Is Arweave Crypto's Darkhorse L1? | 1000x

And you actually have to care about this stuff. You can't just say, oh, well, we've got several orders of magnitude left to go, like, whatever, because you're legitimately trying to store information forever. You have to worry about what will happen in 1,000 or 10,000 years. It's interesting to think about 10,000 years in advance because Avi and I are usually worried about what happens this week in terms of price action and just space.

You're always thinking about the next, the next 5 minutes.

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Welcome everyone back to another 1000x podcast. Today we have a special guest, Sam of Arweave, who's going to be talking to us about Arweave. Crazy, I know, right? It's a fun, it's a fun conversation. Um, you know, we normally do markets podcasts and now we're doing a building podcast because when the market is slow, we focus on the actual real stuff. No more chasing meme coins, no more talking about meme coins. It's actually dive into something that is going to be useful for crypto. Uh, so thank you, Sam, for joining us.

Yeah, thanks for having me on. It sounds like a fun conversation.

Um, so I, I wanted to start with just for the people that don't know, what is Arweave? And then maybe you could tell us a little bit about the origin story. You know, how did it start?

Yeah, so Arweave is a true protocol. It is truly a protocol, not a product at this point. It doesn't have a core team per se. It has many different organizations that advocate for it, of which I'm part of one. But yeah, it's a truly decentralized protocol that is just focused on permanent information storage. So put simply, the idea of on-chain storage, like you could have with Bitcoin, but scaled to arbitrary sizes and then made economically rational for storing data for the maximum possible time period. We got started about 7 years ago. Yeah, 7 years ago next weekend. And we launched mainnet 6 years ago and a weekend ago. And Yeah, now it runs stably in productions used all over crypto. It's kind of like the— I jokingly call it, maybe your audience will appreciate this more than the normal Arweavers— casinos. You know a casino? There's like this huge industry for the seats in casinos, right? They try to optimize the hell out of them so that no one stands up. Well, Arwe was built as a permanent store of humanity's knowledge and history. But the first use case people really found for it was being the seats in the casino. So storing like ungodly numbers of NFT files was the first use case. And then it became the backbone of storing many different chains because the blockchains, basically, if you have a scalable blockchain, you have this problem that it has arbitrary data constraints or sizes. and the more scalable it gets, the more data it has to replicate. And so people started to put that on Arweave, and over time it's become this, I would say, one of the backbones of Web3. It's not talked about that much, but it's used almost everywhere. Um, like virtually, yeah, the top 85% of Solana NFT collections, something like this, are all stored on Arweave. Um, 20 or 30 different chains use Arweave to store their actual chain data so that people can sync it back to run nodes. Yeah, and it's just an extremely useful utility, basically. And then on top of that, we built this system called AO that I'm sure we'll get into later.

I just think it's so fascinating that, you know, as somebody who's a little bit technical, but not extraordinarily technical, that basically now if you want to build something and have it truly be decentralized, you can't do it without a product like Arweave or pretty much Arweave these days. So, you know, you are truly the backbone of Web3. I agree with that statement. What boggles my mind a little bit is how do you— your fee system, how is it possible that you're able to charge somebody just once?

Once. Yes.

That blows my mind. The internet doesn't offer a good explanation, really.

Oh, interesting. Okay. It does somewhere in there, but yeah, it's pretty simple actually. So this was one of the two major, I would say, advancements or technological innovations that led to the creation of Arweave. So we realized as soon as you get to scalable on-chain storage, you have this problem, you have an ever-growing ledger. How do you pay for it? Right. And the answer, it turned out, was relatively simple as all good answers are. Once you've worked out what they are, finding it takes some time. Uh, it's just an endowment. So you put in storage costs for 200 years worth at 20 replicas at today's prices. And then as the cost of storage declines over time, the amount of storage purchasing power you have in the endowment increases. And there you go. If the rate of storage cost declines are higher than 0.5% on average per year, assuming a stable token price, and that's one of the reasons there's such a massive safety margin in these calculations. Yeah, then you end up with more storage purchasing power at the end of any given year than you had at the start. That's fundamentally the system.

Okay, so that was the part that I guess I, you know, I should have— I apologize, it is well documented on your website, but this decline in storage costs throughout time, is that something that This is what I wanted to ask you. Is it something that follows Moore's Law? Is it something that you can bet the farm on? I guess you have.

Yeah. So it is analogous to Moore's Law. It's not Moore's Law. It's called Krydar's Law. Krydar was basically the person that proposed a similar sort of hypothesis for the declining cost of storage as the increase in compute power. Um, I think, yeah, so over the last 50 years, it's been about 38.5% approximately on average yearly declining storage costs. And our expected rate is 0.5%. So it's extremely conservative. And that's also partially because it uses an unstable token price as part of that, that mechanism. So we like to have even more security, uh, buffer, but But even before digital storage, if you think back, the task is not well specified at that point. So it's best thought of as encoding information. Well, humans have been trying to do that since there were humans, since we first created language, and even before then with basically stickman drawings of cows and stuff, whatever it was that they felt was necessary to store. But if you think about it in terms of the amount of human effort or labor that went into encoding those symbols, to write on a cave wall is very costly in terms of time. And so even before digital storage, there's been this declining cost of information encoding over many millennia, probably into the tens of thousands of years, if not, yeah, probably not 100,000 years, probably tens of thousands. Um, and so, so we see that basically where the, where the trend comes from is robust, the trend in the present day is robust, and then the question becomes, well, will it happen in the future, right? And so to understand that, you have to understand a few different things. Like, first, is it possible? Like, do you reach a theoretical limit somewhere? Um, And, and this is true of Moore's Law with thermodynamics. Basically, you end up at a point where you're doing so much computation that the computation generates a certain minimum amount of heat. And then to remove that heat from the, uh, the surface of the chip, it requires a certain amount of space. And then you get to like a, a computational density limit, essentially. And on the storage side, you get to a data density maxima. At 10 to the— I believe it's 68 bits per cubic centimeter. We're at about 10 to the 13 right now, something like that. And even then, you don't need it to be compressed. Like, imagine we've got to 10 to the 68. Well, you could just stack it next to each other, right? So the theoretical limits are really very, very, very far off.

And you actually have to care about this stuff. You can't just say, oh well, we've got several orders of magnitude left to go, like whatever, because you're legitimately trying to store information forever. You have to worry about what'll happen in 1,000 or 10,000 years.

Yeah, like the, you know, when I joked at the beginning about the casino seat things, it's one of the most, you know, life is sometimes so ironic it can hardly believe to be true, yet it is. Um, yeah.

It's interesting to think about 10,000 years in advance because Avi and I are usually worried about what happens this week in terms of price action, right?

You're always thinking about the next, the next 5 minutes. Which brings me to a question actually. I mean, how do you guys think about the approach to changing the protocol given that you're trying to last for 10,000 years? I mean, you obviously have the Bitcoin approach, which is You want it to never change.

You want it—

that's like a strength that you know that in the future it's going to look like the past and you're storing data. Maybe you want that or maybe you need— there are challenges that might come up that you don't know about. So you want it to be immutable like Ethereum. How do you guys think about it?

Yeah, so that's super interesting. I spent 2 years of my life like obsessed with that question because basically we got it to the point where it was like scalable on-chain storage, like arbitrarily scalable. You can fit the whole web in a single transaction, like tens of thousands of times over or something like this. And then we made the economics— or actually we made the economics make sense before that. And then it's like, okay, well, what were the next risks on this mission? And yeah, the very obvious one is, well, we can't predict what the protocol might need some distance in time out, like hundreds of years. It's you know, the way that it's currently structured, I think is good for decades, but realistically something will need to change on the centuries horizon, let alone millennia. And so we're trying to work out how to deal with this. And the reason that we believe that crypto exists, or the reason that I'm in it, um, is because it's a mechanism of providing users with immutable and guaranteed rights. And like, at the time we were starting to to really look into this problem, uh, the state of the art was DAOs, which I just think like, okay, they are a 10x improvement on companies, but to be very clear, in their current form, they are just on-chain companies. They're publicly traded on-chain companies. There's nothing more to it. And like, I don't know about you, but I could also buy some Amazon stock if I wanted an ungodly small amount of influence in what Amazon did. There's nothing really there. So that wasn't a good idea because, well, the company would inevitably— company, air quotes— the DAO stroke company would inevitably be incentivized to extract value from its user base in the maximum possible way. So that doesn't work very well. Forking, like you have in Bitcoin, is quite good because it allows basically people to disagree And to coalesce into groups and then have their own systems that maintain rights. And so if you want to change the system, you have to convince everyone that it's better. But the problem with that is that there's no incentive for the innovator, right? Like we, we, we did the math on this and really, if you have less than $500 million worth of Bitcoin, the delta in Bitcoin price after you're done with your innovation is really very unlikely to be worth it for the cost of innovating and convincing everyone, the marketing, the PR that would be necessary to get everyone to agree that this was actually better than the original Bitcoin. So it's virtually unworkable. Um, so we, we came up with a different system which we call evolutionary forks. And basically the idea is you can make a single adjustment to the protocol, like in one go. You don't, say, oh, trust me, bro, I'm going to implement it later, it's going to be really good, you know. No, you just, you have a single update to the, to the code base that it triggers at a specific block height, and you can create new tokens for yourself as a reward for doing so. And then basically the market just decides, and if your innovation is actually worth the amount of dilution that it created for the protocol itself, then, then your tokens will be worth something. And this allows permissionless innovation. So you incentivize entrepreneurs anywhere, you know, builders that think this is a good part of the protocol, but we can make it better. Or there's this oncoming problem that's a few years out. I can see it because I care about this protocol. Other people don't care yet, but I can be right and make the right adjustment early. And then the old one might fail, but the new one succeeds and all of the value goes there. And at the same time, the dataset is maintained between these branches, essentially, of the evolutionary tree. And that allows us to evolve around problems in the future. And there's also an efficient market for innovation that happens there. So if, you know, you come along and you say, hey, I'm going to make this innovation and it's going to make the protocol better, but it's going to be 100% dilution or something, well, people can be like, well, 'that doesn't seem that hard, I could make that too, and I'll do it for like 3% dilution.' Then people will go to the one that's less dilutionary. Um, and so you should get an efficient market for improving the protocol over time. There's a couple of other factors in it, but it's, it's written like a constitution, not in code. It's just like 274 words, something like that, that just describes how— look, as a community, if we want to have a permanent information storage system there doesn't appear to be any other viable way to do this. Here are the basic rules, you know, go evolve it.

Do you think— I'm curious, do you think Arweave could ever transition to also having a semi-permanent data storage? Because, you know, the, the market for permanent data storage is huge, but there's obviously also a market for data that isn't stored permanently, right? That's that's actually a large part of it as well.

Yes. Although the question right now is, is there a large market for decentralized temporary storage? And I think the answer to that pretty clearly is not at this point. Now, there is some market and we, when's this podcast going out? Do you know?

Thursday.

Thursday. Well, in the next few weeks, we'll have some news on that.

But the—

there's some alpha for you. Um, all right. But, but there isn't like an enormous market for decentralized temporary storage, at least at this point. And we know this to be true because for a start, I, I invested in— so I mined some Bitcoin in 2011 or something. I put like $15 worth into Ethereum and then I took some of that and I took it into Storj, which was more or less the first decentralized storage network. And I thought it was a cool idea. And, you know, I put the money into Ethereum just because I wanted compute credits, not because I thought it would go up in value. And I did the same with Storj. Storj did not go up in value that much because no matter all the attempts that people have put into it, there just isn't a huge market for this. And And the reason is kind of obvious. Like, what does decentralization actually get you? Right? It gets you permanence, trustlessness, censorship resistance. Well, when was the last time you heard of someone having their encrypted data on AWS or Google Cloud being censored? I don't think I've ever heard a story like that. Right? Whereas permanent information storage is just not a model that a company could ever sell you. Because the company would change its model over time, right? So the whole idea is because the rules of the protocol are protocolized, they offer you guarantees that you can't get elsewhere. And we've seen this in the most extreme degree with Filecoin, I think, who had 70% of their token supply approximately for mining rewards. And now they can't give out storage. Like they have an extremely low utilization rate because they literally can't give it away for free. They tried selling it at, not kidding, a thousandth of the cost of AWS and no one wanted to buy it. Then they gave it away for free. Then they started paying people to store it. And all the while they are inflating the token supply, which is really horrendous to see. Like if you look at the market cap, the market cap has recovered with the market, but the price is just. It's approximately 1.5 times the price in 2017 because, because they printed all these tokens to overly subsidize just a service that people fundamentally didn't want. And so, yeah, we think there is a market for decentralized temporary storage, but the way to do it is definitely not with extreme token incentives. It should probably be actually tokenless.

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You brought up something really interesting, which is sort of permissionless innovation, constitution-like, uh, founding principles that should allow you to endure. I agree that, you know, no piece of code is better than perhaps the United States Constitution for evolving with time. Um, so on that note, can you give the listeners maybe a concrete example of a small problem that your structure helped you innovate around or helped your community innovate around? Has it been triggered recently?

We tried yet. Hasn't been triggered yet.

Okay.

So we're waiting. But I imagine it could be years, if not a decade, potentially before it ever needs to be used. Kind of like the Constitution was also not in question in the early days. It's later on that, like, we've really tried to engineer Arweave so that it it is the, the most optimal solution for the current state of affairs and the affairs that we can see in the future. Like, we're kind of interested in DNA storage right now, which appears to be about half a decade to a decade away from commercially viable, and that will be 10^27 bits per cubic centimeter. So huge, huge improvement. We're just trying to make sure that the protocol is sufficiently flexible so that you can mine on DNA, as crazy as that sounds. Sounded slightly less crazy 6 years ago.

Are you talking about storing everybody's DNA or just—

Oh no, it's, um, it's, it's just the DNA itself, right, is a, is a sort of tangle of, yeah, helix of, um, different components. And, and if you manufacture each component, you can get them to stick together and you can encode any data you want. Basically, and it's very, very dense, like crazy dense.

You're not talking about like just storing somebody's genome in an encrypted format. You're talking about actually computing over the same mechanism that DNA is effectively formed with. Interesting.

Yeah. Although many years ago, we did kind of wonder whether you could make a self-replicating version of Arweave in viruses, but don't worry, we're not going to do that. I promise. It's just that if the DNA replicates them, theoretically, you might be able to.

Here comes the world's best transition. Like a virus, Arweave has managed to survive several cycles of crypto nuclear apocalypses. So what I'm wondering is, what is it— you know, you feel like our traders and investors and people who are interested in, you know, buying and selling tokens who listen to us, some of them are extraordinarily in the weeds and technically capable. Others are just, you know, hobbyists who aren't necessarily that technically knowledgeable. Can you help us understand in the bluntest possible terms and help our listeners understand what it is that you did with your tokenomics to structure Arweave such that it survived better than— I call it StoreJ, or you call it Storj, Filecoin, IPFS I think is another one, like any, any of these other protocols that have just kind of faded away. Like, what is it that— what are the hallmarks of your product that have allowed it to endure these cycles aside from just meeting a good product-market fit? And what should our listeners sort of look for in terms of tokenomics for other things that you think are important in the blockchain ecosystem? Jason Yanowitz, like Arweave.

Interesting. The first one that comes to mind is don't be hyperinflationary.

Yes.

Like don't print crazy numbers of tokens to subsidize supply when you don't have any demand. That's not a wise idea. Yeah, that would, that's the place to start. The second part, I think it's just fundamentally useful to people. Like, it's grown in usage through both of those bear markets. Is it only two? Feels like more. Yeah, three bull markets, I guess, and two bear markets. I'm not sure if you call this a bull market. I don't know. Two and a half, something like that. Yeah, it's just grown in utility for people. And it's a cool thing because that's a compounding utility over time, right? Like, when we first built it on day one, I come to you and I say, look at my shiny permanent information storage system. It's got all these cool features. And you're like, okay, but it's permanent and it's been around for one day. Well, it's six years now. It's like non-trivial part of Bitcoin's history right there. And it's been stable and mature. And so more and more builders trust it. And I think that slowly compounds interest over time as people start to realize what it is. I mean, frankly, the— I think our biggest problem, at least until the start of this year, was our marketing for it has always been very careful because we really are seriously trying to build a permanent information storage system. We're conscious that the words that we say in the early years might have effects downstream that we can't easily predict. So we like to make our statements sort of accurate and terse, if that makes sense. Like, really just try and say that— yes, try and stay on topic. It's kind of ironic, like, I built it as a permanent ledger of speech so that anyone can speak on the internet without having to have an intermediary between them, and then I also found that my own personal speech was massively curtailed because I'm associated with a project, and I don't want to do like an Elon Musk style hyperpolarization of the user base because many, many years down the line, it's going to be like, oh, that's that guy that I disagree with this thing he said about something completely unrelated. And so, but anyway, yeah. So, so it's kind of in the background there being picked up by more and more builders as time goes by. Doesn't have hyperinflationary tokenomics. Actually, the tokenomics are super cool, but that's a, yeah.

And it's, I mean, the, the, we can get there. I'd love to talk about just because I think your main competitor Filecoin, you know, whether you want to call them your main competitor or not, at least in the mind of crypto they are, uh, and, and they take kind of a complete opposite approach in terms of token inflation, marketing, uh, basically, you know, uh, almost everything. So it'd be kind of, you know, interesting to compare and contrast between the two. And then, you know, you can talk about the token economics as well.

Yeah, well, so I think the, the wider point is perhaps the— yeah, the one that has more meat to it, which is that most token designs really don't actually make any logical long-term sense without being extractive from the user base, which kind of goes against that principle of why we're all here, which is to build services in cyberspace that users can trust in the same way they trust a constitution. Can't be swapped. There's no switcheroo. And with Filecoin, basically the token value accrual mechanism is you pay for storage for a period of time. You take those tokens out of circulation for that period. Okay, that makes sense. Like MV equals PQ, the equation of exchange, you're just lowering the velocity. Of those tokens. Yeah, makes some sense, but you need a lot of storage in order to do that relative to the market cap. Arweave has the same effect but magnified approximately 100-fold, something like that. The maximum deal size on Filecoin is 2 years, but on Arweave you pay for 200 years worth of storage upfront. And so you take those tokens out of circulation. And there's an interesting argument to make as to whether you're essentially burning them or just lowering the velocity, but it's kind of immaterial because you're lowering the velocity for hundreds of years at minimum. So it may as well be, uh, they're just burnt. Um, yeah, and that, that has a mechanism where you're not incentivized as the protocol to increase the cost to users because that would decrease the amount that they're actually going to store. Um, and at the same time, you're not being extractive. There's that huge safety margin, but it's there for a reason. It might actually be used in the future. We can't predict what's going to happen in storage markets 50 years from now. Um, and so this mechanism allows you without being extractive to the user, like literally you pay 0 cents above what the protocol truly believes the cost of storage is, like the cost of supply. Um, and at the same time, the token accrues value because you're just moving more and more tokens out of circulation proportionate to usage. And it's very, very hard to get a token design like that that actually makes sense. And so that's one of the things that I think is underappreciated about the protocol, but I kind of like because I spent a long time working on it, I suppose.

No, that's really interesting and elegant. I want to dig into the tokenomics a little bit more because I think it's just so important. We're in this, you know, phase of the cycle where um, altcoins have underperformed. You know, you have these majors like Bitcoin, ETH, Solana performing, so the infrastructure layer is performing. Then you have, um, you know, unlike maybe the previous cycle where all altcoins were sort of viewed as, uh, you know, bets on the future, I think there's a little bit of apathy this cycle around, you know, the middle of the risk curve, as we traders call it, tokens associated with projects like yours. And then the, uh, you know, let's call it a— let's call it a casino. The meme coin shit show is, is, you know, volatile and interesting for some traders, but that sort of middle of the spectrum is very difficult for people to understand. What, uh, I think, I think what a lot of fatigued crypto traders are wondering right now is, if I buy a token, um, like Arweave, you know, it's not a security, it can't pass through dividends, there's no value accrual mechanism to that to that token in dollar space, uh, with securities law the way that it currently stands. So what, what's going to drive my upside other than, you know, new people buying into it? And the interesting thing about Arweave that I like so much is that you're literally paying for a product that has product-market fit already in those tokens. So you can kind of guarantee an inflow of fiat into the Arweave ecosystem Unlike, you know, name, name your 99% of other altcoins. So I guess, why hasn't the market— can you think of reasons why the market hasn't sort of picked up on this and thought of Arweave as the type of protocol where, unlike most, there is this constant sort of inflow of fiat for, you know, to buy the product?

Well, I think it has to some extent, most in recent months. Um, but, but I do think that the understanding of the utility lags behind where things are actually at. Like for a very long time, uh, when we spoke to people about Arweave, they were just like, oh, it's storage. It's like Filecoin. It's like, not really. Um, it's doing something that you can only do with a blockchain. Uh, that, that meme is spreading, but it spreads kind of slowly. And I also think that it also goes in the same way that Arweave has found liquidity, right? So people have just discovered it on their own accord. Like we spoke to many exchanges about Arweave over the years, but we only really ever signed agreements with, or even NDAs with 2 or 3. And now it's on most major exchanges because people find utility in it. And I think that that's what drives long-term value. It's like, just build something useful and make it complete and actually scalable so that it won't just stop working and then there's a crisis in the community. And then work to spread it as wide as you can. Like, at this point, Arweave, the core protocol, is mature enough that the tweaks we make to it are very minor. We try to— unless there's like a fundamental problem, and there hasn't been really since like Arweave 2.0, which has been, you know, introduced the arbitrarily scalable mechanisms. And that was like 4 years ago at this point. Unless there's a fundamental problem, we make the minimum viable nudge to the protocol. And it's kind of in line with Bitcoin. Nothing more than the Bitcoin community would accept.

You literally stole the next question out of my mouth, which was, this sounds like you're describing a benchmark L1 Bitcoin, or I would have said, you know, ETH as well. I think Solana, they're a little more hands-on, but so should the market perceive Arweave like proper L1 and not bucket it with other altcoins using air quotes here.

Yeah. And I think it will over time. It's just, you know how markets go. They're like eventually efficient, but they can be quite inefficient in the meantime. But at this point it is, it's just like Bitcoin except for permanent storage at scale. And I actually think that, I know, Ethereum to me seems way more hands-on. I'm curious what, I don't know what the institutional bias is with you guys on Ethereum, but that's an interesting conversation if you want to have it.

I think, you know, Ethereum's generally deemed as very hands-on.

Hands-on.

Yeah, yeah. I mean, there's a lot of change, right? And there are a few people that are effectively in charge of driving forward that change. Obviously there are a huge amount of people whose opinions are voiced, but then, you know, the actual process, I think it's— and that generally I think is deemed okay because when you— Bitcoin is immutable because it's money and it's a lot less complicated than Ethereum from that perspective, right? There are a lot less things that I think can go wrong. With BTC. And so when you're building a platform, this is at least from the perspective of a lot of, a lot of investors, Ethereum investors talking from their perspective. The idea is, well, we have to be responsive to the changes, right? We have to be responsive to changes. And that, I think, is what drives the, the hands-on nature of Ethereum. Do I necessarily agree with that perspective? You know, I'd say that a lot of the reasons that people got into crypto in the first place is that they wanted to build on a platform that they know wouldn't change the rules on them. And so I think that that obviously is not Ethereum at this, at this point in time. But, you know, I'm just trying to make the argument from the perspective of the people that are changing it, right? And I think that one question I have about this, and, you know, I'd like to, I'd like to hear your responses. There does seem to be development around AR in terms of new projects that are building on AR, like AO. And how does this, how does this sort of play into the Arweave as an L1 narrative? It was confusing to me because I'm not sure, maybe is AO going to be competing with Arweave, but still built on Arweave?

No, God no.

So again, this is what I'm trying to figure out. Maybe we can start with what is AO?

Right. So AO is an actor-oriented computer. Basically, the idea is to build a decentralized supercomputer. You kind of heard it before many times described as the world computer, but this time it actually works.

And is this like Gollum?

No, no, no. Well, so I mentioned before that the Ethereum ICO, right? I went to that website and in the middle of the website, this is as far as my memory serves. So maybe it was in a video potentially, but in their marketing, they said Ethereum is the world computer. Ah, okay. That sounds cool. I want to be part of that. And what they delivered was really very, very interesting and unlocked a huge amount of innovation on top. But it just doesn't scale. It's like the world's most enormous calculator. It's kind of absurd. It's like you have 70,000, you know, it oscillates a lot, but around 70,000 different nodes. And it's doing the amount of computation that you would get in a literal desktop calculator that you would use in school. And that I also think speaks to the prior point, which is why is Ethereum so hands-on? I think the answer is simple. It's like the protocol doesn't work, right? If the protocol worked, then I think the whole development of crypto over the last 10 years would've been completely different. Like if they'd shipped something that was more in line with what their sharding design was, which actually could scale in theory. but has different trade-offs, then we just wouldn't be in this. Yeah, the whole thing would be much more like normal commodity protocols. That would be the expectation. Whereas Ethereum sort of set the benchmark and they set it more or less as a company who has a product. And, um, I think that took us way off track. Jonah, you look like you, yeah.

No, no, no. You're, you're, you're just blowing my mind. Like I, I've never thought about it this way. I mean, I, yeah, it's, it's a world computer that's really slow. But at least it's reliable, right? At least the calculator doesn't break. And so that's true. We can start there and then we can say, we could go back and say like, oh, well, in, in the 1950s, you know, if, uh, if, if only ENIAC had been able to process, you know, like teraflops worth of computation, then we'd be in this totally different world. And yes, I agree. But, um, no, I think your point stands. Like, it's It's kind of shocking when you put it that way, just how shitty Ethereum is. And I wasn't disagreeing with you. I was more like, wow, I've never philosophically thought about crypto this way. And gosh, maybe we could have avoided two bear markets if only they'd had scaling solutions, or if scaling solutions weren't necessary because the mainnet was so fast.

Wow.

Right.

What a powerful statement.

And I think it's— I don't want to trash talk them too much because their innovation was truly incredible. Being able to run arbitrary computation on a decentralized computer is unbelievably cool. And it's the reason that this whole industry exists, but they fell into a trap that's very common in protocols, which is protocols are about communities, right? Like there's no use my computer having a set of rules about how it should interact with other computers if there isn't another computer in the world for it to talk to that's going to speak the same rules. The problem that you get is you can't just scale it like a Web2 company, right? A Web2 company just pivots the product until they find something that people really like, and then in the background they make it scale one way or another. But a protocol doesn't work like that because each of the scaling solutions has different trade-offs, right? And if you build a really large community around something that doesn't work, getting the necessary buy-in to change it, to change your position in the trade-off space basically is just too hard. And that's eventually what happened. They got too much adoption, ironically, at a time where they didn't have the protocol rules laid out in such a way that it would actually scale to do what they wanted to do is build the world computer.

Well, you're in kind of the opposite situation, right? Like you've built enough lanes on the freeway and you're waiting for the traffic to show up. I'm just curious, What is, or maybe there's already a ton of traffic. To answer my question, what does your community look like? How much data are they storing on Arweave right now? And what does that look like? Is it still just a bunch of JPEGs or are we looking at cooler stuff?

Cooler stuff now, fortunately. Well, I mean, the JPEGs are still there, but there's about 6 billion pieces of information on Arweave at this point. And for some perspective, when we had, so we had the 6th anniversary of mainnet just a few weeks ago. And, um, in the prior one at 5 years, we were at just shy of a billion transactions. So the usage is really skyrocketing. And that speaks to people just find it useful and it just scales and doesn't charge you more as more people use it. It just charges you the, what it calculates as the economically rational cost. Um, but to that, to that prior point for a second, because I do think it's really interesting. Yeah. If they'd have just got it to the point where it had scaled arbitrarily, then they could do what we did, which was, and that was actually what we used the first bear market for as well. Like while everyone was depressed, we just made our scale. Um, yeah. Then the focus just becomes, well, how do we get the largest number of people to adopt it as fast as possible? And we've done a bunch of things there recently, like acquire Odyssey, which is the largest Web3 social app out there. It has about 7, 8 million monthly active users, and we're decentralizing it and just making it an open public utility on top of Arweave that runs just like a protocol. And Solarplex as well, a smaller social network. And then also this effort to build AO, which is basically It turns out if you have arbitrarily scalable permanent storage, you can imply the state of any computation, right? So like computation, if you have a deterministic— okay, stop me if I'm going too technical, but yeah, if you have a deterministic virtual machine, that's a computer, if you will, where you put the same inputs in, you get the same outputs every time. If you can store arbitrary amounts of the logs of computation, then you can do arbitrary amounts of computation, full stop, and then infer the same state on top of it. And with AO, what we did is we just built that system and a message passing layer that uses Arweave to move information from one— we call them processes, you can think of them like smart contracts— yeah, to other participants, to other processes in the network. And then you have an arbitrarily scalable world computer. What you lose is what Ethereum's sort of position in the trade-off space got stuck in, which was global shared state. It's called the idea that every program has access to the memory of every other program, right? If you have that, I don't believe it's possible to make it more scalable than Solana. Solana's pretty efficient at that niche. Whereas with AO, we just said, okay, screw global shared state. It doesn't work. It never worked in traditional computer science. Why would it suddenly work in a decentralized world where everything is actually just harder? Let's go with what actually works, which is message passing. The whole internet is just a message passing machine, and we just made that on-chain, essentially.

On that point though, just a quick question, and, you know, forgive me if this is a stupid one, but you've definitely exceeded my level of technical understanding by quite a lot already. If you can use infinite storage to infer any state, isn't the trade-off that you're making, oh, well, let's just use an absolutely enormous amount of storage to arrive at some state, doesn't that, if you do it incorrectly or if you use too much storage to arrive at that point, like, couldn't you just be stuck in arriving at your state but in an infinite amount of time or an extremely long period of time? Like, your supercomputer has to be fast too, right?

Right. That's actually a nice segue. That's exactly what AO does. So you've been able to store these logs of computation on Arweave since about 2020. We first called it SmartWeave. But what we advanced with AO is this idea that you can— do your viewers watch or listen? Because I got like a diagram right behind me. I could just point to it.

Probably a little bit of both. But if you're listening to this, Why don't you switch to YouTube right now?

Actually, Spotify has video too.

Oh, does it?

Oh yeah. Well, here we go. This is how the system works. So in HEIO, and I don't know if my mic is going to pick this up. Basically, we have this, we break down a blockchain into its fundamental components, a smart contracting system into the components that are necessary to make it run. So part of that is computation and part of it is settlement and data availability. So for Arweave, sorry, for data availability, we just post to Arweave and there's a certain node type that does that. And they sequence in ETH speak, I guess. And then there's this different subnet for computation where we basically build a peer-to-peer network where anyone can plug in a node and they can stake against the correctness of state transitions, so of computation. And that computation might involve another message being sent around the system. And so then we have these messaging units, which are a different subnet, MOO. Yeah, we call them MOOs, COOs, and SOOs. And the MOOs, they basically just push the data to the appropriate scheduling unit, which does that sequencing and uploading to Arweave. And yeah, like by splitting the blockchain node up into its fundamental components and then solving each problem individually and making that arbitrarily scalable, Then you plug it all back together and you have an arbitrarily scalable decentralized supercomputer. And it's not like, it's no joke. It's, it's doing things like running Llama 3, the LLM, the 7 billion parameter model running on chain inside a smart contract and making financial decisions. So to bring it back to meme coins, the day you're listening to this, we're launching a meme coin for the community. It's not going to have any value. But do with it what you will. Um, and basically it's the first LLM-operated monetary policy. So there's a Llama model who runs the Llama Fed. And I, I like to joke it's a fiat simulator, but some people don't get that. Basically, you can go to it and you can petition it to print you some tokens. And it will decide whether your petition is any good and it'll basically manage its own monetary policy. And it can do that because it is a, yeah, an LLM, a real AI running inside a decentralized network.

Have you tested this? Does it actually work or is it like, yes, every time we hear AI X crypto now we just glaze over, but like this speaking to you, absolutely. Like I'm kind of blown away by this. I want to see if it's like an AI.

This is an AI-driven meme.

Yes, it's an AI. Monetary policy in a meme coin called LlamaCoin, operated by the Llama Fed of Llama LLMs.

Is the chairman more like an AI Volcker or an AI Greenspan? Yeah.

Or Powell.

Yeah.

We gave them all different personalities. So you get like randomly assigned to a chairman and then they'll give you a, uh, they'll assess your petition. You have to burn some Arweave tokens to, uh, do the compute.

But so how do you get access to this coin?

The easiest way would be, well, it'll be on Dexy would be the easiest way to find it. Dexy. Dexy. Yeah..arweave.dev or.anyarweavegateway. And it's actually a fully on-chain Dex screener that you can check out and then it'll point you to the places. Mechanisms in the network where you can pick it up. Or just go to AO the Computer on Twitter, and I'm sure it'll be like one of the top tweets if you guys publish this on Thursday.

And so this is, do I, how do I access AO? Do I need a specific wallet?

Yeah, you, you would use an Arweave wallet. ArConnect is the typical one, but there's actually this thing called Authent now, which allows you to do Google Auth. So Google in their KMS, they have your key. They can't access the key in the same way that like if you have a ledger, you can't get the private key out of it, but they could stop your access to it. So it's an easy onboarding system, but I wouldn't trust it with huge amounts of value.

I've had this thesis for a long time that the infrastructure layer is going to outperform pretty much every other part of the stack. For years in token space. And listening to you speak about your protocol, I can't help but sit here and kick myself for not bucketing Arweave into the, like, when I say infrastructure space, I mean the proper L1s. But what you said earlier in the podcast about how what you say early on in the history of something that's meant to be so lasting carries so much weight. You know, if you're the George Washington or the Alexander Hamilton or the Thomas Jefferson of a Web3 protocol. You can't be out there shilling your thing like you're, you know, this cycle's protagonist on Twitter, right? So I kind of understand now, and I'm glad that our listeners are getting a chance to sort of see under the hood here because now I can't, you know, I'd like to challenge you, but I can't come up with a real counterargument for why Arweave shouldn't be considered a benchmark L1. And if you're launching interesting meme coins on it, uh, with characteristics that are performant other than just like the pump.fund casino, um, wouldn't that be more fun than just buying something to see number go up only to crash back down in your face? This is a very interesting concept.

Well, to be clear, I don't think Llama coin is a long-term store of value. Please don't buy it for that purpose. But, but it, it does demonstrate the capabilities of the protocol. And we think that it's also the start of something we call agent finance, which is basically AI financial activity on chain. And most, I hear you with the skepticism, most crypto x AI is total BS. That's definitely true. But if you can make it so that the AI runs inside smart contracts, then you can make it such that the AI does financial activity in the same way that LlamaCoin's got its, you know, Federal Reserve, right? Uh, and have the trustlessness of smart contracts. And that is actually the place where I think crypto plus AI makes sense. Imagine that you can have a, a strategy, uh, that is an autonomous hedge fund basically, or a portfolio balancer or whatever else it is you want. but you can now have it on-chain trustlessly. We think it's a huge, huge market.

Oh, massive. I mean, I'm, I'm a commodities trader. I, I have a preference for systematic trading. So I build not AI. Well, I use a little bit of machine learning in my models to make them better, uh, at the very end of the, the process. But I am deploying agents that trade on my behalf in the crude oil market. And I was just, you know, listening to you talk. One other thing you didn't mention just then that is, I think, an important marketing characteristic for your product is that in addition to the permissionlessness and all the other benefits of Web3, there's also the access benefit, which is, if you're not me and you don't have 20 years of commodities trading experience, very few institutions will let you spin up a robotic trading model and deploy it. Whereas on something like Arweave, you just you could do that from your bedroom with no prior experience.

Yeah. And then if your strategy does well, that developer from the bedroom that no one knows the real name of, even you can trust it to put more capital in, your capital, right? And then withdraw it at any time because it's a smart contract in the same way that you trust Uniswap. Yeah, we think that's super cool.

It's, it's, I agree, super cool. What is the, forgive this cliché phrase, but I can't think of anything better. What is the hockey stick moment for Arweave? Like what, Obviously you've had a lot of success already, but like where does Arweave just blast into mainstream user adoption, onboarding users into crypto for the first time, like a real dream scenario for you?

Man, there's so many and there's so many different parallel threads of adoption at this point. Like Arweave already is a hockey stick. We're doing nearly a billion transactions a month and we did a billion, slightly less than a billion in the first 5 years. So that's pretty, pretty extreme growth. Um, but, but outside of that, what we at Forward Research are doing is pushing in two different directions that we think there's some, uh, overlap, but, but will emerge at something that is genuinely useful to consumers in a short period of time. Um, and that's first this decentralized global supercomputer, for lack of a better term, right? Any computation you want can now have the characteristics of, of smart contracts. And the cost should be very slightly above what you would actually just pay to AWS. So that's pretty cool. We think that people will find uses for that computer in ways that you just don't use smart contracts because like, why would you use a calculator to run a desktop? You know, but you can run something like a desktop on top of AO. You can have your little workstation, you log in from anywhere in the world. It just trustlessly, autonomously lives like inside the system and you can, uh, have it programmed to do whatever you want to react to the world around it while you're offline. And it never goes offline. Like there's no such thing as offline for it. Um, and at the same time, we think on the consumer side, now we didn't even get into this, but basically, uh, we think that composable data is the big play in consumer crypto, most likely. When you upload a piece of data to a social media platform at the moment, you give away your rights to that data. You sub-license, at minimum, if not license, the content to the platform, who then basically uses it to do whatever the hell they want. And they can deplatform you at any time. And when someone else wants to build a new version of a social experience, they have to start again from an empty database. Well, you can solve all that if you use Arweave. You just upload the data to Arweave. It's a big open database shared between any number of participants, um, those, those participants being users or platforms. And then basically when it comes to building TikTok, you just build a, a UI on top of the existing dataset that says, hey, give me all of the videos that are vertically oriented and less than 30 seconds long, rather than starting with an empty database and doing all that growth work. And from the user's point of view, when you upload your data, you are the rights holder. We built this thing called the Universal Data License that allows you to control those rights. So you can tokenize it if you want. You can say the person that owns the tokens gets the royalties, and the royalties can be, I don't know, free for individual use, paid for commercial, or paid for AI training on top of the data, like really whatever you want. And so as a creator, now you upload your data once to the web, you own it and control it. And it can be reused everywhere that it is useful to people. You get maximum distribution and maximum ownership rights. And then underneath all of that, that creates a content economy, right? Like there's all these different pieces of data and where this is the direction we're going with Odyssey. Um, yeah, you have all these different pieces of data. They accrue value from royalties and well, obviously you, you can trade them, right? And you trade not just NFTs, the casino, but actually something that's been more like a commodity. It has real tangible utility that someone's gonna want. Um, it just generates revenue based on the, uh, usage of the data itself. And then you can build content funds that autonomously just go around and they offer to buy content from creators that they think are likely to make money in the future. And that's instant liquidity for a creator. Like you upload the tweet and you don't wait for Elon to pay you through like 3 months from now, you can sell 20% of that tweet today if you so desire. And at the same time, that obviously plays into this agent economy we're building. Anyway, yeah, I feel like I've rambled way too much here, but that's kind of the big picture of where we see it going.

Kind of reminds me of how Elon talks about turning cars into a productive asset through AI. It's like, well, you have, you know, it's the, the, you had this depreciating asset. That really is just a liability. And through AI, you can actually generate revenue through it. It's kind of what you guys are trying to do with content in a way. It's, you have this, you have this content that's not really doing anything for you, or, and you can unlock a lot more value just by allowing it to move itself around in a trackable way. It's kind of fun. It's cool for sure. And you know, there's a, I think there's also a huge benefit if You can have content verification as well. As we all know, that's been a huge, huge, huge problem. I mean, to the point where if you actually listen to Trump— I don't know if Biden has mentioned it, but Trump has mentioned it a few times— where he's talking about deepfakes. Yeah, he goes, well, how do I— how do I— how do you— how do I make sure that people actually know it's me? This is actually easy. He said this at the crypto event.

Yeah, totally, right? And here is that something that Arweave will be able to help with? Yeah, for sure. I mean, so you upload that data to the permaweb, we call it, which is really a stack of all these protocols we're building. That's what Forward Research, my organization, that's what we see our mission as, just build the permaweb. That's why we built Arweave. That's why we built AO. We acquired Odyssey. It's all part of this same mission. And yeah, like you authenticate yourself with your cryptographic keys. And you can store those on Google if you want, but you can store them anywhere. There's like a bunch of different ways. And across all of the different applications on the permaweb, you have the same identity. Like your identity moves in the same way that content moves. It's just a big open data lake, basically. I think that that's— it solves two really key problems, which is I don't like that we live in a world where corporations control our ability to speak. In the way that matters most to us. Like, we got the right to free speech when the idea of transmission of information over large distances was, was pretty remote, and it was, um, you know, only a very small number of people could do it if they owned a newspaper, basically. Now we live in a world where we're all talking over the internet, right? But our ability to do so is at the, uh, at the behest of StreamYard. And they could just deplatform us if they want. And when it becomes politically sensitive, the major services do. They have a track record of it. We wanted to solve that. And so when you own your own identity in the form of a key, everyone can see who you are across any platform. You are the same person. And at the same time, you get this flow of data across all the different platforms. And so you're not locked in anymore. And from the developer's perspective, it's amazing cuz you don't have this cold start problem. Where you have to, like, on day one you have an empty database and you have to go do growth for 10 years before you can even start to compete with YouTube, which is like the story of TikTok. Instead, you have the whole web's data on day one.

So let's say that you get there and you have TikTok and YouTube and Twitter and all of these social services deploying data composability across all of the different social graphs out there. And it's this one big verifiable core of valid censorship-free information surrounded by a bunch of deepfakes and bots, but everybody knows what's real and what's not because, you know, politicians will publish their public keys on their website and you can just go and verify that you're looking at Donald Trump's TikTok. Well, here's the question I had for you. How can you reassure your future users that Arweave has the throughput to process what sounds like half the internet worth of computation.

So my dad, when I saw him recently, he was commenting, sometimes I tweet the graph of the number of transactions on Arweave to try and prove this point. Because it's one thing to tell people it's scalable. It's like our industry is the industry that cried scalability and it was never true. Right. Well, it actually is true this time. The only way to show that to people though is literally actually demonstrate it. And so sometimes I tweet these graphs, we're going like 350, 400 transactions a second, something like this. And my dad, when I saw him next, he said, Sam, are you ever worried that there'll be like a victim of your own success? I was like, Dad, that is the least of my worries. Like, we got to push adoption of this thing. I'm way more concerned about that. Then, yeah, then Arweave is not scaling. And the only way to do it is just show people. And we're doing that, like, yeah, so.

Because your benchmark L1s, right? Like Ethereum doesn't go down, but it's slow. Solana is super fast, but it goes down from time to time. Yeah, I guess, has Arweave ever had a major outage? I haven't heard of one.

14 minutes on day 6 of mainnet.

Unusable.

Unusable, yeah. That was like 6 years ago. But other than that, yeah, nodes have been online doing stuff consistently for 6 years. But to that benchmark, Solana is where Arweave's data throughput is at now. Right. So normally we get around 350 to 450 transactions per second. On a normal day. Solana is sometimes up to like 500, 600, but then it stops working. Yeah. And it won't be long before we're at like double that or triple that. AO itself is already causing 25% of the transactions on Arweave at this point. And we think that will be like 95% possibly within a year because agents will produce an ungodly amount of interactions. They don't have the same concern as humans do for execution speed. And like the amount of intelligence, if you will, that has to go into a decision for a human is just way higher because the cost of operation is higher. An agent can go like 10 times a second if it wants to and go do stuff in the market. So we think that will be a huge, huge amount of transactions. And then it's just a case of showing people rather than telling them because I can understand the skepticism. I've been in this industry a long time too.

Is there a spam agent risk, an agent designed to DDoS your network?

Well, with Arweave, you just have to pay for storage and the network is completely agnostic. As long as you pay the fee, then it'll store your data. Pay the fee, upload the data, and it'll store it. With AO right now, it's a testnet. And so there's no payments on the edges apart from for that LLM compute, which is super super intensive, so you have to have a way to, yeah, at least make it cost something, else you will get spam. But, but AOV, the mainnet, will have a mechanism whereby you, you just pay for the computation that you use. Actually, it's kind of interesting, you pay for the, you pay for the security that you actually need for your transaction. Like I mentioned before, that Ethereum and Solana, they have this really strange— and Bitcoin too, but I don't think it matters so much there— this strange model where the tokenomics just don't make sense. Like, when you think about it carefully, imagine Ethereum without a block reward, okay, and infinite scalability. Just say they solve that problem and they got one thread and it goes any speed, okay? Well, then the security of the network would diminish to virtually zero. Right? Because the incentive to stake and to secure the network comes from the block space scarcity. And if you remove block space scarcity, oh, and the inflation reward, which you can think of really like a tax on token holders, right? Well, yeah, if you made it arbitrarily scalable, there would be no fees. And so the APR for staking would decline. And so the number of people staking would drop to virtually zero. And you actually see this in practice with Solana. Like, without the block reward, Solana would be absurdly insecure. Now, they have a block reward, and you might say that, okay, you know, that's a, that's a reasonable way to solve the problem. It's just a tax on the people holding the token. And that's one view of seeing the world. But when we made AO, we realized that because you can have any number of processes in parallel, um, you have arbitrary throughput. Transactions. And so you don't have block space scarcity. So, so how do you secure the network? That pushed us down this track where essentially you just, you ensure in the literal sense, um, by collateralization, the message you want to transfer. So you say, hey, I want a fraud detection time of 4 hours. And this, this transaction is worth like a million dollars to the recipient to know that it's correct. Maybe they're moving $100,000 or $50,000 or something. I want a million dollars worth of security and collateral that I can claim if the message is untrue. And that's how the system works. You just buy access to that stake for that time period. And so you sync stake time across the network. Yeah, rather than having the system that just like, it's basically like you're buying access to block space, scarce block space in order to subsidize security. Like what you're buying is not what you actually want. And subsequently, when you fix the problem of scalability, then the system breaks. Whereas in AO, we had to do it the other way around because it was arbitrarily scalable. So yeah. Wow.

This is crazy. So sorry, I just have so many questions. All right. So let's say that I'm a financial institution and I am interested in doing what some financial forward-thinking institutions are doing, which is replacing a bit of my back office with, you know, crypto, Web3, blockchain technology. So let's say that because my slow-moving compliance department has approved Ethereum, I'm going to be settling my transactions on ETH, and then storing records of those transactions, probably on Arweave, because there's no decent file storage mechanism built into ETH. Other than my compliance department telling me, hey, ETH is safe, settle the transaction there and store the log on Arweave, is there any reason why ETH should be part of that picture? Or should it all just go straight to Arweave?

The reason that ETH is part of the picture at all at this point, I think, is two things: it's memetic prominence. So people just know the name. Brand association, but the other one sort of associated, but more sticky, I think, which is liquidity, right? Like why do projects found, yeah, why do people found projects on Ethereum still, even though it very evidently doesn't scale for a globally shared address space, basically that niche of smart contracts as much as Solana does. And lots of them are going to Solana. Um, but why do they go to ETH? Well, it's liquidity, right? That's where the money is. So if I'm going to build a financial application, I want to do it where the money is. That's why with AO, we did this fair launch mechanism, like 100% of the token supply is distributed to the community over time. Zero pre-mine of any kind. Um, and it follows Bitcoin's model. It goes to 21 million, halves every 4 years, and a large chunk of that, about two-thirds, um, it's slightly less than two-thirds, is given to people for bridging assets from other networks. And the idea there is that basically you can take your ETH, staked ETH, you can bridge it into AO, and then you earn ownership of the protocol over time. And when you use applications, you're essentially transferring the right to the AO that you receive. To that process. So that will become the recipient, but that process can choose to share it back with the user or share 50% or 100%, like whatever, whatever they want. And so this creates huge incentives for developers to build applications that attract liquidity because they just become owners of the protocol by doing so. There's no grants council. It's just, you know, VCs even, it's just permissionless building. And if you, if you build something that attracts people to use it, then you get paid in ownership of the protocol you're building on. And as a user, you earn ownership of the, uh, yeah, of the protocol simply by using it. And so we want to turn that into like a liquidity magnet, basically. As soon as we realized that the technology was solved, and we didn't start building AO until we actually had scalability solved, because we didn't want to like You know, you do what basically everyone does, which is build something that's kind of a bit more scalable for now, and then you hit a brick wall and you have the problems Ethereum has that we discussed earlier. Like, we didn't want to do it unless we did it actually properly. Um, yeah. And so once we had the technical side solved, it was very obvious that the second thing to address is liquidity, right? How do you make it so that there's a huge amount of value in the system to build against? So that as a developer, you're not always thinking, oh, I should just have done this in Ethereum. Then there would be lots of users because there's lots of money there. And what's nice about this model is that it scales with the market cap of the protocol. So as the protocol becomes larger, the market cap grows, and so does that reward for people bringing in liquidity. And that should be, I mean, it's like been live for 3 or 4 days at this point. It should be an incredible flywheel for bootstrapping the economy of AI. And so yeah, you think you need those connections to pull the liquidity into the system. But in the ideal case, that's about as much use as Ethereum is long-term. No offense to Ethereum. I really like, you know, what they built was incredible.

It's just time for the next thing.

Right.

That's super interesting. I mean, I guess Wow, I never thought about it that way. I mean, one thing NEAR did back in the day that I thought was really cool was they, you know, if you generated a lot of transactions on their network, you would get rewarded in NEAR. And that sort of appealed to me in kind of an archaic sense, because that's kind of how the petrodollar works. Like if you, if you take your natural resources, and you denominate them in this foreign entity called the United States' currency, and you generate a lot of economic activity in this foreign currency, then you get to, you know, participate in the upswing and the value of that ecosystem. And that, you know, that benefited one nation state, actually several, but, you know, just thinking about it from the commodities perspective, again, geeking out. But, you know, I think what you're doing with AO is very similar. You're just doing it in a slightly more nuanced and intelligent way to try and attract value and then kind of like, I guess, redeliver that value back in spades to the people who create successful applications with their value that they've bridged over. Super interesting. And I think ultimately it will be successful.

Right. It's, we also thought about like, you know, rewarding people proportionate to their transaction fees or something like this, but it's, as far as we can tell, it's not possible to build a civil resistant mechanism of doing that. So we went this other route, which just says, look, put your economic residency there and you gain ownership of it. It's also kind of cool because if you're a trader, you kind of have to have some exposure to ETH, right? Because particularly if you're managing other people's funds, like imagine you're a crypto fund and you don't have any ETH and ETH goes up a bunch, then everyone's going to think you're an idiot. Well, here you can get access to this new, really cool network while holding the exposure to Ethereum at the same time. And so we see that as, and of course, once you're in there, it's like it's only a smaller step to be like, oh, well, I'll just use, you know, Astro, this overcollateralized stablecoin. I'll borrow some and I'll go use this and that and the other. And I'm still earning my AO while I'm doing so. And then they get in the ecosystem and it's just a flywheel.

Yeah, I will say, I will say just from that perspective, it's quite funny just running a crypto fund because you're always judged on whatever the best performing asset is at any given moment. So if Bitcoin's the one that's winning, then people ask you why you're not beating Bitcoin. If Ethereum is the one that's winning, then they'll say, well, I could have just bought Ethereum. And then if Solana rips a 10x, they go, well, I could have just held 50% Solana, 50% BTC. And I totally would have done that if it weren't for you guys. Yeah, right, right. It is, it is pretty funny. But, you know, I think, uh, I think, I think your, your point stands, but at some point, you know, at some point you'll get away from the ecosystem, right? At some point you'll remove yourself from that process, especially as better tooling comes out. I say that like what you're building. And even, you know, when Solana came out, you saw that it ate into ETH market share. I'm curious because you've thought like so much about mechanism mechanism design. Are there any other teams out there that you've, you know, drawn inspiration from, or, you know, you've seen be really talented or very cool and, you know, you like?

Or at least—

because crypto is an experiment, right? Nobody knows with 100% certainty that the design that they're building is the correct one. So it's kind of nice to to see other experiments?

I mean, the first one's Bitcoin, like Satoshi, whoever that was. I have some theories, but whoever they were, and I think a lot of it was kind of, it worked a happy accident. Some of the components of it working was a happy accident, but they were, they said like, it's kind of amazing. Virtually nothing in Ethereum, sorry, in the crypto ecosystem has reached proper decentralized commodity status apart from Bitcoin. And Bitcoin did it first. It's like they had zero knowledge to draw from and it just worked out okay, which is pretty incredible. And then Ethereum as well, like building the decentralized world calculator, it was seriously, seriously innovative. And they they came up with that idea largely and executed on it and built something truly incredible. And then the other one I would say is Solana. Solana took the idea of a global shared state machine to its nth degree, and basically it would be hard to optimize much more out of that niche in the design space. But we just fundamentally don't believe that global shared memory is necessary. And there's very obvious evidence of this, which is like the global financial system is not a shared computer, guys, with where every program is accessing the memory of every other program. It's a message passing machine. So yes, you can of course build a global financial system in a decentralized system. You just have to not have global shared state, which is where Solana really pushed it to the limit. So, and they also executed very well on adoption and growth. Like, I remember 2 or 3 years ago listening to— I won't name the podcast, and also I've forgotten the name, so it makes it easy— this podcast in like, maybe it was the dying days of the last bull market, something like that, 2 years ago then, I guess. And there are these guys, and you know, they're big ETH maxis, and they were coming up with all of these amazing justifications for why ETH is definitely going to win. When it was so obvious, like, look, the best technology doesn't always win, but when it's well packaged, it tends to. And that's what's happening with Solana. And they execute— we knew the team relatively well because when they built Metaplex, which was the first real, like, takeoff use case of Solana, they stored all the data on Arweave. And then there was a couple of moments where we were actually in that obvious 2.0 transition, making it scale properly. Like, so we were doing it, we were finishing the shipping of that live with them. And that was a few intense weeks, like working 16, 18 hours a day, getting it done. And they were, they were there alongside us for a bunch of that. So we know them well and they, they really execute like hell. Like they're really very, very talented on that front in a way that Ethereum was kind of lagging, I think. But those are the ones that I look at and I'm really impressed with what they've done. And there are many others too. I don't want to shut the door. It's just those are the ones that come to mind.

Wow. I mean, maybe there's alpha in seeing what's blowing up on Arweave. If some protocol or project is suddenly storing a bunch of valuable information in there, maybe that means it's going to go up. Anyway, I mean, Sam, you have— you've absolutely— I can't speak for Avi. You have blown my mind on this podcast. I now fully place Arweave into the L1 infrastructure necessary for crypto category. Obviously, not— you know, none of this is financial advice. We're not recommending that you go out there and put all your ETH on Arweave and then create a tic-tac-toe bot that plays against me and Avi's tic-tac-toe bot. In a super high-stakes automated, semi-automated game. But man, wow. I think there's a lot of— even for, by contrast to you, very stupid people like us, a lot of opportunity to explore the Arweave ecosystem and attempt to trade around it, learn, store data, deploy bots. Super cool. Thank you.

That's a plus one, Sam. You're an absolute pleasure to listen to. Explained a lot of concepts, I think, extremely well. Hard concepts too. This is really fun.

Well, thank you for the opportunity. It was fun to chat. I hope it wasn't too much, like, tech speak, endless tech speak. No, no, no. It's good.

This is really, honestly, good stuff.

I am genuinely hoping that more, somebody, you know, a few people listen to this and end up getting more involved in your community as a result. This is super cool what you're building. Thank you.

That'd be amazing. Yeah. Check us out, arweave.org.

All right, let's wrap it there.