Today we're joined by Mike Ippolito, co-founder at Blockworks, who's here to breakdown his take on the Blockchain trilemma and how Ethereum, Solana, and Cosmos chains all attempt to solve it.

This wide ranging interview asks great questions and shines a light on what a multi-chain future might look like.
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✨ DEBRIEF | Ryan & David unpacking the episode:
https://www.bankless.com/debrief-blockchain-trilemma/
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Resources:

On the margin podcast:
https://podcasts.apple.com/us/podcast/on-the-margin/id1558223079

Mike:
https://twitter.com/mikeippolito_
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TIMESTAMPS

0:00 Intro
6:13 Intro To Mike
11:16 The Three Frontiers
19:11 Recap and Overview
25:58 Different Approaches to The Scalability Trilemma
31:42 Explaining PEPC
36:13 A Point By Point Walkthrough
45:29 Ethereum Vs The Invisible Hand
56:58 Should The Free Market Be in Control?
1:01:11 Moloch
1:08:13 Solo Validators
1:10:31 Defining Decentralization
1:15:49 Power Law Winners
1:19:03 Roll Apps vs App Chains
1:29:09 Defining Soverign Rollups
1:33:29 Sequencer Incentives
1:36:20 Exploring The Superchain
1:41:31 Price Discovery on Chain
1:44:15 Making Crypto Accessable
1:48:50 Permissionless Panel
1:51:29 Outro and Disclaimers

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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures ⁠

I think America is – I know what people hate when Americans say this.

I think it's the best country in the world.

But I don't wish that it was the only country in the world.

I'm really glad that there are other countries out there.

I think if everything became America, America would stop being America and it would actually be much worse.

So I think there's real genuine value in having multiple different ecosystems with multiple different viewpoints.

Welcome to Bankless, where we explore the frontier of internet money and internet finance.

This is how to get started, how to get better, and how to front run the opportunity.

I'm here with David Hoffman, and we're here to help you become more bankless.

The topic today, convergent evolution, or Ethereum, Solana and Cosmos, are they all building toward the same thing?

Our episode with Mike Ippolito of Blockworks explores that.

This is a well-researched challenge to, I think, the traditional bankless thesis of this future of Ethereum dominance and value accrual.

What are David and I missing from these non-Ethereum ecosystems?

That's what we talked to Mike about today.

There's some pushback on today's episode, a little bit of debate.

All of this is handled in an adult manner that we hope will further everyone's understanding, unlike the Twitter battles that we see so often.

A few takeaways for you from today's episode.

Number 1, Mike starts with the scalability trilemma.

There are 3 sides of the triangle, and according to Mike, there are also 3 ecosystems that matter, Ethereum, Cosmos, and Solana.

We talk about why Mike thinks they might be converging all into the same thing.

Number 2, we talk about the role of validators in these ecosystems and the different definitions for decentralization in each of them as well.

Number 3, we talk about Cosmos AppChains versus Ethereum Superchains.

Which entities are going to capture all of the MEV?

And most fun of all, I think, was the back and forth, the contrast between Mike and the bankless thesis to date.

David, I've got a lot to discuss with you in the debrief.

David, why was this episode significant to you?

1 of my frames of understanding of this industry is that every single chain wants to dominate.

Every single chain wants to eat up all the other chains.

And not everyone has agreed with that take.

The take that eventually in the fullness of time, in order to survive in crypto, you have to be the biggest chain.

And he's been exploring all 3 different rabbit holes, the Solana, the Cosmos, and the Ethereum rabbit hole.

And he's come up with this understanding of the paths that each 1 of these ecosystems is trying to take to complete the blockchain trilemma that you said.

Each 1 has its injection point in the trilemma and each ecosystem wants to complete the trilemma because each chain wants to dominate.

And so I think understanding the Cosmos strategy, the Solana strategy, how it compares to what people are probably very familiar with on the Bankless podcast, the Ethereum strategy, and weighing the merits and cons of each, I think will give us all a very deep understanding as to what is the current frontier of crypto economic research.

And so that's why I would say this episode is so significant, is that it takes crypto economics to its furthest depths in 3 different flavors and then brings them all back and compares and contrasts all of them.

I can't wait to discuss this all with you in the debrief, David.

That is available for Bankless citizens right now on the Bankless premium feed.

But first we disclose nothing specific in today's episode.

We're long ETH, we're long layer twos, but you already know that.

There's always a link to all Bankless disclosures in the show notes at bankless.com.

All right, we're going to get right to the episode.

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Bankless Nation, I would love to introduce you to Mike Ippolito, the co-founder of BlockWorks, a crypto-native media organization that we find very agreeable.

Bankless and BlockWorks share a similar corner of crypto in which we are trying to reconstruct what trust media and news is like in this industry.

Crypto is, of course, going to rebuild many new institutions and social structures, media being 1 of them.

And we share that in common with Mike and Blockworks here.

But in addition to building Blockworks, Mike is also the host of the Bell Curve podcast, where he explores very deep corners of the crypto rabbit hole.

And now I've been watching Mike explore some of these corners by our shared conferences that we go to and the podcast that he produces.

And so now that Mike has had a lot of time to let his ideas bake, we want to see what Mike has synthesized from his journeys across the crypto landscape.

3 frontiers we're going to focus on here on the Bankless Show with Mike here today.

The role of validators for their respective ecosystems, which is just another way to articulate what's Solana, what's Ethereum, and what's Cosmos, but specifically through the lens of how these individual ecosystems think about the role and service that their layer 1 validators provide to the ecosystem.

Second, role apps versus app chains, which is just basically layer twos versus Cosmos.

What is the tension between these 2 domains?

And then also, lastly, third, MEV value capture across the stack, specifically across the rollup stack, where you have the rollup SDKs, like the Optimism Superchain, Arbitrum Orbits, Hyperchains.

Then we got rollups as a service provider.

Where is all this MEV and ultimately all the value capture going to land in this ecosystem.

Is that aligned with what you want to get done here?

I think agreeable is the nicest adjective you've ever given me.

So thank you for saving that until I came on the podcast.

Mike, let's take a moment actually just to dive down a little bit again into you and Blockworks.

Bankless listeners are of course familiar with us, Ryan, myself, who we are, what our vibe is, how we think.

Maybe you could paint a similar picture for you and yourself.

What do you think about and how do you select the content that you want to explore on Bellcurve?

So, Blockworks is a media and research platform.

It was founded by myself and my co-founder Jason back in 2018.

And I think the way we divided responsibilities, so Jason, for anyone who's ever met him, is probably the most, even more agreeable than me, if you could imagine it.

And he was the natural fit for sales and growth, which we needed in the very beginning, and we still do.

Content, we think of ourselves as manufacturers of ideas and content, and then we sort of spread that out across our various channels.

And I had never thought of myself as a content or person before, but someone needed to do it.

And I found that I really genuinely loved it.

My background in college was I was a classics major, which is like the nerdiest thing you could possibly do.

I was actually a classics psych double major.

So I was determined not to get a job, but I found myself doing this.

And I really focus on the full spectrum of content that we produce at Blockworks from editorial, which is kind of news and breaking stuff, podcasts, which is 1 layer deeper.

So think context to the news and facts that you might read.

And then research is even 1 layer deeper.

So let's say you've gone all the way down the rabbit hole and your past just context, and you want to understand how stuff really works and what's coming next, that's my sort of focus at Blockworks.

Okay, is classics like, are we talking about like learning Latin?

Is this like Greek and Roman mythology and stories and this sort of thing?

Like a classics education, a classical education?

It's actually Latin and ancient Greek, the languages.

So 2 languages, neither 1 of which are spoken today.

I was going to comment earlier that when David is going through these subjects, you know, the role of L1 validators, roll apps, snap chains, God, this is gonna be a nerdy podcast, which is how I like it.

And then he brought classics into the mix.

So we're going real nerdy on today's episode.

I've got my liberal arts training though, so I'll make some metaphors and some analogies.

Mike, would you say it's accurate to say that Mike is the David of Blockworks and Jason is the Ryan of Blockworks?

All the pros and cons of each of those personas,

That is very, I take that as a very high compliment because Jason is a fantastic individual with fantastic sense.

He is absolutely, breaks when he needs to be and he runs a fantastic business over at Blockworks.

I can't say enough good things about Jason.

Maybe you want to talk us through what we're going to see.

Give us a preview of all of these slides that we're going to get.

I gave us the preview of the 3 frontiers.

Let me, let's start with this concept of, so zooming out here for a second, David, when you asked me to come on the show, I think 1 of the things that I've been noticing a trend in crypto generally is this convergence of architectures between different blockchain ecosystems.

And, you know, if you zoom out and actually ask yourself, what is a blockchain from first principles, it's a shared database that users can verify that the computation is being done in a way with integrity and accuracy.

And if you kind of think about Bitcoin as the first version of this shared database, which is probably still the most decentralized, most other blockchains that have been launched since that period of time exist on a spectrum of extremely decentralized, and we can get into the definition of exactly what that means, to very centralized, which would be a singular black box database looking something like a Binance.

And there's a spectrum of different trade-offs that you can make.

And I think the best way to understand that spectrum of trade-offs, which is what we're looking at with this slide here, is this scalability trilemma, the blockchain scalability trilemma that many of us will be familiar with.

I'm not sure if Vitalik actually coined this term, but I pulled this actual slide from a blog post that he wrote a couple of years ago.

And I think that it's becoming relevant again, because the idea behind this triangle is that on each side of the triangle, you have scalability, decentralization, and security.

And I think most of the, I'm going to talk mostly about Cosmos, Solana, and Ethereum because those are the ecosystems that I've been most focused on and understand the most.

But I think each 1 of those chains basically has focused on, in particular, 1 leg of this triangle.

And I think the reason that this moment in time is unique and the reason why we're starting to see convergent architectures is because I think each 1 of these chains has sort of mastered their leg of the triangle.

And what they're starting to do is say, all right, I've been extremely optimized for scalability or I've been extremely optimized for decentralization.

Now I need to start trying to conquer this unsolvable problem of somehow getting all 3 of these things.

And that's why I think you're starting to see convergent architectures.

And if you want to understand the trade-offs, where those trade-offs are most visible in these different blockchains or where it all really stems from, I think it comes from the way that each 1 of these ecosystems perceives the role of the validator and what the job of a validator should be and what it should do.

So come up with, we love our memes in crypto.

So if you're following along, I came up with the memes of each validator from Ethereum, Solana and Cosmos.

In Ethereum, broadly speaking, we want our validators to be CUCs.

That comes from, shout out Evan Forbes, who gave this talk.

He's actually working at Celestia, but he gave a great talk about this at the Modular Summit this past couple months.

In general, the design decision for Ethereum— Mike, you said CUCs, right?

Yeah, we can't— You've got to explain that.

That's a little internet definition of Men who like to see their ladies pair up with other men.

I think the point you're trying to make is that how to make Ethereum validators just dumb and low and stupid and simple.

Yeah, commoditized is probably the best way of describing that.

And I think it's probably worth even just going through the history chronologically of Bitcoin was the first blockchain ecosystem And there were 3 stakeholders in that ecosystem.

There were the devs, there were the miners, and there were the node operators.

And Bitcoin, you know, was very religious about, is still very religious about a lot of ideas.

Now, to the point where in 2017, there was the block size war that was fought over a very specific definition of decentralization, which is reducing the hardware requirements of being a node operator.

This sort of set Bitcoin on this very specific path.

And I think Ethereum, just chronologically, it was the only other really credible layer 1 that launched around that period of time.

And I think it inherited a lot of the ideas that Bitcoin originally had.

And 1, I think it inherited this very specific definition of decentralization.

I think also it inherited why decentralization matters, which is, I think there are 2 camps of why decentralization is unique or necessary for crypto, which is 1, a government crackdown, but the other is just enabling new market structures.

And I think that distinction is actually important.

And then there are some other things about money and things like that.

But I do think it's worth pointing out that a lot of Ethereum's very good ideas actually did originally come from Bitcoin.

So the node operator from the Ethereum point of view, and you guys correct me if I'm wrong here, is that it should be a cock.

And we should be paying the minimum amount that we can to our proposers to still get security from the network.

And the benefit of doing this is that you can have solo stakers.

Really a good way of saying this is that Ethereum is optimized for enabling solo stakers to still validate the chain.

The way that I would say this is that Ethereum validators are optimized to be the lowest common denominator because that is maximum inclusivity.

All right, we've maxed out on that word for

So the trade-off there, obviously, is scalability.

What you don't want to do is make the cost of verifying the computation on the chain more than the weakest link in the chain.

So you have inherent sacrifices at the main net level.

The role of a Cosmos validator is a little bit different because first of all, Cosmos was the first, I think, sort of credible attempt at proof of stake chains.

So a lot of the ideas actually from Ethereum today, many of them come from Cosmos originally.

The big difference there is that they envisioned a future of app-specific chains that are interoperable with 1 another.

So some of the, you have a little bit more complexity and cost in terms of the hardware requirements for being a node operator because in addition to running consensus, Tendermint consensus, you're also running the application code and those are interfacing through something called ABCI++.

And the consensus type is different because of the, there's a trade off in the way consensus works on Cosmos, which is they've sort of prioritized safety over liveness.

And they've, 1 of the consequences of that is that you have a smaller number of validators that make sense, and they also have delegated proof of stakes.

And the idea, I think, behind Cosmos, and we can get into this as well, I think it still applies to almost all these blockchain ecosystems, is that even though you're able to be a solo, you can verify the network as a solo participant, you're mostly gonna do that from a light client, and there's gonna be professional validators that are actually validating the chain.

So all the way on the other side of that is Solana, which has taken a very distinct set of trade-offs, which is similarly to Ethereum, they envision a future of 1 layer and generalized blocks to base as opposed to app-specific block space.

The complexity of being a validator is high.

The costs of running the hardware are high.

And the consensus type similar to Solana is delegated proof of stake.

And I don't want to totally speak for Solana here, but I think they envision a future where they probably optimize less for decentralization from the perspective of any user being able to validate the network in the interim.

They're going to let hardware requirements scale to a point where individual users can validate the network over time.

But for now, solo stakers have been priced out, essentially.

So you are laying out sort of your thesis.

And so I want to make sure that we kind of understand this so far from your perspective.

And then I'd like an opportunity to kind of clarify understanding or like pushback in various areas.

But your thesis, we go back to that kind of trilemma, right?

I think you're basically saying, so Ethereum occupies the bottom side of this triangle, which is a maximization of decentralized and secure.

Those are the 2, Because the trilemma is like, you get to pick any 2, right?

So the things that Ethereum has picked are decentralization and security.

I remember back in 2018, I was trying to understand this Ethereum thing.

So it's like it inherits from Bitcoin values.

And it's at the bottom side of this triangle.

On the left side, at least on this diagram, you've got this optimization for decentralization and scalability.

And this is where multi-chain ecosystems fit in.

Because you could spin up tons of Cosmos chains, right?

It's open source, you just fork a new chain, you deploy Tendermint, you got it.

So scalability and decentralization is kind of that side.

And then you've got Solana, which is maximizing for scalability and security on this other corner.

And that's a, you know, I think, at the time that that Vitalik was writing this post, he's probably thinking about EOS at the time that was that was kind of the big Solana type of chain, where you maximize TPS, You boost kind of the validator requirements.

So maybe these can't be run by individual solo stakers.

You have DPOS, so that's delegated proof of stake.

No idea of like proof of stake solo stakers.

And that would be a maximization of scalability and security and that side of the triangle.

Is that where you'd place all these 3 ecosystems?

There's like, there's only 3 strategies for blockchains because there's only 3 sides to the triangle here.

See all Bankless transcripts on Youtube

The Blockchain Trilemma - ETH Vs SOL Vs ATOM with Mike Ippolito