How the pNetwork fixes Ethereum's fragmentation

Transcript

all right hi everybody my name is Andrea great to be here great event so far what's happening over there okay no I'm the speaker actually no worries so should we start again or um ah okay you tell me where when to go are we good to go okay okay

um so I was just saying it's great to be here my name is Andrea I'm a business developer for p network and today I'm going to talk about liquidity fragmentation on ethereum and uh what's our approach to solve this problem um more specifically I'm gonna try to dissect the problem first uh try to provide an overview over the current market solution the the bridge solutions that are available it won't be a technical speech as the one that I heard yesterday but hopefully I can provide some insights on what's the offering on the market and then of course I'm gonna be talking about what's the Pinnacle solution and provide a glimpse on uh what the future looks like so I love to start with the statement because this is really the foundation

when we took Bridges the future of blockchain is is gonna look a multi-chain one and I'm sure um pretty much everybody of you is is convinced and doesn't found these um a strange statement or controversial statement but if you on anecdotal evidence you just have to go on the coin gecko or whatever analytic platform pick the top 100 asset and over these 100 assets 55 lives on their own independent chain so it's true that there is a sort of a power load distribution where a very few chain accrual most of the value because the top 20 assets accrual for 85 percent of the total market cap and the

top 100 asset accrual for 95 percent of the total market cap but still 57 adds it's a lot and the market is really telling us that there is value outside of ethereum and there is value in several different chains and if you're still unconvinced uh I just love this meme uh like it's probably not the market that is wrong but with that said uh the problem so the problem is uh just that blockchain art is wallet Gardens so they can really talk to to each other and if if you take a step back at what happened after Bitcoin there was this era of sovereign chain where basically everybody was trying either to Fork

Bitcoin or build their own application specific blockchain and then ethereum came along and said hey what if we have a virtual machine where everybody can comprise on and what if we establish standards so that contract can talk to each other much more easily and that's why we experienced the legal money and defy magic of today but the word that we're going uh towards is a world where you can do the same stuff that you do on ethereum today just on every single chain so really uh enjoy the multi-chain composability and um this is just to build uh this Vision which is uh what ultimately we are in uh into right so to build this Global permissionless Network or networks uh of

um for the transfer of value uh but so far we're stuck with uh very uh more down to earth uh yet practical problems which is um like higher slippage especially for exotic assets so we're not talking uh about uh ether to usdc pool but really um the the smaller pool can um suffer from liquidity fragmentations this idea that Capital just spread apart across different chains uh so the slippage is uh likely higher in a multi-chain world the user experience is um is terrible because some of the bridges that are available in the market today requires hours if not days to go back and forth on a new layer

and then for smaller project it's just more difficult to capitalize on narrative that shapes the market because um like January everybody was going towards a minor smart chain and then afterwards everybody was going towards polygon so if you're a small project you just build up your uh Capital um your liquidity pool on using on uni swap or sushi swap then you can really capitalize on those narratives and it's very difficult to move Capital around and the last thing is that these guys are sort of coming uh so rather than taking an adversarial approach um it we should really build together to build a standard or to

um sort of allowing this composability because some of the capital some of the liquidity on ethereum will fly to these environments anyway so what are the solutions available in the market as of today I try to sort of um put them into three buckets so we have the wrap approach there can be other centralized or decentralized the swap approach when you trade one asset for another and uh the inter blockchain communication approach when uh with projects that try to fundamentally rebuild the way blockchain communicate so let's start with the wrapped approach uh of course it's just putting your

collateral somewhere and that somewhere is really the issue here and uh minting a synthetic version a rap version on the other side which is a one-to-one representation that can always be reading back for the original asset uh it's no stranger I put broad BTC there because uh if we talk about BTC on ethereum rap BTC is really the largest size of that pizza uh goes out of 255 000 BTC on ethereum today which is uh 15 of D5 tvl which is a lot uh 75 of those are rap BTC and 94 are overall in the custodial side of thing which really

tells you a story about what the market is valuing today so it's not to say that it's not valuing decentralization but probably something it is valuing something else even more um so the catch with rap BTC is of course that uh there is uh it's a centralized approach so you have to trust a merchant that deposits the asset over within a custodian and uh then a mint contract uh mintra BTC which then again gets sent back to uh the originating user and it's true that you can have um transparency because there is it is possible to prove that on chain that assets are there but you're not really eliminating counterparty risk which is what D5 is really supposed to do so

that's the reason behind decentralized wrap approach so we're still in the realm of wrapping but these projects uh brand BTC pbtc tbtc all try to sort of solve the canopy risk problem uh with slightly different approaches but at a very high level fundamentally they try to build a network of nodes that store the key for the collateral and we will see uh later on what's our approach on this so this is what the latter ball looks like so of course you see that custodial BTC are really the the only game in town so far but there are a hybrid solutions

that are emerging uh like Ram BTC pbtc second um we have I I guess a few more BTC than that because we also have BTC on other chain but uh yeah this is what the picture looks like and the second approach is the trade approach as I call it and I funnily enough I included I included binance because most of the people in crypto are non-technical um may we like it or not and so still centralized exchanges are the best way to go from uh BTC to Ether so and that's it's where you can find the lowest amount of slippers so it's just good to

keep in mind uh torching is another project which is a slightly more interesting in that they try to sort of solve the decentralization or centralization issue by having this uh this omnipot where you can trade natively asset using a common quote currency which is roon the utility asset of the protocol so you can go from BTC to either going through a single pool rather than having an individual currency pairs and the way they do this is uh basically uh by um observing um sort of syncing the the blockchain uh from uh ethereum let's say

with a middle layer which is they call the bifrost and they um forward it to a state machine that is where the third chain operation will happen so once user transact over these State machine the transaction then gets signed and finalized back on the main chain uh what I find interesting about Fortune is their incentive pendulums they of course there is a security issue where um the amount of capital that is uh overlooked by the um sort of the the notes uh has to doesn't have to uh be higher than the amount that is uh bonded otherwise

there's there is an incentive for the nodes to collude and steal that capital and get slashed on a lower amount so 13 oscillator between um different states uh these are the extreme so on one side the optimum state is where 50 of the capital is bonded by the Rune by the sorry the nodes and 50 of the capital is in the liquidity pool so remember that there is a 50 50 Rune to other asset liquidity pool and in this state the system is sort of balanced if more capitalists start to sit on the lp side then you have the situation that we were talking um earlier because now the notes are incentivized theoretically to collude to

steal the um the the the capital over there over the liquidity pool um so the way torching works is that the rewards start accruing on the other side so the rewards inflation rewards and fees start occurring on the bonded side so that over time the system should revert back to the optimal State and on the other side you can have a system that is just inefficient where more capital is bonded compared to put in a liquidity pool connects is another approach which relies on state channel to work so this idea that you can have Alice that is sending asset a on chain a to Bob if Bob is sending asset B on chain B to Alice

this approach really relies on what they call routers which are just liquidity providers so it has happened in the past month that user were just stuck in the middle because there wasn't enough liquidity and we've seen how thin liquidity can be in in defy especially when there is Market turmoil or a huge Market volatility so yeah I wouldn't say that's their weakness but that it is certainly a critical component of this design so they have to build a deep liquidity for this system to work properly and the last sort of project that I will explore in this design space is any swap which is an interesting one because it's based on on fusion and they

leverages the distributed control rack management which basically spread the split the private keys with sharding across all the nodes and they not only have a wrapped module so they wrap the the assets onto um you know they store the collateral and mint wrap token but they also have a tax built on top of these architectures so they they can then swap assets for the you can swap the wrapped asset for the native asset on the other side this is uh again um is sort of relies on this idea of having liquidity uh builds uh built on top and the last category are interblockchain communication I know

that there are other projects near gave an awesome talk yesterday with the Rainbow Bridge but sort of I just wanted to to put some projects that fundamentally try to reshape the way blockchain communicate Cosmos for example has this a vision of building the TCP of blockchains they basically split the networking the consensus and the application layer so you can have this module that you can tap into and start building your own blockchain but um the it's it's gonna not trivial to build a system that is already running into into Cosmos it was mentioned uh like yesterday I guess in

The Silo talk that there are you there's a huge amount of developer hours that needs to be uh put into Port an existing system into um sort of this uh these projects so uh good overall great flexibility potentially um absolutely revolutionary in the way uh you're able to interoperate between chain but not trivial to to develop and substrate which is the next one is is similar in a way uh when we think about substrate I guess we all think about polkadot but subject can be used to uh sort of similarly to Cosmos to build other uh things uh on top um like chain flip uh chain flip is

similar to to 13 in a way so they're really trying to bring uh to do only one thing that is bringing uh allowing you to trade one asset for another one uh very very easily but in a sort of rigid way uh so summing up uh there are several vectors across which these protocols may be compared but if we take uh just a centralization and flexibility has two main ones this is sort of the picture that come out and with flexibility against rigidity I mean um like with torching you can only swap asset from one to another with a more flexible approaches such as wrapped

approaches you can decide either to swap the asset with a curve-like mechanism which is over the penal code P network does for example or just using your wrapped asset as um you know has collateral in a market liquidity Market protocol or you can start earning interest on the BTC that is there for example while retaining and using your wrap BTC so the design space is much more um ample and coming to the p network so what's our solution um some key figures about us we have 75 million in total value locks so far we

facilitated um 400 million in volume over the past two months and a half we have 37 K users and we integrate 10 different blockchains blockchains that are really different from one another so we go from of course Bitcoin ethereum polygon xdi binance machine EOS we're working with algoran so blockchain that are sort of really different from one another and we really take an agnostic approach in the sense that uh what user asks us we try to uh sort of build without taking uh any preconception or um or um sort of you know um

philosophical thinking about what we implement and so there are three main pieces of our infrastructure the network of nodes uh the bridge and what we call portals so application built on top of the bridge the network of node is what facilitate the game and pick out they are the ones that Safeguard the collateral and they earn a fee for every transaction that goes through the bridge So currently there's a 25 Business Point fee on Peg out and there's a zero percent fee on begin to facilitate incentivize the total value locked and the the way that nodes Safeguard the collateral is through a technology

called tee so tea means trusted execution environment is this idea of having a sort of a Sandbox environment at the hardware level which is um which which is coming from the manufacturer itself so it greatly reduced the attack surface and it is where the private key is stored and on top of that we we plan to implement the multi-party computation just to make the system even more attack resistant we are going towards uh decentralization decentralization in the sense that none of the wrapped approach that I mentioned before are fully decentralized yet so Ram BTC which is one of the I guess

um approaches that are more similar to ours is um is um is not decentralized uh yet as well but we are going towards in the sense that we now have two different nodes so um the I will show it in the next slide two different kind of nodes and we are going towards having a fully validating nodes in the future that everybody can spin up so at the moment the validating notes are still run by the team but there are node operators which are sort of Challengers so they every few minutes they challenge um what happens on the ee on the other side

and everybody can verify that the code that is running is what is really supposed to be running on those machine in a very open source and a transparent way uh we have implemented a Dao which is where the nodes are asked to register to claim the rewards and to uh of course is what we use for our governance system uh just to add another another layer of decentralization and this is sort of the most basic infrastructure of the bridge uh so of course there is a ball contract on one side on the native chain which will store the collateral and there is a token contract on the other side which is where the wrapped asset will be minted but what's more interesting is

that we have this additional set of contracts which we call portas which are sort of um a layer that can interact with external contracts right so with this sort of approach you can Implement a whole set of interesting logic through metadata transactions so those portals can send metadata can attach metadata through the bridge and what these enable for example is bridges for nft so we developed these Bridges where essentially you provide as metadata the either the the state or the behavior or whatever the nft is is

supposed to look like and on the other side you get this abrupt nft which inherits the trade thanks to this metadata and the the wrapped nft can be traded uh swapped collected on the other chain and then eventually burn and you will retrieve your original nft if you want uh the portability is another interesting application that Rebels around this design um you can have for example your treasury on ethereum and I don't know the voting on X style or something like that to really make people uh involving

your governance and the last use case that I will show is this idea of having a liquidity extension so imagine you doing a trade on on one chain uh usdt for ether but there's not enough liquidity over there so you can forward the metadata through the bridge saying okay I want to swap this asset with this maximum three patch and this metadata gets sensed through the bridge you do the pegging or the pig out depending on which type of the chain you are you end up on the other side you complete the trade on say uni swap so you swap the usdt for ethereum uni Swap and then you

do the reverse process so you then do another plugin and you end up on the original chain and you complete your trade uh staying on your original uh chain but part of the liquidity comes from the originating chain the native chain part of the liquidity comes from uh the uh the host chain so the other side so uh operations on the two sides can happen atomically so yeah this is another sort of cool approach that uh really extend the liquidity to every chain that is integrated with uh with the p network and this is just our Tech stack which is fully open source fully verifiable

everybody can build on top of this um you doesn't necessarily have to uh have a portals for um using the bridge you can just use the bridge at the Smart contract level but if you want you can really start to build on top of that um and yeah just a few more slides on uh the path going forward so we are in this uh sort of scenario where we are starting crossing the chasm on mass adoption so the current users looks like this but we're really going to users that are less technical uh doesn't really care about anything that we've talked so far

they don't care about bridges they don't care they just want to move around their money into whatever kind of blockchain where they find the most value in and so what we are trying to do is really to build a really a a stack that goes from a mobile non-custodial app that user can use to interact with these protocols with a crypto debit card that is linked to to the account and with the bridge an easy to use bridge that can be leverage within this app so this is a I do is sort of a sister business of p network and this is uh what our vision looks

like for the future and uh thank you get in touch and grab me afterwards if you have any question or just ask thank you no question okay great thank you