Kyle, welcome to Hot Takes, the show where we eat spicy foods and hear your take.
I am kind of terrified. I don't think I know what I signed up for, but let's do it.
How it works, we start with one wing and they get progressively hotter as do the questions.
Whoever sweats first loses.
Over sweat. Physically sweats.
Yeah, that's the goal here.
Okay. So, it's like going to glisten on camera a little.
All right. So, this is like the the kitty stuff. It's the first...
The baseline. Baseline. Okay, people know you on the internet for the thesises.
This is going to be rough.
People obviously know you from your investments, your points of view, your thesis. What's something about your personal life or your personality that doesn't make it onto crypto Twitter?
I have a little dog at home.
And I love my dog. And a lot of times I'm on podcast interviews, my dog is right next to me. Her bed is elevated. So it's basically like kind of right here.
And my dog sleeps in the bed with me and my wife every night. That was not a hot take.
Hot wing, not a hot take.
Hey, listen. We got to start somewhere.
So this is going to be hotter than the last one. That's right. I've seen you argue that L2s create fragility back to Ethereum L1 and in some ways extract value from the L1. You've been vocal about this, but I'd love to get your views on whether L2s are truly taking security away from Ethereum layer ones.
I don't think L2s are taking security away from the L1. I think they're parasitic to ETH, the underlying asset. I think I coined that phrase a few years ago.
But I mean, the basic idea is that all of the sequencing revenues are going to the L2 sequencers.
And I mean, the data has been out there for a few years now, right? You look at Base, Arbitrum, Optimism, whatever. Something like 95 to 98% of the L2 revenue is being kept by the L2 sequencer and only a few percentages going back to the L1.
Sure. Is there a path for them to fix this? Is it Ethereum that needs to kind of put their foot down or is this ossified to the point that it can't be fixed?
I don't think it can be fixed because the fundamental problem is that the Ethereum Foundation starting five or six years ago said everyone else please leave L1 and go do stuff on L2.
And in doing so, prior to that happening, 100% of DeFi was on ETH L1.
And it was very hard to make things happen not on ETH L1. But now they've told people go do stuff elsewhere. And obviously now lots of stuff happens elsewhere.
And I don't know how you can force users to come back to L1 especially if L1 is not better in any way. Block times on L1 are still slower than all the L2s.
Throughput is slower on the L1 than the L2. So it's like you can't just tell people to come back and expect them to come back.
You actually have to provide a better product experience. But even still, the current game plan is still for the L2s to provide a better product experience than the L1. So it's not going to work.
I guess the counterargument I've heard is at enough scale, right, with enough users, there could be still value leakage, if you want to call it that, up to the L1. But my real question for you here is like fractured liquidity among L2s. Is that a big enough problem that folks are talking about?
It is a problem. It's not like the end of the world problem.
But it's definitely sub-optimal. It certainly is a thing where it's like kind of a tragedy of the commons thing where like look Coinbase made Base and Binance has BNB chain and Robin Hood I guess has Robin Hood chain now and all these people want to control the system but in them all doing so the aggregate user experience is net worse for all end users.
Because of that, that's kind of the fundamental tension at hand. The other interesting part of this is you create inherently much more political drama in this L2 system because Binance is intrinsically political and Coinbase is intrinsically political.
And Solana is objectively much less political than those two things because it is this truly just standalone L1 thing.
It is permissionless. It is open source. The Solana Foundation doesn't have any native applications on the L1.
It's all built by third parties and that makes it much more palatable for the WorldPays of the world, the Fiservs of the world, the PayPals of the world, the Paxoses of the world, the Square/Cashes, all these people as they want to engage with crypto. It's like Coinbase is telling the world they want to compete with almost every major traditional Wall Street firm.
And Robin Hood is kind of implying signaling similar things. And so it's like do any of those firms want to deploy their businesses on Base or Robin Hood chain? It's like obviously no. If you look at Checkout.com, Adyen, Square, like all those guys are not going to deploy on Tempo.
Like full stop. And so Solana, by I think the biggest problem with the L2s is not that they fragment liquidity. It's that they are intrinsically political and then all of the response to all of the competitors of those intrinsically political sponsors actually drives people to Solana.
Is there an opportunity for the ETH L1 to ever make the revenue back from the L2s?
I don't think so because their product experience is objectively worse. Block times are slower.
The aggregate throughput is slower.
There's no functionality that the L1 offers that the L2s don't.
So why would the people come back?
It's a tough situation. You want to get spicier?
All right. Wing three. We are increasing in heat.
No sweat yet. Little perspiring. It got a little bit hotter, but...
That's it, man. You look good. You want to get started?
All right. So, how many wings are you eating today? There you like 70 wings.
No, I'm on a wing only diet. That's how I stay trim.
Straight protein, bro. We talk about resilience, Kyle. About networks that are resilient from outside attacks, right? From threats but also just from like a service standpoint. Can they stay up and can they avoid outage? Solana demonstrated that pretty well this year, right? You saw this kind of flash crash in October. There was an AWS outage. There was a Cloudflare outage. My question to you is on the network level, right? Thinking about the network that Zero provides, do you see an opportunity for more resiliency within Solana if there is a dedicated network sort of powering validators?
The addition of DoubleZero doesn't make the system more brittle. It's by definition another lane. The public internet has many lanes and then you're obviously adding new private lanes via Zero.
So kind of by definitionally like you're getting more net resilience in the system, right? Just by unlocking more pipes.
Like when you look at Solana's performance in that flash crash or right Cloudflare, I know our last questions were around L2s, but it's really the only other comparison, right? You saw Solana up functioning, transactions landing and the rest of the field essentially not in performant offline.
Obviously a celebration from your side, you called it earlier but how do are there any other threat vectors that these other chains have that maybe Solana has perfected?
Yeah, I don't think about the threat vectors so much as a technical issue anymore. I think about it more of just like a focus issue. The reality of these systems is that they move assets around.
