MegaETH in 2026 & Ethereum's L2 End Game | Brett DiNovi & Lei Yang

We are trying to have a self-contained ecosystem where we have composability maximally because we have so much that can be done within our, our sphere of composability that we do not care if like people can go out, like those things will happen, but we want to bring people inside of our ecosystem. We wanna have the best execution environment. We wanna be able to do very, very complex stuff like a flash loan that is like novel, net new amongst a thriving DeFi ecosystem. So I, I'm not pegging my value prop, our value prop on playing nicely with a bunch of other chains. Our idea is to grow the biggest, the fastest, like the most performant.

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All right.

Welcome back, everyone. I am Rob and Jan have decided to leave me out here. There's going to be an intellectual battle. We have Lei and Brad from MegaETH. I'm very excited to have you guys on. You guys, there's a lot to talk about, but for anyone that's been living under a rock, why don't you guys introduce yourselves and then we'll set the stage.

I'll go first. My name is Lei and I'm a co-founder and CTO of MegaETH. MEGAETH is a Layer 2 blockchain that is aiming to be the fastest blockchain ever possible by, I would say, strategically centralizing the components and delegating the security to Ethereum Layer 1.

And I'm Brad. I'm here to defend— so I don't even say centralizing. I hate saying that word because it's such a trigger word for people. But I'm on the— Yeah, go ahead, bring it in. What's up?

He's here to chaperone the conversation. There's some pretty inflammatory stuff. So full disclosure, guys, I'm an investor in MegaETH, but this conversation is, as I told them backstage, the gloves off. I mean, there's a lot happening in the, in crypto. Prices are terribly down, people are leaving, um, and Vitalik came out with a pretty— saying the quiet parts out loud. He said, look, the value proposition of L2s like is broken unless you do certain things, but most L2s just you know, the rollup-centric roadmap is broken in my opinion. Uh, why? Because L2s capture most of the value. Value doesn't flow back to the L1. And so we've sort of talked about that. People generally understand that, but seeing Vitalik come out and say, hey, kind of acknowledging that publicly, I think is, uh, will probably be a very important, um, I think it is very revealing. Curious to get your guys' thoughts on that. as someone that is building an L2 on top of Ethereum L1?

Yeah, I have some very strong opinions on this. And actually, so like background again, again, for the intro, Brad, I'm— you might know me on the timeline. I'm the dude that has traditionally actually fudged L2s, specifically Blobspace. I'd like— I did that for probably a year and a half before joining, uh, MegEthereum, which is November of last year. So I'm very aligned, frankly, with where or what Vitalik was signaling towards there. And I made a post on that where I think that post specifically kills alignment games that were being played. I was so, so critical for Solana, like, bro, Base is Ethereum, Arbitrum is Ethereum. Like, guys, no, they're separate blockchains. I think we've acknowledged over the last few years that the value is going to be driven towards execution, right? That's largely what Solana was pivoting itself on. There obviously is a monetary component to all of this stuff. But you can't, you can't determine that stuff. And as this entire industry gets more and more, um, let's say traditionalized, right? Like we're starting to bring in more parties from the traditional world, which means they're going to lean on metrics that they know and trust and are comfortable with. And most of that stuff is, as Santi has pointed out in recent, uh, weeks, too much chagrin, is like DCF models, right? You like, you want to see how value is captured by the underlying token if there's a token associated to a network, right? And that frankly has been going to Yeah, frankly, the L2s, I think that the execution, that's where all the money is, right? And everyone was hoping that Ethereum with its monetary exporting would appreciate based on just like being used as a denominator in these ecosystems. And that frankly was not materializing as much as people were hoping. And I think it's just because they lean too far into one direction. And I have been pushing. I'm thankful that they're starting to get back to scaling Ethereum mainnet because I think you do have to capture some degree of execution fees, right, priority fees, whatever, on your actual chain, then when you can start like banking on the, uh, monetary premium that you can command. And I do agree that if you're only going to do execution premium, right, if you do these DCFs, even today you look at a Solana— Solana with all the value that it's captured, even though the, the block building pipeline gets eaten up by Jito and, you know, everyone else— even if you do that, you're like, Solana's pretty pretty expensive. It's pretty expensive even today, right? And I called out maybe a year and a half ago, I said all-time top for all smart contract platforms was Ethereum's top. It was like the $4,000. Then it touched it, kissed it. I kind of had to give in on that. But then I, I still think maybe it's going to happen if we're going to continue going on that path. I kind of deviated a little bit there, but my general position is I, I think he made the right call. I think this, like, you need to scale the L1, you need to capture execution fees, and then you can try to hit upper echelons.

To strip off some technicality there, the way I think about it is imagine if you have a company and that company then has divisions within that company, and divisions within that company have their own specific stock. And that stock is, you know, Google for instance is a good example, like these conglomerates. So I like private equity. So back in the '80s, there's all these conglomerates and they have different divisions. Some might be widely profitable because they sell Cigarettes and others might be not as profitable because they're, you know, an R&D department that is not very profitable. It's a dying industry. And that's how I think about Ethereum. It's very fragmented. People think about Ethereum as this one ecosystem, but it's very fragmented and value is being captured by these individual subsidiaries called L2s. Vitalik being one of the founders says at some point, I was like, why did it take you so long to kind of come out publicly? And I think just for context, Lei, this is where I want to get your perspective, which is this whole started because Ethereum couldn't scale. And I remember looking at my addresses interacting in Ethereum and I paid for a house in fees. Uh, and, and it's, and it's disgusting. Uh, you don't see a, a, a path towards, you know, back in the NFT craze mania and DeFi yield farming mania, you were paying thousands of dollars per transaction. But you know, there's been a lot of innovation in the underlying L1. I think fees are down like 90%. I think part of the argument that Vitalik now makes is like the L1 is and has scaled. Um, without getting too technical, Leïa, I'd be curious. You started this journey, um, saying, okay, I believe in that. I think scalability, I think applications are going to be built. I'm going to create this environment that is more performant. And there's some trade-offs and you talk about this taboo word of centralization. And when I first met you guys, I'm like, well, finally someone's building in that direction. Um, and people can go reference that initial podcast that we had with you guys around like, why, why do you kind of decided to build in that direction? But in some ways, like maybe ask the, the question, hey, do we need L2s when the L1 has scaled? To Vitalik's point? And if we do need L2s, what is the purpose of an L2?

Yeah, of course. So I think first, I think according to Vitalik's post, I think I don't really think that his kind of realization or his new vision on Layer 2 is purely driven by productivity, by kind of aggregating value back to the to the ETH token. I think it's purely driven by a technical reality, which is it's much harder to verify correctness of software because I think in the original vision, so I think maybe just take one step back to how the Layer 2-centric, the rollup-centric roadmap came into being, right? It's because Ethereum was trying to build shards, sharding. And I think back then they thought that, okay, so build 128 shards for the Ethereum blockchain so that it's scaled by 128x. But then I think they realized that, okay, so if it's not very interesting, if we build other shards, why not delegate the work of building individual shards, like the individual departments you were mentioning, to other companies, to other entities, such that they can do some exploration? I think the main highlight— because they could have just done the sharding roadmap themselves, right? But the reason that they switched to the rollup-centric roadmap is really because they want exploration. So I think exploration is the keyword that kind of centers the value of Layer 2s even today after his post. I think actually his post even just highlights the significance of exploration of like a diverse set of trade-off points being explored concurrently by Layer 2s while all anchoring their security in some sense to the Ethereum Layer 1 blockchain. So I would actually say it's something that is, I think it's kind of an evolution of the original rollup-centric roadmap. It's not like the death of it. It's not like they're doing a complete pivot or anything. And why do we need Layer 2s today? So I think let's center back to the word exploration. I think the thing is, with any physical system, you have to face trade-offs. And I think that's the most interesting part you can play in a system designer. You want to strike the best trade-off you think that is good for you and your users by filling a gap in the market, by doing something that you think makes more sense to the general public so that you can serve a better— so you can address a better market, a larger market, right? And I think Ethereum as a layer 1 or any individual layer 1, Solana, other alt layer 1s included, they can only strike one particular trade-off point on this curve between centralization and performance. And the trade-off is fundamental because if you have a few servers around the world co-producing blocks, then if you want to communicate between the servers, it takes some certain amount of time because information travels in fibers at one-third of the speed of light. It takes time. And that latency fundamentally limits your performance of the blockchain. The more nodes you add, the more decentralized you get to, and the slower you become. So we kind of see that kind of a difference between Ethereum Layer 1 and Solana and other Layer 1s. So I think what Layer 2s can serve in this trade-off curve is the far end of the curve, which is maximizing performance. So this has always been the North Star for MegaETH. We just, we don't think that we are a scaling company for Ethereum, scaling as in 10x, 100x Ethereum performance. We want to address a market that is fundamentally impossible for any layer 1 to address. And by doing that, you kind of capture a part of the market that you'll never be captured by any layer 1, however much scaling they are pushing. So we feel actually very happy seeing Vitalik post this kind of like a validation to our roadmap, actually, that we have been saying.

In fairness, I think you guys started with like, hey, we're going to create a super high performance, um, uh, focus on scaling. Like, that was, I think that was the value out of you guys initially.

Yeah.

And say, we're going to focus on that because if we do that, there's certain applications that can never be built on the L1. Um, if Ethereum gas limit kind of keeps 10xing, like, what's your moat?

Yeah, good point. Um, I'll talk a bit first, and I think Brad can, of course, should address the marketing, the app side. So I think the mode here, 2 acts, I think there's 2 parts. One is fundamentally it's cheaper for a layer 2 to process transactions. And there's no, I personally, I think there's no question around that because fundamentally layer 2s use fewer servers. With layer 1s, you have to get many validators, you have to communicate between the validators, which costs quite a bit of money if one actually runs applications in a distributed cloud. So these costs ultimately, they have to be passed down to the users. So the cost basis, I think the bottom line is the cost basis for Layer 1s is just fundamentally higher than Layer 2s. So there is some certain threshold that the Layer 1s cannot pass in terms of scaling, in terms of getting cheaper and cheaper gases. And I think the second and more importantly is the latency, which I kind of touched on. With Layer 1s, you have to communicate between block producers. So one simple example is if I send Santi, say, $10 on a blockchain, and currently it's the New York block producer certifying that transaction, and the next transaction would be— the next block would be certified by a producer in Tokyo, then just the fact that I sent Santi the transaction, has to be communicated to the Tokyo block producer in order for it to continue. Right. So this latency fundamentally limits many applications. For example, online gaming, like high-frequency trading and anything that is interactive. Right. Because it takes almost 300 milliseconds at the least to circle around the world, which is something that Layer 1s cannot bypass if they want to stay the globally decentralized nature. Yeah.

An old-timer— Brett, I want to go to you. Uh, I know.

Yeah, yeah, yeah, go for it.

Um, as an old-timer would say, hey, we've had this problem before in TradFi. I remember people were getting closer and closer to Wall Street because you could get the information faster. There's always latency when you propagate information. Um, naturally the skeptic person would say, well, what's the trade-off? It seems too good to be true, right? If you're saying you're fixing latency, like, and you're faster Do I really want to be moving billions and billions of dollars when there's a centralized, basically like what is the trade-off when you really go like low latency? And are people prepared? Will they be prepared to accept that trade-off?

I think the answer is, yeah, I think the answer is, I think people already voted with their feet. I think with the success of— I think I would actually say that so far the Layer 2-centric roadmap has been a success. You have prominent Layer 2s capturing, I would say, values and TVLs from the Layer 1, which I think actually prompted your initial question, right? What about the fragmentation? But actually, first, I don't think it's fragmentation. And second, I think it's actually the fact that people are moving money to other Layer 2s. That kind of testifies the fact that people are fine with centralized block producers. And yeah, back to the point of, back to the question of what's the trade-off? The trade-off here is block production. If you want low latency, you have to co-locate the facilities for block production into one data center or into a few data centers that are close to each other. So this, I would say, is the quote-unquote trade-off you're taking. But how does that translate into actual properties that impact users? I think that's actually the beauty of Layer 2s. I would say Layer 2s preserve most of the security guarantees from Ethereum. So let's just take MegaETH as an example. In, say, a year of time, MegaETH will give users the escape hatch so that they can take their money, withdraw from the Layer 2 back to the Layer 1 whenever they want, because users can force their transactions into the Layer 2 chain, even if the centralized— I think with centralization, the most—

You can censor the transaction, but you still get your funds.

Yeah, exactly. Exactly. With centralization, the major risk is censorship, right? But with proper design, you can actually let users post transactions to the layer 1, and the layer 2 will have no choice but to pick up those transactions. So this kind of circumvents the censorship problem. Yes.

So Vitalik is pushing with his native rollup precompile for trusted EVM verification. And so, but like, so are you guys building towards that or like, does your architecture make it impossible? Because I think concretely, like, yeah, maybe address that and then I will follow up to that.

Yeah, yeah.

It's not a, I don't think it's a black and white question. So I think the, so, okay. So the problem they are trying to solve, which I kind of touched on, is making sure the Layer 2 software is correct because the Layer 2 security mostly relies on correctness of a piece of smart contract that checks whatever state root or whatever Layer 2 state the Layer 2 chain wants to snapshot and commit back to the Layer 1. Because this is what allows people to move money between Layer 1 and Layer 2 without any trust assumption, right? It's supposed to be like code is the law, right? If a withdrawal from the Layer 2 to Layer 1 is greenlit by this piece of smart contract, then it is greenlit. Then the kind of the risk is what if there is a what if there's a bypass? What if there's a backdoor in this piece of code such that people can withdraw money that they do not own, right, from the Layer 2 to the Layer 1? So I think Vitalik's proposal is to delegate that work to the Layer 1 more and more in the sense that currently it's a piece of smart contract, and next it can be a piece of code that those validators run and compare against each other. Then it's not one single implementation of smart contract. It's a spec that different validators can implement themselves individually and compare the nodes against each other. So it's less risky. It's more different implementations. You can compare the results against each other, right? So we are definitely compatible with this vision. But I think the core here, the core question is what kind of spec are you going to push to those Layer 1 validators. So my guess is they are going to push a spec that is equivalent to Ethereum Layer 1, which means only those Layer 2s that behave almost equivalently to the Ethereum Layer 1 can benefit from it. And in our case, because we did a bunch of optimizations, which I think is purely worthwhile, we're not compatible with, we're not 100% equivalent to the Ethereum Layer 1 spec, although its code is bytecode-level compatible. But this kind of the— sorry for the elaborated long answer, but yeah.

I want to ground it to reality. And Brad, I want to go to you, but before, I think there's— so like, why does this all matter? Because I think in a lot of these podcasts, we get lost in the technicality of TPS and technical stuff that at the end of the day is like, what does it actually matter for bringing more users on-chain? And is it actually going to meaningfully influence the possibility to create applications and bring more users that stick around and do cool shit on-chain, whether they believe, whether they appreciate that they're doing it on-chain, doesn't matter, right? If you can build stuff, there's sort of the cynical argument here, which is like, I remember in the peak of DeFi mania, PancakeSwap eventually had more activity than Uniswap. And you're sitting there, you're saying, well, you clearly understand that Binance, like BNB, that chain is way more centralized. And then you say, well, wait a minute, like, clearly users are voting with their feet. They're going to a place where they can do activity. Why? Because Binance has all these customers, they create a chain, they can do more stuff, they can make more money, they're going to naturally flow. And I think a lot of times the Ethereum community has sort of been academic in their approach. It hasn't been— you need to be savage in the best sense of the word to win in this industry and in any industry. Otherwise, you know, go back to academia and don't make any money. But it's very cutthroat. Before we move over to like actually why does this matter, why do you guys win in the next 5, 10 years, like I want to talk about composability because it is an important thing. There's two components. There's interoperability in the system of chains and there's composability. And composability was one of those things where I remember back in DEF CON in Osaka, it was you were starting to see the first L2s come out and people were very worried about that because DeFi is pretty awesome. The money Lego analogy is pretty powerful that you can have all of these applications, the core property cryptos, you have all these different applications that are composable. So your money in AAVE, you can do flash loans, you can, you know, just do not like skeuomorphic things, which is copying what exists in traditional finance, but really do just entirely new things because money's real-time connected composable. Now, when you go to an L2 framework where there's multiple chains and the question really becomes, so, so say for instance, you deploy DeFi protocol on MegaETH and it's a really cool DeFi protocol, options trading or a perp. Can it atomically compose with Uniswap in the L1? Today? Or will it ever be able to do that? Or you, maybe the position is it doesn't matter. Our users are never going to leave.

I, that's, they're never going to leave. Like, like, so what you're trying to touch on is kind of what base rollups were trying to do, right? Where you're talking about, oh, you have a validator that also can perform transactions on MegaETH that can also do transactions on Ethereum because it has awareness of both. You can do atomic stuff. But frankly, what you're pointing at is why I have been, or what Vitalik has kind of crushed with his recent post, right? The way I described it to people, just to take it all the way back of, of simplifying just the roadmap is like there's Ethereum, there was Ethereum, and then all of the current rollups were being Ethereum Plus where they're like, it's Ethereum, but it's like kind of cheaper, right? So like because of that, because they're still not super scalable, they still require a little bit composability because you can't do too much on any individual one. So you need them to play nice together. You need to try to like get stuff from Ethereum mainnet. And the value props were all still very intrinsically tied to each other because like they needed all of that stuff to grow. And again, taking a little further, you talk about even with Ethereum scaling, like where is MegaETH mode? I still think people do not fully grasp the level of difference and scale between a MegaETH and an Ethereum and or Base and, you know, even some of the other like more performant chains out there right now. Because you even just said like, oh, what if Ethereum scales 10x, then what? Well, I'll give you some numbers and then you could— I'll let you do the math in your head how long this will take. If you take Ethereum's current throughput, you 10x it, and then you 10x it, and then you 10x it, right? From that starting point, you're still about 50% of what MegEthereum can do today, right? And then you think of the timescale it takes for them to get to that point, like, bro, we're talking 5 to 10 years, right? It's just like, it's just how the systems work whenever there's this much capital at play, just going to take a long time. So it's effectively never going to happen in, in this environment. So okay, that's the paradigm, that's where we're operating in. Our mindset, my mindset, and what I've communicated, try to advocate for the ecosystem. We are purchasing a service from Ethereum, right? We are purchasing security. We are outsourcing our consensus. It allows us to achieve a high level of scalability that, like, today that they will never be able to achieve in the next 5 to 10 years, right? Cool. We give Ethereum the asset a privileged position inside of our ecosystem, right? Ethereum the asset gets a monetary value from that, whatever that is, I don't know. We are going to be a self-contained ecosystem. And while other, other ecosystems Base may as well be Solana to us. I'm being frank. It's an EVM chain. Like, yes, there's some things that can go back and forth, but we are trying to have a self-contained ecosystem where we have composability maximally because we have so much that can be done within our, our sphere of composability that we do not care if, like, people can go out. Like, those things will happen, but we want to bring people inside of our ecosystem. We want to have the best execution environment. We want to be able to do very, very complex stuff like a flash loan that is, like, novel, net new. Amongst a thriving DeFi ecosystem. So, uh, I, I'm not pegging my value prop, our value prop, on playing nicely with a bunch of other chains. Our idea is to grow the biggest, the fastest, the, like, the most performant.

Well, I'm, I'm glad. I've always appreciated your, your guys' transparency, and I'm always very skeptical when builders in the space just assume that there are not trade-offs with technology. There's always a trade-off.

There is, for sure.

There's always a trade-off. Security, centralization, whether you believe that trilemma is real or not. Kind of to ground it back to— so your real-time thesis requires apps to be natively deployed on MegaETH. That's a walled garden. You're effectively saying, we want to create this walled garden. Sure, users can leave. Sure, you can commit back to the L1. You can't lose funds, but it's a walled garden. In the same way that you can switch social media network, Facebook, you know, you, you use Facebook and Instagram, you can go to TikTok, like nothing really stops you from doing that. User behaviors is really interesting because no one really cares about the infrastructure. You know, you don't really care. You don't, you don't go to book a flight and say, does that airplane have a Rolls-Royce engine or something else? Maybe now if it's a Boeing 777 Max, maybe. You might not want to fly that. How do you—

you say walled garden, I say black hole. And this is, this is because I'm— this is going down the same path that you're talking, right? MegaETH will be a performance and UX black hole. Because right now we're in the early stage of all this stuff. And people are bickering, bickering over consensus mechanisms, they're bickering over like this little stuff. And you know what happened? Observably, this last year and a half, everyone went to Hyperliquid. Everyone. One of the most profitable applications in our entire ecosystem. You know, Hyperliquid is— it's 24 validators in Tokyo. No one cares. It's a good experience. Go there. It's got liquidity. It's fast. It's snappy. And what—

like, the reason that happened is because you care if you get liquidated and their auto deleveraging mechanism. Yeah. I mean, that's a layer on top of— that logic matters if you have—

if you're trading there. For sure. I mean, for sure. And I even, man, I felt like I got hunted over there, if I'm being totally honest, which— so like, you know, we can call into question some of that stuff, but like, let's like abstract it. It's just, it was a good user experience. So, you know, we can be like, whatever. And I think that is going to continue to happen, right? So in a world where we are progressing to where everyone is continuously giving less and less of a shit about what chain you're on, what the consensus mechanism, how many validators you have, whatever, whatever, apps are naturally going to just gravitate towards the place that gives them the best execution environment because it gives them the best user experience. And if I can sit there and say I can take my app from a base, a HyperEVM, an Ethereum mainnet, an Avalanche, and I just port it over to a MegaETH and it's instantly a better experience, like I'm probably going to do that. Assuming there's liquidity there, assuming there's like, right, you need some of those like bones to make sure that the other stuff is there. But if the experience itself can continue to be better, it's— they will just do that. And I have already had calls over the last several weeks of apps that have come to me and they say, bro, I want you to be my AWS. It's like, I want blockchain, I want liquidity, I want composability, and I just know that I want— you're going to be there. I'm not going to have to worry about it. My costs, as we showed in our stress test, can scale up to tens of thousands of TPS with a static base fee. Like, it never changed. We were— we had 50,000 transactions per second. We had people coming on and doing latency-intensive apps on top of that same time. Costs were still fractions of a cent. So that's, that's predictability for these builders, right? And they can come and they're like, awesome, it's a relief. I don't have to worry anymore.

So you guys are, you said something interesting there, which is, um, you are bringing value to the Ethereum ecosystem. You're kind of, you're giving it monetary value because you're bringing all this activity. You're doing the hard work. You're renting security from Ethereum.

Yeah. It's a service exchange.

It's just in the same way that you can go buy infrastructure or decide where you want to live because it's more secure or not. Is that security that you're buying adequately priced? Because my thesis is security and the pricing of security and how you tax it effectively is grossly, grossly miscalculated. And it's one of the hardest things to figure out. There's all this analogies that you could say of like, what is a proper tax? You live in the US, well, there's federal tax and then there's state tax. Uh, and the composition of GDP tax is a small sliver and there's always that trade-off of how much you tax. You don't want to go the California route because if you tax people too much, Mark Zuckerberg goes buys a mansion in Miami and then the taxable revenue of California is dropped by a trillion. So it went from $2 trillion to a trillion. So how do you guys think about that? You're effectively buying security from the Ethereum L1.

Maybe the—

lay this more abstract— this is a hard question to answer. I haven't found— like, I think about it a lot, I just don't know how to price it. The way I— the observability of that is, what is the effect of that? Are more people building on the Ethereum ecosystem? But at what point does that model break? Because, because like, if you're, if you're in New York and you're building Wall Street and you're building, you know, uh, these massive enterprises on top of that city? Does it collapse? Does New York as a state make more money in the federal government? And then at that point, what's the whole point of the federal government? You might as well just be an independent country. And then, but maybe the perverse, the perverse answer to that is don't ever be a federal government, be a state, and then just use federal resources and just keep your head low and be quiet about it.

I, I, I tend to believe in free markets. So I, I really tend to believe in free markets, so eventually it'll be correctly priced. And I, I have absolutely no comment on whether it's—

you're saying it's not priced right?

No, no, no, no, no, no, no. So I, I, I, I have to be very honest, I have no idea whether this is— it's, um, I think it can be calculated, but I cannot calculate it right now on the podcast. But so this is how I would calculate it, right? So if you take a look at the So I think, okay, so what are the transactions you want to guarantee security for? It's the in-flight transactions, right? It's the ones, for example, you withdraw to a centralized exchange and the centralized exchange is going to wire you the money, right? It's the transactions for which the centralized exchange have wired you the money to the bank account, which is not recallable. But the on-chain transactions, but maybe the corresponding on-chain transactions have not been settled. So it's these transactions that we really make sure that they get settled. So on a Layer 2, this latency of settling transactions from the Layer 2 to Layer 1, depending on the notion, it's 30 minutes to 7 days, depending on whether you want to make sure the state is also settled. So if you just calculate the volume of transactions on the Layer 2, within such a time period, right? And by Little's Law, the result is the number of transactions or the amount of money you are sending or everyone sending collectively on the Layer 2 per second times the amount of time you have to wait for your transactions to settle. This is the so-called inflight volume, right? Inflight capital that have not been settled, that you really need security from Ethereum. Okay, so take that and consider how much money you would pay for to guarantee its security. And that's, I think, the fair market price of security. Yeah, so this is how I would calculate it. But I think what's quite interesting is it does not really cost too much for the Layer 1 to guarantee security of these kind of in-flight transactions. Because all these volume, all the volume, all the transactions, they settle down to the Layer 1 as a single Ethereum transaction. So I guess that I think the conclusion here qualitatively is that the cost basis for Layer 1 is actually pretty low to guarantee the security. But yes, I tend to agree with you that it's kind of a big amount of money that you are guaranteeing. So, yep.

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So, well, let's kind of ground it a little bit more, which is, um, how much revenue flows back to the Ethereum L1, uh, from MegaETH in fees? So, so like proportionately, what's the ratio of value that you guys keep and how much, what's effectively the tax rate back to the L1? For every $100 that you guys are making, how much are you posting back to the L1?

This is really hard to calculate, right? It really depends on the frequency of the settlement, depends on the frequency of us posting those transaction batches to the Layer 1. And also I think value flows in different forms. For example, when we have a large TVL, then all those TVL, they ultimately come from the Layer 1. I think these are all values. And also I think more importantly, when people know that Ethereum token is securing an economy like MegaETH, the token itself becomes more valuable because Ethereum itself is secured by PoS, proof of stake. And the security all comes from the value, the market cap of the token, especially amount of token. Being staked on the Layer 1. So people will have the incentive to keep the token price high such that the economy it secures, both the Layer 1 and the Layer 2s, are adequately priced against the amount of tokens secured. So against the amount of tokens staked. So I don't really think it's good. I don't really think it's comprehensive to consider that like the gas fees paid to the Layer 1.

I understand that. So look, I'm an investor in Megateeth. I want Megateeth to be successful. And I've owned Ethereum in the past. I don't own it anymore because I fundamentally think that I cannot justify the value proposition or the value capture of Ethereum. I've been very vocal about it. I just think that it is a broken, bankrupt model. And I'm not getting paid enough for the value that it provides. Its infrastructure is a commodity and Ethereum is very vividly, like you're seeing it in real time. Uh, you know, unfortunately the market, you know, can be irrational. It has a memetic component. It has this abstract, like security, which no one has explained to me how you price that. And it's, it's a, you know, that's what Eigenlayer was trying to do, right? Yeah. You know, exactly. Look, and look, I actually think it's a, it's a interesting I, I sympathize with what Eigen is trying to do, the shared security, and try to be— it's probably the most—

they're trying to create a market for it. That's— they were trying to create a market for security, and it, it makes sense.

Like, I actually think that that is a pretty interesting experiment. But, you know, again, if, if Megadeth is wildly successful, Brad, you're going to tell us why and, you know, what kind of applications are uniquely possible. And I've invested in a few projects. I have a ton of bias. I'm trying to just really focus on the critical stuff here. But if MegaETH is like wildly successful, does ETH the asset benefit or just Mega the token benefits? Like what is— and again, there's been like a number of folks, like if you objectively look at the chart of L2s, it's been down only.

Like the—

I'm an investor in, God knows it, most of them. Except one, they didn't want to have me on the cap table because their lead investor blocked us off. But nonetheless, I've invested, you know, in Arbitrum, um, a number of other L2s. Every major L2 relative to Ethereum has collapsed in value over— if you made that trade, you were saying L2s are going to capture more value and activity. Base doesn't have a token. I guess you could buy Coinbase stock, but it hasn't been a good trade for investors. But, but it's interesting because They're collecting a lot of value, but the market, for whatever reason, seems to still—

the foundations are—

yeah, the foundations are. Exactly.

Yeah.

Yeah. Good point. Excellent point. So, uh, but yeah, like walking me through, like, if you're a token holder, why would you hold Ethereum ETH, the base asset? Why not hold MEGA, the token?

So I want to, I want to make sure I circle around and say, like, this is the reason I have a conversation and frame MEGA ETH the way that I do, because I see what you see. And like, if like we're talking margins, right, there actually is margin calculator that are out there. And, you know, Base, Arbitrum, whatever, they're taking 98% of, of whatever. I think it's— that's roughly the margin they have. And we would be probably less than that because we're with Validium, right? Those teams have to purchase Ethereum blobs. We don't do that. We use EigenDA for that, right? And like, this is just objective fact, and this is how it is. And that's why I try to frame this as a service purchase between Ethereum and not this, this like symbiotic— or not— I mean, we are symbiotic, right? We have this mutual agreement. Like, we are purchasing something with them, they are giving us something. We give them a privileged position in our ecosystem, and they get some monetary premium from that, right? Like, we already have an economy that's starting to spin up, right? Our meme coins are denominated in Ethereum right now. There is value with that, right? People have to acquire Ethereum, the asset, to trade the recent shitter that just launched from the launchpad, right? Why? Like, how much that is relative to a $200 billion asset, you know, like, we can have that conversation. But that's, that's the exchange that we have in order to reach the performance levels that we have. Now, extending that to like L2s, frankly, getting merked, on the charts. I think we can all objectively say that. And like, our unique construction, we think, is, is, um, not taking the same governance-only proposal, right? We are trying to make sure that if we were to launch a token, it would be plugged into our economy in some fashion. Now, whether that drives it in any particular direction, like, you know, the market will decide that. But, you know, we have two unique mechanisms that we think are novel for us that put us in a privileged position across all blockchains, frankly. So like the one is, you know, we have our native stablecoin USDM. Uh, you may have seen like there's a lot of discussion around USDH whenever they came in, right? You, you lose a lot of value.

I wanted to ask you about that.

Yeah. Yeah. So like the, that's an arrangement we have with Athena. So Athena helped us launch USDM. Uh, there are rewards associated to that. So the, the actual value that would typically go to a Circle or to a, um, a Tether, right, to buy gold bars, instead of doing that, right, the, the dollars are, are the, the USDM is bought into USDTB and then we have a little bit of USDC on on the back end just for like, um, some safety. And then the rewards that come from that are collected by the foundation, right? So like, that goes to us, it stays within the ecosystem. We're able to deploy that in any way we see fit. We've already committed to saying that like we are interested in purchasing the MEGA token with the value that we accrete from that. So in a world where we continue to build up these applications, we continue to try to get them to nominate in USDM. And the fact that we're starting from zero with USDM as opposed to again USDH, right, Hyperliquid had $5 billion worth of USDC and you're asking DeFi users to say, hey bro, unwind your position and then build it back up in USDT because it'd be really nice for us. Okay, thanks. That's awesome. That'd be really nice. And everyone is going to go tell them to go fuck themselves, right? Everyone. Because it's just, it's not like, why would they do that? It's, they don't have any interest. But since we're starting from zero, right, it's already live. People are already doing it. It is now being plugged into the ecosystem from day zero. Do like, so if you want to use the unique apps that we have, the useful apps, you buy USDM, you plug it in, whether it's a Perp exchange or Euphoria or whatever. and then it builds up, and then now we have that 3 to 4%, uh, rewards on the back end that we can actually use to deploy back into the ecosystem. So it's a fixed value leak. That was one thing. The other side is the, uh, proximity markets, which is something that we hope to debut soon. You have a question?

Yeah, on the USTM. So you guys are using Athena— Athena is basically a tokenized hedge fund. So like, they're, um, my understanding is you're, you're not paying out the yield sort of like covering HopEx for the chain. Uh, I think Sequencer fees. You can correct me if I'm wrong, but like part of it, how, how should a user think about dependency risk and interest rate sensitivity in that model where it's like, you know, a scenario where treasuries go back to zero, what happens there? Like who subsidizes the cost? Uh, if there's an issue with, um, these counterparties, what, what happens to the chain? Do you need to roll back? Uh, does it get stalled? Does, um, how did you guys think about adding a layer of— does the surface area seems to be expanding here of relying on counterparties?

Um, yeah, so the, so one, like, obvious, like, Athena is a counterparty, so like they're involved in the thing, but they're talking about the interest rate specifically. The reason that we went with Athena for this is because it gives us flexibility for the mixture of assets on the back end. Right. So in a world where USDTB is going to zero because interest rates are going to zero, we actually have the ability to swap into USDTB. Right. So as you know, that's inversely correlated. So we can use that to be a little flexible with how we actually market. Obviously, we're going to be very conservative. That's why even to start, we have a little bit of USDC. We want to make sure that we're not over-indexing on things, but we have we have optionality there that to try to, to weather a market in any condition.

Is this a— so like, like, so let me get it straight. So like, USDM yield buys back some MEGA tokens, um, and MEGA tokens are—

we call them rewards.

Rewards, uh, um, and the, the MEGA tokens are locked via proximity markets for like seed venture access.

Yeah, so we have, we have two things that we've announced. Yeah, so the one is the USDM rewards, and, and, you know, it's at our discretion, but we have already signaled that we are interested in purchasing the MEGA token. And then the other is proximity markets, which is effectively— because, you know, Lei already earlier very, uh, accurately described the latency games, and you even alluded to some of the traditional market setups that are in place, right? Like, yeah, people want to get really close to the NASDAQ, obvious reasons. So for us, you know, in, in a traditional blockchain, people pay priority fee, right? Regardless of where you are in the world, even if you are physically closer to a thing, the block— the chains are so slow that the, the block producer has the optionality to sit there and put people in front of, behind people. That's why you pay a priority fee, right? So BASE, because it's 2-second block times, you have 2-second window of people to land, and then BASE to ultimately say like A, B, C, D for whoever pays the most. Because our block times are basically zero, 10 milliseconds, like we don't really have much chance to reorder, right? So priority fees for us would be meaningless in a 10-millisecond window, right? It literally is just like who is physically closer. So Lei, and he can maybe expand on this a little bit, we've now— we are mirroring, uh, the traditional setup where we say, okay, we have this virtual space next to our sequencer. We are then— this is effectively would be a priority fee to get physically closer. So instead of, you know, paying more in that sense, you come and you bid to get closer to the actual sequencer and you bid in the MEGA token. So effectively the priority value, this MEV value, this block building value is derived and denominated in MEGA.

Yeah. Does that introduce like reflexivity? Like it's a circular flywheel. Works well. Like the stablecoin props up demand for the token. Which props up demand for the stablecoin, like there's more activity. We've seen a lot of times the inverse of that where reflexivity can work both ways. Like, have you guys thought about what that would look like in this design?

Right. Good question. I think actually the proximity market and the USDM reward is inversely correlated because when the treasury yield is higher, probably your money can, I guess, make more. Your money can appreciate more if you just park your money in, say, a lending market, something that is less active, right? And in that case, the USDM reward, I think they shine and the proxy market probably because of the lower trading volume, it kind of goes to a secondary place. Whereas when the treasury yield goes down, probably trading will pick up, less money stays idle, and more money goes into, say, non-stable tokens. So I guess USDM goes into a secondary place, whereas the proxy market and the MEV, it's getting bought, it goes to primary place. So yeah, I think in that sense, it is kind of hedging against each other because ultimately, if you think about an about an ecosystem, if you think about an economy, money takes two forms, right? It's either sitting idle when the interest rate is higher, or it's actively into investment, into, into active trades, into, into speculation, right? So if you capture both, I think we're pretty fine. We're in pretty good shape.

Uh, last question on proximity markets. Um, it's, uh, so essentially, um, you know, it allows users to lock their MEGA tokens to basically pay for low latency and get sort of priority access. Say, hey, if you're doing a big trade, if you see some arbitrage opportunity, boom, you want to capture that, you're going to pay. Other chains solve it differently. And that value goes to Agito, for instance. Now you're saying, hey, well, let's you're effectively selling privileged MEV access with an extra step here, forcing someone to have MEGA token, not JITO token. Is that correct? Or do other chains, like, was that characterization correct?

Yes, yes, that's more or less correct. And I think the only difference between us and other chains is the granularity of the auctions. I'm more familiar with Ethereum, but with Ethereum, you are basically having very microscopic auctions in the sense that you can literally reorder transactions within a block. And with that comes the burden of running such auctions every block. And I think for Ethereum, it is okay because they run a block every 12 seconds. So there's enough time for all the so-called builders to, for all the MEV searchers to kind of negotiate in a sense of an auction, the amount of priority fees each transaction wants to pay. And then arrive at the final ordering of the block. And as correct— sorry, as Brad correctly mentioned, at 10 millisecond block time, this is impossible. Even if you co-locate all the potential bidders, just the bidding process, aggregating all the pricing, aggregating all the bids and determining the final ordering, it takes time and it's not productive to run it within the 10 millisecond block time because it actually cuts into the time that you can execute transactions, right? So, um, Yeah, I guess the difference here is really that we want to enlarge, we want to prolong the length of each auction, sorry, the validity of each auction so that you run one auction and it's kind of valid for maybe a week, maybe half a month or even longer period of time. That's, I think, the only difference between us and other MEV builder, block builder searching system. But I think it's pretty valid. It's kind of tailored to MegaETH.

I want to say you— so like the, the key point of both of these things that I've tried to mention is, or, and even they mentioned here, is like these are, these are fundamentally value leaks for these chains, right? Like both of them, right? The, the— whether the USDC on every one of these chains is a value leak, Tether is a value leak, right? In Solana right now today, they're losing hundreds of millions of dollars a year out of the ecosystem to buy gold bars for, for Paulo, right? Every single year. And then same thing for this Jito, Enshrined Jito, which is literally— this is like one of the examples that I used when describing this, right? Like part of our team has like— I was aware of the inner trenches of the Solana ecosystem. And you know what is skyrocketing for them? Physical floor space in these data centers next to Jito bundlers. I don't care how decentralized the Solana validator set is. If you have 2,000 people all across the world, if the people can physically co-locate next to a Jito bundler, of which there are 5, then that is how you're going to get built into our block or bundled into the Solana ecosystem, right? And that is where the literal traders, these entities that are trying to make millions of dollars, are going to purchase floor space to be able to make money. And that money is going to go to a Jito, right? Or, well, Jito and/or Latitude and/or, you know, whatever data center is actually doing stuff. So we observed this at both of these value leaks and we said, how do we incorporate this into our ecosystem to try to close it off, to make our economics actually, you know, more sustainable?

Um, I want to get to more bigger picture stuff, Brad, around what's happening in the ecosystem, applications. Um, maybe just let's, let's go there. Um, I, I guess, uh, you know, the criticism again of Vitalik was like a lot of these L1s are just effectively bridges to the, like, to the L1. There's just not a lot of activity, not interesting activity. The vision for an L2 is, hey, let's actually create a more performant environment where we can bring different applications, and whether it be gaming or or some more DeFi activity. I mean, my criticism has been we haven't— and Lord knows that I've invested in just gaming, a ton of gaming stuff, a ton of DeFi applications in your ecosystem like Euphoria. And so I'm genuinely very excited. I think anyone that's sitting there saying, look, activity has come down, none of this matters, gaming's not going to matter, NFTs are not going to matter. I think like That analysis is very incorrect in my opinion. Um, these things take a long time to build and gaming as an industry outside of crypto has also been in a tough spot. And so like, if we properly contextualize this, maybe I want to start with like getting your opinion on like, I think you guys have been, you Brad in particular, you joined MegaETH, you could have done many other things. You're, you're someone that is critical of the space. And I think some of these design and architecture choices. In many ways, like, first mover advantage is very overrated, particularly in open source systems. Ethereum has a moat— developer mindshare, TVL, institutional awareness— but I would probably guarantee you that if Vitalik were to start Ethereum today, he would definitely not architect it in the way that it's architected today. Maybe he would borrow some concepts that you have in Monad or in Solana or in other systems that are just more performant. From day one without having to have this, um, uh, you know, fragmentation. Um, but Brad, give us some insight into like what is uniquely possible. Like, are we finally— like, what does the ecosystem look like? Um, you have the folks that like Casper and says these things are just asset ledgers, they're here to transfer value, just call it that. Just if we just focus on stablecoins, that's good enough. Like, we don't need to go to gaming. Like, just don't overthink it. Don't focus your energy on that. Obviously you guys think of different position, but what are like the, the top kind of 3 applications? What's the activity that you guys are looking at? Like, what's uniquely possible in MegaETH?

Um, you know, I'll kind of, I'll pick a category for us because like right now the apps that I'm most excited about aren't live, they're on the, on the horizon, but we're trying to pioneer something that we call and have lovingly labeled in our recent ecosystem page, um, as a category consumer DeFi. And Euphoria would fit in that category. We have another app called HitOne. We have another one that's coming called Blitzo. And all of these are apps that are on the surface very consumer. And to be very consumer, you have to be very responsive. That's where our low latency block times, all like in real time moniker, comes from, right? If you were going to tap something on your phone, you want your phone to throw the confetti instantly. Instantly, right? You don't want to wait 12 seconds for the confetti to happen because it's just a bad UX, right? If you're going to compete with any other app that you download in your app store, you have to have that. And all of these apps— so again, Euphoria is the one that you've called out, Options Protocol on the back end, but it's sexy options, right? Because on the surface it's a game. You see the bar going up and down, you, you play it, you hit your little finger and you like try to predict where the, uh, the chart is going to go. It's got good music, it's whatever, it's a consumer experience, it's like, it's, it's fun. Right? Same thing with HitOne. HitOne's another one on the back end. It's perps, right? You, you hit a button, it spins up a 250x short on Bitcoin over a 15-second time horizon, and maybe you just hit some money, right? Awesome. But it's a— on the front end, it's a— it's consumer apps, right? Same thing with Blitzo. Blitzo down the horizon is going to be something that is injected into the consumer payment, um, flow, right? So if you monitor everything that's going on today in I would say just like the Zoomer circles, right? If you're watching people flipping watches, you're watching people flipping like TCGs, like Pokémon cards, anything. You know what happens at every single transaction? They go, want to flip a coin? You know, you want to, you know, do 20% above, 20% below, flip a coin. Whoever gets it gets more or less than what they're trying to do. Blitzo is trying to insert that into consumer flow everywhere, or like And end of the night, you guys are all trying to pay for dinner. Everyone throws their card in the middle, someone picks a card, that guy pays for everything, right? Everything is starting to get gamified, whatever. And Blitzo is trying to inject high-end DeFi into those moments, right? So if you're at the checkout counter, right, and our grocery store, you tap with your little Apple Pay, Apple Pay fires off, and then you get a little prompt at the top says, bro, you want to double or nothing? You're like, yeah, I don't know, maybe I do this time. So I hit the little thing on the back end. It's taken a 500x long on BTC and it settles in 5 seconds because it can do it. It's a nice experience. And bro, you just hit, like you chose the right direction and you just doubled it. You got your groceries for free. Awesome.

Or you got liquidated and never want to come back and use MegaETH.

I mean, potentially. Yeah, potentially.

Yeah. Neo, I think stablecoins are very unique primitives. Like I think about them constantly. Um, and, and, and I think the world is not prepared to what real-time money does for consumer experiences and businesses. And I think you want to really lean into that. Um, the consumer experience has been, has been tricky in crypto because it's mostly been hyper-financialized applications. And going up 20x long on Fart Coin, I have a lot of opinions on that, and I think my opinions don't care. The market clearly likes it, but churn is a very big problem, uh, as it is in TradFi. I think Robinhood kind of pioneered this, like, you know, making options trading simple. Whenever you collapse like trading fees to zero, you get like Jeevons paradox is real, ladies and gentlemen. You know, you're going to get a ton of activity. But I do wonder, um, as an ecosystem, are you guys being intentional around like, you know, and this just kind of really summarizes my thinking around like infrastructure and where, what are we building towards? Like, are you just the difference between speed and velocity? Leigh, you're the smartest guy in the room, but like, I don't need to tell you what that difference is. But for anyone listening, it's speed is just, let's prioritize just rate of change, right? Just let's go, right? Velocity is direction. There's speed with direction. So it's a vector of direction. And I think that intentionality matters when you're building. Otherwise you're a central, otherwise you just go back to building a, being a centralized database. Like, does security matter? Does latency matter? Does what really matters, uh, because I think a lot of times I get it like from, from like why you want to build a more performant system. I think stems from this idea that Ethereum, the L1, had a very valuable resource, but it was not properly utilized because it's just difficult to interact with it. It was expensive. It was for the UI/UX or whatever, but primarily this, this fees. And you're saying, you're saying, gosh, I think like stablecoins are pretty cool. I think people are going to want to use them more. And I think people are going to want to use them for payments. And if we want to get to that state, we want to create a way more performant system. So let me go on, leave MIT, hire a bunch of smart people like Brad, like let's start this. But at some point, a lot of chains just like lose that intentionality because, you know, you wave the flag and say, we're open and we're permissionless. So anyone can come build. But I just sort of like, um, and many ecosystems, the way they fund grants, it's like kind of like a free-for-all and let's just get activity and let's just get fees. And it's like capitalism, you know, let's— what do I care if, uh, you know, you know, you could, you could be prescriptive or you could not be prescriptive and you don't really care about the quality of the economic activity.

You think pump is detrimental to Solana?

I was an invest— I'm an investor in Pump. Um, was it detrimental? I think you can argue yes in many vectors, like, uh, around, uh, like someone, I think it was CoinGecko, they produced a report saying, look, all these token failures, like token launches went up like orders of magnitude and then the failures go up. And I think it's an unfair characterization. They're lottery tickets. I will say the idea of like launchpads is interesting, but I do think that at some point, like, I won't go back on my thinking that meme coins are bad. In many ways, meme coins are just meme coins by default. They don't pretend to do anything else other than like, this is pure speculation. Like, and I think the user really under— perhaps understands that more and is very clear. Um, it's just human nature. Like, I'm not— I don't have like a— I don't have a— would I go back and do the pump investment? It's a good question. Um, I think I'm being more opinionated now as I'm building my own ecosystem and, and where I'm focusing on. And it's like Prometheus myth, like, okay, you bring fire to humanity, what the fuck are they going to do with that? Now, I invest in a lot of DeFi applications. I don't know. I don't know what the answer to that is. I do think as a builder, like, how do you guys filter through that? Like, it's open, it's permissionless, but do you have an opinion? Like, do you filter? Do you give grants to very specific applications? Are you going to be higher than DAO? Because that's what I don't want to convey. Like, I don't want to convey this higher than DAO because I cut my teeth in DeFi. I yield farmed the shit out of pretty much 99 protocols, like every single protocol. And you test the technology and you say, okay, well, but at some point it's like, hey, maybe we can do something more than that. Or then you just go back to the more, you circle back to the initial assumption, which is it's just human nature and humans don't change. They're going to want to improve their condition and the underlying The underlying, like, reason why someone goes to Pump is because there's an affordability crisis and you, like, you know, you want to gamble your way out of, like, affordability. And then it's just a more systemic fundamental question that we don't have enough time to discuss. But is that enablement good or bad? I think the rules are transparent in Pump. I think the crypto is a very transparent system. It's, it's, um, you're buying a lottery ticket and that's really it. Whereas if you're interacting with a, um, as a centralized company, you have like a perp prop, you know, and the first thing the user sees is going 30x levered long in a meme coin. I have a stronger opinion that the product decision there should probably not be that. Like, like you should have an opinion around like, hey, do you actually value your user? Do you want to retain them? Do you want to serve them other products like a savings account? Um, So I, I would say pump as an enabler for meme coins, uh, it was going to happen. Like, people like meme coins, they're an established category. I don't— I'm not here to have a higher-than-Dao opinion on it. Uh, would I put my money behind it again? Probably not, just because I've just— I'm just less interested in that. Because I think if we really want to grow up as an industry and want to be taken seriously, we kind of need to kind of start focusing on, on the real shit. And the, and the reality is, like, we have really cool stuff, which is stablecoins. And I think the neat— the consumer experience, like, you know, I was just calculating the other day the amount of money that the average consumer in the United States gives up to their bank because there's trillions of dollars in a— sitting in their checking and savings account. They're getting— to your point around stablecoin, why you've decided to have a thing at Tron in your chain, right? So like, if you put your money in a bank account, they're going to give you maybe 200, 300, like no, 25 to 30 basis points. So 0.2 to 0.3% at best. They, on the other hand, make 4% on that because they're buying treasuries and then doing other stuff with it. They don't share that with you. Okay. So if every consumer, if you move to a system where the consumer doesn't get interest to one where they do what banks keep, that's effectively equal to $1,300 a year, which is a COVID stimulus check. You want to stimulate the economy, move everyone to stablecoin. Uh, but then of course, you know, shareholders of JP Morgan don't like that. So like, that's capitalism, right? But I do think that the power of crypto is we can be— we can solve around things that have been really hard, which is financial illiteracy is never going to change. I think people don't really know how to make their money work for them, and a stablecoin is programmable. It has clear rules. It could be regulated and can work for the consumer in a way that traditional checking and savings accounts It's camped. So I'm very focused on what I'm doing, where I'm spending 100% of my energy is fixing that. And if people want to then go without money, go invest in meme coins, then, you know, at that point, I just, you know, I'm not, I'm not necessarily going to enable it. If I were in your shoes, I'd probably be more opinionated in curating the experience in the same way that Apple curates the type of applications that you can see. And at least as an initial review. Process by which, like, hey, you know, you're not going to necessarily be able to download certain apps. But what's the difference between Pump and Robinhood? I don't actually know. Or Pump and Kalshi? People are making money and losing money in, in large sums in Wall Street. So speed by which people lose money on a platform like Pump, how's that any different from Wall Street?

Well, I think for an ecosystem, censoring applications is a bit different from curation. I vouch for curation. I think curation is good. I appreciate Apple's App Store. It kind of keeps malwares out and stuff. But I think blockchain really aligns better to a computing substrate and I think censorship can lead to both legally and just ethically dubious outcomes, I would say. But yeah, curation, definitely. We are also, yeah, we have been running, we have been kind of pioneering the idea of as a chain, as an ecosystem, kind of incubate and support applications that we actually vouch for. So I think this is something that I've been doing for quite a while and we have seen some great success from it. All the applications Brad mentioned, they come from this kind of incubation program. Yeah. And on your thoughts on stablecoin, yeah, it's quite interesting because I was in Copenhagen last summer and we're having dinner with a pretty prominent DeFi MEV searcher. And I think something he said really was really interesting was that he was kind of, he found it really fortunate that Pump.farm did not happen on Ethereum. Because kind of the meme coin or I don't want to use the word like unserious. I actually enjoy meme coin. I spend quite some time on Kumbaya these days on MegaETH. It's quite fun. It's just for pure fun, right? It's not to make money. It's just to kind of see the memes. I enjoy them. But for relatively kind of funny, unserious stuff, if people kind of attach the image of a chain to these kind of applications, his point is that it in some sense does limit the cap, like the ceiling of an ecosystem. Because once the image is attached, it's really hard for the chain, for the ecosystem to shake it up, to shake it out. So yeah, in some sense, I do agree that crypto should aim for solving even harder problems in the society, in people's daily life. I definitely echo that point.

I think the hardest problem that we can solve in the next 10 years is not technology related. It's product and go to market.

100%. 100%. Yeah, 100%.

I don't want to demerit what you guys like.

No, no, no, no, no, not at all. No, yeah, no point like that taken. I fully agree with you. I think solving the infrastructure problem is just one step. And yeah, we're pretty much ready to, yeah, in the sense that we think now we have a very interesting chain. It's actually more interesting, more exciting time for me personally, because finally we have the chain out. People can start really building on it. I think finding the interesting applications, curating the interesting applications, I think is far more exciting than building the infrastructure itself.

Really. Yeah. Before we go to parting thoughts, curious if you guys were starting Megaseeth today from scratch, would you, what would you do differently?

Well, many small engineering tweaks But they are really fine details. For example, the gas model, we probably want to settle down on the gas model sooner than we actually did. We will probably want to arrive at a.NET so that people can start developing and prototyping with sooner than we did. I think it's lots of like microscopic reprioritization on the engineering department. What do you think, Brad? On the, on the BD, on the, on the marketing department?

I think I would enshrine more. And like, like I, like we, we did a good job with— yeah, it's curation. Yeah. I would like, I would, I would think earlier around things that we could own as a team to bring to market to create a net new experience that is good. And because like, man, I care about value capture. Like I want to make sure that what we're building is something that is sustainable. I do. I know, Santi, you and I have been retweeting each other a little bit the last few, few weeks that like, man, I think valuations are frankly broken in this industry. And I think I see where the puck is going. And I think it would be smarter for us to try to think on more things that are not— that are supportive of an ecosystem of builders, right? You see what Hyperliq was doing with their internal Perp DEX. I don't know that that necessarily is something that I would want to do because it takes a lot of special less talent for that. But even stuff like, you know, like aggregators, right? Like, if we can own an aggregator inside of our ecosystem, because we know that, that it's like, we know the routes, we have access to the, the block building and stuff, we can create things that are actually better and more efficient for people. Like, that's just a net better experience. It doesn't encroach on, on net new apps inside of the ecosystem and lets people experiment and just like uplifts everything and then allows us to, to continue to build a successful ecosystem. So becoming day one with stuff like that, I think I wish I would have thought more of, but just time, energy.

How much of that, um, like, I remember going to Berlin when you guys had your first Mega Mafia cohort, and I was very impressed. I made a few investments in projects like Euphoria coming out of that. Um, what, how, what else can you guys do to convince the incremental builder coming in? A, are new people coming or are they all kind of going to TradFi or AI? But how do you compete against other ecosystems that are really well capitalized and going to throw a bunch of incentives? Does that work? Do you generally think that like builders make a decision to build on an ecosystem based on the technology or on something else? Like, how do you win in that game?

They haven't done it based on money to this point. We've given out zero grants to any teams that have been building with us. So like, there is a level of nerd sniping that goes on, and I do think there is a level of like FAFO, like, you know, fuck around, find out energy on the Ethereum ecosystem that has not been able to express itself. We've had a lot of very opinionated DeFi builders and stuff come to us, and like, they're very excited with some of the stuff that we're doing. So like, there is a little bit of a release valve that we're offering there that is just naturally attracting people. And I do think Lei and Yilong have legitimately built something that is world-class. So like, you're gonna attract people for that reason alone, because people can envision that. Now, telling that story and making sure that they even know that that is possible is part of my job to try to attract people. But yeah, that's my, my general position.

Yeah, pretty much nerd sniping. I think, Brad, you said some, some of it. I think for me, the way I go and talk to builders, potential builders, is 100% nerdsniping because I really, I kind of truly believe in just kind of impressing people with the interesting stuff that they can explore and do on the ecosystem. Because if I look back at my journey getting nerdsniped into computers, into distributed systems, I think it's quite similar. I have never thought about the money that what may potentially make or not make by doing one thing. I just found distributed systems like processes synchronizing with each other, I just found it pure joy. It's so interesting to think about it. And my belief is there are people like that around the world, many of them. And as long as we find a few of them, I think we're in good shape.

And I think, like talking about the talent drain to like an AI of the world. That's actually something I've been reflecting on a lot recently because I, I find myself being pulled to it. I'm very excited about it. It's very empowering to see like what you can spin up in, you know, a moment's notice. I do think it'll ultimately boomerang back to crypto as a whole, right? Because like if you think about what we actually offer relative to AI, AI is a world of abundance, right? Like there is so much that is possible. Everything is being created, cost of production is basically going to zero, right? And in a world where production is inflating to infinity, like you need two things. Like one, like AI agents, just like permissionless rails, like that's exciting. And like easy for them as someone that's like been working with it recently, it is just much more compatible to have them operate on financial rails that are permissionless. That's just a fact. And then the second is verifiability, right? So like in a world of mass abundance, and as these techniques for replicating and creating things continues to get more and more and more and more and more advanced, you're going to need to be able to verify what the hell is actually true in this world. We're already seeing things that make it indistinguishable from reality, frankly, and it's only going to accelerate from here. So you're going to need to come back to blockchain and these verifiable systems to try to make sure that what's actually happening is what you actually like, or what you're interpreting is what's actually true. We haven't seen that interlink just yet, but I think it'll continue to accelerate.

Yeah. Speaking of AI, Yeah, I don't really think there's competition between the two ecosystems because I think it's just fundamentally different skill sets. I think the builders that build applications that depend on AI, yes, I think that, yeah, they can choose to build in AI, they can choose to build in crypto, but I don't think there's a fundamental competition or anything like between the core talents, I would say.

Very well, gentlemen. Well, I think it was a good discussion. I really dislike podcasts where we just talk about the fun, the, the Vitalik criticism. Vitalik's an investor in MegaETH. I don't know if that, you know, the conversation with your investor is now a bit more awkward, but I'm an investor in MegaETH too.

I think he vouched for us. If you read it, we were 3 of his 6 points, basically.

Yeah. And so I wanted to bring you guys in here to have discuss around that, um, but also answer hard questions, uh, because I think that's what pushes the space forward. So appreciate you guys coming on and, uh, Yeah. I would hope that, I think in 5 years' time, we don't have regulation to blame, maybe on the margin, we don't have infrastructure limitations to blame. It's really now on us to deliver. And that's, you all kind of look at that and say, hey, maybe this is not for me. I want to go to AI, but for serious builders, I think that's a really good challenge. And, and so, you know, hopefully everyone plays a part in it. I think you guys are well positioned to capitalize on that. So rooting for you guys and thanks for coming on.

Thank you so much. Really enjoyed the discussion. Yep.

Appreciate the time. It's fun.