Yo, a little bit of a late afternoon one. I said I wanted to get some practice in, so that's what I'm going to do. Today we'll talk about layer two smart contracts. Not many people talking about this mainly because
They try to be layer one smart contract platforms, which I disagree with. I think something so big and heavy, such a smart contract should be on its own separate layer. And I'm going to be talking about how to do this on hive. I think that's the most efficient way to do it.
You look at Hive, you can package long form content, you can put something called a custom json.
which is just text that you can reference. You post it on chain, it's immutable. Now your smart contract can reference that text in any form. It could be a sword and a game, any kind of smart contract, whatever you want it to be, you look at that data and reference it.
So you build around that, around data. So I call it a data availability layer. And when you remove all the need to have the accounts and transactions, all of those things, and you move that on a base layer, and now the smart contracts can be very lightweight.
And the way I look at this going into the future, I look at it as you have sort of a
an entry layer where it's sort of like the smart contract platform you see today, something like Ethereum or Solana, where you just have a core node system and then you pay a gas fee. So you'll have a layer
that lives on top that'll have its own sort of gas token. And that's where a lot of the smaller apps when they first come in, they'll utilize that. As their platform grows and gets traction, they're going to want to, in my opinion, at least I would, have their own set of notes.
So the problem with Ethereum is if you have somebody wanting to pay $100 for every gas fee, if the demand's that high, that means you have to pay that. And that doesn't seem fair when you're not wanting that much. You're just wanting to do a transaction or something simple. You have to pay for crypto-cities
whatever the hot app is at the moment. That's a problem when you get big, when you get a big app or big app, get a large community around it, you don't want to be limited that way. That's why a lot of the apps on Ethereum make their own chains essentially, right?
They have to have their own validators, their own security, everything. And then they'll post to Ethereum or use an ERC 20. But when it comes to, you know, their token economy and how everything works, holding that data and all of that, they essentially make their own change.
We've seen many of these break off try to become layer ones and that's just the worst idea. It's much better to live on top of a transaction layer and focus on your smart contracts and make it so you have your own so it's the same thing. It's sort of like all these people are
leave the social media sphere and go and create their own sites. The isolate themselves from everything else. When you can join something like "Hi, if you can create your own sites" the same thing except you also show up on all these other front ends you're connected. That's sort of the problem that solves
here right because what happens a lot of these you know so-called apps end up having to get their own node system anyway right they isolate themselves because where do you get these nodes you can't go to Walmart and get a smart contract valid there right so you know you you can try to pay these people with
you go on Upwork, where do you find these people? You go on Twitter, it's not an easy problem to solve, especially if you don't have connections. If you're just like a new app or developers and you don't, you know, I mean, how the hell are you going to get started? It's a big problem. People don't realize how big of a problem that is because of the pre-mines they can
easily pay for their own validators at the millions dollars they raise and basically they're finding these people and ordaining them. But for just relatively new chains or new developers, a big problem getting butts in the seat, getting validators to actually run your chain voluntarily to create the censorship resistance.
So I think that problem must be solved if you want wide scale apps, if you want thousands and thousands of apps and apps and mass adoption, you're going to need to solve the validator problem. People don't, developers want to build, they don't want to have to worry about the censorship resistance, the consensus, all these things that are outside of their control anyway.
They should be able to plug into a system that's congruent and flows and is something that they can basically attach onto. So the way I foresee it, you're a new application, you go and you live on top of the
the layer 1 or the layer 2 on how it's smart contract and you just pay the gas token and yeah you might have to pay a higher fee than you would like because it's sort of you know the same setup as a theorem except it's going to be my OS cheaper because of the niche right you're only running smart contracts everything else can live on hive so these things can be my
lighter weight, which they are. I already seen this in practice. And as you grow, and as your token economy grows, you'll have your own from the core validator set. So if you can imagine a circle of validators, like a B hive, hive of, and all these bees are the validators. And you're, you're living off of that for now.
But what if you want to like plan a flower and just draw some of those bees you don't need to whole hive You just need some of right because that's the problem you pay This extraordinary fee because you have so many validators, but if you were to niche it out and say look I'm going to incentivize you with my own token
And therefore, I want you to buzz on over here and run my setup and you'll be incentivized. But the only way to do that is actually have some kind of liquid token. So that's for bigger apps. And really, it's a big app problem anyway. So as these things grow and they have to have more predictable fees,
You'll see people wanting their own node system and that's where high smart contract comes in handy right you don't have to go find these people You can just set up your own flower and the bees are gonna come if you can picture that analogy That's much easier you incentivize the validators to come but you do so in an area where they can actually see you
It's like raising your hand, you signal to the network. And if they see that it's worth it, it's extremely cheap to run these smart contracts, especially if you're small and the medium, as the bigger you get, obviously, the fees grow, but at that point, if you have that much transactions, you should be fine.
So when you start looking at smart contracts in that way, it starts to make a lot more sense and you can actually say, "Okay, well, I can envision in 10 years of mass adoption is actually working." A lot of people are heading with smart contracts on layer one, the fees are high now. Listen to me, if the fees are high now,
with so little adoption. Imagine when it, when it cranks up, how is that possible? None of these are going to work. Even BSC had what, $10, $15 fees there in the boom market. I remember I paid like 20, $30 a stake and unstake due to some DeFi operations, which are a little bit more costly.
That's with a, it's not D-Pos, you can call it that they selected the validators. So you have this preordained validator set that's small group, so it should be as fast
as it could possibly be, but since you're lumping everything on the one system, you ruin it. Transactions are transactions. They should not be bothered by smart contracts. My transaction to send to somebody else should never be hindered by somebody's fucking
smart contract. It makes zero cents. It's a terrible setup and it doesn't scale and nobody's going to want to use that and excludes 99% of the world. It'll cost me a dollar to send a dollar. Am I going to send a dollar? No. So what? You can't send a
dollar? Whoa, there's fucking billions of people that want to send a dollar. You're excluding so much. And you can keep saying, "All will scale," as Vitalik said, "fix scaling." Okay, let me wave a wand. It's been how many years?
On high, how much can I send a dollar for one high? For free. I just need some of the bandwidth token powered up. That's it. I can power it down a cell if I want to. I can even, you know,
get a little bit of RC's delegated, which is still next to nothing. Right now you can get it done for free. There's so many ways to get free RC. So it's free to send a dollar on high and it's instant.
within what three seconds it's immutable. 1.6 seconds.
You know, it's funny what you can get away with when you label something and you have a bunch of smart people say, oh, well, it works. It's great. But for some condoluted reason, some
vague, smoking me a reason we're going to say it centralize because of the parameter validator count. What is a parameter validator count? It's essentially saying, look, you need 20 validators or whatever the number is on high of its 20 plus 21, the rotating.
you need at least those, you need 17, you need 2/3 plus 1 to agree. And they say I sensualized because there's a number there and there should be no number there, there should be thousands and infinite, you know, it should be uncapped.
many as you want. And that sounds cute, but in theory, you get mining or staking pools and there's only two validators because a staking pool becomes a validator because people are delegating off chain
or using multi-sigs, whatever they have to do, there's no on-chain voting with a lot of these.
to an entity and an entity is the one that makes the decisions. And we can run, you know, I've already talked about Lido, Rocketpole, they run what you would call a quote unquote, "Deposite," but it's not. It's permission validators. They choose the validators and they're the ones that make, you know, they're going to be the
or the orders of truth, especially as it grows, these things are unchecked. Since you don't have parameters, that means the biggest can grow and grow, and there's no stopping it. It could become so dominant that everyone stakes to this one, and then you have to trust this one. Then you're layer, it's pretty crazy.
Not to get too off topic, but it's really crazy what happens when you look at proof of stake. You think you have some crazy, you know, uncapped, there's going to be thousands of nodes everywhere. But what happens is you have a staking pool and it becomes so dominant that that layer two staking pool becomes your layer one security.
Try to understand that for a second. You have a layer one chain where you have people who can vote with their coins, but since people delegate to one entity, since there's no parameter, so it can be just the best all we're going to vote for them.
whoever. You can say it's, oh, it's a decentralized protocol. No, they had a pre-mind. They had their own incentives. They had their own permission notes. It's how it's set up. That's the easiest way to do it. That's all we've seen on proof of stake thus far.
It doesn't matter if you hold custody of your coin or not, so people who are making the decisions, who are putting the blocks on chain.
So it becomes very strange because you have this layer two staking pool. It's an entity, guy or woman or a small company, whoever it is, group of investors, right?
And they set up something to create their own little governance token and they ordained the validators of that staking pool because a staking pool needs to be maintained. The smart contracts, all these things and needs to be maintained. You need to pay people to do that. It's not free.
And it's hell is not easy. There's a lot of responsibility that comes with it. So it's not an easy thing.
That's strange. How do people not see that in practice? I'm not judging. As I said, I don't judge the wave for what direction it goes. I observe and I adapt. I'm observing what happened in practice. You can get but heard about it.
You can say, "Oh, you know, FUD!" Or you can say, "Look, that's actually interesting. That's true. Maybe we should have some parameters." Because if you don't, you just get one or two. Two, if you're lucky, if you're lucky, you'll get two. If you run this simulation,
years you're lucky to get to. There's more of a chance you get one. That's what makes more sense. And then that one ends up running the chain, the security. They have enough of the governance coin of the layer one to make the decisions.
And once you hit a threshold point, it just becomes lopsided. It's like the walls break because it comes. Oh, well, why would you delegate to anyone else? And we're in a culture of people
who don't bring their own infrastructure, they don't run their own nodes. We live in a delegation culture. That is what the masses want. They want to delegate responsibility.
That is what happens in practice. Now you can run all kinds of theory and you say well what if these people were to run infrastructure? It's the exact same problem I've seen in poker. I wasn't the greatest poker player but I learned how to exploit the theory bot. I call them theory bots. They might as well be MPs.
They're so smart and they're so good and they understand poker theory so well that they're too smart for the game because they end up being able to be exploited because they say well I'm playing the right way you're playing the dumb way well the dumb way can exploit you then I'll do something what's cool
on quote on profitable but it becomes profitable if this person is doing a certain move. It's the same thing. It's the same crazy theory where people say, you know, I'll give you an example. Good theory in poker is you don't raise something like
like 7-Duce Offsuit from Under the Gun. That means you're the first person at it. You don't raise that because it's a losing play. If you're playing against people who are good, eventually you're going to lose. But if you know that a certain player is playing a certain way, you can start to get away with these things.
And then you can start to exploit them because they become robotic. You can see their moves. You can say, well, I know what he has. I know his range because he's not going to ever play out of this range where he doesn't know my range. He might think he knows, but the board comes do so seven. He's not going to put me on any of that. He's going to think he has the advantage from calling for
mid-range or the blinds. Now if you look at cryptos the same thing people say well look you should run your own node you should run you should raise that under the gun you should raise this you should run your own node it's the same theory right these theory bots saying oh you should run your own node but that's not what happens it just it's not
So you can exploit the situation because you understand that that's not how practice is going to play out. It doesn't matter. The majority of players are going to be bad in poker. The majority of people in crypto or the masses are not going to run their own notes. They're not going to do what you quote unquote should do.
you can bitch, you can cry, you can say, well, even in the best circumstances, with the best parameters, delegation is still inferior to running your own note. And to those people, I would agree. The best thing you can possibly do is have everyone run their own note.
It doesn't happen though. You can cry, you can bitch, you can moan, or you can adapt. I'm an adaptor. I say, "Well, I can't control the populace, but I observe what they're doing." So we might as well make the best of the situation.
There's people who say, if I don't get my way, I'm flipping the table. I'm not that person, right? I compromise when I have to when I realize, hey, you know, it's a fucking elephant. What's a compromise with the elephant? Well, if it wants to be where it's at, it's going to be where it's at. I'm not moving it.
Now I can deal with it or I can fuck off. And that's the same approach when it comes to how crypto works. So many people, the web, the Jack Dorsey Web 5, it just, it sounds cute, it sounds cool. You can get the smartest people in the world to agree
with it because it sounds right in theory, just like the smartest players in poker, you have a national on, you have people who are really, really smart and are really great at poker, but the ones that are the greatest, the elites, they master theory, but they
know how to exploit and practice. They know how to switch it up in the moment because poker, life, everything is in the moment. The he who can adapt in the moment is going to be the strongest. So these, you know, you got to, you got to laugh. You got to, it's a joke. These people who are making such hardcore theory
when it comes to relying on human virtue, what what human should do? We don't live in that world. We're getting an elasia world. I don't know about you. I've been around for a few bull runs. The bull runs aren't getting more sophisticated. They're getting kind of dumb, right? I think people are getting
It's easier. It is what it is. You can bitch about it or you can incentivize build. That's why I love how hive works. People think you should run thousands of nodes but then they only get one or two in practice. I was like, "Look, we know what's going to happen. We know what's going to happen in practice."
We're going to build for that. We're going to go with the current. We're going to build fast because we need 20. We understand we're going to actually be more decentralized because we have 20 not one. No matter how big or badass a validator on hive gets, they can be the shit. They can be
so awesome. They could be amazing. Everyone could vote for them. And if there was no parameter, they would be the only one anyone would ever vote for. You can have that. But guess what? They're one of 17. There's 20, but 17 have to agree. Then how bad Ash you are, you need to agree with a bunch of other humans.
That's how it has to be. Because humans, they love a leader. They love the best.
You know, it's just what a president, a CEO, or something, they want a person to look up to. And there's nothing wrong with that. But to think that humans were designed perfectly to have perfect consensus.
without having to go in and fix some parameters and do some critical thinking. You think we just default do this shit right you're wrong. That's not how it works. We're still we have we're deeply flawed. So we're just say all free market
rely on human nature, humans will eat themselves. You get to understand. No parameters is not a good thing. You come to consensus on parameters that make sense.
That are helpful. What's a helpful parameter? Well, you know, on hive when you when you stake you can't vote for a month. That's a parameter. It's non-negotiable. That helps because now you can't attack the system overnight. You can't just
You can't power up users' funds and attack the network. We'll see it coming from a month away. Slow motion bullet coming as we can see that. That's an example of a parameter.
You have to put some kind of guardrails. Right, if humans were perfect, we wouldn't have guardrails, would we?
We wouldn't have airbags, we wouldn't have seatbelts.
It's the same thing with consensus. You have to have your seat belts, you have to have your airbags, you have to have your guard rails.
And yeah, crypto is very primitive and we've been driving fucking cars without any protection and when you wreck you just get wrecked.
And then there's people who are understanding, okay, this is how it works. Let's make it where it's actually math. You can have mass adoption. It's going to be sustainable. It's going to, you know, protect
from human nature because human nature is crazy. Volato is very maximist.
People love centralization, and whether you want to admit it or not, it's just people feel the comfort, centralization, most people are uncomfortable with the idea.
So when you add those parameters, you protect people from themselves in the correct way. So having one validator, you should have 20. And that shouldn't be something that's weird. It should be like, you should come to an agreement, but look, how many validator should they be? Because the funny thing is, it's very funny. You can get
a whole bunch of humans and you can ask them this question, what's better for decentralization? Having one or having 20 people, like, oh, having 20 and then you all and then you just let them free to do their own things and it's like, well, you got your coins, you add greed to the situation, greed.
momentary greed meaning in the moment what do humans do then oh I'm gonna delegate to the best because they're gonna give me the best returns and I don't give a fuck what happens is protocol next year I'll probably sell and I'd be a part of it that's the mentality so it goes from you asking what I know it's best but then in
practice they do the exact opposite because it's more beneficial to them in the short term. This is why you have to understand human psychology, how people work. If you don't, you're never going to get consensus for it. You can't write theory about the gym. If you've never been in the gym, it says
simple. It's it's a very blunt analogy that people overlook. There's so many people in there that they don't even try these things. Writing theory about dolls, they've never had a public publicly funded good and they decentralized manner. They just fantasized about it.
This is why there's a lot of chaos. There's a lot of people shit on the UX itself. Crypto can't be scalable and all this. Yes, it can. It certainly can. We're definitely proving that.
And as we move in and you start to see more and more robust applications built on high, I think you're going to start to see the light bulb click. And the great thing about high is it's like a magnet. As I said, it doesn't compete with Ethereum. They help each other. Ethereum is not a data available.
ability layers not a transaction layer. It's a smart contract platform and you pay high-ass fees to send things. It hasn't had the high would act sort of like a lightning network but it would be a base layer to a theorems layer too. The theorem would just attach on and you can look at it.
I don't care what Ethereum people say. They can say, "Oh, Ethereum's the layer one and Hives layer two." Does it like to lighten the network should be the layer one to Bitcoin? That's where the security should be. You should have your transaction layer to gut the transaction layer and put it on another
layer without incentives just leads to centralization every time. So there's correct ways to do layer two and there's absolutely incorrect ways to do layer two. You cannot do layer two if you have a high fee-based layer. If you do, you're going to have centralized layer two.
So yeah, you might get convenient.
I love how people say I'll lighten that work. You know, don't put a lot of money on that. You might lose it. It's like, whoa, your transaction layer is that faulty.
All it needs is a robust incentive system. So you know you have some heavy hitters, you know you have some people who are going to do the job, put the transactions where they need, have a whack-a-mole system where if one goes down and another one pops up.
Understand go ahead and fold the idea like when you what you learn in poker is when you have a bad hand you fold You don't keep going you don't keep putting money in the middle when you know you don't you don't have it
You're either, you know, the board isn't right and it hits your opponent in a good way or they're showing strength, but you know, you got to know in the photo. So it just.
It comes to a very clear point where people need to understand the difference how this technology works, how to do this in a way where
We're not competing. You can easily just have a Ethereum sit on top of hive. It can start dumping its data on the hive using the smart contract notes to reference it and alleviate gas fees by 90, 95%.
You still have your same thing with Bitcoin. You still have your smart contracts on Ethereum, right? Your DeFi and all of that. You're still relying on the security of Ethereum. You're just making a fees law cheaper.
A lot of people are forcing bad hands right now. They are trying to do the impossible with technology that's not
And that's going to leave a wide opportunity. That's what I'm here for. I'm for the disproportionate opportunities. I'm here for
either being very, very right or wrong but learning my lessons.
But I don't know, it seems like when you go around and you're listening to people talking about crypto, it doesn't seem like anyone knows what the hell they're talking about. You know, we're still talking about what, you know, Vitalik's quote, "fix scaling." That's where we're at. 2023, what's the resolution for Ethereum? Fix scaling. I'm not shitting on Ethereum.
know how to scale it there. At least I think I know how. Maybe I'm wrong, but we should try it at least. And that's a great thing. You don't have to ask for permission. When the nodes become more robust, you can easily fork a theorem, gut it, put it on top of hive and say, hey, look, this is this is a version that you could be doing. Ethereum could be doing this.
same concept of Leo Finance went what? 50/50 reward, a lot of people are talking about we should make curation 50/50 so people don't self-upvote. If you get more for the upvote than you do in curation, people are just going to be entitled to self-upvote.
you split that and now it's like, well, it's not worth it because yeah, I could try to get the other 50% but I'm just gonna get down voted. So we've seen this work out in real life. This is what a beautiful parameter is. We've had Hygien, one of the worst self-up voters. That's all he did. He just posts 10 span.
post a day in self-upvote. And that's what everyone said was going to happen with this sort of coin voting, incentivized stakeholder distribution. They said, well, people just keep it. You tweaked the parameters a little bit. And now Hygiene is known as one of the better curators. He's curating right. He's not self
He's up voting other content that seems to be quality because he realized that it's better It pays better to be good. You have to make a system that pays better to be good because if it pays better to be bad people will be bad You can't say oh well there. This is what they should do
Very important to understand how practice works. Practice is everything. Theory is just trying to get practice right.
Don't focus so much on theory. You can go down this rabbit hole and then you get confused because there's so much information out there. It's so easy to write theory. It's so easy to sound like you know what you're talking about.
Practice is there. Like look at the history. Look at what we've been through. That's concrete. That's there. You can't change that. You can learn from it. And you can deny human nature or you can see what's going on, adapt. That's what Hive does.
That's what this community does we adapt we understand how to make censorship resistant consensus how to distribute the coin where people aren't going to hoard it everything has flaws
but we are getting. It's like a ball rolling. We start off as a square. You know, it didn't really roll and we're starting to smooth out, smooth out. Now we've gotten pace, we've gotten momentum. And you know, this thing is starting to shape, smoothen out, smoothen out.
So I have no doubts in five years. We'll be distributing the coin better than we have ever had. We would be more scaled than we've ever been.
And if the layer 2 smart contract system is indicative of anything hype is done on the layer 1, that layer 2 is going to be highly scalable. It's going to be very efficient. And a lot of people are going to want to run their
DeFi, they're going to want to run their applications on such a layer. And that's the bet. No centralized funding. Nobody saying, clapping, snapping their fingers, saying, hey, this is what you got to do. This is all up to the community.
So that's the bet. Can we do it? We know the blueprint. We seem to know information that people don't know or they're just ignoring for their own self-motivation, you know, their own reason.
So yeah, I'm going to kill her here. Cheers.