Matt Cutler is CEO & Co-Founder of Blocknative, the leading transaction monitoring and management infrastructure for the crypto economy. Matt has founded multiple technology startups, including Web analytics pioneer NetGenesis, which went public in 2000 at the height of the Web 1.0 boom. His most recent startup, mobile collaboration platform Collaborate.com, was acquired by Cisco in 2013. Along the way, Matt has consistently made substantive contributions to emerging technology ecosystems, including serving as chair of the first-ever Webmasters Guild, co-authoring the award winning E-Metrics Whitepaper, championing AdWeek’s Viral Video Awards, establishing Cisco’s influential enterprise Design Thinking initiative, and more.
How did you initially discover blockchain and cryptocurrency?
While I was familiar with the term crypto and some things in the space, I was not active in them and not paying much attention for years. It wasn’t until a good friend of mine came to me and said, “Hey, look, some exciting things are happening in this world that I think you’d really enjoy,” and I said, “Look, I’m busy doing other stuff” because I was working at a big company at the time. He was persistent, and eventually, I said, “Well, if you’ve come back three times to tell me I need to start tuning in and paying attention, then maybe it’s time to do so,” and he took a fairly interesting approach, which I have used subsequently, in which he said, “Listen, what you’re going to do is you’re going to start by opening up a Coinbase account, and you’re going to put enough money in that you’re going to pay attention to it, but not so much money that if you were to lose it all, it wouldn’t in any way affect your quality of life.” And that’s how I started: with 500 bucks in a Coinbase account.
That was 2016. The thing that helped me was to have a little bit of skin in the game, start to see some of the action, and begin to tune in and pay attention. Once I really began to go down the rabbit hole, I realized that I had seen this movie before, in large part because the first company I ever started was an internet company way back in 1994 long before it was fashionable. It felt eerily reminiscent of the early stages of the web, the formative years. It was exciting to see society about to be rebooted all over again.
Could you share the genesis story behind Blocknative?
Blocknative was started with a couple of friends of mine and it initially was focused on doing digital collectibles as an NFT gaming platform, strangely enough, way back in 2017-2018. It was very much inspired by the success of CryptoKitties, which really was the first-ever ERC 721 NFT, at scale. I was initially brought in to help sort of guide this fledgling project. They had a meeting at a prominent venture capitalist office, and they wanted me to chaperone it, and I agreed to—I’d be part of the meeting, but just sort of as an advisor. That was a 45-minute meeting that went two and a half hours. At the end of the meeting, Seth Levine of Foundry Group said, “Matt, if you’re in, I’m in. I’ll write a seed check if you’ll be the CEO.”
That was a pretty exciting moment when I had to decide if I was going to make the jump from big corporate life. Well, I said yes, and the rest is history. From there, it was a ceaselessly iterative process filled with design thinking, user feedback, and taking action on the most critical things that would contribute to our growth. I’m big on this type of iterative process where we listen to what people are saying and take action on their feedback. If people can’t use it and understand how it’s being used, that’s a real problem. From there, we built this little widget that basically checks to see if you had a wallet installed – if not, it would help you get one. We built many iterative widgets like this that solved real problems that people were experiencing. By that point, we started to make some contacts in the crypto industry and started to share what we were building with them. I’m pretty sure I had six meetings in a row that all went like this: “Hey, this NFT game you’re building? Not so interesting. But those little widgets? That’s super cool. Can I have one of those? Can you generalize that for me? I could really use that.”
You hear that six times in a row, and you think maybe that’s a real opportunity to build some tool around all of this. What your customers actually think is interesting is often quite different than what you think is interesting. My entrepreneurial successes and failures are entirely tied to this. Teams that take feedback well and move in that direction have done well and teams that did not, failed.
It was at that point that we pivoted the business from building NFT games to building tools for the entire ecosystem. We changed the name of the company to Blocknative. From there, we started doing this pattern repeatedly: putting stuff out, getting feedback, and leaning into that. Then we had a wallet approach us and say, “Hey, those transaction status things are super cool, but we don’t want them to be on the screen. We want them as an API–we want to integrate them into our wallet experience, and we’ll pay you to do this.” They became the first entity that had ever offered to pay us something for anything that we had built. As an experienced entrepreneurial CEO, I said, “Yes, of course, we’d be happy to do that. Then, I turned to my co-founder and CTO and said, “Hey, can we do this? And his comment was, “yes, we can, but not with what we’ve built.” So we had to build something new and different to support our first paying customer. That was the foundation of our real-time data platform, where we took a very different approach and started to capture the mempool at scale. I like to say we squeezed through that crack, got out the other side, and once we had this capability and realized there was a massive set of applications based on this data, a whole new vista opened up. We didn’t say, “Ah! Mempool This is it.” We started building, got feedback with some of the input, leaned into that, turned some more cards over, got some more feedback, and turned that crank a few more times. Before you know it, we’re building something uniquely differentiated and beneficial for the ecosystem.
Could you explain specifically what a mempool is?
The mempool is the pre-consensus layer of a public blockchain network. Anyone who’s done a transaction is familiar with the experience. You submit a transaction, wait for a while, then hopefully, it gets confirmed. I always ask people, “Ever thought about what’s happening while you’re waiting for a while?” That’s the mempool. When you submit a transaction, it becomes a candidate for inclusion. It goes to this almost-cache-layer called the mempool, where it competes with every other pending transaction in the world for one of a small number of slots in the next block. So the mempool is where transactions are in-flight, where money is actually in motion, and where transactions compete for miner attention to be included in a block and therefore confirmed. It turns out the mempool is a pretty interesting, different, unexpected information space. It’s global in nature–there’s no such thing as one mempool or “the mempool.” There are just tens of thousands of copies; each individual node has its own copy. Transactions interact with each other because there’s no consensus yet. Transactions are immutable, so once things get written down to the blockchain and go on-chain, you can’t change them. Everything in the mempool has the potential to be modified; you can overwrite them, you can cancel them, you can speed them up, and you can replace them in other ways. You can have transactions and systems go to war with each other where they bid against each other to compete for specific opportunities; you can have all sorts of different characteristics of mempool transactions. Transactions get lost, they get stuck, they can get dropped, they can fail, of course, as well. Mempool is a surprisingly rich, varied, and frequently dangerous area that’s quite hard to work with, which is exactly why we do what we do. Blocknative makes this critical data layer much more accessible, much easier to work with, and much more of a level the playing field.
How does Blocknative help in having predictable transactions?
Blocknative operates the world’s largest global data infrastructure for capturing, normalizing, and enriching mempool data in real-time. In this complex, fast-moving, sparse data space, Blocknative makes it easy to work with, like an easy button for mempool data. We provide our customers with visibility across everything that’s happening, not just certain things, but the entire public mempool. That means that you can now track individual transactions and their various states as it moves through the mempool. You can track what’s going on with a specific protocol. If you want to see everything happening with Uniswap, for instance, you can do that. Because we see everything, we very much can predict the future contents of upcoming blocks. Therefore, you can predict future price movements of various assets. Our customers can leverage this real-time data capability, and through advanced features on top of that, to get predictable transaction performance so that they can specify whether a transaction is going to succeed or fail, how long it’s going to take to succeed or fail, and how much it’s going to cost to do so. By mastering the mempool, you can have mastery over predictable transaction performance. In today’s active public blockchain networks, the marketplace for settlement moves very quickly. You can have a very common pool that is easy to understand with low fees, then suddenly there’s an NFT drop where both demand and fees go up and both transaction performance and predictability go down. Our customers rely on our infrastructure to stay on top of all of the movements, even in the most extreme circumstances, so they can make sure their transactions and protocols behave as they expect.
How can the system help with malicious transactions?
All transactions must transmit through a mempool to become a candidate for a block, including ones that have exploits in them and may result in radical balance changes. Because we see the future, we often will detect these attacks. Increasingly, various ecosystem members are interested in leveraging our infrastructure for protocol protection which involves detecting these anomalous transactions that have unexpected outcomes. This allows them to monitor their smart contracts, make sure the transactions going against them are within the standard deviations of what’s considered normal, and if they’re not, to look deeper, and potentially pair that with other forms of automation to introduce solutions like pausing a protocol or immediately firing off competing transactions to try to front run the offending transaction. It’s a piece of the puzzle related to protocol protection, but it’s the most critical piece. In short, it’s detecting that something unexpected is about to happen. Our infrastructure has an aspect that we call a simulation platform that allows visibility into pending internal transactions. Typically, you wouldn’t have visibility that gives directional insight into the numerous ways an attack could manifest.
Could you discuss how wallets are incorporating Blocknative in order to improve user experience?
Our very first paying customer was a wallet provider. We assist wallets and their user experience in all sorts of different ways. The simplest is when a user of the wallet conducts a transaction; the wallet wants to display real-time transaction status to that user. They can use our APIs to do so very straightforwardly while also alerting the user if any intervention needs to be taken.
If a transaction is sped up, canceled, stuck, or dropped our APIs can assist with that. We have a very accurate gas estimation. Gas estimation is a particularly tricky problem in real-time public blockchain systems because of the Goldilocks problem. If you overpay on your gas fees, your transaction fees are artificially high, and you don’t get any better performance, it just eats away profitability. No one likes to waste money. If your transaction fees or gas fees are too low, then you’re below marketability and you disrupt transaction predictability. There’s a happy zone in between and that zone is constantly moving, as a consequence of our real time data infrastructure and mempool data. We have machine learning models that are continually running in the background. Every second, we provide accurate predictions on current gas prices and how to structure transactions to be included in the next block.
Forward-looking wallets are incorporating our gas feeds directly to provide more precise, timely, and accurate gas fees to users so that when users go ahead and click submit, they’re not overpaying and they’re getting the class of experience that they expect.
Lastly, we have this capability called simulation platform that looks at transactions in the mempool that detects an internal transaction then simulates those and, in a way, says, “Here’s what would happen if this transaction were confirmed against the current block header and the chain’s current state.”
What’s on the current roadmap for Blocknative?
We have a rich roadmap. One of our deepest cultural values is that we ship and produce many technical capabilities that we release to market. In the near term, we’ll be adding support for additional layer one and layer two chains. Today, we support Ethereum, XDAI, Binance Smart Chain, Polygon, Bitcoin, and we’ll be adding more down the line along with more features to each one of those. Although the nature of what we do is real-time, we archive all of our data. We have over 100 terabytes of historical mempool data that stretches back almost two years. It’s like TiVo for transactions; you can replay exact conditions that lead to specific outcomes. And in particular, this data set can be quite valuable for traders looking to build ML models for novel and low incident trading strategies. Because we’re getting a lot of demand for this, we’ll be commercializing that as well. Beyond that, we have a next generation of all of our existing products– the products we have in the market, we’re continually improving, and we’re excited to continue on those.
We have entirely new capabilities that I can’t describe right now. But I would say we’re probably 50% to 60% of the way through our total product roadmap. We’re looking not just to introduce new capabilities, but package them into solutions that are geared towards specific classes of buyers.
Is there anything else that you would like to share about Blocknative?
For anyone interested, you can find us at Blocknative.com or @Blocknative on Twitter. We also have a very active Discord community if you want to jump in there. Our products are all available; you can get hands-on with them directly. We’re growing like mad, and we’re hiring in all levels of the organization: technical and non-technical roles, leadership roles, and staff level roles. If you or anyone in your ecosystem are passionate about some of the topics I wrote about today, we encourage you to check out our career hub. It’s available on our website today. Feel free to apply and get in touch as we’re trying to grow as rapidly as we can. If you want to reach out to me, I’m available on Twitter @Mcutler. I very much appreciate folks’ attention and interest in what we’re building.
Thank you for the great interview, readers who wish to learn more should visit Blocknative.