Jesse Pollak I Global Onchain Economy With Base I Pragma Denver 2024

[Music] so for our next Talk of the day I want to bring on Jesse from base for an interview and Far Side chat on what we think the future of a global economy looks like so without further Ado please welcome Jesse on stage hello everybody happy Friday no it's not Friday it's Wednesday yes it's Wednesday three more long days till Friday um hey everybody good to see you this is my first talk that I've ever done with glasses so I have to bear with me the glare is a little bit different well uh this should be fun so there's a lot of things I want to cover um and a lot of things are already on the theme of what you are actively talking about which is how do we become onchain but the thing I want to start off with is some good news which is just last Friday Baye turn one it's a massive Milestone and uh I'm gonna curious to understand how the last 12 months have been and uh how do you reflect on that yeah um yeah I mean last week was the oneyear anniversary of our announcement and launch of the net so we launched the maid net in August so it's been about six months of maid net but um it's pretty crazy that it's been a year since we were here last year for E Denver talking about the L of Bas and it's been about a year and 6 months since we actually started working on Bas and if I think about where we were a year and six months ago and where we are now I don't think I could have imagined uh all the progress we would have made in 18 months uh I think the way I feel about today is that um the industry has never been better positioned to um take this kind of next upswing of adoption and next upswing of the world coming on chain and that's because we've built out a lot of the core infrastructure um from lowcost l2s to better wallets to to Identity and social graphs and with all of those pieces in place I think we're really starting to see the rise of this next generation of applications and I think the thing I just feel grateful about is that um Bas gets to be a part of it and that we get to be building with all the incredible people in this room um all the incredible people who are Building on Base around the world and um getting to help kind of Shepherd in this next era of uh the onchain revolution which I think is going to be pretty freaking awesome so let's get into that I mean so the thing that's interesting to me is you actually really well summarized this thing in a blog post that talked about basic's new Mission and uh the mission you kind of talked about was the goal is to become a global onchain economy that uh supports uh open Innovation creativity and and freedom so what made you kind of converge on that statement and how did you get to that mission and what does it actually mean to be on chain yeah you know when we started working on base last year I think the first thing that we really thought about was base as a developer platform it was like okay we're building oh we're building block space we're building a blockchain that offers block space the primary consumer of that is developers they build apps um users then go and use those apps but I think you know we were launching the test that we were kind of coming out uh and and trying to figure out like how do we get our feet under us and the thing that felt like a really clear Northstar was we care most about developers we want to make sure we have a really really great developer product um and that was really our Focus for 2023 it was how do we make sure that when we bring Bas into the world we kind of incept a developer ecosystem a developer platform that people actually want to build on uh and I think that uh we're pretty successful in that obviously still very early but there's a lot of people there's thousands of people all over the world who are building on baits every day and I think as we came into 2024 that kind of foundation the foundation of okay we now have at least somewhat reasonable developer platform uh give us the space to take a step back and be like okay where are we going like yes we are building developer tools but really what is all this about and I think one of the things that we kind of kept goinging back to because a lot of us have grown up in coinbase for the last seven years and you know I joined coinbase at the beginning of 2020 uh 2017 um as an engineer kind of spent five years building all the consumer products um was the coinbase mission uh and the coinbase mission is to increase economic freedom globally that's it increase economic freedom and the idea is basically if we increase economic freedom um which is things like you know shity for the assets that you hold freedom to transact freedom to trust the the financial systems that you depend on um if we increase economic freedom what you see from research is basically everything else gets better too it's like you have longer lives you have happier lives you have better businesses you have people basically working together because they're building on a platform that um they can trust and that supports them and puts them on a Level Playing Field and so we kind of thought about okay we've built this developer platform we have a strong Foundation there we come from these roots of thinking about increasing economic freedom and figuring how do we actually do that what does this mean for what is bass's role in achieving that goal of increasing economic freedom leveraging this developer platform that we built and I think what that kind of brought us to is this conception of Base as an economy and we're not the only people you know who have an economy and one of the things I've actually done recently is analogize based to other things and the two ones I really like analogizing to are the United States uh and the Apple apps store both of those are economies um the United States you have pretty big economies too pretty big economies right in the United States you have the kind of governance platform that people build on then you have this ecosystem of apps that people um depend on to run their businesses or to do things and then you have actual like Capital markets that sit at the top that are governed by the United States um and there's a lot of great things about that market you know it's an economy it's worked really well there's also a lot of not so great things like if you're not a US citizen you don't have nearly the same access to it and so depending on where you're born you might not be able to participate in that economy same thing with the app store right if you're in the IOS app store you have a developer platform it sits at the bottom then you have this ecosystem of apps and then you have a a capital Market with all of this Revenue that's flowing through there and apple in this case has decideed hey we're going to tax all the revenue at 30% we're also going to make it so if you don't have an iPhone because you don't have enough money to have an iPhone you can't access any of the apps you can't participate and I think the thing that we saw with Bas is wow there's actually an opportunity for us to create an economy that's better than both of those economies because we can have a developer platform that's fundamentally open that anyone anywhere in the world can build on regardless of where you're born regardless of where you live regardless of who you are if you have an internet connection you can build on base we could have an app ecosystem that is a neutral Level Playing Field where any app is accessible to anyone uh you don't have to have an iPhone you don't have to be United States citizen you can just participate and then we can have a capital Market that is decentrally governed using all of this incredible governance infrastucture infrastructure that's starting to be built on chain that can be free and support that economic freedom um that I think we're striving towards and so that conception of Base as an economy and an economy that we believe can increase Innovation can increase creativity and then most importantly can increase Freedom that was kind of this Insight that I think we had at the end of last year that has brought us into this year and really anchored us on why we're doing what we're doing that was amazing um the I mean all those things are actual active things that everybody can relate to because they've experienced either side of it um and I think the the the the Nuance here is that the interoperability on the US government or the App Store is still the pring issue that everybody wishes for but we've also seen I mean as somebody who's been in the space for also such a long time we've also seen the definition of onchain differ and evolve over time so what does it actually mean for you to be onchain are we talking about anything must happen must be on onchain as a auditable thing and I get to see everybody's balances I get to see everything that's literally going on and Trace everything what's the the differentiation on what should and shouldn't be onchain yeah you know if if you're if you've seen me on the internet you've probably gotten sick of me saying onchain um because it's a thing we've been hammering on and and there's a reason we've been hammering on it and that's because as we have actually done a lot of research on the base team and at coinbase what we found is that um when you use a word when you use onchain it uh is much better received by both existing Builders and net new people because they can very quickly analogize it to online and that is a mental model that people understand and there is significantly less stigma for onchain versus web 3 or blockchain or crypto and so I actually had a conversation with a builder this morning and they were like hey do you have any feedback and I said yes I have one piece of feedback change your website stop saying web 3 start saying on chain and what you will get is you will get more high quality builders and you will have a higher hit rate of of conversion for people who don't understand what crypto is that's like we've researched it that's the facts so if you if you're writing web three stop write on chain you will land better with your audiences but I think when we talk about onchain the way I've kind of um ended up uh defining it for myself because I I do think that there's questions from people of like you know does this mean everything needs to be on a blockchain and I think the reality is where our infrastructure is today that's not possible from a cost perspective and we're still really figuring out what the cores are of this architecture that's shaping up what's going to be on L1 what's going to be on l2s like bass what's going to be on l3s which I basically think about as uh onchain integrated servers that anyone can run uh kind of like their own data center we don't really know what that's going to look like and so how I've really started thinking about onchain is something is onchain if it is anchored to the kind of money and identity that is anchored on chain on L1 or L2 and so if for in but not not that to a user uh sorry but so she said it's anchored to L1 and L2 but not specifically tied to a person uh anchored to a user's identity and money from L1 L2 and I think forecaster is a really great example of this you know for those who maybe don't know forecasters is a social network and onchain social network um you know lots of really cool things happening there right now highly worth checking out um the way their work is their identity registry is on uh Optimus mainnet and that's kind of where you register your forecaster ID um that's where you link additional address to your ID so people can know who you are across a bunch of different places but then they actually have another kind of network layer called hubs which I think about basically as an L3 that's sitting on top of L2 um where all of the actual cast data or tweet data is and in that case what they're doing is they're basically saying hey we're going to leverage the identity infrastructure of blockchain of ethereum of of optimism mainten that and these addresses that people have to Anchor we're going to use the payments infrastructure to do payments but we're going to have these kind of like components that flow off it that enable people to operate at a much larger scale that actually supports consumer apps and so I would definitely consider forecaster on chain I would also consider things that are you know we're going to publish literally every transaction on chain um you know into a block uh on chain as well but I think having some flexibility and really thinking about um this more as a kind of like mentality mindset and transformation some proof of happening on chain so that there is guarantees just like when businesses went online um you know when you first bought your books on Amazon the books didn't live online the books were in a warehouse but you bought it online the identity the payment happened online and what's happening now is the identity and payments happening on chain and then sometimes the other things are offline sometimes the other things are online but that uh kind of really foundational component of identity and payments is moving onto this new INF infastructure that is fundamentally accessible to everyone because it's a global onchain economy and you don't need permission to deploy which is exact best part anywhere in the world can partici State I think the the cool thing to me about all this thing is that it is a function of time too like we've spent the last five years getting to the scalability based kind of thresholds to be like hey let's this is actually finally possible uh and obviously there's a lot lot of room for improvements here but I want to kind understand how do you think about the cost of being on chain um as as base as coinbase as the as advice to developers as I think about this thing uh what should be considered what can we expect obviously you've contributed to a lot of these scaling efforts too so let's kind of like merge all that in and let's kind of talk about the cost of being on chain and around it when we started working not on base specifically but um kind of like the concept of bringing coinbase on chain about two and a half years ago I think the first thing we identified was that we wanted to build on evf we wanted to build on ethereum we wanted to build on L2 but L2 was still too expensive you know if you look back then uh you know the average transaction was in the dollars on L2 maybe High you know cents um uh today average transaction something like 20 to 40 cents um and for certain things that's fine like if you're setting usdc it's actually way better than ethereum um but it's still pretty pricey day um and it's not something that you can do hundreds of times a day uh and so I think our belief continues to be that in order to kind of support the the the consumer scale that we want to we need to get transaction fees subset like that's our Northstar it's like my team wakes up every day it's like how do we get transaction fees subset while preserving the decentralized secure scalable reliable characteristics of ethereum at Layer Two And I think that you know with EIP 4844 coming up on March 13th which base will be day one ready for uh thanks to two and a half years of hard work and and collaboration with optimism Collective and uh other ethereum core developers I think we're going to get another kind of 2 to 5x reduction I I I think there's a chance that we're actually going to get subs sent for a little while there as the kind of at the fee economy thresholds bandwidth yeah um but I I think that this is going to be the next inflection point we kind of had an inflection point over the last year where L2 emerged we got 10x cheaper and a lot of new youth cases started to come up next we're going to have 4844 which is going to come down again we're going to see more use cases and then I think we're actually going to see the maturation of l3s um which like I said earlier is kind of like a blockchain connected server where you can do anything at a massive scale but again you can still use those identity and payments derivatives you can still access the identity that a user has you can still use the usdc or dgen or whatever other token lives on the L2 but you can operate at massive scale I think that's going to drive the cost down even further so you're talking you know 100th of a cent a thousandth of a a scent which is going to open up even more of the aperture of what's possible so let's try to get a better intuition for these l3s so L1 is ethereum and then we have have L2 as optimism yeah you have L3 as base yeah not quite not quite I I think about this is L1 is ethereum so that is it it's pure technical infrastructure its job is to provide the ability to run evm compute in a way that can be protected from nation states and have ultimate maximal trust optimism originally launched as n 2 op main net is an L2 it runs on top of ethereum um I actually think about optimism as we talk about it today almost as an L 1.5 what optimism is gradually evolving into is a governance system that will govern many l2s including base including op maet including Zora including mode including a bunch of these other pieces of infrastructure and optimism is basically going to live as a connection of smart contracts that exist on L1 that bring them together create a shared security model shared bridging model super chain of sorts super chain of sorts and that's going to basically I think lay the foundation for what I expect to emerge as somewhere between 5 to 50 l2s that will make up L2 and the mental M I have for this is actually kind of anchored to the original ethereum scaling Vision which is when you look at pre- rollup Centric scaling of ethereum it was we're going to have 64 shards I think that we're going to end up in about the same place with l2s where you're going to have somewhere between five and 64 shards that are basically going to be these big l2s that have major economies driven through them that have governance that are uh cultural that have you know maybe verticals or maybe GE geographies that they're really anchored to and I think Bas is going to be the center of that economy and that's really what we're working towards that's L2 I think that the really cool thing about L2 is it's going to be able to support global scale we're going to be able to have billions of people who do some amount of transacting on L2 but there's still lots of things that you can't support at that layer and so I think a great example of this for me has actually been um foraster where I don't know if folks have used forecaster but they now have a warps button where you can click and it gives 10 warps and a one warp is one cent basically that's the mental model there's also something called dgen on there where you can reply 500 D gen and that gives like five cents of dgen which is a token on base you can't do a warp click or a dgen tip that costs 5 cents if the network fee is even going to be 1 cent because then you're paying one transaction uh then you're paying you know 20% of the transaction fee and so what you can instead do is you can stand up an L3 and then you can really easily in one click let users deposit their dgen or their usdc into that L3 and then the fees on that L3 will be a 100th of a cent or a thousandth of a Cent and users can withdraw at any time as well and so what that's doing is it's basically pulling in that sense of identity and those payments uh pieces and saying we're going to create a contained execution environment that we can really uh run at kind of Max Capacity to get the sort of scale we need in order to do tons and and tons of transactions and so I think that will be really useful for tipping I think that will be really useful for gaming where you want to put some money into a game and then play that game and then deposit you know withdraw the money whenever you're ready and I think in general the way to think about that is it's going to be like running a server it's going to be as easy as running an ec2 instance on AWS but instead of that ec2 instance being totally disconnected from the onchain economy you're going to be able to stand up an onchain L3 E2 in and it will immediately have access to the entire L2 economy that's connected to as well as all of the user identity infrastructure that comes with that no that's great partially answer the question I was going to follow up with which is what other properties does that L3 have in this definition because you now have introduced another sort of level of talking to other l3s because not everything can be entirely self-contained so does that mean yeah sort of I think this is what we're figuring out right now and I I I wish I had the answer but I don't I I will say that I expect there's going to be massive experimentation at um the L3 layer and so you know we are obviously really excited about people building op stack l3s on base and work core contributor to the op stack we're writing code shipping you know we're actually about to ship the uh 4844 update that's all led by the base core team we did the governance proposal we're running the whole release process really incredible example of decentralization and I think there's going to be a ton of op stack l3s but I also think there's going to be salana VM l3s on base there's going to be mo VM l3s on base there's going to be parallel evm l3s on base they're going to be orbit that's that's the best experimentation it's going to be all of this incredible experimentation and over time we're going to figure out okay how do we drive more interoperability between these things but I also think a lot of these things aren't going to need as much interoperability because they're going to be a game the final State matters as well yeah exactly so yeah I I am super super bullish on the ability for developers to figure it out because that's what we've been doing for the last 5 years 10 years I mean I've been now doing this for 13 years so it's like we just have to keep iterating on these pieces of been structure and they will gradually come together to create this onchain economy amazing so can I coming back to the three things that you said you need you need obviously create developer experience you need uh an app ecosystem and in capital markets what role do you think base plays in all three of these versus kind of having this be a platform and everybody else can I guess to decide how they want to contribute versus kind of bootstrapping it and also maintaining it yeah I think it's a really good question it's it's uh I think particular pertinent for Bas because because Bas was incubated inside of coinbase um there's both an opportunity which is leveraging coinbase distribution leveraging coinbase apps to fulfill a bunch of those layers of the stack right like coinbase can build developer tools to make it a great developer platform and coinbase can build apps to make it a great app ecosystem and coinbase could build Capital markets to make it a great Capital Market and there's a world of vision of Base where it's like all coinbase and there's opportunity there but I also think there's massive risk risk because when I think about building an onchain global economy that increases Innovation creativity and freedom if that's just one company you don't have a global onchain economy or a lot of freedom or Freedom right like then you have the app store and so I think one of the things that we are working really really hard to do on base is leverage the coinbase strength and help coinbase come on chain but also make sure that we don't um do that to a fault where we basically have a chilling effect or a monopoly effect that crowds everyone else out and so a few example of this um uh you know like on the developer tools coinbase is building developer tools on Bas right we have coinbase pay uh that lets people onramp onto Bas but Bas is also working with moonay and ramp and transact and every other onramp to make sure that Bas has the best onramps in the world coinbase has a wallet coinbase wallet we love coinbase wallet I also love Rainbow I'm a rainbow user every day I'm a dawn user every day it's my uh default Safari browser app um uh even all dabble with metam mass sometimes and I think we're going to see more and more applications and then on the Capital Market side I think this is a place where um we're being particularly sensitive um it's it's such a a a I think a risk that it would be overly controlled both from a regulatory perspective but also from uh you know a freedom perspective and so we I think up up to this point have said hey we're going to do everything we can to make Bas a entirely neutral Capital market and sometimes people have been a little surprised anybody can do whatever they want or implying that anyone can do whatever they want you know like some people they were like what did you think about bald launching you know Meme coin like why didn't you guys shut that down it's like that was the best test for us and in many ways I actually think it was the best thing that could have happened to Bas because before anyone even had the chance to really think there was a proof point on Bas of like we're not going to mess with this stuff we're going to let people create we're going to let people do crazy things sometimes make mistakes learn uh and that's going to be the thing that creates this creativity that creates this economy and that's going to be what allows us to have it be free and so I think particularly on the capital markets we've really really focused on creating that neutrality letting organic Capital markets form and then gradually figuring out how do we nurture them by you know selectively saying hey let's lean in here let's amplify these things let's help help drive more uh you know resources Capital into the markets amazing well that I do kind of want to jump in a little bit deeper here what is the relationship with coinbase and Bas and like obviously it was incubated through coinbase but a year and a half has passed how do you kind of think about it now versus kind of where do you think it's going and what role do you see coinbase playing and the eff the freedom that you have to make decisions as base versus kind of what may or may not be complimentary to coinbase yeah absolutely um so I I I'm actually about hit seven years at coinbase um on March 13 thanks um I I started a startup before I joined coinbase uh that business didn't work went through an aqua hire process my whole team actually sold to twilio because they wanted to keep working on two-factor authentication which we were working on but I was so excited about crypto because we've been working with crypto companies so I was like I'm not going to tlio I want to go to coinbase and I kind of carved out my offer join coinbase and then would go on to recruit back my whole team who joined over the next few years um but for the first five years I led all of the consumer products at coinbase So coinbase Pro coinbase at coinbase um we built those teams uh to a few hundred people I led all the engineering for them um and then in in middle of 2021 I basically said hey I I loved that that was awesome but I'm both not ready to just be a big manager of managers of managers of managers like I want to be at the in the weeds with the build the US government right exactly um and I wanted to get closer to the metal of what was happening in crypto and really push forward the ecosystem from an infrastructure perspective and so started working on this concept of bringing coinbase on chain we went through a bunch of different ideas uh all of them failed they actually shut down my team and then kind of out of the ashes of that we were like what blocked us from actually doing all this and we're like well we don't have a platform to build on and that thing was a kind of like overnight idea that we had we shipped an internal test net called baset and then we were Off to the Races and the beginning of coinbase uh was Bas was incubated inside of coinbase and it was me and two other people who I've been working with for a long time one who had literally joined a month before me and we've been working with for together for seven years years um and then we gradually kind of built the team up now it's about 25 people um and the core team is still employed by coinbase um we are in our own little area I operate as a kind of CEO founder of Base have basically full Independence um but we are kind of in this interim stage where we we started out much more connected to coinbase we've now transitioned into a more independent role but still within the broader coinbase umbrella and then over the next few years what we're working to figure out is how do we continue to centralized further so that's the team that's kind of the decision making um and how we're executing from a core team perspective now from a technology perspective one of the things that was really really critical um both from a ethos perspective but also from a regulatory perspective was that we actually set up the base Network such that it wasn't just coinbase and that coinbase was not a single actor that could make decisions about the network and so when we launched base made that one of the prerequisites was that we ensure that that was not the case Mrs is commenting on sequencing transactions this is not commenting on sequencing it's actually commenting on the contracts that control the L2 on the L1 that basically Define who can sequence Define the block derivation um and so could rotate out the sequencer could rotate out Challenger could rotate out any of those roles or it could change fundamental things about the blockchain and the way that's governed today is we actually have um a two of two which then goes into two much larger multics one managed by the optimism team uh foundation and then one one managed by the base team and what that means is it means that base and coinbase cannot unilaterally make any decisions anything needs to go through optimism and the optimism foundation and anything needs to adhere to this thing called The Law of chains which is open neutrality framework that we spent nine months drafting with the optimism Foundation to kind of create a framework for what I think about is basically onchain federalism where optimism is operating as a federal government that um taxes us a little bit and then gives us funding gives us infrastructure gives us security um and then base is operating as a state government I generally analogize us to California that's where I'm from that's kind of what our Vibes feel the most like um where we can have our own governance we can set our own rules as long as we continue to be a good member of the union and so that structure has basically made it so we can ensure that base remains open and permissionless because we have that back stop and the two of two is the first step the next step is we're actually going to transition those controls to um a security Council that optimism just build and moving all the way towards um optimism governance while preserving our sovereignity to have our own governance systems to maintain our own economic rights um within that broader context so that's the actual Network um it is a step further decentralized already and then I'd say the third thing is the base ecosystem and this is something I've started talking about more and more but one of the things that I have been most encouraged by in the last 6 months is that there have been a number of organic cultural movements that have started to emerge in base and build influence clout and governance rights and so the three ones that I'm most excited about right now um one is called base management which is kind of building a whole Army of interns who are like building culture on base trying to on board other interns basically trying to be this onboarding funnel for people to come into Bas and and and kind of create the the economy that we have there that's totally independent of Bas it's a dow it uses now's Builder started by this guy Leon kusak who's incredible and light both of them are are real like Visionaries the the second is something called yellow Collective which is a collective that uh is supporting artists on base also a nouns Builder Dow um and they are uh you know kind of basically building a whole artist Community uh and then the third one is something called Bas God which is basically building a religion on bass um and when I look at all those they're very different um you know one is like kind of taking more corporate slightly more different than the others here somewhat one is religious one is you know artistic but when I look at the history of society cultural re right if you look at what has historically been um you know the biggest cultural movements in the offchain world it is sports and religion and then there have been cultural art movements there have been cultural corporate movements and I think one of the things that I I am increasingly convinced is that because Bas does not yet have an explicit top- down governance infrastructure with a token um which I think in many ways can end up becoming monolithic what we are seeing emerge is actually one of the first Bottoms Up organic um uh governance uh kind of s cultures sub cultures emerge and I think one of the things that we're going to be able to do is we're actually going to be able to bootstrap off of those organic subcultures to give them more governance rights so you can imagine saying hey let's add base management to the security Council let's added different counties in that analogy exactly exactly and so that for me you know when we were building bases thing that I was most scared of was no one was going to show up like man let me tell you I had more anxiety heartburn in last year that no one was going to show up then any time in my entire life but I think what we've seen is to the contrary that there actually literally thousands tens of thousands hundreds of thousands of people all over the world who see this vision of building a global onchain economy that increases creativity Freedom uh and Innovation and rallying are rallying towards it and are saying hey not only do we want to be a part of it we want to build it because we're Builders we're base Builders who have this shared mentality of building for the long term doing things right putting the team in front of the individual and making sure that when we are building this thing we're making it last for what I expect to be Generations literally hundreds of years that was awesome well uh well maybe we'll land on this note by a simple obvious question what advice do you have for Builders Building on Base build something that's the only thing you know people often ask me like how can I get involved can you get on a call like what can I do and the thing I say to them is find something that you're interested in and build it like I don't want to do calls I'll do a call maybe if you build something cool but I think the coolest thing you can do is just take an idea that you have and put it on chain and that can be anything it can be a new app that you write code for it can be a piece of art that you publish as tutorial you follow just to see how tutorial that you follow it can be a meme that you create like literally today there are tools for anyone to create anything on chain and so all that requires is you taking initiative say I'm going to be a builder and I'm going to build on base and if you raise your hand and you want to be a builder we are a trillion percent here to help you you can post in the SL based channel on farcaster which is the largest channel on farcaster has 130,000 followers you'll get a ton of distribution there and there will be a ton of people who want to help you you can join our Builder telegram Group which uh I can add you to you can DM on Twitter or farcaster if you want to you can join our Discord where it's even more Hands-On um there's a ton of ways for you to get involved but the best way to get involved is by building awesome Jesse thank you so much for that amazing conversation yeah thanks you all for having me and build Bas build with all of you cardic thanks as always I love pragma thanks