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[upbeat music] Welcome back to Bitcoin Season Two.

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I'm Charlie Spears with Blockspace Media. Uh, Bitcoin Season Two is about ideas, new ideas, new conversations on Bitcoin.

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It's the technical and cultural smash together for an exciting era of new topics on the oldest blockchain. So everybody's talking about Bitcoin MEV right now, um, so we're gonna talk about it.

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It's a more mature conversation on other blockchains like Ethereum, but it's comparatively immature in the Bitcoin ecosystem. We're gonna talk with Walt J.

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Smith of Cyber Fund about his recent write-up, The Specter of MEV on Bitcoin.

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Uh, we've also got Julian Duren of Marathon, who is head of product, uh, as the company makes very interesting moves into layer two side chains by way of the Enduro platform, which has, as a design goal, among others, MEV reduction.

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So I think these guys are pretty sharp and emblematic of what I consider to be Bitcoin Season Two, and they represent the first conversations about what I think is gonna be a defining era for Bitcoin.

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So let me bring up on stage Walt and Julian. Thank you so much for coming. I gave you a little intro, but Walt, tell me a bit about yourself and how you got here. Hey. Thanks a bunch, Charlie.

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Glad to be a, a, a first-time guest on Bitcoin Season Two. Big fan of what you guys are doing at Blockspace.

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Um, yeah, I mean, I think, I think like a lot of people, uh, kind of in the broader blockchain crypto space, was kind of, uh, attracted by Bitcoin's kind of sound money, um, narrative, store of value narrative, which is very much, you know, a narrative, but also very real.

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Um, and then I think I kind of drifted into other ecosystems over time, worked as a trader for a while at Galaxy Digital, then on their ventures team.

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Eventually I joined Cyber Fund, which is a family office based out of Europe for some of the guys who set up P2P Validator. Also, we're the first contributors to the Lido DAO and the Nail Foundation.

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Um, so I work in the ventures team. We do a lot of interesting stuff, grants, um, leading deals, following onto deals, a bunch of fun stuff.

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But, um, we're, we're very research, protocol-focused, trying to really bring about DAOs is, I think, one of our core focuses, so, um, make DAOs very real and, um, you know, staying true to my roots.

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Uh, I've, I've always kind of stayed in Bitcoin despite, um, Cyber Fund's kind of Ethereum-centric, I guess, the focus on Ethereum at Cyber Fund.

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I, I still kind of have stayed kind of locked on it and, um, I think, you know, a lot of these side chains came out, or roll-up ideas or op code ideas came out last year and, and were kind of being ignored by the market and I kind of took an interest, um, right around July of last year and I started thinking about how is this, how is the MEV different here?

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And then I think when Ordinals really took off, I saw some really great tweets from, like, Eric Wall about it and just got totally nerd sniped because I think MEV is definitely the most interesting conversation in Ethereum and Cosmos and, um, really translates well to Bitcoin in, in terms of, uh, kind of understanding Bitcoin's new expressivity.

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Thanks for having me on. Yeah, for sure. And, uh, your piece, The Specter of MEV on Bitcoin, is kind of like, I think, one of the defining write-ups on it, so thank you so much.

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I really enjoyed kind of getting some previews for that. Um, Julian, welcome. Uh, tell me a bit about yourself, how you got here, and what, uh, Marathon is doing. Absolutely, yeah.

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And thanks a lot for, for having me, Charlie. Definitely love the-- what's to come out of Bitcoin Season Two. So yeah, my background is very much all over the place.

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I have a background in US politics and social impact work in Latin America, energy in China, fintech in China.

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Um, found my way into the blockchain sphere, broadly speaking, after basically reeling from Chinese COVID policies and trying to find, like, some new gig in fintech.

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Wound up in the Ethereum world, um, which I know is kind of strange to have a Bitcoiner who started off in a different network.

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But I think what attracted me to this world, generally speaking, was the possibility for financial primitives in emerging markets.

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So I'm originally from Latin America, and my reason for getting into fintech in the first place was just the ability to do new things with money, especially in parts of the world where there isn't that much money.

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You know? So finding [chuckles] new things to do with money, it's pretty, pretty essential. Um, and I, I, I think just, yeah, any blockchain technology, broadly speaking, can, can change that quite a bit.

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Um, now my [chuckles] my experience in, in the non-Bitcoin world, um, was a lot of fluff and a lot of hand-waving.

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Um, I was actually trying to build real products, but I've-- oftentimes when we'd bring them to market, I-- Last startup that I had in that world was a crypto savings accounts in Central Asia.

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So I'm out here in Kazakhstan trying to sell this DeFi app to people, and I'm getting questions left and right, you know, "Well, is this Bitcoin? Does this have anything to do with Bitcoin? Where is Bitcoin involved?"

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Bitcoin, Bitcoin, Bitcoin. And I'd get so annoyed at the question, I'm like, "Man, but, like, that is impossible on Bitcoin. Can you guys just, like, take this?"

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But then after, like, the nth time of listening to that, I was like, "Well, okay, let me listen to the user," you know? Why are people so keen on this? And this, these weren't, like, you know, maxis telling me this.

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It was just, you know, everyday people, you know, knowledge economy workers, taxi drivers, et cetera, that just knew about Bitcoin. And to pitch them a blockchain solution that didn't involve Bitcoin was just...

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It, it, it was a non-starter. And so anyway, my, my role here at Marathon,

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as you mentioned, is, uh, yeah, leading product for Enduro, and we're basically trying to expand the set of use cases, extend the utility of Bitcoin, um-grow the ecosystem, and I, yeah, it, I- I've seen it on the ground.

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I've seen how there- there's a clamoring for Bitcoin from the voices who don't hold any of it. Um, they just wanna get involved and they don't know how to, and, um, yeah, it's- it's our goal.

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It's incumbent on us to- to find a way to make it more, um, palpable and, I guess, accessible. So that's- that's [laughs] my defining vision. Yeah, and you've had some really good...

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You know, you- you seem to be the guy to be talking about Marathon's Enduro platform, and we'll talk a bit about that, but I kinda wanna pull back.

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Um, 'cause I decided, like, I was like, "Who are the, who are, like, two interesting people to have this conversation with?" Walt, obviously. Um, and Walt w- let's, uh, I wanna...

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I'll start at a high level here because, you know, I'm- I'm also new to really the MEV conversation. I'll start at a high level.

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Um, and in my experience, um, until recently, and even still, like, most people, uh, in the Bitcoin ecosystem have no idea what MEV is. They don't really pay attention to what happens on these other blockchains.

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Um, Walt, what do you think, like, the average Bitcoiner's current understanding of MEV is compared- [laughs]... to the average Eth user? [laughs] Uh, yeah, so what- what would you say that?

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I think- I think, um, you know, a lot of Eth users have gotten front run on a meme coin trade, so I think they have, like, a very, you know, hands-on understanding of- of what MEV is in that, you know, you- you broadcast a transaction, maybe it lands in the mempool, but, uh, maybe it doesn't.

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Maybe you send it to, like, a private RPC or- or private builder or something. But, um, it doesn't execute right away, and even if it executes, the block isn't necessarily finalized right away.

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So, um, that's basically kind of the, uh, the main problem is from the time you sign a transaction to when it actually lands, there's kind of this open value, this open expressiveness.

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And because it's a permissionless system where anyone can kind of act to fill your bid or fill your ask or however you wanna say it most generally, um, the system tends to kind of lean towards the most sophisticated, most savvy users 'cause they can extract the most value, um, and then they can bid you back, you know, the best value and- and bid everyone else.

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So th- that's kind of where the equilibrium sits. I think Ethereum people, uh, you know, I- I'd say there's a couple buckets.

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I'd say, like, the hardcore researchers I think really we're on the frontier of- of kind of building out the understanding of MEV and- and we're probably the first ones to say, you know, if Bitcoin ever gets side chains, if it ever gets merge chain chains to take off, this is, like, a big risk for Bitcoin.

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Um, and then I'd say there's another group of people that, you know, day trade and- and do interesting stuff, and I think they have a very good high-level understanding of it.

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But they- they probably, you know, haven't, like, read a lot of the literature on it, which I think there's a lot of it in Ethereum and in some adjacent ecosystems.

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Um, compared to the average Bitcoiner, [laughs] I'd say, like, zero, which is fine.

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I mean, I think, you know, I think i- ideally Bitcoin gets to the point where you don't have to understand what slippage to set a DEX trade, otherwise you're gonna break the system, and everyone in the world has to do that.

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I think one of the great things about Bitcoin is you can just send a UTXL, send it to a mempool, and doesn't matter who... If it's Marathon, doesn't matter if it's Antpool, doesn't matter if it's some other miner.

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They'll just execute it. Um, but

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I do think [laughs] the core developers should probably have a better understanding of it, um, based off of, you know, the literature from other ecosystems and then, you know, as they kind of consider, uh, which kind of op codes to implement over the next, you know, decade, as they kind of consider which side chains to kind of campaign for and- and- and how to make things like BIP 300 or BIP 301 someday work possibly, um, or if the BITVM kind of develops and becomes more efficient.

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I think there's a lot of open questions in Bitcoin that, um, it's really important that the miners, I think the core developers, and then people like p- probably people like yourself, Charlie, who are, like, not a core developer, formerly a miner, but are, like, very well educated and kind of, you know, you- you're not a shareholder on other people's behalf, but very much, like, a spokesperson, um, and have influence in the community.

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So I'd say, like, those three groups don't have a great understanding. I'd say right now people like yourself have the best understanding.

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I think miners haven't really gotten it, um, from the ones I've talked to, and then the core developers. But f- I will say, the last thing I'll say is I think miners are more willing to learn.

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The core developers kind of wanna, like, reject the Ethereum research and create their own body of research, I think mostly for ideological reasons.

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Yeah, I would say miners are very profit driven, very pragmatic, and when faced with s- you know, unknown situations such as new things that people are doing, some might call it MEV, miners will, it seems to me, like, it's intuitive, like we'd be the first to learn.

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Now, like, the average miner I speak to is not very technical.

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However, we've got Julian here, and Julian, like, you're, you are with, uh, one of the largest mining companies in the world, and which has taken a very forward approach to side chain development and just this conversation.

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What's your thought about the current narrative and discussion around MEV on Bitcoin?

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Yeah, I would say when we first started, uh, building Enduro, the goal was, all right, like, what- what are certain things that we should embed from the get-go?

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Um, both things that the market needs, but maybe things that the market doesn't say they need now but they'll need in the future.

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And so when we first started on that, on that task, this was early part of, early parts of last year, MEV on Bitcoin wasn't even talked about.

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Most calls I'd get on to talk about this, like, layer two side chain R&D effort that I was trying to lead, people would just kind of, like, laugh and like, you know, like, "A- all right, sure. Good luck, man."

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I remember I got on a call with this venture team and, like, eight partners come on board telling me how, like, ridiculous it is that we're even wasting a single ounce of shareholders' money to explore the topic.

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I mean, all of what you're saying is 100% true, and there- there was this reticence to even begin talking about it.

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But something from my world coming, having come from, you know, the non-Bitcoin side of the world, um, of- of the crypto world is yeah, MEV is the- the- this is, like, the-Polygon, Optimism, all these like new layer two side chains coming out on, in the Ethereum space, this is the thing that they would deal with, right?

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And like, you know, the single sequencer issue and how do you, um, decentralize that and make it more trustless. And by and large, nobody in that community had really sorted what they wanted to do there.

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And so one of the defining things, one of the earliest things I wanted to do with Endura was let's embed certain features into this platform and into the side chains that we create that make this compelling not only to Bitcoiners, i.e.

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you know, the Bitcoin native asset and all that stuff, but also compelling to outsiders, right? And maybe our approach to MEV resistance isn't gonna be the most robust and the best out there.

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I think it's a pretty great one, but it, it, it's an attempt to try to fit into that... Be understood by the wider market as being plugged into these different narratives. So I don't know.

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My view on it is, yeah, it's, it's, it's coming into vogue to talk about Bitcoin side chains and Bitcoin layer twos. Um, as a result, MEV has become a bigger deal.

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But it's something we've been thinking about from the earlier parts of last year.

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Though I will admit that generally speaking, miners want to keep things as simple as possible, in part due to the technical constraints, but also just due to the nature of the business.

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I mean, you're already dealing with so much complexity when it comes to negotiating energy rates and finding new mining sites and modular deployment and all these sort of topics that are mind-numbing and, and head-spinning, that to on top of that start getting into, all right, well, how can we front run or how can we play around with these other layer twos and side chains that don't really have much activity?

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It's kind of... It's, it's, it's moot. It's useless. And so I don't know.

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My general take on MEV I guess, and, and where it is right now in Bitcoin is it's, you know, in vogue to talk about, but it doesn't truly become a problem until that adoption really comes into play.

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And so in many ways, I spend most of my time on that adoption question s-setting up the frameworks to, to make sure this is a robust system in the longer term.

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But I think the number one question we should be asking ourselves on top of any MEV is, all right, well, you know, there's, there's front running if there's transactions to front run, right?

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There's front running if there are transactions. So where do we get that transaction velocity? And all of these things are related. You know, it's a chicken and egg problem.

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But, um, yeah, I think we're, we're only now beginning to talk about this because now there's that [chuckles] there's, there's money to be made, right? Because there's that velocity or that interest. Yeah. That's great.

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And I, I just kinda wanna dive right into Walt's piece. Walt- [gasps] Alexa got me for a second. I wanna dive right into, uh, Walt- Walt's piece here, um, "The Specter of MEV on Bitcoin." It's on Cyber Fund, cyber.fund.

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It's a great piece. Um, and I kinda wanna ask you, like, um, you-- Walt, in your piece, you talk about key divergences from proof of stake MEV, um, Gasper meets Nakamoto.

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Can you talk a little bit about that and describe your thinking there when you say, um, or by, by portraying Bitcoin alongside Ethereum and other proof of stake networks, key differences and the relative advantages and disadvantages become clear.

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Can you kind of flesh this out for me? Yeah. Yeah. No. I, I think that's a, that's a great question.

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That's, that's one of the sections that I think I had some disagreements with, um, mostly from EF people, people at the Ethereum Foundation.

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Um, I think my kind of general point with it was there's a lot of stuff in Ethereum that was included in the protocol after, you know, long debates, um, that ended up not being necessary, um, because they thought, you know, in the theoretical case, this is what will happen.

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But in, in reality, in practice, you know, there's natural frictions, there's transaction costs, there's a bunch of things that can kind of, um, make in practice not meet the, like, upper bound of theory.

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Um, so I think, like, one of the things that really stands out about Ethereum is there's b- the-- been this kind of push for something called single-slot finality, which is basically, um, an accounting system internally where all the nodes in the network, you could call in miners in Bitcoin, but that's different terminology in Ethereum, but let's just, let's just use the same terminology.

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All the, all the miners in Ethereum sign off on a block before you progress to building the next block.

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And what this does is it makes it, you know, probabilistically very unlikely to have another reorg based off of the economic cost. So you wouldn't say it's really probabilistic cost. You-- It's...

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The right way to say it is there's a huge opportunity cost, um, because you'll get slashed and you'll give up, um, a ton of Eth if you, you know, attach to two blocks at the same time or if you try and go block it, go back and, and reorg the chain.

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Um, I think, you know, Cosmos, which runs on Tendermint, has a, has the property of single-slot finality today.

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But the Ethereum Foundation, right, when they, when, when L2s kind of became popular and, and Arbitrum became a thing, worried that, you know, an L2 with more value, with more activity, with more economic kind of state, um, would drive a reorg of the Ethereum network, and that would, you know, obviously lead to some really negative things for the applications.

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You know, if you're, if you're running a system with an Oracle, um, let's say something like MakerDAO, and you had a multi-block reorg, you could actually bankrupt MakerDAO because you could censor.

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If you owned, you know, multiple blocks in a row, you could censor, um, the debt from clearing, right? So this is like a huge theoretical issue, right?

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Um, in practice, if you talk to, like, Robert Miller, if you talk to, you know, the really good MEV people who understand the theory because they helped write it but are also building the infrastructure around the clients like MEV-Boost or MEV-Geth before it, um, there hasn't been that many instances of reorgs.

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So I think this is like an- another interesting point that I kind of talk about in the piece is, um, there's the difference of kind of the rational world where everyone's driven by economic incentives, maybe their reputation is on the line as well, versus, you know, the Byzantine world where there's kind of arbitrary behavior where you can do anything you want.

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You know, Bitcoin is a BFT system, so is Ethereum. They're both trying to be. But sometimes, you know, we bought against these, like, rational assumptions, and they're kind of nicer.

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They're kind of more friendly to work with. They end up not being, um, the right assumptions over the long haul for a variety of reasons.

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But I think when I talked about proof of stake ver- versus proof of work, there's a couple, like, bleeding considerations such as the lack of, like, single s-slot finality, um-And kind of the ability to potentially reorg multiple blocks that indicates that, like, Bitcoin gets a lot more expressive.

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You would expect more reorgs, which means you know confirmations, the number of blocks you need to settle or to have, uh, your block be built underneath.

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So if there's like 10 blocks and then you know my transaction was included in the 10th block, I'd be like, "Okay, this is pretty secure."

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But if there's more and more reorgs, if there's more and more expressiveness, maybe it's 20 blocks, which makes Bitcoin a worse kind of asset for collateral. It makes it a worse asset for DeFi.

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It makes some of these, you know, more sophisticated applications harder to build. And all this comes down from, right, this one property of accountable safety.

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Now, there's a huge trade-off with accountable safety, which is, um, everyone on the network has to be doing it once. So you... To have a voting system, you know, you have to say, "We have this many nodes.

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They have this much balance. They have this many votes. They need to vote within this time period," right? So it's, it's, it's very, it's very complex. It's very hard consensus mechanis- mechanism to build.

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Bitcoin's really nice because it's very simple. It's just this, um, uh, like heaviest chain sort of rule, right?

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But that also lets just a miner, you know, a miner could come along online in China and just build a block and then just disappear forever. So the, like, kind of anomi- an... I always struggle to say this word.

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The, um, kind of like identity preservation where no one knows who you are and no one knows how you operate, and if you want to broadcast a transaction, you can just stick it right through, assuming you win a block or assuming you can, um, win a block inside of a pool or something, um, is, is really, really great.

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So I think this is like a fundamental thing where, you know, Bitcoin's gonna consider different things, much like Ethereum did, and sometimes they're gonna be like, "Oh, single-slot finality.

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Maybe we really need this," which Bitcoin can't really add it. But, um, maybe there's a different mechanism. But right now, you know, there's, there's no research indicating Bitcoin can add it at all.

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Um, Bitcoin's gonna add stuff, and then down the line it's gonna be like, wow, this was a theoretical assumption that is, you know, in practice we never hit this theoretical assumption.

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So we kind of didn't need this, this feature.

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So if you talk to Robert, you know, I was argues, not arguing with Robert Miller at Flashbots, but him and I were DM'ing about it and he was like, "Yeah, why do you think there's gonna be more reorgs of Bitcoin?

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We don't even see them on Ethereum."

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Because Ethereum doesn't have single-slot finality yet, but it's something they've really pushed for because they're worried about Arbitrum or they're worried about EigenLayer or something p- you know, creating a lot of incentives for reorgs.

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So- So- Go ahead. Yeah. So you, you, you, you managed to touch on like eight questions that I had for you there. [laughs] Sorry. Which is great. [laughs] You got it coming on. But, but it, it does.

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It maybe brings like, you know, another part of, you know, a- another section you have is you talk about us reentering a Byz- a Byzantine world.

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Just again for the, the normal, I know there's some ordinals degens who watch this. Can you explain what like a Byzantine versus rational actor would be?

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And then my follow-up question is, do you think Bitcoin, because it's less expressive, remains comparatively Byzantine just due to its nature and design? Oh, that's interesting.

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I might not have a good response for the second one right off the bat- [laughs]... but I'll try to think about it while I talk. Um, you know, I'm not a theorist.

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I, I didn't go to MIT and get a PhD in distributed systems or something. So if anyone is watching and, and did do that, you know, you spent a lot more time studying it than me, so you can't get angry.

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But, um, kind of the, you know, back of the napkin math, uh, way of expres- explaining this is a rational world is, is something where you model where all the particip- participants are economically incentivized.

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Their welfare function is, is driven by money. Um, their reputation can be tied to that too because i- in an iterated game, your reputation does kind of determine how much money you can make, right?

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Um, in a Byzantine world, there's arbitrary behavior. So there's things... You know, there's a couple ways of saying this.

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You could say there's things out of the bounds of the protocol or just out of the protocol that can throw off the network incentives.

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So even if the incentive in like an iterative game is I go first, then Charlie, then Julian, and we just go round and round and round, um, external value, that could be, you know, a meta protocol like the ordinals protocol.

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That could be a stablecoin. That could be a protocol built on top of Ethereum or on Bitcoin. Um, you know, I think EigenLayer is, is this like big restaking thing on Ethereum.

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You can get something similar on, on Bitcoin where, you know, Bitcoin's not staked natively, but you could create slashing logic.

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You could create kind of proofs of, uh, you know, validity or, or proofs that someone should be slashed for their activity, right?

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And this kind of thing would drive, um, you know, arbitrary behavior that Bitcoin can't really reason about. It's kind of outside the scope of what it can see.

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The, the, and, and, and by that I mean what the protocol can see, what an individual miner can see, but also just with the whole network coming on to deal and deal with on, on a given block.

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Um, so I think when, when Bitcoin's reentering this world, it's kind of just this reminder that, um, you know, a lot of the assumptions that Bitcoin has kind of been built on and, and kind of what they've gone off of maybe will be removed.

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So I think, you know, if you talk to someone like Paul at Drive Chains, he's really pushed for like bli- blind merge mining.

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Um, which, you know, I think in 2012 the argument around this was largely based around hash rate centralization.

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I think, you know, that conversation's kind of over, but maybe it has some validity in the MEV context where you're like, this can drive less MEV.

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The barrier to entry to harvest cross-domain MEV would be much higher, higher if the merge mining was blinded to what was actually happening on the side chain.

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But if everyone could see it just automatically, right, maybe there's more of an incentive.

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So I think it's like kind of this reminder for the core developers, for the miners, for everyone thinking about it that we're not in a rational world. There's, there's, you know, the US government exists.

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There's Bitcoin futures markets.

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There's these meta protocols, you know, silly ones like ordinals that could end up driving, you know, hundreds of millions of dollars of volume, and more sophisticated ones like Babylon that are gonna stake your Bitcoin and, and potentially drive reorgs.

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You know, I, I don't think that'll happen in practice, but, um, in terms of your, your second question, would you actually re- uh, repeat it maybe for the audience and for me?

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I, I kind of want to repeat it, but I actually want to throw that question to Julian. Um, which is, so Julian, I mean, you know, Walt-Talks about Bitcoin's fairly Byzantine-- its current Byzantine model and state.

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Do you think in the face of heterogeneous assets and, and all these new things on Bitcoin, do, do you think Bitcoin has in, in some ways, because of its simplicity, uh, uh, and just like MEV reduction built into the system?

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Or what are your thoughts on this topic?

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I really think that at the end of the day, a world in which there are these heterogeneous assets, a lot of stakeholders in Bitcoin are gonna find themselves without proper footing.

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And so they're gonna hire talent, hire people from these other ecosystems that have a better sense of how to manage these heterogeneous assets, have a better sense of MEV.

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When there's that incentive to profit off of it, I have a very strong faith that a lot of miners and a lot of stakeholders in Bitcoin are gonna find ways in order to get a sense of what's going on.

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And if it's a Byzantine world now, and there's a reason to be a rational economic actor, they'll move in the direction away from Byzantine toward being rational economic actors.

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But I think we have some time, and I think like at the end of the day, there's, there's a switching cost, right?

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Like, there's gonna be a time, like a startup time, so to speak, where people are still kind of getting their bearings.

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One thing I will say on this topic, just generally speaking, though, Chinese miners and Chinese pools, some of the most sophisticated, um, teams out there, you know.

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Because they- they'd been thinking about a lot of these sort of topics for quite some time.

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I remember a conference early part of last year, I wound up, um, in Singapore at this Bitcoin Layer 2 event that was completely in Chinese. And I speak a little bit of it, but it's not like I understood everything.

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Um, but from, from what I gathered, a lot of-- there were a lot of these conversations with top professors in China about, you know, side chains and rollups and all of that, and a lot of those conversations predate, which nowadays we're like, "Oh, well, now it's Bitcoin season two," but in East Asia, I think, um, yeah, in many ways it predated it.

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So I think it's probably gonna still be a Byzantine world, even in a world in which Enduro takes off and there's all these heterogeneous assets. It's gonna take time for people to catch on.

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But I do think that there's already some-- Well, number one, there are st- some stakeholders in Bitcoin that are quite familiar and have been exploring this Layer 2 space as early as twenty sixteen and even beyond.

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Um, and number two is that when there's an incentive to profit, you're gonna have these other actors from other ecosystems coming in.

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And actually, we see this with Enduro, 'cause the whole goal of it is a multi-side chain platform, bring in other different ecosystems.

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And we're seeing a lot of big teams from other, you know, the Solana worlds, Ethereum worlds coming in and being interested in spotting an opportunity, in some way seeing like, "Okay, Bitcoin, you know, heterogeneous assets, MEV potential, they're not gonna figure it out maybe for a few months, and I can profit o-on, on it in the interim."

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So I think, I, I think we're gonna head away from that Byzantine world in the event that these heterogeneous assets are actually adopted.

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Because again, it all comes down to are-- you can't front run something that isn't existing in the first place.

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So in the world that we see that, I can expe- I, I would expect a similar evolution as to what we see in other ecosystems. Yeah.

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So that, um, you know, we've, we've talked a bit about, you know, m- uh, Walt, you, you brought up Paul Stork and BIP 300, 301 and Drive Chain, which brings us to merge mining, which is an old idea.

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Now, in some ways it feels new again, but, uh, it's back, it's, it's back at the forefront of conversation.

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Um, and Walt, you have a, you have a section in your piece on blind merge mining and, and some perhaps some concerns or just some just discussion on it.

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Could you talk a little bit about like how it might play a role in, um, this MEV narrative on Bitcoin? Um, yeah. So I, I kinda wanna like let you, let you chat about that.

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So I think, you know, and, and maybe Julian will correct me here, but I think from my understanding there's a few implementations of merge mining.

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There's one-- there's a few that are already w- live like, like Roofstock. There's like the OG idea for it, which I think Satoshi actually came up with.

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Um, and then I think there's like blind merge mining, which was kind of proposed in, in twenty twelve to deal with this fear over centralization, which if you look at like Bitcoin dev mailing lists, it's, it's probably the repeated theme like against, um, merge mining.

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Um, I think like, like the way to kind of think about this though is just like any sort of sidecar that has broad adoption above miners kind of raises the baseline level of sophistication.

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And the more activity, uh, and economic value kind of on the sidecar that you're merge mining, the more kind of political and, and economic influence that sidecar will have.

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So there's like a very similar thing in Ethereum with, with MEV-GATH where that really gave, um, certain people a seat at the table in terms of core development in, in a way that some people were less fond of.

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Um, arguably it was something, you know, super important. Um, but I think other people, you know, are, are less in favor of it. And, and we don't need to get into the nuance of that.

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I guess, I guess for merge mining, you know, I think one of the things to kind of think about with other side chain schemes is a lot of this revenue is gonna go to the L2, miner revenue will cut back.

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There will maybe be Ordinals fees, maybe we'll have Rune fees. You know, there's gonna be a bunch of meta protocols on, on Bitcoin, that's pretty clear.

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But where this revenue is kind of pointed and how it's distributed, I think is like an essential question.

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Um, ideally, right, you would get a lot of expressiveness, a lot of, you know, and I think Paul would agree with this.

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He says, you know, "I, I wanna-- with, with BIP 300 and BIP 301, we wanna, you know, have a Zcash side chain," which, you know, I, I think that's kind of useless now, but I, I, I get what he's trying to say with that.

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A Zcash side chain, an EVM side chain, a Solana VM side chain, right?

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You wanna do all these interesting things, um, but you wanna keep the base level kind of-um, requirements of running a miner are very, very low, and you want to point this revenue to Bitcoin as much as possible.

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Now, I don't want to do too much pattern matching, and, and Julian, maybe you'll have a really, you know, interesting take on this from the mining angle, um, which I'd love to hear in a second. But I think with, um,

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a lot of these side chains, they're kind of siphoning execution fees, congestion fees, and just general payments, um, to kind of these, you know, let's say it's proof of stake or proof of governance, L2.

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Now the revenue's not really going back to miners. Now we're not really securing the network. So it's a, it's a, it's kind of a problem, but you also don't want to make it, like, too sophisticated.

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Uh, running a Solana node is, is famously very hard. Um, so it- let's say you have a merge one Solana chain.

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Now it's gotten really, really hard, even harder than just running ASICs and finding, you know, insanely low-cost energy, which, you know, people make full careers out of being, like, energy, uh, you know, energy gods finding the cheap energy somewhere.

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Um, so I think that's kind of the, the way to think about it.

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But the interesting thing with merge mining is it kind of breaks up the revenue, um, potentially if you have enough slots in the merge mine chain and you rotate it between a bunch of different miners.

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It breaks up the revenue, which could actually kind of, like, reduce some of the, the MEV issues and, and kind of smooth the fees to the miners because Bitcoin block times are so long and they're so random.

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So let's say you have, like, a bunch of slots on this L2, on this merge mine chain, on this sidecar, and then you only have one or two Bitcoin blocks in this time period, right?

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So there's, you know, some fees on the L1, but you've also broken up a lot of these fees for these other people and, and maybe it's a business they can run on the side.

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Obviously, the machines there are very different, so that kind of, you know, is, is not ideal in that standpoint. But, um, yeah, I think, I think it's, like, the OG idea. I think it has a lot of validity.

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I think the real thing with merge mining is you have to get broad adoption really fast, and historically miners I think were undereducated on this issue or just kind of listened to the people who said, "Hash rate centralization.

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Hash rate centralization," even when that was already here. Um, so that's kind of where, where I kind of land on it. But I think, you know, it's a design space that potentially is the most promising in terms of,

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you know, still allowing MEV, but, but kind of smoothing some of the issues around it. There will obviously be, like, application-specific w- ar-areas to address.

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But Julian, I don't know if you w- if you wanna comment this from the mining angle, I would love to hear it. Yeah, absolutely.

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I mean, look, I think merge mining, it's, it's something that most big miners have actually been involved in for a, a good amount of time.

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Um, like, I mean, Rootstock I think at the moment has, like, sixty percent of the hash rate on it, and it's, it's really-- it's, it's a,

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it's a no-brainer, um, in many ways, especially if the chain is offering-- if the transaction fees are to Bitcoin denominated, then you might as well plug in. It's a simple API integration.

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And the hardware itself actually isn't different at all. I mean, the beautiful thing about merge mining is that you can mine multiple chains at once using the same hardware, no extra energy input.

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It's just basically like a setup cost and of course the hosting fee for the node itself.

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Now, my, my [chuckles] most of the sidecars as, as you're calling them, that have come into existence, the nodes themselves are super, super small, uh, both in part by design and sometimes not by design, but just by the lack of, um, adoption.

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And so because of that, we haven't seen this issue of, you know, the side chain node being so heavy and so insurmountable that that could become some sort of barrier for Bitcoin miners to enter.

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But look, just, you know, Solana VM is its own thing obviously, but I, I think that the level of sophistication with setting up hardware on the mining front, especially with Marathon or with another of our other public miners and, and big pools, is such that I, I don't think it would be impossible if there were market demand for a Solana VM for them to set it up.

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And in many ways, I think they could probably be better suited to do so insofar as, like, it's not all gonna be co-located in one place or spread across like a pr-particular few set of entities. Um,

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I mean, look, I'm not the, the expert on exactly where these Solana nodes sit, but my sense is that it's much less decentralized than Bitcoin.

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And just given that you have these massive miners in, you know, everywhere from the US, Russia, and I mean, yeah, maybe the Chinese ones are pushed a little bit underground or have moved elsewhere.

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But still, like, you ha- you have some pretty sophisticated data center operations out there that it wouldn't, it [chuckles] it wouldn't be surprising to me that they, they would be able to run a Solana VM and maybe even run it better or find, like, efficiency gains that in the Solana world they haven't quite as much been able to find.

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Uh, but coming back to merge mining, I think, look, the, the blind merge mining approach and, um, the drive chains approach is, is certainly one that we find compelling.

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I think ultimately anything that is gonna force a consensus change on Bitcoin is gonna be a tough sell, and it's gonna require a lot of people to come together and coalesce, let public opinion come together.

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Um, and so the way that we see it is, all right, let's start with what works. Let's start with what we can put out tomorrow.

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Because a lot of the detractors of si- of drive chains, um, oftentimes it has nothing to do with the incentive or wha-what it does with MEV or, you know, what sort of incentives it creates, uh, the distorted incentives it creates for miners.

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Oftentimes it's, "Well, why do we need side chains in the first place?" No side chain that has been created on Bitcoin has been all that active.

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You know, maybe if you look at TVL or speculative value, sure, but these aren't metrics that matter to Bitcoiners.

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And so to me, the first test case, the first thing that we need to prove is that these sidecars are actually valuable, that Bitcoin is more than just, you know, that store of value, and that it can actually be a layer for a lot of DeFi and a lot of innovative, um, financial use cases.

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And once we prove that, then all right, okay, let's backward solve or, you know, maybe this whole like Enduro thing or these merge mine side chains without the blind part of things, um, maybe they worked and they show that there's that pent-up demand.

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Now let's see how we can smooth over the MEV concerns after the fact. Um,

221
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but look, I think another thing is that with merge mining, without the, the, the blind side of it, if you have a federation involved, which is what we did with Enduro, um, there's a way there to add that MEV resistance and to, you know-- No need to over-engineer the merge mining or try to find a way toward blind merge mining without a consensus change.

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There's no way to do that. But if you even try to undergo that exercise, we kind of started with the, the premise that, hey, let's just add in a collective, add in a federation here, consortium of entities.

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They'll sign periodic blocks.

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They'll guarantee that reordering isn't, transaction reordering isn't happening for a subset of transactions that they areYou know, creating or, like, um, adding into the block template and there you go.

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Like, at least that, that gives us a product that we can bring to market, and that's really been the focus from day one.

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It's just let's just bring something to market, let's just show that people are actually willing to use this stuff, um, let's take the simplest design possible. Yes, there are trust assumptions.

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Yes, it's not permissionless, but at least it works. Um, and then from that, you know, let's see, let's see what other... You know, all right, let's see how that changes the narrative on the drive chains conversation.

228
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Let's see how blind merge mining could be better, um, from the MEV standpoint. I don't know, at least from our...

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I know, and you, you guys had a conversation I was supposed to join but was too sick to join last week about MEV. I think at the end of the day there is no panacea.

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At, you know, you can have the most sophisticated solution and MEV still happens. At the end of the day, if there's an incentive to front run, people are gonna find mechanisms around it and ultimately they're...

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You know, and I, I... The literature on it has, isn't completely conclusive, and insofar as that's the case, to me it sounds like, all right, let's go with the federation design.

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[laughs] Just go with the simplest thing possible, get together entities that are com- that are legally bound not to, you know, engage in transaction reordering, and kind of like make the system stand on its own two legs and let the R&D continue in parallel, and when it's, you know, ready to be production ready, the, you know, the solve all to, to MEV, then all right, let's, let's implement it.

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But let's first get an ecosystem stood up.

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It's interesting because it sounds a bit heretical to say that one of the best MEV me- mitigation mechanisms is to lean upon trusted institutions, but in so, insofar as like it, that it does, you know, it [laughs] seems like that might actually work, and I think that's a kind of interesting idea.

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Um, yeah. What, what are your thoughts, Julian? I just, I, I think that at the end of the day, it's, it's...

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So a few weeks ago we were chatting about creating an NFT marketplace and, anyway, I had some time on a Saturday and so I like designed this perfect system and this is how it could work on a UTXO chain with DLC contract, da, da, da, da, all, all of this sort of stuff.

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And then I, you know, I'm talking to the team about it and everyone's like, "Well, why don't we just create a centralized marketplace?" Like, man, this ecosystem doesn't even exist.

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Let's, let's first get people like interacting with these NFTs that we're creating and maybe then like if they trade them and they wanna like use them, let's, you know, we'll, we'll talk about the whole decentralization component then.

239
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And it comes back to this exact point which is sometimes the simplest answer is like staring right in front of you.

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[laughs] Um, th- there's no need to over-engineer it, and when it comes to, you know, placing trust assumptions, I mean, we all know the issues with like trust assumptions placed on like centralized exchanges, right?

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Like, you know, oh, like it's not your keys, not your crypto. I get it.

242
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But if you bring together, I mean, the goal with Enduro at least is bring together like 15 or so entities, have them across different parts of the world, have them in Bit- do Bitcoin forward but maybe not in the same Bitcoin verticals, and hope that that diversity and that, that differentiation moves them to a scenario where they're almost gridlocked on certain core issues.

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Like, all right, no, let's engage in MEV. Well, I mean, you have...

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You know, they'll convince the Chinese v- Chinese miner about that, that, you know, join this system, and I'm not saying there's a Chinese miner in it, but just as a hypothetical.

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Um, yeah, I, I, I think on our end it, it just, it, it felt the most simple, um, and it felt also something that would just work, right?

246
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Because the thing with MEV that I was concerned about from the get-go wasn't even the long-term like implications of, oh, what would this mean? Would this move us away from a Byzantine world?

247
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For me, it was, I don't want users of this side chain on Bitcoin, like, they're Bitcoin holders that are getting involved in DeFi maybe for the first time to be front run.

248
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That is an awful user experience, and I don't wanna recreate the same mistakes that happened in other ecosystems.

249
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And so damn it if we have to like [laughs] recruit entities that just promise not to do so and put a contract behind them that has some penalty in the event that they do it, it works.

250
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[laughs] At least it, it gets us to the, it gets us past the first year. Th- that's, yeah, that's really fascinating. I'm, I'm really enjoying [laughs] this con- this, this conversation here.

251
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Um, well, I was, before I transition to another thing, um, do you have, uh, any kind of more double taps or questions for Julian on the Enduro platform merge mining? Where's your head at? Yeah.

252
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I, I mean, not, uh, not to make it contentious. I guess I, I kind of ha- would have a challenge here that I think, you know, the Byzantine versus rational thing is, is kind of what comes to mind when you describe that.

253
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I think off-chain stuff works until it doesn't, and I think, you know, this is a little bit extremist or hyperbolic, um, but I think I'm, uh, I'm, I'm... I know that I'm only doing that to kind of express the point.

254
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I think, um, imagine kind of like a world where like something like Slipstream where you have this like private channel for non-standard GTXOs, imagine that like generalized for anything.

255
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So let's, like, you know, people are gonna laugh at this on Twitter, but imagine you have like an AMM on, on Bitcoin.

256
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Imagine you have like all these side chains on Bitcoin and basically everything is, is trusted and you're just using like private mempools, and it's like Marathon and, and CleanSpark and, and AMPool and, and that's kind of the network, right?

257
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So, um, dependency on these things will only increase because they provide a better UX, and it'll create kind of like fake security, but ultimately like the revenue of the network and the political and economic power of the network will all kind of rest with a few entities.

258
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And then it'll be harder to change things at the, at the core level without these guys. These guys will be able to kind of lobby for what they want.

259
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Um, and they'll have, uh, you know, such a large percentage of the hash rate, they'll, you know...

260
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Uh, for the same reason Ethereum doesn't want to, uh, have Coinbase stake call ETH 'cause then, you know, it's one phone call to turn off Ethereum.

261
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You want something like Lido, you want, you want other validators in other countries as well, you want solo stakers.

262
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I think Bitcoin wants kind of like a rich, um, distribution of hash rate, not just among its like big mining companies but also like at-home miners and stuff. So I think by not letting them

263
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have access to the rich order flow in, in kind of the valuable blocks, you end up in a world where things become more rationally dependent and then, you know, it's easier for governments to turn it off, it's easier for governments to apply pressure, it's easier for, you know, things like BlackRock which have, you know, made-Their entire business model around kind of political lobbying and, and being these giant corporate shareholders getting, getting what they want at any sort of core development level done, whether it be an institution like the government or s- something like Ethereum.

264
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Um, I think, like, that's the biggest risk actually for crypto is kind of this corporate capture, and I think, like, any sort of rational thing actually accelerates it because it creates dependencies where now if you're a solo staker, now if you're an at-home miner, you actually can't compete because people are only sending their UTXOs or spending their UTXOs with Marathon or with CleanSpark.

265
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So I think, like, right now it's great and it's a great business model, but we wanna make this on-chain.

266
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So, like, the way Ethereum has tried to do this is PVS, so, like, pushing block building outside of being a proposer, but I think in other ecosystems there's different approaches.

267
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So I'm kind of curious if you have a takeaway on what that should look like. Yeah, absolutely. I mean, number of thoughts.

268
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I, I'd say number one is that we're, at the end of the day, we're talking about Bitcoin, um, and there are much, there are a, a lot of large holders of Bitcoin that believe and, and will push very, very hard for this permissionless v- this permissionless ethos to, to, um, live on, right?

269
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And doesn't matter what sidecar you wanna create on Bitcoin, any layer two, any, any side chain needs to have liquidity.

270
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And so at the end of the day, Bitcoin holders, um, the vast majority of which came in at a time when, you know, these exchanges and, and none, none of this stuff of MVD even existed in the first place, um, believe and wanna keep that sort of world, that it in many ways hamstrings any potential corporate takeover, right?

271
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Like, you need that Bitcoin liquidity to be in there in the first place, otherwise you're just gonna be creating some altcoin side chain, and then is it even a Bitcoin side chain to begin with?

272
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Does it have any impact on Bitcoin? Probably not.

273
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Um, so I, I would say I have a lot of faith in [chuckles] the Bitcoin ecosystem, and also just a recognition that Bitcoin itself isn't a technology, it's an exercise in social consensus, right?

274
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And so insofar as it's that, corporate takeovers are extremely difficult. Um, uh, corporate takeovers are extremely difficult in the real world, right?

275
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'Cause you have governments and you have other corporates that are trying to fight with each other.

276
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In the world of Bitcoin, you have this massive decentralized army of, um, whether it be [chuckles] whether they get operationalized via Twitter or X, um, or otherwise, that will actively fight against those sort of efforts and, and fight against that bleak future where that, that, that you're describing.

277
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So I'm, I'm, I'm not as, I'm not as concerned about that. I've been in business a [chuckles] while long enough to know that the Bitcoin audience is a very different one.

278
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Um, and I think, like, look, at the end of the day, if we're talking, like, non-Bitcoin ecosystems like ETH, like, sure, Coinbase doesn't hold the, isn't staking the majority of ETH and so they, one phone call doesn't turn around.

279
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But I think three phone calls could probably turn off ETH in its totality. So [chuckles] I would say that, like, I mean, corporate takeovers, there, there's other ecosystems to be worried about.

280
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I, I w- I wouldn't say Bitcoin, Bitcoin is the one. Um, now on the topic... I, I forgot. Yeah, there was another point that I wanted to mention that I, like, kind of- I did, I did like the spicy take though, Julian.

281
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I, I really, uh- Right... I really liked that. Um, I'm actually gonna- It's a good little bit at the mi- at the beginning. Just include it. [laughs] Yeah. [laughs] We'll, we'll clip that.

282
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But, uh, you know, I have this idea, we'll, we'll, we'll clip out some of these. That'll be a, that'd be a good one. The, the hardcore Bitcoin, uh, crowd would love that. Um- Well, [laughs]

283
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I'm sure they would It's more than three, but- No, there was another point you made, Walt, that I, I really wanted to touch on, so if it was all right with you.

284
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Well, the, the, I guess the dependency on these systems, like, increasing.

285
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If let's say, all right, I'm wrong and Bitcoin holders love the great UX, and everybody just piles into it and, and creates this dependency, I think you're 100% right about that.

286
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And so that, that's another thing that we're embedding from the get-go. Well, two things.

287
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Number one is that the majority of fees that are driven in this network don't go to this federation, and I think that's the dangerousness of side chains that have existed in the past that have just, like, a total proof of authority model and, like, have this, like, closed group of consortium entities earning all the fee revenue.

288
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We have a maximum of, like, 10, 20% going to this consortium, 80, 90 going to, uh, miners, right?

289
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And so the goal there, like, a design principle from the get-go was if you're signing on to be a collective member, if you're signing on to, like, help with, like, im- improving the, the MEV experience or reducing, rather, um, MEV on the, on these side chains, you're not coming at it because you think this is gonna be, like, a massively profitable endeavor and you're just gonna own this entire network.

290
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It's actually supposed to be that, you know, you're still bene- You're here, you exist for the purpose of, again, advancing proof of work. Um, so that, that, that's one element that we have.

291
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Um, but the second element is just in terms of the future state of side chains that get created, we're basically leaving it up to the community to, to create those.

292
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And so I think that there's, there's an element of, like, sure, Marathon, and maybe there's, like, a, a corporate genesis, but the, the longevity of this project is so much beyond us.

293
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I mean, I'll put it to you very bri- bluntly. Like, I'm leading product for this. I am not Mr. Expert when it comes to all things layer two.

294
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And so at the end of the day, there are gonna be bigger ex- experts that come into the room, that build new side chains, that, um, propose new, new developments in how this ecosystem evolves, and it's actually behooves Marathon, both from a, not only from a product standpoint, but from a regulatory one, to not be the sole owner of this whole thing for the reasons actually you described.

295
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The more control the federation, the more control founding members have over the system, the worse it is for each of us individually.

296
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So it, it behooves us to let this, like, kind of stand on its own, and I think there are legal incentives that keep us from a total takeover. So anyway, I'll [chuckles] I'll leave it at that.

297
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I, uh, fascinating conversation. This is... I, I'm loving this. Um, I wanna try to maybe wrap this up in 10 minutes. Julian, you, I, you know, people, the people watching, we've got quite a few viewers right now.

298
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The people watching might not know that you're actually, uh, it's morning where you're at and you were on a, on a plane all night I assume. So- Correct. Yeah. I thank you so much for hopping in.

299
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It's evening in the, in North America and morning over there on the other side of the world. Um, this, you know, this gets into, um, like, one of my big existential questions, and it's probably for Walt, I guess.

300
00:49:14.152 --> 00:49:30.292
Um-It like [laughs] this is a spicy question, but is there anything to learn from Ethereum except what, like, not what doesn't work? It's a big, it's a big question. No, I mean, I think that's for sure savage.

301
00:49:30.392 --> 00:49:36.172
I mean, I think, I think, um, definitely yes. I think you can learn, like, what didn't work.

302
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Um, you know, as, as a good starting point where Bitcoin maybe won't take the same mistakes or can, you know, leap forward a little bit quicker.

303
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Um, I think one of the core developers was in, like, a, a, a roll kit GitHub repo, which, you know, that's, like, super specific, but, um, our Celestia team focuses specifically on, like, a roll kit development kit, so anyone can build a roll-up really easily and deploy it to Celestia really easily.

304
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And in it they were kind of debating some MEV stuff, and one of the core, Bitcoin core developers jumped in and was like, "Why don't we just, like, randomly order, um, and just use randomness?"

305
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And, um, there's various, like, trade-offs with that and, and stuff, and we don't have to get into the specifics, but, um, it's doesn't work. It's not a good idea.

306
00:50:19.932 --> 00:50:28.672
And I think there's, like, a lot of established research where stuff that feels very counterintuitive of what you think would work in Ethereum ends up not working.

307
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I think Bitcoin is gonna have staking, and I think it's gonna play a significant role. Um, I don't think, you know, the network will ever become proof of stake driven.

308
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I don't think people are gonna swap out Nakamoto for something else, but I think you'll get, like, staking logic. So, like, people will be able to have bonds, um, and the bonds will be able to be proven.

309
00:50:48.272 --> 00:50:55.452
So if I do something off-chain, I can prove that, you know, I executed it correctly. And off-chain, it could still be on another blockchain, right? It could be on a roll.

310
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But, um, I think, you know, staking economics have a significant kind of, uh, you know, threshold in terms of MEV or, like, an, an importance in the MEV world.

311
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I think staking itself is a bit of a plutocracy because it's really rare to get slashed and it's really rare to, rare to lose that. Hash rate's a little bit easier to lose, right?

312
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Like, we had the China ban, then we had the war with Russia.

313
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So within two years we had two huge macro events where a lot of hash power just got turned off or, or s- or, like, uh, taken by the governments, um, i- uh, in Russia and China. That can happen all the time.

314
00:51:30.092 --> 00:51:37.762
Um, staking is a little bit different because it's internal to the system, so it's easier to port around. Um, it s- arguably has more long-term alignment.

315
00:51:37.912 --> 00:51:45.152
I think a lot of people mine Bitcoin and don't know anything about it. They don't understand the twenty-one million market cap. I think there's some miners who think they...

316
00:51:45.412 --> 00:51:52.692
I remember, like, in, like, I think it was, like, in the first halving, like, one miner kept trying to mine blocks with the full Coinbase reward from, like, pre-halving.

317
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And so I think, like, you know, there's some alignment stuff where if you have skin in the game, if you're largely denominated in the, in the network.

318
00:51:59.932 --> 00:52:07.922
All that stuff's gonna happen on Bitcoin, so, like, big UTX holders, right? And if you can make a proposer commitment where you say, "If I, if I do X, I get slashed.

319
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If I do Y, you pay me a little bit of a fee," and, and you basically do something on someone's behalf, and it's crypto economically secured by slashing, that creates, like, a great place to build an MEV market, and that's kind of what Ethereum has done.

320
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So I think, like, Bitcoin is gonna learn from this. Bitcoin's gonna have staking.

321
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A lot of MEV is gonna route through this hopefully eventually, 'cause it's one of the ways you can create kind of more secure on-chain markets. Um, so I think it has a ton to learn.

322
00:52:33.692 --> 00:52:43.212
I think, you know, the reorg stuff was kind of over-hyped on Ethereum. I think it's potentially bigger on Bitcoin, um, just 'cause the global distribution of hash rate is significantly larger.

323
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I think the payoffs could probably be greater and there's less of a penalty. Um, that remains to be seen, right? That's, like, that's, like, a largely theoretical thing.

324
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But this could be driven just by, like, um, you know, merge mining as, a sidecar. So I think there's a ton to learn here.

325
00:52:59.312 --> 00:53:07.292
I just think it's very hard to map it and still have it be theoretical, so it's hard to know, like, what, you know, seems feasibly possible.

326
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But then something has, like, some hidden transaction cost or some friction, or it's just, like, too hard to do, you know, cross-domain MEV.

327
00:53:13.652 --> 00:53:25.462
Which right now in Ethereum there's very little cross-domain MEV between blockchains because they don't have the same assets, and that inventory is very hard to keep in because just switching between blockchains, even if it's both Eth, they're different versions of Ethereum.

328
00:53:26.192 --> 00:53:32.352
So, um, it exists, you know, in the case of, like, Finance to Uniswap, but it doesn't really exist in the Arbitrum to Ethereum case.

329
00:53:32.372 --> 00:53:35.931
But it's also because the sequencers aren't decentralized and they're not permissionless.

330
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On Bitcoin, presumably, you know, this will happen sooner because the L2s are launching after we've had L2s for five years and five years of L2 research and R&D and product development. So I think there's a ton there.

331
00:53:45.852 --> 00:54:00.332
I, I love the inflammatory question, though. Yeah. So yeah, you, we can write all the papers we want, but it sounds like you're saying we need a, a MEV in the arena. Yeah, yeah. That's pretty good. Let's do it.

332
00:54:00.372 --> 00:54:06.882
[laughs] Uh, yeah. That's, that's one hundred percent true. Well, I feel like the... Yeah, that's what, I mean, that's, this is what Julian's doing is, uh, you're leading this.

333
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I kind of want to, like, wrap up this, uh, conversation, close it on our...

334
00:54:11.892 --> 00:54:20.672
Julian, closing thoughts just on the general discussion and, and on MEV, on Bitcoin, and, um, what do you hope the next few years looks like on Bitcoin?

335
00:54:21.812 --> 00:54:33.942
I, I really hope there's a lot more learning from other ecosystems and taking in the, these, you know, these top thinkers when it comes to MEV. The fact that, like, randomization isn't itself just a solution.

336
00:54:34.272 --> 00:54:42.292
Something that I see a lot is, within the Bitcoin world, is reinventing the wheel just for the purposes of, "Well, we're Bitcoin and so we know this very well," and that's largely true.

337
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I think the Bitcoin developers are, um, definitely [laughs] the average quality of a Bitcoin developer is much higher than in other ecosystems, and I can say that as somebody who's hired a lot of developers and I've seen that in, in practice.

338
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But I do think that there's, there, we run a risk sometimes of being too isolationist.

339
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Um, and so I, I, I really, one thing I wanna do with Enduro broadly speaking is not to remain isolationist and take in these different ideas from other ecosystems and, and kind of embed them from the get-go.

340
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Um, I also think that one beauty of this multi-sidechain ecosystem that we're creating is that it does give us, like, a test case, kind of like MEV in the arena, so to speak. And, and other things too.

341
00:55:20.252 --> 00:55:41.576
I mean, there's so many more problems and, you know, the-User experience issues that, that Ethereum has tried a number of years now to solve, that we can use Enduro and sidechains on it as, uh, sort of like a test case to see how those-- how solutions could work, um, on a chain linked to Bitcoin, um, on a chain that has merge mining and that miners are involved in in the first place.

342
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And maybe there are ways to get creative with how that merge mining is incorporated.

343
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Like, all of those, like, all of those ideas, very open to, and I think that's what I'm probably most excited by is, is the idea of creating this, like, sidechain network that learns from a number of different ecosystems, and, you know, one of the old concept is like ETH is the test net, right?

344
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Like, well, okay, like, if we actually believe that, let's n-you know, Enduro's the staging, right? Like [chuckles] and then let's push things to main net, right, like after, after some extra testing.

345
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I would really hope that ends up being the case because you don't just, you know, we can't just keep claiming that ETH is a test net and then not take any learnings from there.

346
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So hoping that the next, um, the next few months of Enduro and the next few years also are ones that we incorporate these new learnings, have more conversations like this, and, and put things out into the wild and kind of like see what's theoretical versus what's actual.

347
00:56:26.976 --> 00:56:30.636
You know, to your point, Walt, I love that point, right? Like, we can't just stay in the theoretics.

348
00:56:30.696 --> 00:56:40.596
We have to think about, all right, like what, what will actually happen when people are using this and not just, you know, what we think could. So that, that, that in a nutshell. I appreciate that.

349
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Walt, closing thoughts? Uh, I, I don't, I don't know if I have a closing, closing hot take. I guess, um, you know, Paul was, was kind of right all along, so was Satoshi. [laughs] Merge mining is, is kind of a superpower.

350
00:56:55.216 --> 00:56:59.056
I think it has a lot of potential interesting attributes.

351
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Um, I'm very excited to see, you know, kind of the adoption Marathon's, uh, new stuff gets, and, uh, you know, I think, uh, I think in eighteen months we're not gonna recognize Bitcoin at all from today.

352
00:57:10.316 --> 00:57:19.556
I think it's indistinguishable from even a year ago, and I think it will just keep getting weirder and weirder and weirder, so I'm really excited for that. You teed me up perfectly, Walt.

353
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That is kind of the whole thesis of Bitcoin Season Two.

354
00:57:23.056 --> 00:57:36.176
We're entering a new era that lets me-- I'm gonna kinda refine what I, my little definition of Bitcoin Season Two, what it even is, but it's very clear that we're entering a, a time when Bitcoin is gonna look really different in the conversation.

355
00:57:36.216 --> 00:57:46.886
So Walt, Julian, thank you guys so much for joining. Julian in particular, calling from halfway around the world, um- Globally distributed Never too early or too late to talk Bitcoin, right?

356
00:57:46.896 --> 00:57:58.336
[laughs] Yeah, this is a decentralized podcast, you could say. [laughs] It is. Look at that. Um, yeah, so anyway, thank you so much. Uh, look forward to talking to you guys again. Um, shout out Walt with Cyber Fund.

357
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Go read his piece, Spectrum Map on Bitcoin, and Julian, uh, with Marathon Digital and the Enduro platform. So thank you so much everyone for joining me for the resurrection of Bitcoin Season Two.

358
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Make sure to go to blockspace.media, um, sign up for the newsletter coming out every Monday and Friday, and then subscribe to the YouTube channel, Blockspace Media.

359
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We will have a live stream on a week night and a video on demand during the week day. So thank you so much for coming, and we'll catch you later.

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