Episode 18: Jesse Pollak on Coinbase Base - The Network State Podcast

Balaji Srinivasan 0:00
Jesse, Welcome to Network, save podcast. Thanks for having me. You and I have kind of had an ongoing, sort of philosophical discussion for many years on how, um, Libertarians can learn from progressives and progressives can learn from libertarians. And it’s, it’s funny, because I went so far libertarian that it became like a progressive. And I’m like, you know, I need to do community building. I need to do community organizing. Go ahead.

Jesse Pollak 0:22
No, yeah, it’s exactly right. I mean, this is when I think back to our time at Coinbase. I feel like so much of the fun that we had was thinking about, How are all of these different political philosophies going to be kind of rewritten in this new world where the internet defines all of us and we’re actually all looking for kind of new frameworks to think about how the world can come together and how the world can can be better than it has been in the past.

Balaji Srinivasan 0:46
So let’s go through base. It’s it’s really funny how Coinbase was so well named that it managed to not just be like easy to pronounce and pass the bar test, but it was also based like you managed to launch base. When base Go

Jesse Pollak 1:01
ahead? Yeah, no. I mean, I think that one of the things I’ve always felt about base is that we just got incredibly lucky in having a name that we could borrow from, Coinbase that kind of brought over the trust that had such a metaphorical meaning in terms of being this platform that everyone can build on that was associated with the cultural phenomenon like based, that was four letters, really easy to pronounce, totally globally accessible. You know, I think, I think there’s probably a lot of things we could have gotten wrong, and the name still would have been really, really great. But luckily, over the last two years of building, I think we’ve got a lot of things right. And today, you know, for those who are maybe listening to this for the first time. You know, base is one of the largest chains in the world. It’s an Ethereum layer two. There’s 1000s and 1000s of builders all around the world who are choosing to build on base, to help us build this global on chain economy that we think is going to massively increase economic freedom, innovation and creativity around the

Balaji Srinivasan 1:55
world. You know, one thing I think about, and let’s go into details, is, base is interesting because it’s a coinless chain, in the sense of, there isn’t a native asset on the chain, but it is, it is still useful. And one way of thinking about it is that coin, the stock, is like, sort of the quasi Native Asset of base. So it’s not, you know, directly there. Or another way of thinking about it is it actually takes aspects of blockchains that we didn’t think you could take, you know, you didn’t think people didn’t think you could run a blockchain without a coin, but you can, you can run as like an open state database, right? Maybe you have some thoughts on that, and let’s get into the details of how base works.

Jesse Pollak 2:32
Yeah. I mean, from the beginning of base, one of the Theses that we had was, if we just focused on building a really great product that solves problems for developers and creators and consumers, that was going to be a way higher leverage way for us to bring this to market than what we kind of seen for the last few years, in terms of people really focusing on the coin and token side of things. And I think that’s proven out to be true. It’s been a really good forcing function for us, right? You know, whereas I think a lot of folks who’d been building chains otherwise, they said, Hey, we’re going to have a coin, and then we’re going to use that coin to pay people to come and build with us, and we’re going to kind of use that as a shortcut to try and kind of jump start this the network effects that’s required to be here. We didn’t have that luxury. Instead, we had to go and say, Hey, we’re going to go fight for every single customer, every single developer, every single creator, every single user, we’re going to go have to win them on the merits of using base because it’s faster, because it’s cheaper, because it’s easier to build on, because it’s, you know, more more connected to create on, because you can do things that you wouldn’t be able to do anywhere else. And I think that that’s been a really good forcing function for us to just make sure that we’re always building the right product,

Balaji Srinivasan 3:43
all right. So I want to go like kind of top to bottom. So let’s start with the technical parts of base, and then I want to get to why I think base and tools like it are base for building new societies, startup societies, network shades, and so it’s okay, great. So what is the problem that base was created to solve, I know this is super basic, but you know, go

Jesse Pollak 4:03
100% I’ve been at Coinbase for five years. Balaji and I got to overlap when he was CTO. It was some of the most powerful learning experiences I ever had, getting to watch him operate inside of the company. And in those five years, I built the consumer business at Coinbase. So Coinbase, Coinbase Pro, Coinbase wallet. And then after doing that for five years, I had this idea of if we wanted to accelerate global crypto adoption. Coinbase was a crypto company, but it wasn’t yet an on chain company. It had been started in 2012 it didn’t know how to write smart contracts. There weren’t engineers who were kind of building on chain every day. And it felt kind of like the early days of the Internet, where there were going to be companies that figured out, okay, how do we do this transformation to really become an internet company, to be a native internet company. And if a big company like Coinbase could do that first, then other people could follow. And so that was kind of the initial thesis behind the conception of base. Was. How do we make Coinbase a truly on chain company? And we went through a bunch of different product iterations. We tried a bunch of things. None of them worked. They all failed. And all of the kind of learnings from that pointed us to this idea, which was, in order for Coinbase to be an on chain company, we actually needed a platform where we could build the on chain products and services that would help Coinbase be more efficient, help Coinbase get more global scale, help Coinbase leverage this technology to build a better business. And so that was really the initial conception of base. It was, let’s build the platform that enables Coinbase to make this transition. And then once we started doing that, we were like, Okay, well, if we’re going to build this for Coinbase, Coinbase is going to want the best platform in the world. And the best platform in the world is actually going to be an open platform, where anyone else in the world can also benefit from that technology stack, and can also benefit from plugging in, you know, as you like to say, to the open state database and all of the APIs that Coinbase can kind of bring on chain, whether that’s on ramps or off ramps, or payments, or whatever it is that that, you know, people need in order to build that’s what base became. It kind of became this platform built for builders by the builders of Coinbase, originally, to solve some of Coinbase problems in coming on chain, but now, I think, really to enable and accelerate the rate at which the entire world can come on chain

Balaji Srinivasan 6:21
awesome. And I think actually, in a sense, you can almost think of base as like the next version of Coinbase is APIs, where you’re not just querying Coinbase as server for data. You’ve got this open state database where you can write and read to it and so on and so forth. And in a sense, it’s maintained by Coinbase, but it is also something that is more open than a traditional API. It’s kind of the next iteration of it. Would you agree with that? Or do you

Jesse Pollak 6:48
disagree with that? Yeah, exactly. And I think back to, you know, some of the presentations you gave when you were at Coinbase, where you were talking about, you know, how do we get more verbs, crypto verbs, for people to do? And this was like a thing that Balaji said, it’s like, we have a few verbs buy and sell right now, but we need to expand to hundreds of verbs. And one of the ways I like to think about base is it’s almost the perfect platform for enabling rapid expansion of verbs, because rather than one corporation, you know, maybe in a traditional API or serverless environment, one corporation having to add every single new API or every single new verb that you can do. The really powerful thing about a chain like base is that it’s an open platform where everyone can add new verbs. Every smart contract that a developer deploys is a new verb that some other developer can call. And so what that enables is it enables very rapid expansion in what’s possible and what capabilities both builders and consumers have on the chain. So I think when I was thinking early on in the journey of base, I thought back a lot to those conversations that we had where you were really just hammering, how do we get more verbs? Because verbs are how you expand the GDP of the global on chain economy by giving people the actual tools and capabilities to transact on chain, to buy, to sell, to borrow, to lend, to do all of these things that have historically been very complex, very expensive and very kind of locked out for a lot of people in the traditional

Balaji Srinivasan 8:14
world. Yes, exactly. And just, you know, the nouns and the verbs, right? So just for folks who know what we’re referring to, like a noun was something like a I should have published this at that time in 2018 but basically nouns are like a minor, a holder, right, a wallet, right? And verbs, buy, sell, send, receive, but then also stake, burn, mint, right, all this kind of stuff, right? And you’re exactly right, that essentially, the innovation one way of thinking about blockchains is Coinbase or any company, Twitter, for example, it can’t put its Postgres database in public. It can’t give everybody the root password to its Postgres, but it can put a chain in public, and everybody has read and write access to that, and the consensus algorithm ensures it’s not corrupted, which would happen with just a Postgres database that was naively, you know, opened up to the world and so. So, because everybody has read and write access, they can add the smart contracts, which, as you say, have the verbs, and actually can also add the nfts, which add new or help add new nouns. And, you know, different user types are also new nouns. And a sense like the smart contracts are on chain code and the nfts are on chain data, right? So, so now help me understand how does base work technically? How does it work in terms of validation of blocks and so and so forth? Let me understand that. Yeah,

Jesse Pollak 9:35
absolutely. And before I jump to that, one thing I do want to say is, you know, you mentioned kind of you can think about base as, you know, an extension of Coinbase, or an on chain, open version of Coinbase, where you have access to these APIs. And I think that was like almost the initial conception of base. But one of the things that we realized very early on is that the opportunity is actually much bigger. It’s much bigger than being a single company where you can kind of have give everyone access. It’s. It’s really the opportunity to build a global economy. And if we want to build a global economy that everyone can participate in, one of the things that we realized very early on is it can’t be controlled by one company. The only way to do that is to build a decentralized platform, because if you’re not decentralized, inevitably, either a single corporation or a single state will get into a place where it tries to co opt that platform for itself. And so from the beginning of base, and this gets into our technical architecture, we’ve been very, very committed to decentralizing base to make it so that everyone can feel confident that they can build on this global platform and trust that it’s a neutral place for them to contribute to the global economy. So how do we do that? Base is built as an Ethereum layer two. If you don’t know what Ethereum is, Ethereum is the most secure, decentralized, scalable, l1 platform for writing smart contracts. But one of the challenges with Ethereum is that it’s built to be maximally decentralized, which meant that costs for doing things kind of got higher and higher, and so Ethereum took this scaling strategy, which was, let’s expand the kind of surface area of Ethereum by letting people build and enabling people to build layer twos on top, which let you kind of bootstrap off of that decentralization of Ethereum while bringing much more scalability and Driving down the costs of how much it actually costs to use the chain. And so what we do is we basically take transactions, we batch them, we publish them to Ethereum, and that lets us get the best of both worlds. And so today, base is kind of processing, you know, every second, hundreds of transactions, and bringing all of those to Ethereum, letting us kind of bootstrap off of that decentralization, provide those same decentralization guarantees to customers, but get really, really great cost savings and make it more accessible for more people to come on chain.

Balaji Srinivasan 11:52
Interesting. So you want to describe kind of how, you know, optimistic roll ups work and sequencing. And, you know, one thing I was actually researching, and I was just thinking is, like, how many disputes have actually? Well, first, why don’t we describe how do optimistic scrolls work for

Jesse Pollak 12:07
somebody who doesn’t know? Yeah, so base is an optimistic roll up, which basically means that when we’re doing this kind of batching of transactions and submitting them to l1 we’re doing that optimistically. And so that basically means that people are not trusting. But the way the mechanic works is you assume that the batches are faithfully posted to Ethereum, and that’s done in a way that kind of preserves the mechanic. But there’s a mechanism called a fault proof or a challenge where someone could say, hey, the sequencer, which is this kind of entity that’s taking those transactions and batching them and publishing them to Ethereum, did something malicious. Now we’re going to challenge that, and there’s going to be a game where there’s kind of economic incentives involved to kind of identify where that malicious activity was and unwind it. And so what that means is it means that rather than doing computation on every single transaction, you actually get to drive down the costs. So in 99.99% of the time, you’re actually not having to do anything because it’s optimistically accepted. And then in that point, oh, 1% of the time, there’s a mechanism for making sure that there’s still safety for users. Another really important kind of part of this design is that the way it’s built is that there’s not just one way to transact on the chain. If you were kind of just able to go through the sequencer, one of the concerns would be, okay, you can only go through the sequencer. What if the sequencer does something malicious in terms of censoring your transaction? And so the way these optimistic worlds like base are built is they’re built to also enable people to submit transactions through Ethereum. And what that means is it’s kind of like an escape hatch where you have this guarantee that transactions can be forced into Ethereum, which gives you much greater certainty that your transaction can’t and won’t be censored. And so that’s the construction that base uses today. Now, one thing I will say about base is that we’ve built it on something called the OP stack, which is this open source kind of standard for for building layer twos. And one of the really powerful things about the OP stack is that’s designed such that the proving mechanism, which is this optimistic roll up kind of construction that we talked about, is modular. And so we’ve started with an optimistic roll up, but we actually have, you know, in production right now, there’s a team that is proving every block on base with a ZK prover as well, which is kind of using ZK zero knowledge proofs to validate that every block is there. We’ve also seen teams experiment with what are called Trusted Execution environments, where you kind of have hardware devices that are kind of provable that they’re signing the transactions and kind of validating and they’re using that to prove blocks. And I think where we’ll end up with base in the next year or so is, rather than having one mechanism that’s securing base, we’ll

Balaji Srinivasan 14:57
actually have more knowledge of Te you. You have some degree

Jesse Pollak 15:01
of you have optimistic you have zero knowledge. They all sit on top of each other. And then you can kind of have a game where if any one of them is signaling, hey, there’s something going wrong, there’s something malicious here, then you kind of layer them on top of each other. And that’s one of the ways we’re going to be able to remove more and more trust out of the system and make it kind of inherit even more of the decentralization and

Balaji Srinivasan 15:23
security of Ethereum. Awesome. So well now you also have a goal for progressive decentralization of like sequencing and validation and so on. Right. Go ahead,

Jesse Pollak 15:35
yeah. And so, you know, there’s this framework that Vitalik, who created Ethereum, uses to kind of define the decentralization of these roll ups, stage zero, stage one, stage two, kind of three levels of decentralization. Base started as a stage zero roll up, which has training wheels. We are about to become a stage one roll up, after a lot of hard work from the team. I don’t know exactly when this podcast is going to come out, but it’s either gonna happen, you know, immediately before this podcast comes out, or immediately after. And so that’s a huge milestone that I’m super, super excited about. And it’s just one more step in our kind of commitment to making base this decentralized platform that anyone can build on. And then from here, we’re gonna be doing more work to get to stage two that involves kind of getting to this multi prover environment, where, you know, we have multiple ways of validating the chain. It also involves increasing kind of the decentralization, the way people submit transactions to base through the sequencer. We actually have some really cool work that we’re doing right now with a team called Flash blocks, which is helping us start with what’s called builder decentralization, where basically there’s going to be the opportunity for multiple people to build blocks, which will make the kind of market more efficient for base, because you’ll have some kind of competition in how people are able to submit transactions and look for MeV. And so that’s, that’s a really good first step. And then from there, we’re going to, we’re gonna, we’re gonna, kind of bring further decentralization to the

Balaji Srinivasan 17:02
sequencer. Awesome. Now, what kinds of things can people do on base? Can they do anything they can do on any l2 are there unique things like, what you know? What kinds of things do you think are? Yeah, go ahead.

Jesse Pollak 17:15
Yeah. I mean, I think at this point, in terms of day to day usage of crypto, there’s probably not another chain in the world where you have more people doing kind of everyday things, and so you have people using payments in terms of social products, though, this is really what’s shining on base right now. If you look at farcaster, this is the kind of fastest growing on chain, social network, the vast majority of mini apps built on farcaster. Transactions happening on farcaster are built on base, and I think that that’s like a daily habit that 10s of 1000s of people are doing right now. It’s still early in the grand scheme of things, but I’m super, super excited about that. And you’re on farcaster. I’m on farcaster. We also have creator social products like Zora, where you have creators all around the world who are starting to bring their creativity on chain, have it more directly valued by the free market, and then actually able to capture that value to help fund future work and to live a better life. And so I think that social domain is a really, really rich one on base, and probably a place where, in terms of any other chain in the world, I don’t think there’s anyone who has more social activity than what’s happening on base. And then I’d say there’s a long tail of other use cases. We have Blackbird, which is building kind of restaurants on chain and onboarding hundreds of restaurants in the United States. We have people who are building pretty much every part of the application spectrum, and we’re just excited to see all of it happen faster and faster.

Balaji Srinivasan 18:47
You know, a few years ago, Moxie marlin spike wrote this piece which said something like, oh, you know, what’s weird about these crypto apps is they have, he’s very good engineer. Obviously, he built signal and so and so forth. But it’s interesting, his framework was, these crypto apps have, like, the minimum level of decentralization they need to kind of get out there. And he’s facing this as negative thing. And I was surprised when he wrote this, because my response was That’s because block space is a fundamental constraint of crypto, in the same way that bandwidth was a fundamental constraint of the early web and everything on the web in the 90s, like, you know, Amazon, Yahoo, Google was constrained where, you know, I think Amazon’s book descriptions didn’t even have images at first, and Google was just put in text, get out text, right? Images. You know, digital cameras were only really widespread by the mid 2000s and Facebook only worked because Harvard had t1 connections, and so people could put digital camera images, and people had, like, one or two digital images of themselves. They didn’t have, you know, camera phones and so on and so forth. So bandwidth is a constraint on the internet for a long time, and block space was a constraint for crypto apps for a long time. So that’s one way of. Thinking about like, what base does, right? It radically increases the amount of block spaces available. That’s what l twos do in general, and how much more block spaces are, and what kinds of things can go on chain. And what do you think is still infeasible? For example, firecaster still has its own, you know, Postgres, right? That you can run separately. So what, what do you think is the right thing to put on Ethereum, versus on base versus on, you know, an app specific database like farcaster, how do you think about the division of data there?

Jesse Pollak 20:27
Yeah, it’s a really good question, and I think your point is exactly right, which is that we need to increase the bandwidth of blockchains in order to enable more use cases. And I think kind of L twos, and this recent adoption of more scalable changes, kind of that broadband moment where we went from dial up to having enough bandwidth to start to build real applications in the early days of the internet. And really the way we think about that is driving down the cost of most transactions to sub cent is really this kind of selling point where once you get sub cent, people stop thinking about the costs, and they start being able to build really, really powerful things. And so, you know, right now, on base, you can send a payment to anyone for a fraction of a cent. You can mint an NFT, you can buy a coin, you can trade you can, you know, post something on social media. And so I think that’s this kind of milestone that we just crossed in the last year or so that’s leading to a ton of economic activity and a ton of growth. Now, in terms of how I think this is all going to shake out. I broadly started thinking about this as kind of, like tiers of applications or tiers of use cases, kind of like the internet. You know, the internet’s actually architected in like three tiers. There’s like, tier one, ISPs, tier two, ISPs, tier three, ISPs. And I think that what we’ll see as more and more of the world’s kind of compute comes on chain is the same rough architecture will happen in the on chain world. And so that will look like L ones that sit at the bottom, that provide kind of maximal decentralization in this kind of scalable platform that people can build on, that they know is going to be neutral, kind of as a technology platform, almost like a pure piece of infrastructure. So that’s gonna be layer one. That’s gonna be things like Ethereum and Solana, I think on top of that, we will, we’ll see what I kind of think about as economies start to shape up. And this is gonna be base, right? Base isn’t just pure technology like Ethereum. It’s a technology plus culture plus economic activity, plus all of this infrastructure that lets kind of global economy start to crop up. So one example of this is one of the big priorities that we have for base right now is onboarding local currency stable coins all around the world. So right now we have about 15 local currency stable coins, the Kenyan shilling, the Mexican peso, the Canadian dollar, obviously the US dollar, the euro, the pound, the Singapore dollar. You know, the list goes on and on and on, and that is economic infrastructure that can enable people to come on chain, to start to build, start to create. And that’s not going to be something that every application is able to build entirely themselves, but it is going to be really, really important infrastructure to enable an economy to start to flourish. And so that’s kind of the tier that base is working on. It’s like our mission is to build a global, on chain economy that increases innovation, creativity and freedom. I think there will be a lot of other economies, and I think they’ll kind of live side by side. They’ll have like trade that happens between them, and they’ll all be working together on top of these kind of foundational l1 technology platforms to grow this economy.

Balaji Srinivasan 23:23
Obviously, Coinbase itself uses base a lot. Probably exchanges use base a lot. So those are the unsurprising major use cases. Forecasters use base. What are the things that you consider big apps, and what are the things you consider like surprising apps, surprising use cases?

Jesse Pollak 23:38
Yeah, I think obviously you talked about Coinbase, Coinbase wallet other exchanges that are using base for payments and transactions, I think farcaster is the second one. We’ve invested a lot in farcaster from a community perspective, and we’re actually in the process right now of integrating a forecaster feed and mini apps into Coinbase wallet. And so Coinbase wallet is going to be evolving to have a full social feed, to have mini apps built into it, and really to be a place where people can come on chain, get started, find things to do, buy a coin, but then stick around to do a lot more. Zora, I think, is another pretty fast growing social network that’s built on base where, if you think about forecasts, are kind of analogized to Twitter. Zora is much more analogized to Instagram, where it’s primarily visual content, and Zora just went through a change right now, where every single piece of content is actually a coin, and that’s through a lot of iteration. Originally, Zora was built as a one of one NFT and then it kind of went to open edition nfts. But after kind of experimenting with those different economic models, I think they kind of kind of went full circle and said, hey, the easiest way to let content be valued is just make each piece of content a coin, let the market value it, and then create kind of market structures that let you redirect that value back to creators. I think the place that base is really winning right now is in this kind of interconnected social economy that’s being built on top of things like forecaster and Zora. They.

Balaji Srinivasan 25:00
Base is interesting because it’s a coinless coin, right? Or it’s a coinless chain, right? Where do you think we’re going to go with equity backed assets, real world assets, other kinds of things on base or in general, right? Like, I think the legal system is moving quickly in a positive direction. Maybe you have some thoughts on that, and whether base supports that, whether base will support that go ahead?

Jesse Pollak 25:21
Yeah, I do think that this is one of the biggest problems in crypto, is that because we’ve had a relative dearth of high quality assets on chain, there’s been a fair amount of confusion around what’s actually valuable and why is it valuable, and that’s led to astronomical valuations for things that don’t really make sense and aren’t really driven by kind of market fundamentals. And I think one of the things I’m most excited about is everything coming on chain over the next few years. And what’s going to happen when everything come on comes on chain is a all of those assets are going to become a lot more powerful. Because when you can do 24/7 fully global trading of equities on chain, that’s going to be a better product experience for everyone, everywhere in the world. And so that’s going to be a huge enabler. But the second thing that I’m really excited about is, I think it’s going to normalize a little bit on chain as a market where, instead of having this bifurcation, where you have, like the on chain assets that are valued in a totally different way, and the off chain assets that are valued in another way, you’re just gonna have one market, and it’s gonna run on a new technology platform, but we can look at all of them as one holistic market and make value based judgments against them. And one of the things I’m actually expecting will be kind of a forerunner of this, is Brian talked about this, and we talked about this, the team has been exploring, what does it look like to bring coin on chain. And one of the things I’m really curious about is, if coin comes on chain. Does it get massively marked up, like every other kind of token that lives on chain, or does it bring fundamentals into the on chain space and say, Now every other token needs to be compared against coin? Because I think right now, people look at the tokens and the coins that are that are on chain, and then they look at, you know, stocks like coin off chain, and they’re valuing the tokens at a much higher rate, and I think that that actually has the opportunity to kind of like, re equilibrate us, and really force the question of, like, why do you value this thing, just because it’s a token, and is, is this kind of like, emergence of these traditional assets on chain going to fix that?

Balaji Srinivasan 27:18
So I actually have, I if I was, if I was still CTO, or if I was, you know, I would, I would put that as one of the top three things to get done this year, to get coin on chain. And there’s a reason for that, which is it’s not so much about just the assets, about the legal pathway, right? Whether it’s done as a Wyoming Dow, whether it’s done as, you know, a Tennessee Dow, whether it’s done in Dubai, whether it’s however, it’s done right building that legal pathway is a 10 to 10 importance, not just for Coinbase, but actually for the whole space. Because, as you say, it puts fundamentals on chain. Number one, maybe it brings marks down, or what have you. And number two is it’s actually what the future is for tech companies. Because I’m actually very bearish on ns, NASDAQ, and generally the entire 20th century, I think is ending in terms of US markets. We can go into all that, but I think it’s basically like the entire, quote, Western world, Anglo world, English speaking world, and so on. Everything will eventually just go on chain. That’s what the financial system will be. That is the flipping. And it’ll be, obviously the right way of doing it. Just like, you know, everything that has not yet gone on the internet will go on the internet, you know, like any data structure that isn’t yet there will will get there, and what, what puts it there is often a very valuable thing. Let me pause there. No 100%

Jesse Pollak 28:44
agreed. In some ways. You can look at what Coinbase has done with base and the path we’ve been paving for other businesses to come on chain, and you can think about coin as a similar kind of analogy, where it’s like base is putting our technology platform on chain and enabling us to build the next generation of Coinbase products on chain, and bringing coin onto base, or coin on chain, will put our governance platform on chain, and will require us to solve a bunch of the hard problems around bringing governance on chain, or figuring out that legal pathway that I think can serve as kind of a beacon for other companies around the world to see how much leverage they can get when they use This new technology platform to transform themselves and to provide greater access, to operate more efficiently and to participate in this new global market, this new global economy that we’re

Balaji Srinivasan 29:29
building. Awesome. So, you know, it’s funny, I don’t know if you remember, there’s another diagram that I drew in 2018 2019 when we were working together, which showed a bunch of boxes, and it was like fiat currency to cryptocurrency was a much larger market than most people expected it to be, right? Like USD, BTC is $100 billion I mean, if you add Coinbase plus binance, plus all the exchanges and so on around the world, it’s a multi 100 billion dollar market, right? And that’s just fiat currency, cryptocurrency, right? So then, if you say, what is Fiat equity to crypto equity look like? That’s what we’re just talking about, right, taking right these stocks and then putting them on chain, what does Fiat real estate to crypto real estate look like? What does Fiat identity to crypto identity look like? What does Fiat X to crypto x look like? I think each of those is like a gigantic business. You know, Fiat dollars to crypto dollars is stable coins,

Jesse Pollak 30:26
good 100% Yeah. And I think this is, I mean, this is why I’m so excited about the opportunity with base and also why I think it’s heating up a little right now in the space in terms of building these technology platforms, because people are starting to realize, Oh, my God, this isn’t just going to be this speculative use case, like we’re talking about the technology and the technology platform that will power the next generation of the global economy. And there’ll be the place where every single asset in the world is denominated and every single asset in the world trades and makes markets, and every single participant, and every single person in the world can access it if they have an internet connection. And that is a massive opportunity, both to obviously build great businesses that aren’t possible today and expand businesses that exist today, but I think also make an incredible positive impact on the world, because we’re going to give everyone around the world the opportunity to participate and to regardless of where they’re born, regardless of where they live, join this new economy, get access to every single asset, and then build whatever they want on top of it. And that’s just going to be incredible way of making the world

Balaji Srinivasan 31:32
better. You see the trailer that we had for the network school fellowship where I said at the end, the only connection you need is an internet connection. Yes,

Jesse Pollak 31:38
yes, yes, yeah. I mean, this is like, I love saying this thing, of like, all you need is an internet connection. Because I think we’ve, we’ve, we’ve felt that, or people have said that for a while. But the reality is, if you had an internet connection, you could do certain things, in particular, what the internet enables. It enabled you to transfer information globally. So if you have an internet connection, for the most part, although, of course, there’s, you know, China and other parts of the nation the world that have kind of secluded themselves off, but for the most part, you could participate in open and free and global transfer of information. But what the internet missed was open, free and global transfer of value. And with crypto, with this upgrade to the system, we’re finally going to have that that actually means that when you have an internet connection, you have access to not just an open information economy, you have access to an open financial economy, and all of this stuff that can be built on top of that, and I think it’s going to be way, way

Balaji Srinivasan 32:31
better. We’re doing something together, actually. Let’s talk about that. We’re doing base batches. We’re hosting folks at network school for upcoming events. Why don’t we talk about that? Tell me about that. Jesse, yeah,

Jesse Pollak 32:41
absolutely so our vision for base is to bring the entire world on chain, a billion people all around the world. And the way we think we do that is by giving builders and creators the tools to build incredible use cases, applications, incredible content that actually bring all those people on chain. It’s gonna be the builders that do it. And so we’ve been thinking a lot about, how do we build a scalable kind of pipeline to enable people to build their first applications, their first communities, their first content on chain, and get distribution to the rest of the world? And so we just started this thing called base batches, and we’re running batch number one, which is kind of everything you need to get started building on chain. It’s build a thon and education. It’s mentorship, it’s a demo day where you can get more visibility and you can get more distribution, and then it’s kind of a pathway to incubation, where you’re actually going to get hands on funding and support from some of the best incubators in the world to help you take your product at that point, which you will have gone zero to one on and turn it into a business where you can actually be working on it around, around the year, full time focus. And so when we were thinking about starting batches, we wanted to make sure that we were working with the best people in the world and the best communities in the world. And at the absolute top of our list was the network school. I got to actually go there in the fall, got to do a fireside chat with Balaji and meet a ton of the incredible students that were at the school. My big takeaway from that is, I don’t think there’s anything else like it in the world, really there is. There’s no other place in the world where you have incredibly high agency, motivated people who are making a life decision to oftentimes fly around the world, to go to some place that’s a little bit off the beaten path, and to be together and try and create something beautiful, and to try and think about what does the next era of our society look like, and how do we start to break down some of these Historical borders and boundaries between us and build something new that’s connected by the internet, and so getting to be there this fall, getting to experience that, getting to see how big a bet that Balaji was making on this future and how unafraid he was, and all these other people that were there to try something new and to. Break out of the mold that to me and in conversations, was then, like, that’s exactly the kind of boldness that base aspires to, and that when we’re thinking about building batches, and we’re thinking about supporting builders that we want to deliver to them, and so it just made sense for us to reach out to Balaji to figure out, how could we do a collaboration to put together this event, to make it so that when folks go through batches, they’ll actually have an opportunity to then go to the network school, because there’s all of that kind of admiration and hopefully collaboration going forward between base and the network school. So that’s, that’s my quick take.

Balaji Srinivasan 35:34
If you are working on base, you know, apply to base batches, come to network school. Also apply for the network school fellowship, because we’ll be funding things on many different spaces, but in particular, people building on base, maybe this will help be the backbone of network society, startup societies, network states. I love

Jesse Pollak 35:51
it, and I want to just dig in a little bit, because I think some of the people who are watching this on the base side, maybe this is the first time they’re hearing about the network school and what you guys are doing with the network school scholarship. So can you just give me, like, a high level overview, like, what is the network school? What is the network school scholarship?

Balaji Srinivasan 36:07
Totally. Okay, so network school takes. Have you heard the term founder market fit? It’s basically like the network school is the intersection of about 20 different things I’ve done over my life, all in like, one kind of thing, right? So first and foremost, it’s for the dark talent so many people around the world, whether in the US or outside, certainly outside the US, in India and, you know, Mongolia, all Africa, all kinds of space Latin America that now have an Android phone and they’re online, but they don’t have resources or what have you, right? So we’ve just rolled out our first thing for them, the network school fellowship, anyone, anywhere, 100k where they fill out the application on online. And if I think they’ve got a good project, we bring them out, level them up, right? And we’re going to roll out other programs like that, probably an internship program as well, which is for folks who are more junior in their career. They’re not yet a tech founder, you know, which is a rare kind of person, but they are, you know. So we’ll do other kinds of things. So the there were still fellowship, anyone, anywhere, 100k and one of the things about that is, we’re in a place with an enlightened immigration policy, so we can bring people from around the world, right? It’s internationalism and capitalism, so that right? Then third is, you know, I taught at Stanford for a long time, and I love that environment, what it was, and it isn’t what it was for a variety of reasons, funding cuts, AI, fakery, of grades and so on. So you have to re envision that. So it’s a school in that sense. Third is, it’s a startup society. So this is something which, you know, is basically an embryonic form of, you know, rather than arguing about politics endlessly, what if we could do it from scratch? What if we could do something new, right? Okay, and just do something all the way away from others, you know, let them do their thing. We do our thing, right? Fourth, it is really, you know, it’s funny as tech as I am, you know, actually, a good analogy is cars, right? We’re driving cars forward. We have, you know, literally, we have electric cars. We have self driving cars. We even now have flying cars, you know, if you saw the E hang demo recently, and it’s also American versions, like Archer, but we also have walkable societies, right? So or walkable places, so you pull cars back and you also advance them. So we’re pushing the frontiers of tech with, you know, obviously AI and crypto and social all this stuff, right? But we’re actually a big part of network school is offline offices, right? And basically, for example, we ran this thing recently. I’m not sure I tell you about this. A learn, a THON, actually, you know what we could do? A learn, a thon for base. THON for bass. You know why? Let me okay, let me tell you what learn a THON is. We took, like the fast AI course, which is like 1011, hours, right? And problem is, people don’t complete these online courses. They sign up for it aspiration. It’s like signing up to go and work out and not going and working out, right? Okay. So we did is, we said, Okay. People signed up for the this, this learn a THON. They come at 9am on Saturday morning, and basically they go through, so it’s like 11 hour course, or an 11 hour course, right? So go through five hours of it on the first day. And like, phones down. They’re literally watching the video. All 20 people, no distractions, no phones, no notifications. They told their significant other, I’ll be back Sunday evening. Okay? Like, literally gone, okay. Focus biology mode, right? He remembered this, right? What would we call it?

Jesse Pollak 39:33
Yeah, I do it like 1am in a conference room with the wall just like, covered in thoughts and be like, yes, locked in,

Balaji Srinivasan 39:42
yeah, we’re locked in, right? We’re just, we’re doing this. We’re not leaving until it’s done, right? Okay, so, so 9am you know? And so they go video, then when it was time to code, everybody would bring out their laptops, they would work on them, and there’s like, a TA who’s walking around just making sure no one’s getting stuck. And so. One, we have a timer, boom, next, right? And in this fashion, it was like, it’s like a personal trainer, but for your brain, I call it a personal brainer, right? So the personal Brainer is that fun, right? So the personal Brainer ran this learn a THON, and we had, we had, we had water, we had snacks, and so on and so forth. But the goal was just total focus. So in two days, you know, we took also before and after videos.

Speaker 1 40:27
When should you use a random forest? Okay, what is a confusion matrix? Donna, what about collaborative filtering? Donna,

Speaker 2 40:35
when should you use a random forest tabular data, and if you have a lot of like, noisy features. What is the confusion matrix? Like a table of actual answers against like the predicted answers, and then comparing, you know, like, how often it gets it right, and then when and how much it gets it wrong? What is collaborative filtering? Recommendation algorithm by clustering people or items or things by similarity?

Balaji Srinivasan 40:58
So actually, we should do that with bass.

Jesse Pollak 41:00
I love that. It’s like the instant, it’s the instant pill. It’s like you get on chain pill in a weekend.

Balaji Srinivasan 41:07
Yes, exactly. That’s right? And it’s, it’s what it is. It’s the right combination, in my view, of offline and online, right? Because what’s what’s Scarce is like focus, okay, so other piece of network tool, it’s internet first, and it’s Asia, Asia as a peer, not a guest, right? So Asia, in the sense of China, India, is obviously a big part of tech, right? And it’s a big part of Silicon Valley, and it’s right. But for a variety of reasons, people are like wilding out in the US about that, which is all very unfortunate. And we’ll open up other nodes in other places. I want to do one, maybe in Dubai or, you know, maybe one in in the Americas, depending on what time zone. But we’ll start, start with this one. And then finally, I think this is the thing that makes, I mean, there’s a lot of different versions of it, I could say, but this is how the cloud takes land, right? We’re doing all this crazy stuff in the cloud, amazing, insane amounts of money moves in our on our coins. It’s like, actually crazy. And huge numbers of people. You know what a million people is like online. It’s just, have you ever seen a stadium like, have you seen the lime thing on crowd sizes? Have I shown you that? Right? It’s like, here’s what, 50 people, 100 people, 200 400 right? So, like, whenever I go to tweet or render, you go to tweet, it’s like, you know the Star Spangled Banner, they go up to the thing, and they’re like, Oh yeah, then look at the whole stadium before they go ahead.

Jesse Pollak 42:24
No, right? I just it’s timely. I’ve been having that experience a lot the last week where I’m just like, Oh man, I it’s easy sometimes to forget that when you go on Twitter now, like with your audience or my audience, it really is like, five stadiums,

Balaji Srinivasan 42:38
stadium, yeah, the stadium or multiple stadiums, right? But the funny thing is, that’s so large, and then when you materialize even a small fracture, that in person, it’s like a packed hall, right? So I think the numbers in the cloud are so mind crushingly massive that when you start materializing them into the physical world, right, you start to realize how big it is. What we’ve built online, is, right? You start to actually perceive that, you know? And I think that is sort of the missing piece, you know, obviously, tech guys have been wanting to build in the physical world, and so, so now we’re actually doing that, right? So there’s a lot of different things in network school, you know, scratches, I

Jesse Pollak 43:14
love that. What, you know, we’ve talked a lot about crypto. How do you think, like, crypto fits into this vision of network states and the network school, like, Why do those two things go hand in hand? Very

Balaji Srinivasan 43:27
good question. So I think there’s the most unpopular word and most unpopular but most important word in the world, I would argue, is recentralization. Okay? Why? Basically, centralization, decentralization, recentralization, in many ways, a crypto especially with Bitcoin, is it’s like there’s a burning building. You hit the fire alarm, you get your Bitcoin, and you get out, right? And you get out. But if everybody scrambles in every direction, that’s crypto anarchy. And actually don’t believe in crypto anarchy. Crypto anarchy is better than pure anarchy, because at least there’s digital order, but there’s physical disorder, right? What I believe in is crypto civilization, right? Ultimately, there’s a re bundling, you know, you have bundling, unbundling, rebundling. There’s a centralization, decentralization, recentralization, on the other side, where we come back together again in a new form. It’s like you take a CD, you unbundle it and MP threes, you rebundle into playlist, right? You take a newspaper, you unbundle it into articles, and you re bundle into Twitter feeds, for example, right? So Western states are getting unbundled into digital tribes organized by coins and stuff, social networks, other things online, I think they’re going to get rebundled into startup societies and network seats. And I think that’s actually like, what people aren’t my view is people aren’t really, yet taking the internet seriously. You know, in a sense, by the way, most people aren’t. This is a both a play on words, but technically, it’s also true. Most people aren’t actually. Country first, their internet first. Should I explain what I mean by that? Like, like, for example, when you wake up in the morning, what’s the first thing you do? Internet first, right? You’re checking your phone or something like that. Or people, even if they’re working out, they’re checking their, you know, watch their Fitbit. Where are you finding your friends? Internet first. Because you’re whatsapping them, or you’re messaging them, they’re on social networks or an email. How about your business? Internet first. How about your transactions? Internet first. How about your communications? Internet first, right? Like, basically, an enormous swath of your existence is actually spent on the internet, right, to an extent it truly wasn’t in 1991 it’s a completely different life. But what hasn’t yet gone there are some of the institutions, universities aren’t internet first, right? Politicians aren’t they’re on social media, but the decision making is an internet first, right? Laws aren’t internet first, and that’s what crypto represents, right? Crypto represents property, so that that’s answers your question, right? How do you build an intranet for society? It is going to start with, you know, blockchains give you monetary policy. They give you property rights to give you contracts, right? And my view is, like common law that worked for the British and the Constitution, it only scaled up to the Americans. But Bitcoin and blockchain, that’s for everyone on the internet.

Jesse Pollak 46:20
I love that. Yeah, I think there’s a lot of overlap. You know, when we’re talking about building a global on chain economy, it’s almost the same thing where we’re talking about, okay, we can use this new technology platform to create an economy that, of course, has property rights and has contracts that let people organize in new ways. And I totally agree. I feel like we are at the next turning point where we’re going to start to see how do people use this technology, not just to do payments and play games and post on social media, but to fundamentally reorganize the way that society works and that humans connect and that we work

Balaji Srinivasan 46:56
together. That’s right. And I think like in, you know, not to sound in the let’s call it time of volatility that I think is to ensue. One of the things, you know, the Internet was built to resist a nuclear attack, right? So even in times of extreme instability, the internet is there. It’s funny. You know, remember, people used to talk about the digital divide, and they feared that people would lack the internet. Or, actually, it’s the opposite. Often the internet is the only thing they have, right, right? So, so essentially, can you, you know, in a server, have you seen a server rack? You can reboot a server from the internet, right? So the reboot will be from the internet, yeah. And what’s network school is about is, is that it’s like, I’ll give one more analogy. Have you seen, have you seen every red foundation by Isaac Asimov? Yeah, yeah. So, like, Terminus is the school on the edge of the universe, right? Which is set up so that when the Galactic Empire collapses, it can be rebooted in a shorter period of time than it was, you know, before, right?

Jesse Pollak 47:56
I love that. So, okay, here, here’s, here’s maybe a last question for you. You know, we’re entering this world of obviously, massive change, the network states and on chain economies, all this starting to happen. What’s your advice for like, young builders, people who are coming up right now, like, how should they be thinking about this world? How should they be thinking about making their mark, whether that’s on base or as part of the network school, or in whatever they want. They in whatever way they

Balaji Srinivasan 48:24
want to. Great question first, Oh, boys, tons of stuff. First is, apply to network school. We’re going to actually have an internship program. So even if you have, you don’t know what you’re doing in life, if you’re smart and you want to work hard, we’ll host you on site, train you up, hire you out. I’ll talk about that soon. So that’s my first thing, just go and apply. Okay? But then more specifically, I’d say a you. So what should you learn? You should learn statistics and computer science, because from those two primitives, you can rebuild almost everything else, right? That’s the equivalent of like learning physics and math. Obviously you should still learn math and physics. Those are very good. But if you those come at the right angle of attack. From stats and computer science, you can rebuild all of AI, all of machine learning and so on and so forth. From the computer science part, you can get to cryptography. And from computer science, you can do simulations of mechanical engineering, electrical engineering. And from both stats, computer science and AI, you can get to actually, the humanities, right, like AI, art and this and that. And, of course, from crypto, you can have the crypto angle on art with nfts, right? So, so from a foundational learning standpoint, from a jurisdiction standpoint, I would reconsider being based in the US. I think it’s like, just less friendly as an environment. I think lots of other countries, lots of places. There’s dozens of countries with digital nomad visas. If you come to network school, we can upgrade to your your crypto, your Fiat identity, like, help you get better residencies, better you know, that’s actually an important part of things. You know, just like one of the reasons people buy cryptocurrencies to upgrade their fiat currency, you know, they buy Bitcoin at $100 Per coin, and they sell it at 100,000 they shouldn’t sell, but if they did, if they’ve made such a poor decision to ever sell their Bitcoin, they right. So they use cryptocurrency to upgrade their fiat currency. And one of the things I think about a lot is their crypto identity. Could upgrade their Fiat identity, their crypto identity, of their NS ID, then we can get them a better residency permit, that we can get them a better passport, or something like that, right? Few more things, I would say they should think about things internet first, not country first. And by the way, there’s a totally different I think if you’re in China, there’s totally different set of things one would do. But if you’re non China, then this way you do and if you’re in China, you can be both. There’s a whole China stack or the internet stack, if you’re outside China, really the internet stack, I would say to be very, very concerned about doing anything in hardware. If you don’t fully understand the Chinese hardware ecosystem, this is something people don’t yet fully understand. But like, basically, Chinese hardware has gotten so good, and there’s so much better than everybody else that if you are even Elon is amazing, and our greatest entrepreneur of all time has BYD really giving him a run for his money abroad. It’s outselling him in many jurisdictions, right? So Chinese hardware has gotten so good that basically competing directly against Chinese hardware will be very difficult, right? So at least be aware of that. So if you’re a young builder, but in software, you can be competitive. In creating content, you can be competitive, but it’ll be it’ll be something where I can’t give a specific, you know thing for any interest person. Those are the general things. The last thing I’ll say is not everybody needs to be a founder. This is actually going to be one of the messages in a coming post. You ready for this one? Ready? Yeah. Did you know that it’s actually by some measures harder to become a unicorn founder than to become a pro athlete? Okay, there’s only 1500 tech unicorns globally, and there’s like several 1000 pro athletes, right? If you add up NBA, NFL, European, soccer, cricket, whatever, there’s like 1000s of pro athletes. There’s like, about 1000 to 2000 unicorn founders, right? So, like to be a professor, like being a pro athlete, not everybody needs to be a founder. You can 1000 in fact, they shouldn’t be. You know how hard it is. I know how hard it is. Most people actually will do better as part of a larger vehicle, right? And they don’t have to figure out everything for themselves. There’s some degree, you know. So we will have a program for the 1,000x the 10,000x number of people who would be great tech employees, tech interns and so and so forth. And then they do really well there. And then maybe they can become a founder or something later. Or they can realize, if they, if they tell me how hard it is to be a founder, then I might actually listen to them about why they want to be a founder, right, but only, only right. So that’s another thing I’d say. For builders. Builders includes founders and employees and execs and so on. Okay, let me pause there and open source developers.

Jesse Pollak 52:44
I was gonna say that not everyone needs to be a founder, but I think everyone can be a builder. And I think this is actually one of the shared this is one of the shared philosophies that the networks school and base really has, is that regardless of what industry you’re in, regardless of what your skill set is, you can bring this builder identity and mentality, which is about showing up. It’s about working hard. It’s about not giving up. It’s about being resourceful and using all the tools that you have at your disposal in order to get things done. It’s about working together with other people. And I think that mentality, it’s one of the great superpowers that people can have, and I think it’s one of the things that has, again, brought base to the network school, because it feels like there’s so much shared alignment around this idea of everyone, everywhere in the world. If you have an internet connection, you can be a builder, and you can make positive change on the internet, and thereby make positive change on the world.

Balaji Srinivasan 53:34
Awesome. Okay, with that, Jesse, let’s wrap it. And so I’ll we’re base for builders in every school, check out base APIs and and apply for never school fellowship. All right,

Jesse Pollak 53:46
thanks. Join base batches number one, join space there. Okay, thanks, everybody. Thanks guys.