Name: Matt Katz, Caldera
Uploaded: 2025-03-14T21:00:00.000Z
Duration: 18 min 41 s

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More from theCUBE + NYSE Wired: Crypto Trailblazers

Matt Katz

Co-Founder

Caldera

play_circle_outline Caldera provides AWS-like service for building own blockchain

play_circle_outline Focus on layer twos and roll-ups on Ethereum for scalability

play_circle_outline Caldera founded in 2022 by Stanford students, focused on infrastructure

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Matt Katz, Caldera

Matt Katz

Co-Founder Caldera

>> Welcome back, everyone, to theCUBE Studios here in Palo Alto, California. I'm John Furrier, host of theCUBE. This is our Crypto Trailblazer series. This is theCUBE's feature performance, partnering with the NYSE Wired community, founded by Brian Baumann. An open community where people get together around content, share their perspectives with you, and of course, bring insights to the marketplace. And the crypto trailblazers are laying down the commentary, the leaders coming together, the Ethereum Foundation's in town, in the Bay Area at Stanford and Berkeley. And a lot of growth action, weighing in on the future of infrastructure and the applications that will run on it. Bring in business to the crypto blockchain. It's a wave that's undeniable. Matt Cassidy is the co-founder of Caldera. Matt, great to have you on theCUBE. You're in SF. Good to see you. Welcome, coming down to Palo Alto.

Matt Katz

>> Yeah, thanks for having me, John.

>> You guys are doing some stuff in the cloud in crypto. Explain what you guys do, then we can get into it.

Matt Katz

>> Yeah, so at Caldera, you can kind of think of us as an AWS for building your own blockchain. So, when you're a blockchain developer, you basically have two choices. You can build on a public blockchain, deploy your smart contracts to Ethereum or Solana, et cetera, or you can build your own blockchain. And this has been a choice that a lot of teams have historically made throughout the entire history of the industry. But go back like five years ago, it was incredibly expensive. You needed to hire a team of at least like a dozen protocol engineers, coordinate, at the very least, dozens of external parties to run nodes to launch your chain. We basically simplify that, just like AWS. One click, deploy your own chain. And then, you have a fast, sovereign environment for your application.

>> Yeah, and AWS has certainly made it easy to stand up with serverless, all kinds of higher-level services, all that good stuff. All right. So, the catalyst is I want my own blockchain, I want to control it, I want to value on it. How do I do that? Is it a buy-build decision? Is it labor? What's the value proposition? And then, secondly, does it work with the existing public chains?

Matt Katz

>> Yeah, so it's definitely like a buy-build decision. And just like in the cloud industry, the space has evolved over time. Before, you probably needed to write the entirety of the code base from scratch, then you had SDKs, which made it easier, but you're still ultimately needing to engineer the thing. And now, you have what we provide, which is a very high-level service, sort of like Vercel, where you get everything out of the box. So, both building the chain, actually creating the software for that chain we help with. And then, the actual infrastructure of running that chain. And that's often the harder part, right? Blockchains that can't go down, that's the whole premise, right? So, you need to keep them highly available, highly online, scale up the RPC nodes that developers use to communicate with. We provide a lot of external services to provide more visibility to the data on these chains, et cetera. And basically, you get the whole thing out of the box.

>> So, it's basically, you said, AWS for blockchain. You're provisioning blockchain for people, that's the bumper sticker.

Matt Katz

>> Yes.

>> All right. So, take me through how that works. Is the use case because they want control, ease of use? I get that whole provisioning piece. Is it blockchain? So, is it Ethereum? I mean what is it?

Matt Katz

>> Yeah. Maybe, I'll take that in reverse order. So, the chains that we specialize in, they're layer twos, AKA roll-ups. So, they're basically highly-compatible chains that are built on top of Ethereum that are settled onto and secured ultimately by Ethereum, and so that model makes it really easy for us to offer this as a service. Traditionally, blockchains, you need to have maximal decentralization from the get-go, that makes it really hard to provide something like this as a service because fundamentally it's not a technology problem, it's a massive coordination problem. With this current model that we have, layer twos, which was pioneered by Optimism, Arbitrum, ZKsync, et cetera, you can have the production of blocks be centralized and then you have a cryptographic proof mechanism to ensure that the blockchain is operating correctly and that's settling on Ethereum. And so, with that, you both get a lot of compatibility with Ethereum, so developers get an environment they're used to, and you also have a lot of the ability to bridge assets trustlessly between Ethereum and these chains.

>> Yeah, Matt, this comes up a lot. We actually had Arbitrum on earlier, yesterday. Layer two comes up a lot now and roll-ups is a term that's used a lot. Ethereum is actually layer one. For the folks out there that are technical, old-school computer scientists or people who know the old stacks, layer one, physical layer, talk about the layer one-two dynamic and roll-ups specifically. And explain that to folks that they can understand why it's relevant in Ethereum and on top with what you're doing. Because one of the things that's coming out of the Ethereum conversations is that value-creation performance has been gaining. Usage is up big time. Composability is a major feature. Developers love this. So, if you're a developer, this is a dream scenario.

Matt Katz

>> Totally.

>> Explain the layers of the stack, so to speak. Physical layer one, layer two, and this roll-up concept and what it means.

Matt Katz

>> Totally. So, I wish it did, it doesn't map as nicely onto traditional tech in this regard as I would like. But fundamentally, the problem with blockchains is you're trying to have a shared root of trust. You're trying to achieve global consensus on some data in some state. And so, that's what the layer one provides. When you talk to people at the Ethereum Foundation or the early contributors to Ethereum, oftentimes, they're thinking about nuclear war level scenarios and they want Ethereum to still remain online at that time. So, Ethereum has actually done a really, really good job at that use case, being a shared, indestructible layer of trust for state and data. What Ethereum hasn't done amazingly well at as a base layer because it wasn't their focus was speed and scalability. Fundamentally, when you're building a distributed system, you're either distributing that system for scale, so you're distributing workloads to the different nodes in the system or you're doing it for redundancy. And Ethereum has chosen the redundancy path. So, every single-

>> And rightfully so, right? That's their goal.

Matt Katz

>> Totally, totally. And so, it's a highly-inefficient system. Every single node in the system needs to process every single transaction and store all the data on the entire blockchain. And that's great for a lot of applications, but if you're building a game or you're building a high-frequency exchange or anything, a social media app on chain, it's just way too expensive. It's unfeasible for you to build that on the Ethereum base layer. And so, as a community, the Ethereum space built up this concept of L2s, which are run separately. They post data to Ethereum, but that data actually eventually expires, so the nodes don't need to store it forever. And they process computation off of the layer one system and they just prove that that computation is correct and that proof is much faster and easier to process than all the computation on those layer-two chains. And so with that, we're able to actually horizontally scale the ecosystem, rather than trying to vertically scale .

>> Yeah, horizontal scale is a feature for like say cloud.

Matt Katz

>> Totally.

>> Okay. We've seen that as a great enabler.

Matt Katz

>> Exactly.

>> All right. Talk about the roll-up. What does roll-up mean? And that's a term that's kicked around. Is roll-up is just on top of one or is it a series of other things?

Matt Katz

>> Yeah, you can think of a roll-up as a blockchain, again, that processes the computation of that blockchain in a more centralized or off-chain way. And then, proves that that's correct to a layer one, like Ethereum. And so, that's done either via a zero-knowledge proof, basically using advanced cryptography just to say, "Hey, this new succinct hash of the state is actually equivalent and we can prove it to all these transactions which occurred before," or there's optimistic roll-ups, like Arbitrum, that take a more game theoretic approach. But ultimately, you're doing the same thing. You're proving off-chain computation onto a base layer, like Ethereum.

>> Explain the skeptic's view of, or someone who might not understand what this is. "Well, isn't that not really on-chain because it's in the cloud? If that cloud goes down, I don't pay my bill, what's the immutability feature of that? Or does it matter? Is that a moot point? Is that misinformation?" Explain that piece of it because the benefit of saying being on-chain is for all the reasons you talked about, immutability, resilience, great features. But if you're going to be pointing to a database or if you have a layer two or a roll-up, how would you respond to that?

Matt Katz

>> Yeah. And so, there's been a lot of effort in the roll-up ecosystem to basically create, quote, unquote, escape hatches for these worst-case scenarios. So, if the chain totally goes down, because all the software is open source and it's public and the cryptographic proof mechanism is all available, anyone can come in and basically act as that roll-up. And because a lot of the data is still posted publicly and is available, anyone can reconstruct the state of the chain. So, you get a lot of-

>> The resilience features?...

Matt Katz

>> the resilience features that you would come to expect with blockchains. But you're right, I would think actually one of the great benefits of roll-ups is that it's a truly pragmatic approach to scaling blockchain. Just like how every application doesn't need maximum resiliency, maximum decentralization, roll-ups find a really good middle ground there. And so, for a lot of the more traditional companies looking to enter blockchain, we're seeing that they're a great option.

>> The way I would think about, again... Just riffing here on this, I think it's an important point. Is that you get the cost-benefit advantage, because you mentioned cost. Think about to run a distributed system on-chain, scope those costs or the complexity involved by not having roll-ups.

Matt Katz

>> Yeah. So, without a roll-up you're probably launching your own L1, like Ethereum, there are development costs. You'll build it with something like the Cosmos SDK. What we've seen historically is teams that do this, they need to raise tens of millions of dollars, maybe hire dozens of engineers, right? That's already single-digit millions of dollars at least to create that chain. And then, once the chain's launched, well, you need to decentralize it. And so, a lot of these teams that are launching these alt L1s, they're rewarding the miners or the validators on their network, oftentimes inflating their token supplies by like 10% or more per year just to reward those miners and those stakers to get security for their chain. So, for a lot of these chains that are launching that are at like billion-dollar valuations, they're literally paying hundreds of millions of dollars a year to secure their chain. When with a roll-up, you can do it basically by just paying gas fees to Ethereum, which is much, much less, literally orders of magnitude.

>> That's awesome. A little bit of a sidecar masterclass here, Matt. Appreciate it. Just one final point on before we get into some of the things you're working on. Market Ethereum, I call it act two because there's still momentum here. It's a movement. I mean clearly, developers love it. What's the vibe growth-wise? And not necessarily numbers, but just the vibe, participation, can you share in scope or help us understand the momentum in Ethereum from developers and/or builders?

Matt Katz

>> Yeah, I think Ethereum does really well when people are truly optimistic about the technology. That's how it's been positioned. That's the kind of culture that the space has cultivated. And so, from what we're seeing is obviously price has been pretty down over the last few weeks, but a lot of builders are really looking to actually come in and build really cool stuff on Ethereum, right? Whether that's institutions, I know you had a lot of folks on here that are working with them. Gaming we're seeing as a huge category that's picking up, social, consumer applications-

>> These are platforms, not just apps. See SaaS was apps on the cloud.

Matt Katz

>> Exactly.

>> Platforms are coming on this.

Matt Katz

>> Exactly. Yeah, and Ethereum is actually the best place for people to build platforms. So, I think like all of that is really encouraging. For us as well, our growth metrics are great. Obviously, the value on our chains has dipped a little bit with the market because it's all denominated in ETH or alt-coins, but like in terms of the number of teams that are looking to launch their own chain and build real cool things, it's only going up.

>> And you mentioned gaming and social apps, they're all on Amazon web Services, but they're not blockchain. So, League of Legends, Fortnite, they're all up there. I mean because why wouldn't you? It's efficient. So, they're now going to move to a blockchain because there's benefits that the cloud doesn't have.

Matt Katz

>> Totally.

>> What are those benefits?

Matt Katz

>> Yeah, so on the blockchain side, I think the kind of first-order benefits are to create more liquid markets for assets. And I think this is something that gaming companies actually really want. I worked very briefly in the mobile gaming sector myself, and it's, in many cases, kind of a miserable industry. You're trying to extract max value from a very, very small percentage of users. I think the company I worked for, maybe a 10th of their revenue was from a single like Saudi prince. So, that leads to really poor gaming experiences for a lot of users. And what we're seeing right now with a lot of user-generated content gaming companies, think like a Roblox, there's really a focus on building like actually healthy in-game economies that closely mirror the real world economy, where you can actually create value in-game for other players. And then, when you think about that-

>> And have a marketplace too.

Matt Katz

>> Exactly. Exactly. So, you have a marketplace. And then, the gaming company almost becomes like the government, which is a great business, basically taking a tax on every little thing and-

>> And a small tax by the way, not massive. But in the aggregate, it's massive.

Matt Katz

>> Exactly. And so, blockchains are a great substrate for that for a lot of clear reasons. And so, we're seeing a lot of gaming teams approach us and-

>> I think social is going to be there next because everyone knows the tagline with Facebook and now Meta, you're the product. The user's the product, not the customer and your data. And so, with tokens, they're the product and the revenue too. They get the revenue. Facebook gets all the revenue. So, again, that's to me... Am I getting that right in terms of the concept with a gaming that would be hosting on something, but now they get rents and new ways to monetize from the architecture and then layer two and the roll-ups?

Matt Katz

>> Yeah, that's totally correct.

>> . Lets talk about your company. When were you guys founded? What's the vision? Share a little bit about your company.

Matt Katz

>> Yeah, so we were founded about three years ago, exactly March of 2022. At the time, my co-founder and I were students just down the road at Stanford. We were really, really excited about the possibilities of crypto, but when we thought about all the applications we wanted to build, things like gaming, things like social, my first ever project on Ethereum was an on-chain version of Reddit. We realized that like you just couldn't build that sort of thing. It would be way too expensive. You would cap out at like 1,000 users. And so we just thought, "Okay. Well, if the infrastructure doesn't exist for massive applications, we need to build it because candidly, I don't think anyone else would."

>> Yeah. I mean it's a huge opportunity. All right. Give us some numbers. What are you guys seeing for performance? Can you share any stats? Put a plug in for the company.

Matt Katz

>> Yeah, so each of our chains can do about 100 million gas per second, which is an Ethereum metric basically describing computation. What that translates to in practice is thousands of transactions per second, per chain. But we can launch, basically, infinite chains horizontally. So, unlike a lot of other ecosystems, like a Solana, which is very scalable but taps out, we can process like an infinite number of transactions effectively if we shard across multiple chains, that idea of horizontal scaling. We currently are running 30 chains about on ETH Mainnet. We account for about a quarter of all layer twos and layer threes that are on Ethereum right now. And at peak, as mentioned before, we secured about $2.5 billion of value on our chains.

>> And by the way, this idea of scale horizontally is a huge concept. And auto-scaling is a hot topic in the cloud that's moved the needle. Is there an area you see that's a needle-moving moment for your business, for folks looking at the chain? Obviously, performance is there on the developer side. What action do you have there with developers? What's the needle-moving environment? Is it just ease of use it, developer productivity, security? What's the key breakthroughs?

Matt Katz

>> Yeah, for us we call it like the three Ss, speed, sovereignty, and scale, right? When you have your chain, as I mentioned, it's very scalable. You have speed. You also have scale. There's a cost element to this as well. Your cost per transaction is maybe orders of magnitude lower. And then, under sovereignty, that's where a lot of the fun stuff happens. For example, one of our customers, Kinto, they have baked in like a know-your-customer system onto their chain. So, they can provide kind of semi-regulated finance in an on-chain environment that's easy for developers to build defi native applications on, but they can still get some assurances that users are-

>> You're bringing crypto-native capabilities to people instantly and you're leveraging the cloud, like a lot of other companies have. And a lot of companies that were in SaaS are now doing platforms.

Matt Katz

>> Yeah.

>> Platforms is what you're doing.

Matt Katz

>> Exactly.

>> Well, Matt, thanks for coming on theCUBE. You're trailblazing. By the way, Stanford hosted a great event. I went to the dinner last night, Stanford and Cal and Berkeley were doing some great meetups, great community activity. A lot of people are super stoked about what's going on, and congratulations.

Matt Katz

>> Yeah, thanks for having me.

>> Thanks for coming on theCUBE. All right. I'm John Furrier here inside theCUBE. We are in Palo Alto. I'm your host. Crypto Trailblazers are bringing all the innovation, the leaders across the industry. You're starting to see a developer-builder mindset move in. Of course, there's tech money and impact. So, blockchain is the new critical infrastructure, emerging fast. Kind of like how AWS was 20 years ago, you're starting to see the momentum. Of course, we got it all covered for you here at theCUBE. Thanks for watching.

Matt Katz, Caldera

Matt Katz

>> Yeah, thanks for having me, John.

>> You guys are doing some stuff in the cloud in crypto. Explain what you guys do, then we can get into it.

Matt Katz

>> So, it's basically, you said, AWS for blockchain. You're provisioning blockchain for people, that's the bumper sticker.

Matt Katz

>> Yes.

>> All right. So, take me through how that works. Is the use case because they want control, ease of use? I get that whole provisioning piece. Is it blockchain? So, is it Ethereum? I mean what is it?

Matt Katz

>> Totally.

>> Explain the layers of the stack, so to speak. Physical layer one, layer two, and this roll-up concept and what it means.

Matt Katz

>> And rightfully so, right? That's their goal.

Matt Katz

>> Yeah, horizontal scale is a feature for like say cloud.

Matt Katz

>> Totally.

>> Okay. We've seen that as a great enabler.

Matt Katz

>> Exactly.

>> All right. Talk about the roll-up. What does roll-up mean? And that's a term that's kicked around. Is roll-up is just on top of one or is it a series of other things?

Matt Katz

>> The resilience features?...

Matt Katz

>> These are platforms, not just apps. See SaaS was apps on the cloud.

Matt Katz

>> Exactly.

>> Platforms are coming on this.

Matt Katz

>> Totally.

>> What are those benefits?

Matt Katz

>> And have a marketplace too.

Matt Katz

>> Exactly. Exactly. So, you have a marketplace. And then, the gaming company almost becomes like the government, which is a great business, basically taking a tax on every little thing and-

>> And a small tax by the way, not massive. But in the aggregate, it's massive.

Matt Katz

>> Exactly. And so, blockchains are a great substrate for that for a lot of clear reasons. And so, we're seeing a lot of gaming teams approach us and-

Matt Katz

>> Yeah, that's totally correct.

>> . Lets talk about your company. When were you guys founded? What's the vision? Share a little bit about your company.

Matt Katz

>> Yeah. I mean it's a huge opportunity. All right. Give us some numbers. What are you guys seeing for performance? Can you share any stats? Put a plug in for the company.

Matt Katz

>> Yeah.

>> Platforms is what you're doing.

Matt Katz

>> Exactly.

Matt Katz

>> Yeah, thanks for having me.