🎙 94 - The Swiss Army Knife of Scaling | Polygon's Sandeep Nailwal & Mihailo Bjelic

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 this is ryan john adams i'm here with david hoffman and we're here to help you become more bankless david i feel like this is a long overdue conversation it's been a long time since we had polygon in the podcast and uh they've been doing a lot over the last like nine months or so since we talked to them so uh yeah fantastic episode with sandeep and mahalo who are the co-founders of polygon which is like

a swiss army knife for scalability on ethereum what were some of your takeaways yeah this is coming right on the on the heels of all of this twitter drama that has been happened uh last weekend uh and that definitely set some of the context of some of the conversations that that we had uh we really drilled down into the the differences between there's a lot of chains out there that are forks of geth geth one of the original ethereum l1 clients avalanche is a fork of gas spinach smartchain is a fork of death polygon is a fork of death what makes these things similar what makes these

things different and so we go into the differences between the security models for these things and overall talk about the in addition uh completely separate from that the long-term vision of polygon where i believe ryan you called it a portfolio of scaling solutions rather than a single individual scaling solution and also talking about um the whole uh draftkings becoming a validator on polygon uh the future of zk roll up tech on polygon and overall just the future of the entire portfolio as a whole yeah i think if you're like an investor

in the space also if you're a user but you know if you're an investor you're someone building right so the key question the the industry is facing right now is like where is the future going to be right and there's the ethereum view version of the future which is like this modular blockchain sort of feature and then there's the alternative layer one future sort of the the multi-chain future uh version of events as well and that alternative layer one feature has really gained steam over the last you know

three to six months or so correlated uh with prices predominantly but there's also been some activity on these alternate alternative layer ones and so i think this is an important episode to hear like you know polygons side of the story which is definitely very modular blockchain very ethereum centric so that you can make your own decisions right because like if you believe the modular blockchain thesis then you might believe a lot of these alternative layer ones are overvalued if you don't believe this thesis and you think that you know cheap

block space is paramount and ethereum doesn't have the market cornered on you know good scalability ideas then maybe these alternative layer ones are justified in their valuations and maybe if you're building in the space you should consider building on one of them so this kind of lays it out and again this is this is polygon's perspective and they're very pro ethereum but also i think that like it's it's sort of bankless's uh take two we we do we have kind of said that we believe in the modular uh blockchain

thesis ultra scalable ethereum we think it fits with um you know the values of decentralization that this program uh holds dear and so it's good to hear other builders in the space doing it so we talked about like the events of uh the the past weekend all of the pushback on on twitter and then we got into the actual polygon solution a lot of people don't know that it's not just one proof-of-stake kind of solution that this is a swiss army knife of different tools and technologies including some

really cool stuff going on in zk roll ups what's also interesting i think is a lot of the narratives get spun on the back of token price i think and polygon is one of the few uh layer twos type solutions in the space that actually has a token which is interesting right optimism arbitrarium zk-sync stark where they do not have tokens available on the market so you know it's interesting for investors to consider relative valuation of of like matic versus everything else that's

going on in the space so a lot of insights here uh as we dig into the polygon story and quick disclaimer i'm an advisor on this project i believe in what the polygon team is doing as well uh but i'm not and so we're good there uh and just for everyone to to know we had a little bit of internet issues uh mihawks in eastern europe he dropped off a few times uh same deep had some microphone issues uh we're gonna do our best to edit all of those out so bear with us a little bit of a hairy bit of content uh quality but uh hopefully we

can get all those smoothed out in the editing process so without further ado let's go ahead and get right into the conversation with me hollow and sandeep of the polygon team right after we get to talk about some of these fantastic sponsors that make the show possible matcha everyone's favorite deck aggregator has just launched an open beta for gasless trading so if you're trading more than five thousand dollars in common eth and wrapped bitcoin pairs then your gas fees on matcha are free and that's why you should be using matcha matcha routes your orders across all the various defy exchanges on

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link in the show notes to see all of the defy apps that ledger live has and stay tuned as more apps come online and if you don't have a ledger hardware wallet what are you even waiting for go to ledger.com grab a ledger download ledger live and get all of your defy apps all in one space bankless nation we are super excited to introduce you to our next guest it's been a while since they've been on it feels like 10 20 years have gone by in crypto we've got sandeep and mahalo who are the co-founders of polygon what is polygon

we've done previous bankless episodes about it but if you're not familiar it's ethereum's internet of chains not just one scalability solution it's like a collection so it's almost like a swiss army knife of side chains and layer two technologies this organization is completely focused on scaling ethereum sandeep and mahalo great to have you guys back how are you doing you're doing great thanks thanks thanks thanks for having us here uh really excited uh

and honored to be here this has become the the best show uh in the entire crypto industry and i think a lot of new people who join in like i was very surprised like somebody i uh in my family i asked them to join and then uh i mean to to you know know more about crypto and i think they found bank less on their own and they said yeah it's good and i said

guys you know what we're gonna start with this there's been some um a little bit of twitter drama here recently over the weekend and i wouldn't normally start here but i think we need to because it's relevant to today's uh conversation and sandeep i noticed you changed your uh twitter profile accordingly it's now sandeep not abandoning ethereum is the subtitle and we just had a week uh weekend of well-known vc investors hedge fund managers stating their public abandonment of ethereum and here you are

saying you are not abandoning ethereum so first question is sandeep why isn't polygon abandoning ethereum sandeep yeah so i think the the easiest answer is that because polygon doesn't hold the bags of other other layer ones right otherwise there is no reason to even discuss this uh you know i think ethereum forget about abandoning anything on ethereum um you know it i mean in in our mind it is it

has actually already emerged as the global settlement layer for this web 3 like you know we have this uh internet of value and we very strongly believe that ethereum the network effects the the the native asset is has now properties of a hard money and you know for any layer one uh decentralization is the most important thing and to have that decentralization you have you need to have um that the the native asset to be a very strong

and hard money because that is being used for incentivizing and disincentivizing the people who are running this network and ethereum both in terms of its app development uh you know network effects as well as the native asset uh capturing the capturing the the kind of features of uh you know hard money on both these fronts ethereum is way ahead of anything else and already that is the the scalability solution that are available on ethereum be it uh you know polygon

polygons pos chain which runs on top of ethereum or it's like you know our layer two project products uh let's say uh polygon hermes which is already live with some production with some payment ready uh payment uh use cases or other uh you know layer twos like arbitrum stockwear have already proven that ethereum can scale on the layer two so it's it's only a matter of time uh you know where uh you know ethereum and the layer two scaling is going you know is going to completely decimate uh you know

other uh kind of competition in that sense uh and you know establish itself as the ultimate uh layer for the three and we strongly believe in that so mahalo i you know i know we were having a conversation pre-show about sort of you uh getting off twitter and just getting to this place of zen and and by the way i i envy that because i could use some zen sometimes in my life and all of the back and forth that goes on in all of the various you know crypto social uh circles but i i want to in case some folks aren't as plugged into

that i want to give some context the question i just asked sandeep and get you to weigh on in on this mahalo so this is the tweet that kind of started it all over the weekend this debate between like abandoning ethereum and going to other layer ones versus doubling down on ethereum which is what you know sandeep just advocated and gave his reasons for but this is the tweet that started it all this is from suzu who is uh kind of a vc fund manager at three arrows capital we've had him on bank list in the past two and he said this yes i have

abandoned ethereum despite supporting it in the past yes ethereum has abandoned its users despite supporting them in the past the idea of sitting around jerking off watching the burn and concocting purity tests while zero members can afford the chain is gross and it's not just this tweet because there's tons of tweets that you know get sent out and no one hears them right this got almost 16 000 likes on it and i i believe that this provided a lot of people some

validation of this opinion so i want to ask you mahalo what do you think is going on here what do you think was the reason for this tweet and why did it set off such a a storm in the the crypto conversations over this past weekend yeah thanks for the question as you said like i i'm personally really trying we have fortunately and luckily we're in very good position with polygon right now and we're extremely happy and humbled by all the success that he have seen in the previous months and we're really trying

uh to to be laser focused on work and what basically our mission is and that is basically scaling ethereum bringing mass adoption to ethereum onboarding the first billion users and i think we are in a very very good position right now with polygon and we just want to be you know very serious about about what we committed uh uh to do and uh these things are um in in in the long term basically on long enough

time time time scale they're just temporary i don't want to say noise but you can even say it like that it's just everyone has the right to to you know be within ethereum or abandon ethereum or do whatever they want and this is like an open open uh society basically and open community but i don't know like this seems to me uh um really seems like some sort of coordinated action number one number two

uh um the dislikes that we're seeing on the street obviously they are communities uh um or at least bagholders basically outside of ethereum and uh there is clear interest now to to disrupt ethereum to take market share from ethereum it's not up for me to say that but i think that maybe when some people feel threatened by all the scaling activity that is

happening including polygon it i think it's in a way maybe even becoming somewhat obvious that ethereum can actually scale with all these efforts with all the activity that's happening in layer 2 and on the scaling front um people are questioning you know their choices their investment choices among other things i guess there can be a bunch of reasons but the the most important thing is and what matters is where are the users

where the innovation is and that is very clearly ethereum like there is like really zero doubt about it like that's where the users are that's what they're all the smart people are i mean oh 90 or 90 plus of the innovation and uh yeah i'm as bullish on ethereum in general and ecosystem as as like as ever basically guys what you think of this chart specifically all right because like you know let's let's try to steel man the argument just just a little bit right

it's like i i totally understand what you're saying about like the the bag bias and you know you know pumping other alternative investments and you know no doubt that goes on um but like the the narrative of ethereum abandoning its users right because gas fees on mainnet are high the the the idea that users are livid that ethereum is just a whale chain that it's not defy if the only the wealthy can afford it that ethereum isn't shipping do you think that there are any

points in that like any merits to that argument or would you reject them all and cindy i i kind of you know jumped in there so why don't i let you uh jump in first yeah so i mean i i i mean i actually also had a similar kind of uh conversation on twitter with someone is that you know when you see the adoption of polygon or when you see the adoption of starkwear or when you see like star pit solution that's a divided dx and things like that or when you see the adoption

of arbitrary or even x die per se all of these are essentially the adoption of ethereum only adoption of evm evm users who own some addresses and then they can switch the metamask and then you know go to the go to the layer 2 side chains whatever you want to call it and you know i mean we have multiple times said that you know our our our kind of definition of ethereum scalability or scaling ethereum is not you know extremely narrow as that you know this

only is layer 2 and this only scales ethereum we believe that there is a whole spectrum you have sovereign side chains and in original thesis of milo also has originally mentioned that you know there are probably 100 plus you know side chains or enterprise chains which are connected to ethereum similarly you have like the chains like polygon pos and all that all of this is actually adoption of ethereum and you know somebody was even saying somebody was saying that you know the dau on some other chain has become has has grown past ethereum and first of all that was

uh you know was was was a wrong fact and uh then second thing was that if you combine yeah even if some chain let's say is starts approaching that dau but if you combine the dau of ethereum main chain you combine the ethereum a dau of uh you know polygon starkware and you know some of these other chains that you know that dau is way way ahead of any other thing that that you see so i absolutely don't agree with this do not agree with this this narrative that you know the ethereum is abandoning

its users and all that is just that you know the the technology this is a very hard uh technology to build and you know ethereum achieved adoption before that you know scaling technology could come but now that is now it is here and then you know the layer one is kind of becoming that you know last time also i think we were discussing is kind of the manhattans obviously manhattan is costly it has huge amount of value going here and there and you know like i don't know any other chain where a independent investor who's not who doesn't have any

vested interest in the chain itself or you know some part uh in in the in the underlying chain would put would be willing to put let's say 500 million dollar worth of their assets on on particular or maybe one billion dollar worth of their assets on any other chain except ethereum ethereum is the you know the the very essence of where you keep your uh core value so i don't agree with this this this thesis and then i agree that i feel that the gas ps are high because ethereum block space is highly posh like you know kind of it it it

needs higher value to be transacted if you want smaller values to be transacted use any other layer 2 scaling solution or ethereum scaling solution like polygon pos or other solutions available out there i think this is a great point and by the way when sandeep is mentioning daus he's talking about daily active users which of course is an important metric for uh for scalability and how many users are are actively in the space but i think you raised a really good point about this kind of manhattan right it's like the you know the main the main chain is manhattan but when you talk about

ethereum you can't just measure manhattan this is like saying that you know it's impossible to live anywhere in the united states because manhattan prices are high well like the united states is like it's a big country there's a lot of places there's like yeah all sorts of side chains and suburbs and like cheaper cities to live in you can live in all sorts of places mahalo do you have anything to add to this this idea that ethereum is abandoning users um what do you say on that yeah i absolutely disagree of course

i guess there are several aspects to to consider there the first one is and the the maybe closest to to i don't know my heart is basically the technology or tech aspect so um narratives aside and whatever someone says on twitter like the reality is this we have ethereum ecosystem that has the main chain that is now expensive because the demand for the the transactions are on ethereum is very high and we have this whole fantastic ecosystem of scaling solutions the layer

two solutions build around it and so many smart people so many smart teams working on these hard problems the alternative are alternative layer ones and like all of them or majority of them are using evm they're basically just a clone of ethereum that starts empty and in the beginning they can offer these cheap transactions and that's that's a given i mean that's that's uh simple but as the state blood grows as the activity on this chain grows they

are facing the same issues like ethereum so uh to put it succinctly i from the tech point of view i don't see a viable alternative to what is happening on ethereum and that for me is the most important like i always try to put narratives aside memes aside let's look at the technology what technology here is there any alternative to what is being built on ethereum that can actually reach mass adoption and can support mass adoption and can support theoretically at least

in five in the next five or ten years can support one billion users i really don't see the technology that can only happen on ethereum and that is what is what i consider the most important that is the the kind of essence um i i could say a few more things but i guess we have topics to to cover but when you realistically look at it and again from the tech point of view i really don't see any alternative approach uh and just something to keep in mind uh um

is that people just need to remember that you're still very early like we are building basically this web free and this there's this amazing promise of this open financial system for everyone and uh to build infrastructure for something like that that is far from trivial and it cannot happen overnight and what is a real strength of ethereum is this decentralization there is no central party like uh uh

no one including vitalik or whoever is controlling ethereum and controlling the innovation the innovation is happening full completely organically and and there's this as i said smart teams all around all over the world that are working on these hard problems and that uh that is like a real real strength of ethereum that's i'm really happy that it's happening things are happening like that because at this phase that's basically the philosophy that we want to adopt that we're trying to adopt at polygon as you know we already have multiple

uh zk based efforts because we are in this stage of intense innovation currently and experimentation and we need to we need these decentralized efforts and with time they will start to crystallize the the these scaling technologies will mature become more robust be more reliable etc and we will slowly i believe converge towards uh several i guess solutions that can actually support uh

mass adoption but this is basically a marathon and i think ethereum is by far uh the the best position uh ecosystem to to basically run and win this marathon so i want to play devil's advocate here and i think there's maybe some of the the newer listeners or newer entrants into the world of crypto uh these are some complex concepts to really wrap your head around and so what would you guys say to somebody that said well there really just appears to be this bias that people have where if you're

building on ethereum that's good and if you're not building on ethereum that's bad and uh it's kind of like the the dividing line is there it's that that tribalism where uh a l1 a non-ethereum l1 experimentation is a waste of time and other people's resources but if you just do what you're doing on ethereum is good what would you guys say to to that critique so first of all like i mean i i mean i don't want to be demeaning towards any ecosystem like ecosystem building is really hard and

some of the other layer ones have done a good work in in trying to build those ecosystems and they are in a very early stage where ethereum was like let's say five years back and things like that but still far away in that but that's that's good good part right but in terms of like you know the criticism i understand uh david and you know sometimes back i also said that you know because blockchains are as much technical as much social as they are technical so there is always bound to be some level of tribalism even like i go to an extent that if let's say

there is there is a particular project community-owned project which does not have any tribalism that project does not have any real community right any project which has some real community will have some level of tribalism we'll have some people die hard fans who are you know willing to go to any extent for that right so so i mean that's that's kind of unnecessary and important evil i i i say to that right so um so but there is some level of tribalism where we simply you know from ethereum community might be discarding and some people can be really

harsh on twitter but the other side of the story is that if you ask me how many teams who are building on these alternative let's say layer ones which are actually determined about building a product or which actually have a product vision and we who are not going for a quick token you know pump and you know that pump and get rich cycle or you know get some large grants and all that i i can because i heavily do this research on i can probably count them on on my fingers

right how many good teams are there are some good teams but they are very very low in number right now so even though there is some tribalism and and you know there is that critique some people can be really harsh and they are the ethereum people are harsh within the community like you know there are people are extremely harsh on polygon at times like you know when you for for a variety of reasons but that's the strength of ethereum community we introspect we kind of question our biases like you know i mean i'm really i really highly appreciate you guys are also you know willing to kind of deep

dive into it that whether there is any reality to it and that's the power of theorem community uh but you know in terms of like looking at good projects like some part of that criticism is actually true or not some part maybe like large part because 90 of those projects which i feel today are like mostly you know kind of not that much focused on building some product and doing some innovation but are chasing some sort of you know grants and you know rewards in terms of like token pumping and things like that so that's my opinion on that hello

yeah i don't have anything special to add i generally wish in an ideal world there would there would be less tribalism i don't know in especially in crypto and crypto is a special industry because we have these crypto incentives on top of i guess human nature that is also not perfect at times so yeah it is how it is i guess but that being said um what i generally don't like i i am

always in support of course of any sort of innovation any meaningful activity be it within or outside of the ethereum ecosystem what i generally don't really like and don't appreciate is more or less constantly you see this pattern of uh um trying to extract value of course you have ethereum that is absolutely uh the dominant player in web free of course and he has like a lion's share of the uh

market basically like 90 plus percent i guess and these competing ecosystems are trying to capture that market share but in some way that i cannot always appreciate first you try to piggyback off of the technology in the community and then some sort of attacks uh uh are kind of um a common thing i guess there in a way and that's something i of course i cannot appreciate and then you have this ethereum's uh immune system that kind of was uh uh uh

strengthened throughout all these years and fights with i guess bitcoin uh maxis mainly and then people have to react and ideally i think ethereum community is very very friendly very uh i don't know supportive of innovation and uh um inclusive in all sorts of ways uh but yeah um i just think um it might have been better for these projects to kind of try to add value it's uh it's better it would probably work better

even for for ethereum competitors if i can give any advice to ethereum competitors don't attack uh i don't know try to add value try to contribute collaborate and i guess it will be better for everyone yeah well guys let's restore the zen a little bit we're done with that conversation right that's like twitter narrative side of things i think the way out of this as always uh for any uh technologist is you build right and so and polygon is building i want to divide the the rest of the conversation maybe

in two parts first uh let's talk about the technology right so like all those benefits the decentralization that sort of thing everything you guys are building and then secondly let's talk about um the users because there are some cool applications cool sectors like nfts and and game five that we might want to talk to too and you guys are doing some really neat things with draftkings and others so lots of different applications going on in polygon but but first let's start start with the tech because as david was saying look there are a lot of newcomers in this cycle right you know 2022 people

don't actually understand um the difference between block space on polygon or ethereum versus avalanche and solana right they just don't understand what the differences are uh and you know i i think we want to talk about the difference between polygon and some of these maybe alternative layer ones and i've got like three differences that i really want to drill into uh to kind of highlight this but but let's start at the top level the first is this understand i think people need to understand about polygon