formal theorem with
its DA layer. I understand.
So kind of if you compare say base and a sovereign roll up, so
kind of the the entity that kind of builds blocks on base is the
centralized sequencer, right? So kind of like in, in effect,
it's some sort of coin base entity, a single one that kind
of, and I mean in, in our roll ups, this is the case to a
certain extent. So with some roll ups kind of
have a very limited list of allowed sequencing participants
and so on. But kind of it's always very
short list that is curated by whoever kind of set up the, the
roll up in the 1st place, which is why kind of like truly
decentralized sequencing is something that kind of all edge
who's on Ethereum or aspire to in some sense.
You're rightly pointing out that kind of this is a very
centralized function, but kind of can you compare and contrast
with Celestia? So kind of like if I kind of, if
I rely on Celestia for something that is issued on a sovereign
chain, so kind of nothing that's bridged for WhatsApp, but also
kind of like say I, I issue a coin on sovereign roll up one
and that leverages Celestia. What exactly are my trust
assumptions here as compared to an L2 on Ethereum that is
admittedly not decentralized at this point?
Yeah. So I think maybe to unpack this
a bit like the and focusing on the first part, which is like
the centralized sequencing parts or most roll ups.
Most role frameworks today rely on this notion of the
centralized sequencer to give fast pre confirmations.
This is also the same for ABC stacks or also the ABC stack.
You have right now a centralized sequencer model.
Why do you want this? Because users especially like in
high throughput if applications, they want to have past blocks
and I want to have pre confirmations like preferably
below 100 millisecond, right? And we all know Etherium takes a
rough 12 minutes or so forth to finalize.
So only after like 12 minutes you actually know that your
transaction got included and didn't get re orked out or
something, right? This is a long time to wait.
Celestia actually in this case it's already so like superior
with a new upgrade. I think it's 6 seconds and they
have single slot finality because they use the 10 M
mechanism. So and there you actually have
to like you could already like if you think about base roll
ups, right, that's sort of basically circumvent the
centralized sequence there censorship problem and like the
equivification problem. And then you could potentially
even like build like you can build base robes today on
Ethereum, but they are very unuser friendly.
Even if you don't write a finalization, wait 12 seconds.
So that's here you could build it today, then you would wait
like 6 seconds, but it's still to to longest why you have
decentralized sequences. But we actually are very bullish
on decentralized sequencing in general.
And so let's say actually has on this road map to also have sub
second block time. So I hope Ethereum will also get
there at some point. And this will actually then
enable us to be much more sort of pragmatic.
Now I think the second question you had was around the security
of a natively issued assets, right?
And the security of natively issued assets on like a
sovereign roll up, for example, are sort of true fold.
It's it's a bit difficult to grab your house around it.
But first of all, as I said, a roll up is a state state
transition function and then EU state, right?
And then you need the transaction ordering.
So you have a finalized list of transactions that have been
ordered. They say the first transaction
is say I want to issue this asset, right?
And then everyone who's running this note basically runs the
same state transition and knows exactly, hey now the output
should be that Frederica received these 100 assets, for
example, right? The cool thing about the
sovereign roll up is the security also sort of relies on
like social consensus. It's a bit similar to Ethereum,
right? Ethereum, what we could do is if
if like Ethereum is also weird in that regard, like in
Ethereum, if everyone would now say like then with the dowel
fork, right, we said, hey, this transaction had happened
actually it shouldn't have happened.
That's all agree of shame and it's all update our client and
bomb after block 100 suddenly this heck didn't happen right.
This was like the security at the very essence at the very
core was always like social consensus.
You can just like fork and then you have to rely on everyone.
So like participating. This is again, this is actually
not the case for enshrined roll ups, right, because they have
this enshrined bridge to Etherium.
So they can't just fork. If they would fork, then the the
the bridge would have to be updated at the same time, right?
So they have to select the pendency that makes them non
sovereign. And what a sovereign roll up is
by not having this enshrined bridge is you could actually do
similar forks when you do an Etherium.
So you can actually say, hey, if everyone agrees, we just update
the client and then this transaction that we included in
our state transition function was actually not is not included
anymore, right? And and you, you, that's why
sovereign roll ups are not L twos.
But there you can think of them as sort of modular or virtual L
ones, but without the need to come to consensus on the data.
I know this is a bit tricky and this also took me some time, but
but yeah, so social consensus at the very end is then still like
the aperture of of of what is like the security.
But do you think social consensus is a good thing to
kind of be relied upon kind of as a default?
So I agree kind of that it worked once for Ethereum, but it
was also a very tight knit community that one kind of like
the stake was way smaller than it is today kind of there was a
very there was a very strong social coherence about kind of
condemning the acts of the Dow hacker and so on.
So do you think this is tenable kind of for few to use?
So like Ethereum is still like the same, right?
So it's, it's all like deep down, it's all social consensus.
When you drill down in the blockchain world, in practice,
the social consensus is highly restricted.
For example, it's another like, of course it's an exaggeration,
but Etherium, like you can argue that Circle or like Etherium or
Etherium settles to Circle and Tether, right?
Because a lot of the S S issue Etherium are actually issued by
Circle and Tether and they control such a vast amount of
TVL on the chain that if Ethereum wanted to fork in order
to do something and Tether and Circle says no we want
supported, then basically suddenly a huge chunk of the.
I agree. Kind of circle, Circle and
tether would be kind of the kingmakers to kind of decide
which focus they're real on, yeah.
And so, so and so they are part of the social consensus, right.
And and this is the same for sovereign roll up as they're
similar to now one. If you have circle issuing funds
on the sovereign roll up or if you have certain bridge
operators that are issuing tokens based on other tokens
that are locked on base, for example, on this roll up, then
they will equally be an arbitrator and this whole sort
of fork trust rule and would say, hey, guys, actually we
don't support this because this is somehow acting malicious or
something. So whereas these chains are
always sort of social consensus at the very bottom, you, you
always have this rely on, but you, you don't want to have this
be one party, of course, right? You don't want to have this
maybe be just circle, but you want to have this to be a wide
community of everyone in, in, in general.
And then as soon as you as long as you have this, you get the
robustness of something like Ethereum.
Another question as to kind of the robustness, so kind of on
Ethereum assets are secured by Ethereum, right.
So if you look at sovereign roll ups, assets are in that sense
kind of secured by Celestian, the Celestia stack.
If you kind of run 100 sovereign roll ups on the Celestia stack,
don't you? Don't you think you're kind of
overload the security that kind of Celestia with a base token
kind of office? Yeah.
So Celestia is in a sense a bit different with theorem, right,
Because we're talking only about like DA right now.
Celestia will have at some point ZK accounts, which is like a
sort of ZK verification system as well.
But when you talk about the scalability of the scalability
of Celestia is really about the bandwidth of how much data you
can send to it. And yes, for sure if we would
have I think 1000 ABCS tech roll ups a day that just sent a ton
of data to the last year, it will probably be full, but it is
already two to four times. I think more higher has higher
bandwidth than Ethereum has today and it is sort of
increasing that bandwidth as a pretty rapid pace with a road
map to 1 gigahertz blocks. And so, so that's for us is
right now the only actual alternative for this sort of
roll up centric road map that we are seeing in the space.
And I hope if you're so that will accelerate and we'll also
provide it because of course the more bandwidth is the better,
right. But in general you bandwidth of
course is limited right now on these these networks and so will
then also be the throughput of the roll ups.
However, that's why like you do have these sort of data
availability committee systems, right?
Let's say if, if, if it would be too expensive to post data to
both Ethereum or Celestia, then you have these committees that
sort of post hashes, only hashes and not all the data to
Celestia. And so you can get addition
scalability benefits at the cost of some trust assumptions, of
course. But yeah, so, so these are the
bottlenecks. But this is where I like this
decoupling. We are optimizing for this
decoupling where hey Celestia, I let you guys cook.
You'll figure this out. And like we focus on actually
making sure that the the roll up itself is as scalable and secure
as possible. So you already referred to this
a bit earlier in the episode. So my Co founder Martin gave a
talk at at Devcon this year talking about Ethereum's need
for native roll ups. I'm kind of explaining that kind
of the the current roll up space adds limited security as you
have already pointed out and also kind of fragment liquidity
because bridging between different roll ups complete mess
as you've also pointed out. So kind of his solution was to
say, OK, why don't why, why doesn't the Ethereum community
kind of introduce Ethereum endorsed roll ups that kind of
all work in the same way where kind of we could say, OK,
valuable assets are issued on Ethereum.
They're kind of bridge into the roll ups.
They can kind of rely on the security guarantees provided by
Ethereum for both bridging back to Ethereum and bridging to
another roll up and so on. You saw the talk, right?
And I assume you also kind of listened to the large in debate
with with Justin. What are your thoughts?
Yeah. So first of all, I think I
really enjoyed Martin's talk and I really like his intrinsic
motivation to try to push the Ethereum community further and,
and, and try to resolve issues and proposing alternatives.
So I definitely applaud Martin for doing so.
And he's been a steward of the theorem for a long time and I
left me deeply respect him for this.
I think for me what his proposal is addressing is, are two things
really for me like there's there's no silver bullet of
course right now to just solve interoperability, right.
How do you solve interoperability is you need
like fast real time, fast and cheap real time proofing, right?
If we have this then like a probability is cool and I hope
at some point the silver bullet comes around the corner.
It's all there, but it will take some time I'm I'm sure.
So what is proposal for me is, is more so of addressing is this
is the value capture and the incentives.
If we look at like, I think what key really sort of also deeply
means is that right now we see we have like the optimum
mechanism with the optional mechanism with the Polygon we
have, you're saying ecosystem, right?
And they're all building these sort of clusters and, and, and
all the value really is being captured by the rollouts, right?
There's barely any value that trickles down to Etherium.
And, and this is kind of like where I feel Etherium finds
itself in an innovator's dilemma.
Where Etherium used to be, there used to be this meme like
Ether's money. And yeah, there's so much like
this pristine scarcity of the Etherium block space is great
because everyone will forever use Etherium.
And the more people want to use Etherium, the more they have to
pay. And the gas fees just go higher
and higher and higher. And we just pay more and more on
bore and it gets burned. And this is great, right?
And, and it worked, right? We for time, we were like
inflationary, but then everyone was like, hey, we don't want to
pay 100 bucks for transactions with the roll up and suddenly
all these transactions, all these priority gas fees and so
forth, they don't come to Ethereum.
All this MEV, it's not leaking to Ethereum anymore.
It's now on the roll ups. And of course this means that
Ethereum, that's what I meant with the innovations dilemma has
to is that a pivotal point right now?
So we have to decide what do we want to do?
Do we want to have this layer? And this is sort of maybe also
where I deviate a bit for some opinions of others, But a
theorem for me has to decide, do we want to be a platform that
caters exclusively to roll ups? Which I think for me also means
that it has to be fine giving up a lot of value to roll ups and
it has to optimize only for these roll ups and like high
bandwidth EA, cheap, fast DK verification, right?
And then actually nothing else. All the old legacy L1 state is
sort of like just like technical depth at this point.
Or do we want to focus on actually creating more L1 state
like scaling L1 and execution, having apps built on the L1
itself to actually capture all the value, right?
Because for me, like based roll ups and like enshrined roll ups
is a cool concept. And what it tries to do, what
Watson tries to do here is he says, hey, let's just have based
roll ups. We have this Ethereum deployed
roll ups where everyone can build on there plenty of them.
So there shouldn't be any scalability issues for
foreseeable future. There will always be at some
point scalability issues. But with foreseeable future we
should be fine. And like all the sequencing
party fees, MEV and what not all goes to ease, right?
And now we are back where we were like everyone just builds
on ease, but just more scalable, right.
And this indeed what leads to if the asset actually being sort of
way more attractive and like to show them to medium term again,
I agree. But and so it's that's makes
sense. It's a good proposal and that
sense for if you have this lens on.
But what I my lens, my lens is on like or like a Gelato, what
we sort of believe and we are mostly catering to actually
application developers and them. And if I look at the incentives
here is that look, if I look at the incentives, they clearly
tell me that liquidity users, MEV and so forth will go to the
ecosystems and the applications that are actually sort of
building and investing all the resources in right base,
invested tremendous amount of resources in Coinbase, invested
trends, some other resources in base to make it what it is
today. Right now they actually are
slowly reaping the benefits of it and why would they want to
and not capture it? Why would they want to give it
away to Ethereum, right? So what we would need is we
would need to recruit an array of altruistic developers that
see base and see the value they can capture but decide not to
capture it and give it back to Ethereum, right?
And I think this is like the dilemma Ethereums or phases.
If you think if you look at the incentives, you will notice that
I don't think this is a likely outcome.
But in this like taking this to conclusion, you were still
wanting to serve all these roll ups and you want to position
yourself as like a key player on this market and you want to have
like nice bridging with why ether your asset and so directed
there. You should maybe embrace this
could be a one way, but you might want to embrace like a
slightly different model, which is close to like Celestia, where
Celestia says we don't have any stage on Celestia where you
can't actually build applications on Celestia.
It's just like a super high through high bandwidth DA layer.
And then what we do is we focus on very efficient, cheap ZK
verification. So the customers of Celestia
exclusively roll ups, whereas an Ethereum, there's like sort of
roll ups there, but only roll ups that they're more like
should pay everything to ease and then still applications,
right? This is like this weird middle
ground. And so yeah, I think it's, it's
a good proposal. I I like his idea, but I don't
think the incentives are there for developers to participate in
in helping. But if Ethereum kind of where to
come out and say, look, we see what all of you guys have done
there with them kind of kind of these, these different roll ups
and we see that this and this and this actually super nice
features. And we will kind of use all of
the work that you guys have collectively done with VC raised
money and kind of synthesize and Ethereum endorsed roll up of
that. So what I mean kind of you don't
actually have to reinvest all the money that's already been
invested because a lot of the learnings are out there and you
can kind of just cherry pick, right?
So kind of like say it would, it would cost 10,000,020 million,
50 million to kind of deploy 128 Etherium endorsed roll ups on
top of Etherium, right? That would under undercut the
entire current L2 system, right? So because if I'm a deaf, why
would I deploy on arbitrum or base or wherever if I can kind
of deploy on the theorem endorsed L2 that kind of
interoperate super nicely with all the other L twos, but I
don't actually have to have the headache of kind of liquidity
fragmentation and and so on. Do you think kind of if the
theorem community were to come out with that admittedly
somewhat aggressive move, do you think that still holds kind of
if, if they say, look, thank you for innovating, we'll, we'll
take it from here. So there's also a lot to unpack
here. We got like interoperability
and, and who gets interoperability and difference
between like atomic, like L1L2 composability and so forth.
So they're like a lot of nuances to what a theorem can offer
versus others and so forth, where I don't want to go into
all of them, but just from a high level point of view, an
incentive point of view. I actually made a tweet this
morning about it because I rewatched the Martins talk
before our our conversation here and I think what if you create
incentives for developers to build the next space as a native
roll up on Ethereum, then I do see this happening this this
could then happen right? How would you actually do this
right? You would need to completely go
away from the scarcity mindset you would need to completely go
away from the ether's money like we need to now extract all the
value mindset. Ethereum needs to go start from
scratch and say like OK revenue 0 cost high.
We now issue even more ease. We say we pay for your roll up
cost, we pay for the ZK verification.
We we incentivize liquidity to come into these roll ups.
We build this platform and incentivize it with a massive
program like what OP is now doing with for example, all the
OP stake rollers, right? They get masses incentives to
join the OP cluster. You need to compete and like
pay, I don't know, $40 million to to these roll up projects.
I want to launch with these big exchanges if you want to get
them on your platform right. If Ethereum would be.
As aggressive to say OK we are doing this and all the value
will leak to you force now and then maybe in 10 years or so
right we will start like taking a small catch on like the MEV
and whatever right And so it's just a long term play then I
would say yes there is a this is a compelling story because the
incentives for projects developed in the native roll up
in the theorem are are there if not then the incentives are not
there and then the technical benefits that this brings versus
just having a sovereign roll up which can also generate the cap
proofs which can also interoperate with the other
chances not that strong and so yeah I feel we need to go
aggressive and I would like to see that I'm all for it if.
You are for aggression. Fantastic.
So maybe let's talk about say kind of this, this vision plays
out or kind of even at who's there as they are and they kind
of they they slowly become decentralized and kind of make
good on the promises. They kind of have been there for
a long time. Where do you kind of see
different sort sorts of applications kind of run in the
long term, right? Because I think in this space, I
think there's often this idea of kind of decentralisation is
great and so on. But kind of like obviously
decentralisation also means redundancy in, in, in some sense
and kind of like making each part replaceable and, and and so
on. So kind of there's a lot of
overhead that comes with true decentralisation.
So and a lot of people don't appreciate that decentralisation
in itself is not a value, right? It's kind of like what you can
in principle kind of reap from it as rewards.
How do you think different applications will group
themselves onto different block chains or roll ups or sovereign
roll ups according to what their security needs are rather than
kind of tribalism or kind of where they incentivize to deploy
and so on. Because these incentive they
can't go on forever, right? At some point kind of they will
have to be recouped or kind of VCs will no longer kind of fork,
fork, fork out for kind of incentivizing behaviour that's
not going to be rebooted in the long term.
For sure. And yeah, maybe to the point you
mentioned with like decentralisation is that that
means an Android. I think what the property is
that blockchains provide is censorship resistance, right?
So this is I think what decentralization provides you,
which I think in today's age is extremely, extremely valuable,
right? If you look at like how we are
sensed getting sensor in the EU, it's crazy, right?
And so sensitive resistance will become, I think, more and more
important. And the security, by the way, as
as long as we, if we have censorship resistant the alias
and then if we have ZK, then the the only real benefit then like
a decentralization will provide your sensor persistence because
like the verific, the verifiability that you can get
from ZK, right? You can get to have a central,
central sequencer with ZK that works, but they can of course
sensor you, right? So centralization is definitely
still a part. That's why decentralization is
also still important on some level, like the DA layer, for
example. Now, how do I see these
applications develop for me, there are two camps of
applications that we we are Gelatos of have in our mind. 1
is like the probably where the majority of like long tail
applications will be. And this these are not like the
the hyper sort of definative use cases.
They will probably not care about censorship resistance that
much. And they're like, what I want is
great UX, high throughput, low costs, all of that, right?
And what is that is like central Sequenza one giga gas, you go
out there kiddo and you just get these users on boarded, right?
So I think there will be huge, huge array of users projects
that will do that because it's totally fine for them.
They are they're not in the business of censoring their
users, right. And then on the other hand, I
think there will be this new financial decentralized, fully
censorship resistant platform that will be built the on chain
binances, the on chain everything financial where you
don't want to have one party controlling the sequencing and
so forth. And, and like the US won't
interact with the secret central sequence of, of Germany and, and
Switzerland and so forth, or citadel of, of, of Deutsche Bank
and so forth. There you need a credibly mutual
censorship resistance platform, but that can be super scalable.
And this will be huge in terms of value and so forth.
And I think there we see, we will see roll ups like we will
see roll ups handling that, but they will have to be built in,
in a way most of the like censorship resistant manner put
potentially a base roll up with super fast block times from the
L1 or some sort of pre confirmation layer in between.
So what I believe is in general like ask, ask answering the
question about pluses, I believe we will soon see a big movement.
That's why we are investing our resources in it into
sovereignty. Projects will want to be as
sovereign as possible. They want to applications want
to reap all the benefits of what they create from the sequencing,
from the users, from the TV and so forth.
They want to be independent. They want to use modularity to
their advantage, but do custom block building and so forth.
They don't want to be limited in the configurations of what they
want to do. And so they want to be highly
interconnected with CK and Sovereign in order to really get
reap the benefits of high scalability.
This is so like where we see it. But in the short to medium term,
you will have these clusters like the Super chain cluster,
you will have the arbiter class you at the the whatever cluster.
So, so it will be a weird time but eventually I think the end
state is sovereign chain all interconnected like in the web 2
right? You like your server is not
power of a cluster. If you build an application you
might be in a data centre but your server is not power of the
cluster. You are a sovereign application
and you have one protocol to deck with another like HTTP or
something to do to to to communicate and AP is and so
forth. But you are still your own thing
and I think what we will look similar.
What does it mean in terms in terms of kind of Gelato and the
ABC stack for you in the next say one to two years?
Yeah. So as I said, ABC stack is
basically so like what we believe the future will be, our
learning of the past two years working with hundreds of roll
ups and customers and listening to what they actually want.
And So what we are really looking to build is how can we
build the next on chain Binance? How can we build the next on
chain Twitter, but fully censorship resistant and highly
scalable. And how can we build a platform
to facilitate this? And that's the platform
component, which is of course, like the roles of service like
this needs to be serviced and scalable and like very easy to
deploy. But then there's also the
censorship resistance and decentralization a part of it,
right? And how can you actually sort of
facilitate this? And this is also where like
abundance at some point comes in to the picture, which is kind of
like the overall sort of branch of of ABC stack.
And yeah, this is these are the questions.
How can you build highly scalable sensor resistant
sovereign roll ups. And yeah, abundance is what this
will be. Thank you, Hema.
So when, if, if there are people kind of who want to try out the
stack or kind of build a sovereign roll up, how can they
find you guys? Yeah, for sure.
So you can check out at Gelato network on Twitter at abundance
under score XYZ for abundance, you can deploy A1 Gigas ABC
stack test that today on Gelato. Just go to Ross, the Gelato
Network. One click, you got it.
Maintenance will go live in in January.
So we'll have the first maintenance live.
Super excited about this team is locked in to facilitate this and
get a ship and yeah, just follow us there and we'll we'll do some
tweets. Cool, fantastic Homer.
Thank you.