Providing Modularity at the Application Layer

So, Nero is a blockchain that gives back the power to applications. How we do this is we focus on providing modularity at the application layer. And when we do this, technically it makes us a little bit more than extends the definition beyond an L1, or even a chain, but we won't focus on that quite much in this talk. So, what was the problem that we see? We see the problem with block space 1.

0 is fees are one-dimensional. There's no mechanisms for price discovery. Applications are generally just handed what fees they're supposed to pay. Those markets are inefficient, and the value capture is by the few. There's no utility, which the effect is there's no utility created for the application tokens in the ecosystem.

So there's a zero sum game essentially between the applications and the infra that they're running on. Long term risks are as those applications or even the chains that they're on don't have kind of real revenues, this creates a longer term security problem, which is kind of highlighted in that last amazing talk. Here's another kind of issue if we zoom in on a single chain, fee volatility. So this is something that is present right now on monolithic chains. This is over the course of three and a half hours.

This is by a group, the Special Mechanisms Group. It's an amazing paper you should check out. And we can see just how spiky fees are over even a short period of time on Ethereum. As we zoom out, we see that if we look at other chains and how they handle fees, generally speaking, we see a Goldilocks problem. So a lot of talk and a lot of discussion we hear around trying to optimize for low fees.

We think that this is the wrong question to be asking. And so we see a lot of projects sort of congregate over in this zone, which creates its own set of problems that the last project or that the last presenter highlighted in terms of security and sustainability. If your only option for creating, let's say, you know, longevity for your project is selling your own token to fund runway. On the other side, we know of the few projects that have high fees and those create their own problems, which is, you know, mass adoption and you exclude a certain subset of applications or use cases on your chain if you optimize for that. Nero, we're looking to optimize in the middle and allowing applications to sort of customize this zone back and forth in this kind of sweet spot of the Goldilocks curve here.

So as I mentioned before, you know, kind of fixed gas, fixed fee, there's much volatility is problematic. Block space 2.0 opens up this whole world into multidimensional gas fees. How it works on Nero is we provide every application. We give them the power to run their own paymaster.

So how this works is they set all of the parameters of gas tokens that they accept within this Paymaster. They can set a markup fee. They can set sponsorship of gas. So they can say, okay, for new users, they don't even have to feel the gas experience, totally abstracting away the existence of the blockchain while onboarding users very quickly. EVM-compatible design, modular design, as I mentioned before.

Kind of the benefit and one of the reasons that we chose to do this was to give this power, this economic power back to applications, which are the ones that face the users, which are the ones that onboard the users, which are the ones that grow our ecosystem. If we can create a dynamic where each application sets its own rules and its own paymaster, probably sets its own token as gas, or it could use USDC or any kind of stable or yen stable, hopefully, soon. As they set those tokens, assuming in their own token, the demand goes up for their token, the TVL grows. New revenue stream for this application. They're satisfied, hopefully, building on Nero.

Attracts new users. And the cycle repeats. Here's just a quick simulation of what an application like Uniswap would look like if their system were designed to denominate every transaction that existed on Uniswap over four years in the Uni token, while simultaneously looking at a 75% reduction in the net fees paid by the users. So you can see where the value kind of recapture would go in this arrangement. We see that this could be the future for a lot of applications that are struggling to find a use case for their token or any utility for their token, but maybe have a large community and a decent following.

So here's our key breakthroughs. Parametric pricing, which I mentioned, applications can essentially customize this whole fee space and correct if they made any mistakes. Fee sharing, we share in the fees through this Paymaster with the applications. So, you know, essentially they're aligned to optimize for their own users' price sensitivity and what they're willing to pay for a transaction. Because we know that, you know, one size does not fit all for transactions in our space.

There's no overhead for them to build. So think of Nero as an app chain without all of the dev work and all the overhead and the maintenance and all within the same network. You don't have to switch networks. within the same network, you know, you don't have to switch networks. Kind of fourth breakthrough is this idea of consignment block space, which means that the applications can essentially not have to take any of their own risk when they are developing on Nero.

So we can essentially spot the paymaster with consignment gas in order for them to go sell it to their own customers. gas in order for them to go sell it to their own customers. Other few benefits are in the future and kind of on the roadmap, each application can set their own bundler. They have a choice of their own bundler. So they could either use Nero as the bundler, which you could assume is a sort of honest FIFO model, or if they don't believe that, they can choose another third-party bundler.

These bundlers can bundle at different frequencies, smoothing out that transaction lumpiness that we saw in other chains. And in future roadmaps, options to settle these bundles to other chains if the paymaster so chooses. And then, yeah, a few more. Okay. And I'm going to just finish up with saying abstract wallet management for each of our users.

This is the user-facing side, account recovery, and different things like if this, then that, and ending kind of EOAs for most users, so much more satisfying experience. So on Nero, your users, your rules, and we're looking forward to building with a bunch of applications that are eager to find a new use case. Thanks guys.