Arjun Bhuptani, Co-Founder of Connext, on Ethereum’s Scalability Problem, Account Abstraction, and the SOL vs ETH Narrative | Ep. 294

In an exclusive interview with cryptonews.com, Arjun Bhuptani, Co-Founder of Connext, talks about the crucial role of intents in enabling seamless transactions, the SOL vs ETH narrative, and how account abstraction is the key to mass adoption.

About Arjun Bhuptani

Arjun Bhuptani is the Co-Founder of Connext and understands the value of a truly universal interoperability protocol for the web3 industry. A pioneer in the space, Arjun was previously a lead developer in scaling infrastructure for Ethereum and a co-creator of the Moloch DAO, one of the earliest Decentralized Autonomous Organization frameworks developed in 2018.

Arjun Bhuptani gave a wide-ranging exclusive interview, which you can see below, and we are happy for you to use it for publication, provided there is a credit to www.cryptonews.com.

Highlights Of The Interview

• The crucial role of intents in enabling seamless transactions—scaling blockchain/web3 for mainstream use cases
• The SOL vs ETH narrative; value props of each chain
• Ethereum’s scalability problem; Speed vs Decentralization
• Account abstraction; the key to mass adoption
• Connext’s aim to create interoperability by building the future of the internet

Full Transcript Of The Interview

Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast. We are buzzing as always, still coming in hot from Mexico. By the time this episode airs, it will be Boxing Day. Wanna wish you all a Merry Christmas and hope you had a lovely time with your family. Super pumped to have today’s guest on the show today. We have Arjun Bhuptani, the Co-Founder of Connext. This is a lad who truly understands the value of a truly universal interoperability protocol for the Web3 industry. He is a pioneer in the space and was previously a Lead Developer in scaling infrastructure for Ethereum, ever heard of it, and Co-Creator of the Moloch DAO, one of the earliest decentralized Autonomous Organization frameworks developed back in 2018. He’s coming in hot from Lisbon, what a treat as well. Super pumped to have you. Arjun, how are you my friend? Great to have you on.

Arjun Bhuptani
Doing well. Thank you so much for having me. Excited to be here.

Matt Zahab
Super pumped to have you. We got to go back to the ETH days. Working on ETH, that must have been absolutely incredible. Before the show started, you and I were shooting a shift for a bit. You mentioned that you were close to Canada where ETH sort of all went down in Toronto and Waterloo, Vitalik and all the other lads and lasses who developed ETH there. Is crazy how it was right in my backyard. And really when it was being built, like I don’t ever remember hearing anything about this, not until I even really got into crypto end of 2019, 2020. That’s when you’re like, holy shit, ETH was built in my backyard, which is sort of cool. Story for another day. You are the star of the show here. Give us some good stories from your time building, ETH. What was it like working with Vitalik? What was it like working with the rest of the team? Did you work on anything in particular that was super cool on ETH? Give us some good stories and then we’ll jump into Connext and everything else we have on the docket for today.

Arjun Bhuptani
Yeah. So to clarify, I didn’t actually work on Ethereum itself. I built a bunch of infrastructure on top of Ethereum, starting in, I guess, 2016. And that said, I think everything in that time was quite early and the community was quite small. And so it was a little bit nebulous as to who was actually working on the core protocol and who wasn’t. And I think a lot of people were just contributing in a bunch of different ways, which is really awesome. I did build a bunch of early infrastructure, helped build a bunch of early infrastructure, and also just sort of was around a lot in the early days, amongst the developer ecosystem. So I started the San Francisco Ethereum Developers Meetup with a bunch of other people. And I believe that ended up becoming one of the largest Ethereum Meetups, and really it was like this, the starting point for a bunch of projects that then launched out of there. So I think the early, a lot of the 2017 ICO era kind of came out of that specific meetup, which is really cool. Some of the early infrastructure I worked on back in 2016, I was working with a couple of people trying to abstract away gas and the complexity of dealing with gas. And we were trying to find good ways to make it so that you could hook up a card or hook up payment in some other asset. And then that way as a developer, you didn’t need to have to actually get your users to pay gas for every transaction. It was awesome because this was obviously even then was such a huge problem. And now today we’re still talking about things like account abstraction. And so it’s cool that there was a really relevant problem. It’s slightly less cool that now almost, I guess, eight years later, we’re still working on it. I think other cool stories from that time, people always talk about how crypto is the Wild West, but it was truly the Wild West at this time. Even the infrastructure itself was kind of ludicrous. I think a lot of people forget how extraordinarily unstable Ethereum was in the ICO era, because the whole chain was just being taken down by coin launches every week. It was just kind of funny to watch how everybody was just sort of panicking all the time. Every time there was an ICO, projects that were trying to build businesses on top of the chain would have to tell their users, oh, by the way, we’re just not going to be available for the next six hours. I’m sorry, we can’t do anything about it. It was pretty funny. I like the thing that we’ve come a long way since then. Things might get really expensive now, but at the very least, it’s a bit of a smoother curve where you’re not just like, oh, wow, I can’t get any transactions to the chain for hours and hours on it. So we started Connexts in 2017 at the time. And I think this is still the thesis. The thesis was just, I really believe in the technology a lot. I think Ethereum represents the best hope that humanity has to be able to build ways to coordinate with each other at a scale that is completely unprecedented. And I think a lot of the problems that we face today are fundamentally at their core, just coordination failures. We failed to effectively capture the longer term financial risks of things like global warming. And as a result of that, the incentives today to hedge against those longer term financial risks don’t exist. And as a result of that, we’re in this broken economic system where we failed to coordinate and continue to deplete resources today at the expense of tomorrow. And run similar mental arguments around things like income inequality, access to food, really just about every problem that we face to scale in the world right now. And Ethereum, and this is really the reason that I became really interested in this space, Ethereum really feels like not the solution to it, but basically how you could build the solution. It’s a platform on top of which you could build these new public goods, it’s like a new market category of things that is not corporations, it’s not governments, it’s now this other thing that looks more like the internet, right? A global public good that is just truly neutral, is non sovereign, is non corporate, exists everywhere. And we’ve all seen the enormous benefit that the internet has had for the world. I mean, obviously there’s a lot of bad things that have happened as a result of it, but I think everyone would say that it’s really pushed him. So our thesis back then and still now is, how can we figure out how to make this technology actually usable? And as it turns out, that was quite difficult.

Matt Zahab
Still working on it.

Arjun Bhuptani
Exactly. So 2017 when we started, we kind of initially started with some hypotheses around things like user onboarding with cards and things like that. And we started on like talking to users and working with a bunch of projects at the time. You know, a lot of projects were focused on just like just recently raised money in their ICOs. And what we learned time and time again was that even though we, you know, a lot of these projects were saying, okay, yeah, we need a way to like onboard users to be able to purchase our token or to be able to use like stable coins in our system. What we found time and time again was that when push came to shove, they really all had one core problem, which was just that their applications were just way too expensive to use because the Ethereum wasn’t scalable. And this is when we kind of realized, okay, there’s this Ethereum scalability problem. Initially, we didn’t realize how big of a problem it was. So we started to, you know, we kind of knew that people had been talking about it. So we were like, okay, we’ll just build a scalability solution and then upsell them on a card payment API. Obviously terrible idea. We got about like a few weeks into that before realizing, oh, actually the scalability thing is like, you know, a much bigger, much more interesting problem than like card payments. And that was when we kind of made a full pivot. And Connexts became one of the first organizations that was working in the space building scalability systems on top of Ethereum. We, at the time, I think it was like just a handful of orgs. Raiden was the one that was like most well known because they just done their ICO. And of course, everybody was making correlators to like the Lightning Network there. And then there was us, we were very small fish, not a ton of people knew about us at the time atleast. And then there was a few others. So there was things like xDAI, which is a side chain. And then a few people trying to like build plasma systems. So Matic, which of course became Polygon. Loom, which unfortunately shut down, but one of the one of the co-founders, George is pretty well known in the space now. It works a Paradigm. And then a few other kind of teams that were like us, like just sort of longer tail looking to research these things. We started working, again, it truly was the Wild West. And we started trying to find users wherever we could get them. The main project that we found that actually had traction at the time was Spankchain, an adult payment network, really the only people doing any consistent marketing.

Matt Zahab
You said Spankchain? Come on. Sorry, keep going there.

Arjun Bhuptani
Yeah, 2018 era, Ethereum, there was, I guess like, I sorry, 2017 era Ethereum, there was really nothing, nobody with any, any, any traction. And Spankchain was doing like, I think it was like 20K to 30K monthly volume. And that was like one of the most huge applications that we’d found at the time. And so we partnered really closely with them. They were actually had their own in house scaling team, research team. We like worked really closely with them and together with them built the first kind of real like L-2 on top of Ethereum, like the first general purpose L-2 that could be used by any project. And this was in 2018. Now, largely at the time we were focused around payments, payments as a vertical just didn’t really take off as much as we expected for Spankchain or really for anybody. I think it was just, it was like one of those really interesting red herrings where everyone was convinced that payments was going to be the thing that got PMF first, but it ended up being DeFi. And even to this day, payments is still like happening now, but it’s still like in the earliest days. So we kind of saw that there was this like shift in the market towards DeFi. And we also saw that there was a, the research was going in the direction of rollups. And we had been working on a different type of technology called state channels. And a lot of our really awesome, smart, talented friends, folks like Plasma group, like formerly OmiseGo people that then spun out and became Optimism, or like the off chain labs team that then went on to develop Arbitrum. We just realized that there was all these really awesome people that were working on rollup frameworks. And we were like, okay, maybe it’s better for us to focus on actually solving some of the more critical problems in rollups than to like double down on this other scalability technology, which is not really as interesting right now. And in the process of asking that question, we realized all of those projects had a single shared problem, which was how do you get into and out of their ecosystems? And how do you even get between their ecosystems? Everyone was gunning to be like the Ethereum L-2. And it was very unclear whether, like that, it was very clear that that wasn’t really going to happen, right? There was just too many people that are too interested in that problem. And so we in 2020 ended up building the first bridge. We built the first kind of like system to transfer tokens non custodially between rollups on Testnet and then took it to Mainnet in 2021. And that was really like the entry point to kind of get into getting into this like whole interoperability world. Now the interesting thing about interop and I think a lot of people don’t really realize this is that like bridging and scalability are actually the same problem fundamentally. A rollup is actually just a construction for how you can bridge to another chain, where if you make some like you basically make some compromises on how you define another chain as a chain. And instead of defining it as a chain, you define it as a sort of like sub chain of something else. If you do that, then you can make it trustless to a bridge to and from that chain. This was kind of like the big realization that led us to developing rollups. And so for us, making the jump from like, hey, we’re thinking about this technology related to scaling to like now we’re working on interop was actually just we didn’t even need to change our code. We actually just took the exact same code and reused it elsewhere, which is pretty interesting. It’s kind of interesting to see that the spaces has of course progressed a lot. A lot has been built and it’s grown so much over the course of the last, I would say almost decade now, but a lot of the problems, a lot of the core questions are almost exactly the same. It’s the same things we were asking each other back in 2017,2018 that are the things that people are asking today.

Matt Zahab
Yeah, exactly. That was a great little spiel there. What a way to kick off the pod. I think we have to go back to sort of first base here, which is Ethereum scalability problem. This is something even the team are working on. Is there like one specific issue? Do you think it is interoperability? Like you mentioned payments, but now you also mentioned that payments isn’t as big of an issue as we think as many teams started to work on it and then said, shit, there’s bigger fish to fry. We’re going to go somewhere else. Like again, I know you and the team are working on it. So I’m asking you a bit of a cop out question, but like what is Ethereum’s biggest scalability problem right now? And like what is the sort of most front of mind solution to that problem?

Arjun Bhuptani
For sure. I guess, define what the scalability problem is, because I think you’re right, it did jump the gun a little bit there. We all know blockchains don’t scale at this point. It’s something that ends up getting talked about a lot, and it manifests itself in a bunch of different ways for users, right? So for users, blockchains not scaling means like really high gas costs, really high low transaction times, things like that. The process of simply making costs cheaper is not actually very difficult. You can increase block sizes, you can basically increase the requirements needed for people to run the chain, and run a chain on a supercomputer, and all of a sudden the whole chain is operating faster. The thing with blockchains is that the way that they’re designed is that there’s like a minimum threshold of infrastructure requirements needed to run a node, and like the whole chain runs as fast as this lowest node, really. And so if you’re willing to make compromises on what is going to go into a node, and you’re willing to kind of run those nodes on like AWS clusters or on a supercomputer, then your chain can be extremely fast and extremely cheap. The challenge is of course that then it’s not decentralized, and this is the big trade-off space that people are trying to explore. It’s like, okay, how do we come up with a system where you can have people running any kind of application they want, they can be cheap and fast, and on top of that, it can still be validated by people at home, right? You don’t necessarily need it to only be in the hands of a few small corporations or like Amazon, basically.

Matt Zahab
100%. One quick point, if I may, would you say that sort of just as a sexy one line framework would the problem, could it be distilled to like speed versus decentralization? Is that like one of the main sort of questions that’s being asked?

Arjun Bhuptani
Yeah, it’s like there’s this thing that Vitalik had posted a while back called the scalability trial and effectively it’s just that. It’s like speed versus decentralization.

Matt Zahab
Okay, sorry to interrupt there. Keep going. You’re on a roll. All you.

Arjun Bhuptani
So the question then comes like, okay, well, if you’re not willing to make compromises on one or the other, how can we get to some other option? Initially back in 2017, 2018, the thought process was like, well, why don’t we try to build more tailored things on top of? So why don’t we batch up a bunch of transactions off chain and post only those batches on chain and have that batching system be more tailored, more application specific? So this was the reason for our payments focused L-2, was we were like, instead of making one payment every minute on off chain or on chain, why don’t we just make one payment every 10 minutes and then have a coordination game off chain where you can be sure that every individual payment is not getting lost. That’s not particularly challenging to do, but the problem that we inevitably ran into was just like, you want to create this very general compute system. So ideally, the scalability system should also be more general. And I think that this is kind of the direction that the whole space started to go was like, well, why don’t we instead of trying to really specialize on creating this payment-specific scalability system that people have to do a custom integration into, everybody at the time was just like, I just want to build contracts. I don’t have to go and do a bunch of extra work. So that created this whole EVM compatible narrative of let’s find ways to build EVM compatible scalability system. So let’s literally just have something that looks like a chain just way faster. And that way people don’t ever really need to know that they’re not operating on chain. They’re just, like it’s just effectively the same developer experience. And rollups is kind of how we accomplish that. And so the rollup thesis is actually very, it’s similar. You are taking a bunch of transactions, batching them up off chain and then putting them, putting only like one batch on chain. But it’s different in the sense of like, instead of running something that’s like very specific to do that, atleast in the past, now, of course, the narrative is changing. So people are creating like application specific rollups and like rollups and whatever languages and things like that. These things just always go in loops. But at the time, the thinking was like, okay, well, what we can do is just split up Ethereum’s execution, like the things that people are doing on chain and run a bunch of those things in parallel to each other and have them only posted to Ethereum every now and then. And by doing that, you can have node operators validating one part of the execution without having to validate all of it. And that means now you improve scalability, because you’re effectively like parallel processing things on chain, right? Not everybody doesn’t need to process every transaction anymore. You can process a some subset of transactions and still have the same security, which is awesome. That is really the core scalability thesis is just like make it so that there is more optionality around what transactions are being processed by nodes. So how do, why is it hard? Now, of course, I think in general, one of the answers to that question is that building any kind of distributed system technology in general is really difficult. It’s insane. And it just, it always takes so much longer than you’d expect. Like I remember I had gotten into a disagreement at a conference once with Dan Robinson about this, where he and I were like kind of talking about like, well, does it make more sense to have like something that’s application specific, like what we were doing where that is hyper optimized and can do like 10,000, 100,000X scalability out of the box? Or is it doesn’t make more sense to like do a rollup, which at the time was just giving like a 10X scalability improvement and then iterate on it in the future. And his, and you know, for what it’s worth, I do agree that the latter now that the latter is actually a better option, but for different reasons. And his argument was like, well, we should do the rollup because optimistic rollups, like they’re really simple constructions. We can ship an optimistic rollup and have it be like with fraud proofs and everything within like a few months. Like we, like it’s a, the timeline is months, not many years. And this was like, I think this was 2019 or 2020, start of 2020. So obviously like, despite the fact that it, you know, optimistics or ellipse, they’re supposed to be like a relatively simple construction that, you know, were, was something that people really thought was going to be like the stepping stone to get to something else. It’s still now years later, you know, we’re still working on fraud proofs. We’re still working on like answering some of these like basic infrastructure questions. If I’m being totally honest, I think Ethereum has solved scalability. Like I think the question of like, can you do fast and cheap transactions is now answered, right? You can just go to Arbitrum or Optimism or Polygon as you can think and do very fast and very cheap transactions. I think the, the secondary question though now is like, how do you do that in a way where users are not having to think about going to Optimism or Arbitrum.

Matt Zahab
There’s so much friction. Arjun, I did a transaction literally last week. I opened up MetaMask. It was 49 bucks. I was like, are you effing kidding me right now? Boom, like, you know what I mean? Like, again, I always use the example of my parents or even someone perhaps a little bit older than us who isn’t as crypto centric and tech savvy as we are. I mean, you and I are, it’s a complete diss to you to put us in the same boat. So my apologies for that, but you get the point here. It’s like, it just can’t happen, candidly. Like, there needs to be, it needs to be as simple as sending a transaction on MetaMask in a Chrome extension, couple clicks, but it can’t be $49 to send a three, four figure value. You know what I mean? Like, what’s the solution for this right now? Like, what is the easiest way to use ARB or something else, you know, or OP to like actually make it happen?

Arjun Bhuptani
Yeah, I mean, it’s still not solved, right? Like the way that the last market, so this became a problem in the last bull market when we suddenly had this like big expansion of chains all of a sudden. And why did we have the big expansion of chains? Because Ethereum just became way too expensive to use. And we were onboarding all of these users coming in from Southeast Asia and like India and like, you know, like Korea and other places where like a $150 bridge transaction was just not going to make any sense ever. And what we saw, and this is actually where Connext’s got a lot of early traction was that we just saw everybody was playing the like ETH Floor Lava game. Nobody wanted to touch Ethereum. Everyone is like onboarding directly into like Binance chain because that was really the main chain that had a centralized exchange integration that was not Ethereum. And we saw like everybody, like we could kind of see this in our own like stats and analytics. Like everybody was basically onboarding to Binance chain and then going from there to go farm tokens on like on every other chain. And then once they were done farming, going back to Binance chain to catch out and no one was touching Ethereum if they could help it. And so that was like, that was kind of like the first step which is like, let’s solve the like the absolutely awful cost pain point by just not ever onboarding to Ethereum ever. But then the second step of that is like, well, there was still this really awful experience where despite all of this, like, you know, users were because we were in this bull market because you know, everybody was incentive mining. Like if you’re paying users a ton of potentially, you know if thousands of dollars, they’re going to claw over each other to get to your product. Like they will figure it out. But like in practice, that’s not, that’s not in any way sustainable, right? So what we found when talking to these users was like, they were extraordinarily confused. You know, they had already gone to the extremely painful process of learning how to like download, MetaMask and set up a wallet and manage wallet recovery and like then get gas fees and like basically onboard to Binance chain and have like their wallet set up. And now you were telling them, hey, okay, so now by the way, there’s not just one chain. There’s many different chains. The application you’re on could be on any one of these chains. And if you go to the application UI, it’s not going to tell you how to get to the app. You can’t just use it. You have to figure out what chain it’s on. You have to figure out, find a bridge that works with that chain and has liquidity on it. You have to go bridge your funds. Then you have to figure out how to get gas for the new chain. And then you have to go and use, and then you go and use the app. And so that’s obviously, absolutely. I mean, it’s just crazy to expect a user to do that. And so that’s really fundamentally the problem that we kind of set out to fix. It’s like, we were like, okay, ideally what should happen is that it should just be like when you use YouTube today. You know, when you use YouTube, you just look up videos of cats and you just get videos of cats and you watch the videos of cats and that’s it. But there’s not anything else. You don’t need to know that like, when you’re actually searching for videos of cats, Google is like searching through their extremely complex distributed data system like behind the scenes. Like you don’t need to know that where that specific video is like backed up in their server cluster and how to get there. That’s insane, right? That’s like not, like we moved past this point of the internet in the 1980s. And it’s really good that we did because like if we hadn’t, we would have never, nobody would have ever used it.

Matt Zahab
You just brought up a great point there. And this is something that I’ve thought about many times. Even again, the other day I’ll use an example, sending a transaction a couple of weeks ago, opened up a new wallet for Reason XYZ. Heck, I forget what it was. This happens so often. And there’s no ETH in the wallet. So I can’t send the next transaction because I’m just sending Tether over. Even though I have Tether on ERC, it doesn’t matter. I still need ETH. Using your analogy about YouTube, I’m a YouTube premium guy. For all the listeners at home, I think, and my apologies, might lose some subs here. You’re bonkers if you don’t know YouTube premium. Ads are the worst. It’s like the easiest, you know, for me, Canadian like 14 bucks a month, probably the best subscription I own, like dead ass. Anyways, what would be the equivalent if having gas in your wallet is the equivalent of having YouTube premium? What would be the equivalent of just having a regular YouTube where you can still fulfill and execute transactions, but you don’t have gas in your wallet? Is there a way that we can like have ads in wallets? Like what the heck can we do so people don’t have to get through this, having initial gas problem? Because that’s something that I think is absolutely fucked with a capital F and something that needs to be fixed pronto.

Arjun Bhuptani
For sure. Yeah. I think the real solution to that is like, is like account abstraction. Really, the thing that the problem that you’re talking about here is exactly the problem that we were trying to fix in like 2016. Unfortunately, the infrastructure just didn’t exist to fix it. And it’s exactly what you were saying. We were basically like, well, this is kind of awful. Like, so either developers should be able to hook up their cards to pay for gas for users or users should be able to just hook up their cards. And then, and then like, you should just be able to add your credit card to better MetaMask and then like go into a bunch of things on chain. And then like later, once you’re done doing things on chain, like once a month, it just like it just debits you. That actually, people are now building that experience. Like that actually is starting to exist now, which is kind of cool. I think it’ll be some time before it becomes like really well adopted. Because of course, there’s there’s just sort of adoption hurdles associated with accounts. So what? Okay. Let’s take a step back. So what is account abstraction? You’ll hear a lot of abstraction related terms. And I think it’s important because abstraction basically means getting rid of the need for the user to have to think about XYZ. So account abstraction is getting rid of the user need for the user to actually have to deal with the account, like the wallet that you’re using. So the wallet that you’re using most of the time is just like the end address, the end account. And the accounts are great and that they’re really simple. Like it’s just an address. So you can write down like some words on a piece of paper and that actually represents your account. Like you have everything you need. But they’re also not great because if you lose that piece of paper, you’ve lost the account and you’ve also lost all of your money. And similarly, because the account itself is is an end address, the only way to actually do things from it is for you to submit transactions chain and pay gas. And that’s really like one of the big hurdles here is like having to deal with gas payments. So account abstraction removes a lot of that. It just moves to you move to a new model where you have a smart account, which is a contract and not not just like an end address. That smart account can be associated with many different addresses. So you can do things like have recovery. And the other thing that you can do is you can one of those addresses could be a relayer or like, you know, in I think account abstraction later account abstraction turns is called a pay master. And basically is the service writer that just when you sign transactions and you send them to to the service writer and you just tell them, hey, I’m gonna like pay you at the end of the month using my credit card. I’m gonna pay you using some other asset. And they do it on your behalf. And that I think is just a way better experience is starting to happen. It will happen as like more and more of the wallets start to like adopt a contract, basically smart contract, while smart accounts.

Matt Zahab
I just, I don’t know how much money’s in that, you know? Cause like, I feel like maybe I’m completely wrong there, but I don’t know if the user would sign up if the fee would be over, call it 3%. I also feel like with 20% traditional credit card interest, like I feel like that’d be too spooky on crypto, especially if like that bill gets racked up quick and things go the other way. And then you’re like no longer just minus 20 or minus 120 in the whole. That’s my, and again, I thought about this, maybe I’m way off, but you may be in an obstacle.

Arjun Bhuptani
To be honest t may actually be cheaper. And the reason is that as a user, when you’re sending your transaction, you’re basically individually sending one transaction at a time to chain. You’re probably overpaying for those transactions because you just want it to go and get mine, right? You’re not optimizing on the process of like, I’m going to like monitor exactly how this transaction is happening and submit it most efficiently as possible. Whereas if you are a service provider whose job it is to process millions of transactions a day, there’s a bunch of things that you can do. You can, for example, like batch those transactions and send them to chain in like lumps. You can work directly with block builders on chain. And so then that way you’re submitting the transactions directly to them, like going around the mempool. So that can get rid of front running, for example. There’s like a bunch of other constructions that people have talked about. So like there’s folks that are creating like block space derivatives. So you can basically like purchase space in blocks at times when gas is cheaper and then like hold it for times when gas is more expensive. And then use it then to like decrease your gas costs. It’s like the moment that you turn it into this like competitive thing where now there’s like a bunch of service riders that are competing with each other to like give the best possible experience or how you submit your transactions, all of a sudden the transaction experience just gets a lot better.

Matt Zahab
I love that. Arjun, you have been absolutely on fire. We have to take a quick break and give a huge shout out to the sponsor of the show, PrimeXBT. And when we get back, we are going to get into a bit of a spicy topic. And that is the SOL vs. ETH narrative. I’ve had a couple SOL Maxis on this show over the last couple of weeks. One, I’m sure you follow him on Twitter, Ansem, BLKNoiz, had him on the pod. He is the king of the Solana right now. This guy is literally deriving the SOL Train. You are an ETH guy. We got to get into debate mode. But until then, huge shout out to PrimeXBT, longtime friends, and sponsors of the cryptonews.com podcast. We love these guys as they offer a robust trading system for both beginners and professional traders. It doesn’t matter if you’re a rookie or a vet, you can easily design and customize your layouts and widgets to best fit your trading style. PrimeXBT is also running an exclusive promotion for listeners of the Cryptonews Podcast. The promo code is CRYPTONEWS50 to receive 50% of your deposit credited to your trading account. Again, that is CRYPTONEWS50 to receive 50% of your deposit credited to your trading account. And now back to the show. Let’s get right into it. SOL vs. ETH. Everyone has been shitting on ETH recently. And I mean everyone. Your Twitter guy, you know it too. I don’t think it’s deserved personally. Obviously, the reason why ETH is getting shot on is because SOL went from what, like, $9 to $60 in three months. When a lot of people get rich, they’re going to wear that ticker with pride. That’s just how it works. What’s everyone’s favorite thing about crypto? It’s easy money, right? It’s also very easy to get rinsed, but it’s also the easiest money. This is why, in my opinion, so many people are on the SOL train right now. You have Bonk, you have dog with a hat, you have just absolute shit coins that have no utility that have made people millions and millions of dollars. And everyone’s on the train. Enough talking on my end. Give us the lowdown. What is good with the SOL vs. ETH narrative? Do the SOL train people? Have any warrant? Do they have any actual sauce in their arguments? Or we can all see this come crashing down very shortly.

Arjun Bhuptani
Yeah, it’s a good question. I want to say in general, it’s really funny to see. There is like a, it’s like once you’re in the space for long enough, you see that there is literally a cycle, right? Like people will shit on ETH and then things will happen and they will shit on something else. And it just comes back around. It’s just really funny. And it’s just a testament to where we are in the market cycle that that’s happening. I have never been as hostile towards Solana, I think, as a lot of other ETH people. And to be honest, I don’t think anybody that’s a really serious, like anybody that’s like deeply involved in technical research is necessarily hostile towards it. I think everybody understands that all of this stuff has a lot of tradeoffs. And so like Ethereum’s thesis is basically like, let’s build the future of the internet, right? And like, let’s build this global platform for creating decentralized public goods that is intended to be truly unsensable and is intended to be truly incorruptible. And a core part of Ethereum’s success criteria is if World War III happens, and I’ve literally heard Vitalik say this, by the way, like it’s like the whole big part of the goal and the design is like, if and when World War III happens, ETH will survive it. It will survive it because there will be enough people, like ETH and Bitcoin will survive World War III because there will be enough people at home running ETH nodes that like you would need to like, there’s enough failover, there’s enough backup happening. And that’s kind of the goal, right? It’s like, you want to allow enough people individually at home to be able to like validate this thing, that if you go and blow up a bunch of data centers around the world, you know, you’re not going to get rid of the chain. The Solana thesis is slightly different. Solana’s thesis is making, is basically making that on two things. One, that there are intrinsically a bunch of use cases for blockchains that are not necessarily going to be like, let’s make this thing as resilient as possible, right? There’s like a bunch of use cases for, you know, distributed systems that achieve consensus out there today, and ones that have like an economic mechanism within it that are very performant or obviously very highly desirable. There’s a lot of places where this has come up in the past, even before crypto existed, like gaming for instance, where like, people have been trying to build like, infrastructure for gaming that solves a lot of the same problems that blockchains are trying to solve today. And they’ve been trying to do that for decades. So Solana’s first bet is that there are intrinsically valuable applications of blockchains that are not necessarily going to be the applications that require you to have like, World War III grade resilience. And then, and then bet number two is the pace at which computing is improving is going to be faster, is going to be fast enough that by the time, you know, we get to the point where we figured out a lot of these like scalability questions at some point in the future, computing will have caught up and we will at home be able to be running infrastructure that is so much more performant that we can then validate Solana nodes more easily in like, basically like the pace of the improvements in computing is going to bring down the threshold at which you can start validating this stuff more easily as an individual rather than honestly per computer. I don’t think either of those DCs are flawed. I think they’re totally valid. I think that Solana is basically just taking another end of that trade-off spectrum where they’re saying, OK, you know what? We’re willing to sacrifice some decentralization to get performance. And in doing that, we’re not having to deal with the complexity of a scalability roadmap. We’re not having to deal with the fragmentation of many different chains. And I think all of that is really valid and very true. The limitation here is that we, of course, don’t yet know what use cases fall into category one. So we live in a time today where we’re basically in crypto summertime. There’s a couple of nation states that are attempting to attack projects building on Ethereum. And it’s like North Korea basically trying to hack people. Not trying to, very successfully hacking a lot of projects. I think there’s a tailor from my crypto did the analysis, I think. And I saw her post a tweet where she found that on average, Lazarus, which is like the North Korean hacking group, had stolen $2 million per day last year from each project. Which is insane. Two per day. Absolutely insane. So I think there is something to be said about, yeah, OK, we need to be conscious of the fact that rogue nation states can and will attempt to attack these chains. But aside from that, we’re still in a summertime situation where major governments have not actively banned crypto. Most governments are still willing to entertain the conversations around it. Their regulators are very interested in talking about it. Like people are, there’s pushback. And of course, there’s hostility coming from certain types of organizations. And there’s a lot of confusion and lack of clarity. But we’re not in a situation where people have actually initiated a war on crypto. In the 1980s, 1990s, there was actually a war on crypto. And like that, there was very explicit attempts to find ways to shut down anything related to the technology that we’re working on at the time of the Zaran cryptography. But right now, we’re not in that situation. And so to that extent, I think Solana is right in that like going for gold with like making this the most decentralized system possible is probably anti-productive to like focusing on adoption. But the flip side of it is that it’s really hard to put it back in the box once you’ve already done it. So like if Solana goes and does get a ton of adoption and then at some point in the future, World War III happens, they’re just going to be in a like not as good of a position.

Matt Zahab
Well, I mean, isn’t the position literally just like turn off the light switch? Like wouldn’t it be pretty easy to turn off SOL? Would not?

Arjun Bhuptani
I think so. It’s basically the way that Solana stands right now, I think it would basically be like blowing up AWS center, server stacks and things like that. As long as you got rid of some of the key infrastructure that is powering Solana, it would be easier to take down than something like Ethereum, which is running validators all over the world. Again, this is a little bit of a horseshoes and hand grenades conversation because of course we’re going to take away here is it ultimately comes down to what you believe the value of this infrastructure is and what do you believe the threat model is. From an adoption perspective, it is absolutely valid to take the position that you’re like, no, you know what, this technology is really important and we need to get it into as many people’s hands as fast as possible and we need to just onboard them into the space. Let’s just make the compromises now and hope that the technology catches up to the point where it can become democratized in the future. Whereas there’s another argument that also to be made, which is just that like for all of these kinds of systems, power corrupts and so like doing it right from the get go, focusing more on decentralization, focusing more on like making sure that this is out of the gala tair and as possible, even if it comes to the cost of adoption, while it means moving slower, will ensure more resilience in the future and resilience is fundamentally the thing that determines what will survive longer term.

Matt Zahab
I love that. Arjun, you’ve been on fire, as I’ve said many times, this pod’s been a treat. This is definitely one that I will have to listen to on a nice walk as well. Just very refreshing. We do have a couple more questions and we got to wrap up. We are getting tight for time. 2024 outlook, give us a couple hot takes preferably. If you don’t have hot takes, just regular good old Luke Warm takes will do as well. Anything ETH related, anything sort of macro narrative related. Again, the hotter the better. I’d love some stuff that not everyone is saying. If you have any of that, lock and loaded that will be a treat.

Arjun Bhuptani
Yeah, I mean, I think there’s a bunch of tech trends. I think bridging is going to get quite interesting. So I’m seeing, we’re sort of seeing that there was just way too many projects that were kind of funded to try to solve this problem in the last couple of years. Way too many. Like 50 to 100 that’s insane.

Matt Zahab
Five mil for you. And it’s like, it’s your bridges shit. I’m being rude. I’m not working on bridges, but like, come on. Yeah, it’s crazy.

Arjun Bhuptani
And it makes sense. It’s a huge problem. It’s all going to be chains and bridges. There’s not going to be anything else. That is the inner chain. It’s at least as valuable as all of the chains combined, at least. And I think people are really underestimating that. But the flip side of it is that, again, similar to chains, just having copy paste chains is not going to make a difference. It’s not fundamentally doing anything new. The thing that really changes what is valuable is going to be specializing. And so I think with what we’ve been seeing with the modular narrative for chains and people specializing into becoming rollups or DA layers or sediment layers, we’re starting to see the same thing with bridging as well, where projects are going to start specializing into transport layers, security layers, or intense slash execution layers. Connext is focusing on ladder, and we’ve always focused on ladder. So we don’t roll our own security for bridging. We actually plug into the rollup bridges. We plug into other canonical bridges. And what we do is we run a layer on top of everything. It’s kind of a Layer 2, on top of bridges, where our network just guarantees transactions go through as quickly as possible. We have an off chain network of what we call routers. Now, in the new terminology, we call it intent fillers. And those are the people that make all these transactions happen. I think that pattern is going to become very popular in 2024. So I would say 2024 is going to be the year of modularization of bridging, and then specifically the massive expansion of this intent layer. Because that is really what’s needed to do what we talked about on this call today, which is like abstract away all of the user experience hurdles and get to the point where this stuff actually makes sense. So that’s point number one. I think we’re going to continue seeing the expansion of many more rollups. I think next year we’re going to start seeing people actually selling rollups to legacy organizations. My hot take here is that I know every VC that I’ve talked to, or not every VC, but a lot of VCs are very interested in consumer applications because they’re like, oh, where are the users? Who’s going to bring the users? And from my perspective, I’m like, yeah, I think there’s going to be a few big consumer hits this cycle. But I think the vast majority of the actual usage is not going to come from people building new applications because it’s like you’re building a new social app. You have to grow to become the size of Facebook. That’s going to take like half a decade, at least even in an optimistic case. If you’re lucky enough to make it. Whereas the flip side of that is like, you know, we know Reddit wants to build, you know, onto on chain. We know that like a lot of these other ecosystems have like made very conscious efforts to try to build on chain constructions they’ve failed to in the past because they’ve had to like go and build a bunch of customers. Basically build an entirely new blockchain. Whereas now you can give them a system, a rollup that runs in their server stack that you can actually build like a data model for it that looks exactly almost exactly like their existing databases and you can then connect that. You can have them like connected to the actual rest of the blockchain ecosystem at will. I think that’s going to be how we like Trojan Horse this stuff into like, like Web2 organizations and that’s where the users will come from. I mean, new applications obviously important, but I think a lot of it is just going to be like older applications being like, oh, we could just do this one simple thing and then now suddenly have stuff on chain. And then I think lastly, I think we’re finally at the point now where we’re really having those hard conversations around user experience. You know, after all of these years, I’m now finally at the point where I’m like, this is the year I’m really hoping that account abstraction takes off. This is the year I really hoping that’s the case because even I’m really tired of having to deal with like gas and sites. It’s awful for everybody, even if you’re a person in this space.

Matt Zahab
Absolutely nightmare. I love this. This was an incredible episode. Thank you so much for coming on and definitely an open invite for round 2. We have to have you on for round 2. I mean, I wish we weren’t tight for time here, but cest la vie. Before you go, can you please let our listeners know where they can find you and Connext online and on socials?

Arjun Bhuptani
Awesome. Yeah. You can find me on Twitter at @arjunbhuptani. I guess my name will be in the thing, in case you need help spelling it. And then Connext is Twitter is @ConnextNetwork. I’d also recommend joining our Discord to discord.gg/connext or checking out our landing page, which is connext.network.

Matt Zahab
Amazing. Arjun, you were absolutely on fire today. Really appreciate you coming on. Can’t wait for round two and wishing you and the team a wonderful new year. And can’t wait to see what you guys are cooking up in the near future.

Arjun Bhuptani
Thanks so much, Matt. Really appreciate you having me here.

Matt Zahab
Folks, what an episode with Arjun Bhuptani. He was absolutely on fire today, folks. Co-Founder of Connext. Guys, this was an absolute masterclass in anything ETH related. We talked about ETH scalability problems, account abstraction, SOL versus ETH narrative. Absolutely everything, building the future of the internet. This is one that I will be listening to again myself. I really hope you guys enjoyed this one. If you did, please like and subscribe. It would mean the world to the team and I, speaking of the team, love you guys. Justas, my amazing editor. You are the man. Back to listeners. Love you guys. Keep on growing those bags and keep on staying healthy, wealthy and happy. Bye for now and we’ll talk soon.