From: thepipeline_xyz
Logan, Managing Partner at Frictionless Capital, joined the podcast to discuss his background, the thesis behind Frictionless Capital, and the future of high throughput blockchains [00:02:24].
Logan’s Background and Entry into Crypto
Logan began his career in Silicon Valley, working at Tesla where he spearheaded the supercharging network on the software side [00:01:14]. While at Tesla, he maintained a keen interest in the crypto sphere, having personally become involved with Ethereum in 2017 [00:01:33]. His enthusiasm for Ethereum waned when he experienced high gas fees ($1,000) during the 2021 bull market, leading him to explore alternative ecosystems focused on scaling the industry [00:01:43]. He became excited about new infrastructure, including Monad, that could onboard the majority of the world due to low transaction fees, high throughput, and unique applications [00:01:59].
Frictionless Capital’s Thesis
Frictionless Capital was founded to focus on new infrastructures, specifically high throughput blockchains [00:02:21]. Their thesis, established in early 2023, was considered “deeply unpopular” at the time, especially when Solana was widely perceived as “dead” after the FTX implosion [00:04:20], [00:04:50]. Despite the contrarian view, Frictionless Capital believed Solana represented a unique category of high throughput blockchains, being the first to employ technology architectures like large data propagation, big blocks, and parallel processing [00:05:04], [00:05:18], [00:05:21].
The core goal of Frictionless Capital is to enable self-sovereignty, private keys, and blockchain functionality for as many people as possible globally, moving from millions of users to ultimately hundreds of millions and billions [00:05:50]. They believe that high throughput blockchains are directionally correct for achieving this mass adoption [00:06:16].
Importance of Scaling and First Principles Thinking
Logan’s conviction stems from a “first principles” approach, which involves dissecting arguments and identifying flaws in thinking to reach the root cause of issues [00:10:13]. He learned this methodology at Tesla, where products like the Cybertruck were architected by challenging industry assumptions [00:11:01].
After departing Tesla, Logan spent a year and a half conducting independent research into blockchain architecture [00:11:33]. He realized that “block space”—the amount of transactions a network can propagate—is the limiting factor, analogous to the transition from 56k modems to broadband and fiber optics internet [00:12:07], [00:12:22]. Users and developers will always choose faster, cheaper transactions that allow for more interesting applications [00:12:29]. Therefore, blockchains that leverage modern computing and networking practices are likely to onboard the vast majority of users and engineers [00:12:48].
Solana was the first to take this unique approach by scaling with hardware and increasing bandwidth [00:13:03]. Other new architectures like Monad, Sui, and Aptos are following suit, integrating features like high throughput and parallel processing [00:13:22], [00:13:37].
Identifying Promising Projects
Frictionless Capital looks for unique, crypto-native applications [00:19:59]. They prioritize discussions with technical co-founders, who are typically honest about engineering tradeoffs, rather than marketing personnel [00:17:31]. For Logan, tech is a starting point to build unique products that will grow the industry [00:18:41]. He values feedback that highlights flaws or gaps in his own logic, as it aids learning [00:19:09].
Their due diligence process involves extensive homework, especially in high throughput blockchains [00:22:35]. When a team like Monad announces they will parallelize the EVM and make it high throughput, it becomes “pretty obvious” given the team’s caliber, that they will deliver something special [00:22:40].
New Architectures and Monad’s Role
Modern high throughput blockchains generally feature integrated designs and parallel processing [00:13:34]. The transition from low-throughput to high throughput blockchains enables many unique applications [00:07:05]. For example, automated market makers (AMMs) were a solution created due to limitations of earlier blockchain architectures; with high throughput, order books become feasible [00:07:18].
Monad is described as a combination of Solana’s performance and Ethereum’s EVM compatibility [00:32:33]. Logan believes if he could rewrite Ethereum’s history, he would design its architecture like Monad’s, incorporating parallel processing and high throughput [00:32:43]. He criticizes the single-threaded EVM for its inability to do parallel processing, which he sees as a fundamental requirement for the industry’s future scaling [00:33:05].
While acknowledging the significant infrastructure and capital built on the EVM, Logan stresses that a more integrated technology stack, like that of Monad, simplifies the experience for both users and engineers [00:34:22]. This allows engineers to focus on product development rather than infrastructure, which is crucial for moving the industry forward [00:35:05].
Future Applications Enabled by High Throughput Blockchains
Logan is excited for the “Golden Era of crypto products” [00:28:27]. Applications uniquely enabled by high throughput include:
- DeFi 2.0: Leveraging native order books and high-throughput capabilities for financial applications [00:35:56]. This will integrate traditional finance (TradFi) technology stacks to facilitate global money movement [00:37:09].
- Decentralized Physical Infrastructure Networks (DePINs): These networks offer a new way for capital formation and have the potential to enable applications with 10 million monthly active wallets on-chain [00:37:17]. Examples like Helium expanding into cell phone plans show how physical world services can use crypto rails in the backend without users needing to know it’s on a blockchain [00:37:37].
- Social Applications: Continued experiments on high throughput blockchains are expected to lead to more widespread adoption in social platforms [00:38:25].
The key is to build foundational infrastructure that allows for unique applications “only possible” on a high throughput blockchain architecture [00:38:45]. This new design space, enabled by high throughput blockchains, is seen as the key to unlocking viral applications and ushering in the consumer age of crypto [00:29:46], [00:40:27].