We had a detailed technical discussion focusing on various aspects of our project, Freenet. Here's a breakdown of the key points:

1. Contract Update Mechanism: We tackled the contract update mechanism, crucial for handling the state (the associated data) of contracts in our key-value store. This involves understanding how updates are initiated by applications, the merging of states, and the process of sending updates to subscribers.

2. Update and Merge Process: We discussed the specifics of how updates work, particularly focusing on the 'put' operation. The conversation clarified how 'puts' are handled differently depending on whether the application is already subscribed to the contract. A 'put' doesn't necessarily need a 'get' first. It's about merging states if the contract exists and managing updates accordingly.

3. Handling Contract Interactions: Our conversation covered how to handle interactions with contracts, including the nuances of 'put' and 'update' requests. We clarified the terminology shift, where a 'put' is used when not subscribed to a contract, and it can contain complete state or just a delta. An 'update' is more about when we are subscribed, and it involves spreading changes across subscribers.

4. Subscription Mechanism and Network Propagation: We went in-depth into the subscription mechanism, examining how subscription requests are forwarded and managed across the network. This included discussing how updates propagate through the network, both upstream and downstream, ensuring all peers have the latest state.

5. Routing and Simulation in the Network: We explored network routing and how to simulate different network conditions. This involved discussing the forwarding of requests and how to effectively simulate packet loss or latency to test the network's resilience and efficiency.

6. Performance Optimizations: We recognized the need for performance optimizations, especially related to speed. We discussed the potential of moving away from libp2p for certain optimizations to enhance the system's performance.

7. Monitoring and Diagnostics for Simulations: We planned to implement tools for monitoring and diagnostics during simulations. This is to ensure we can track necessary data effectively and make informed decisions based on simulation outcomes.

8. Future Development Focus: We agreed on the importance of having a correct and functioning network before moving into deeper optimizations, setting this as our future development priority.

Overall, our discussion was a deep dive into the technicalities of Freenet, focusing on ensuring our network operations are efficient, effective, and ready for future enhancements.