Decentralization at Scale: A Deep Dive into DAGs and Hedera Hashgraph

Transcript

foreign welcome back to the roll up YouTube channel we got Jesse from hashboard on today and we're talking all about hedera Ash port and web3 uh Trends and uh a lot lots of blockchain stuff going on just at the Enterprise level um and the the D gen level as well so welcome to the Channel Jesse and and keep it rolling buddy yeah pleasure to be here um wherever you'd like to start yeah yeah so you were mentioning how you know hedera is actually a little bit under known um as like one of the more used blockchains out there um

and and you know we were talking how it's a bit about like an awareness problem just because we haven't really seen uh some of the applications that are being built on there probably because they're a little bit more oriented towards Enterprise um and you mentioned one one application on hedera that's actually it's got some significant volume um yeah maybe you could just kind of pick up on that protocol yeah absolutely I think you know with hedera there are quite a few things that that sort of have flown under the radar with respect to to people in the space really um knowing about um for one um you know while it does have

blockchain um components to it and and acts like a decentralized network just like any other it's actually a different structure altogether than a than a blockchain something called a directed a cyclic graph um and so that that structure actually and and there are other networks that that are based off a dag protocol not all dags are are created in the same manner there's there's some differentiation there but one of the things that came out of the the hashgraph algorithm that Dr Barron solved for um was you know how do you have a network at scale that is as secure as possible well while maintaining its performance and fairness and so there's

there's quite a few things that that are unique to the to the hedera network um that are just now starting to really make their way more into the mainstream so you know fairness of ordering is such a big thing I think as you get use cases especially Enterprise ones at scale um you're going to need that I think over time with use cases that have significant you know value to them so the algorithm actually solves for fairness of ordering so there's no front running or Mev attacks or anything like that on hedera it's very very very clear the other thing with with the network and the algorithm is a transactions settle the network with 100 finality so you don't have any situation where it's

probabilistic finality where you're waiting for X number of block confirmations to know that your transaction has gone through it's literally once the transaction has been registered on the network it is 100 immutable and unchangeable and then before I just jump back into your your question about about the use cases two other really critical components actually probably three um the network itself is super efficient so it's actually from an energy perspective I think the University College of London actually did a study where they showed that hedera's network is actually the the greenest Network in the world by by a significant margin um and so when you're thinking about all

the you know things in the media about ESG or or energy inefficiencies of networks obviously those things are being worked on with other networks um you know as well as l2s and scaling Solutions but from a native base layer pedera basically Takes the Cake when it comes to to energy compliance while maintaining those security and fairness fairness properties the last thing I'll sort of touch on is the idea that they've really focused on building this from the ground depth Decatur to large use cases at scale so the transactions um and and the the fees on the network are pegged to USD value so it doesn't matter what the underlying token of the

network hbar goes to essentially um a given transaction type will have the exact same cost as you know whether the price was X or Y so over time even if the value of the network grows and and the token value grows with it um you can plan as a business and know that you know say a budget of ten thousand dollars is going to get you the exact same number of transactions as it did the first day that you started building on the network and that's really important as business you need to know if you're budgeting for a use case that you're going to be able to you're going to actually be able to do that so all of those things wrapped together goes sort of back to some of the use

cases that are being developed and it is true there there's quite a few use cases being developed but one that's actually live right now um is called atma.io and that use case has been out now since around the beginning of the year but you know from that use case as well as several others but that use case in particular um it has provided transactional volume that is putting hedera at the top of the list when it comes to transactional volume so you know on any given day it's it's running between 300 to 800 uh sometimes almost a thousand transactions a second on the network from that individual use case um and so when we look at Activity real world activity

um and at scale hedera is really leading delay in that and I think over time that's only going to grow especially as more and more use cases start deploying on the network and and running these novel um you know protocols that are going to enable real world things to happen so that platform IO is I believe sort of a product life cycle track and Trace so I think that they're onboarding something like 20 billion items of which you know throughout their life cycle those items could have anywhere from one to up to 20 touch points through the product life cycle that so you're looking at from one use case potentially and just as a I believe as a proof of concept to start

you know 400 billion potentially transactions running through the network um so it's exciting I mean it's it's stuff that I think the spaces really strive towards um to to you know deliver on the promise of decentralized ledgers and and what that means and so as hashboard as as the the bridge that connects uh you know hedera to the the broader ebm world right now we actually connect to uh eight other chains we just uh connected uh today actually to Phantom and Kronos to go along with ethereum optimism arbitrum uh BNB chain um polygon uh and Avalanche and so you know just being able like web3 is just

about interconnectedness right and being able to leverage novel Technologies to solve use cases difficult use cases and I think you know as time goes on and as the ecosystem becomes more and more cohesive um I think people are really going to find a lot to like with within the hedera ecosystem yeah it has the scalability of a blockchain that like we've all kind of like knew was coming but haven't really seen in practice Yeah and we had a conversation with uh the co-founder of connect just the other day on this channel and he described why we aren't seeing some non-financial applications

and use cases where like a lot of a lot of the promise of blockchain was you know it was guided towards supply chain it was guided towards governance gaming a lot of applications and use cases that weren't specific for financial use cases but because of the limited scalability of blockchains we've only been limited to Applications to speculate on certain Financial products so through the development and and through scaling blockchains it kind of on on unveils like all these other applications that are possible with blockchain technology and and people would like to use blockchain to deploy

these these non-financial applications but they're limited by scale and hedera has built with scale in mind because they're building four Enterprise solutions that have the technical know-how and the reach to deploy these non-financial types of applications so I'm hoping that andera and it sounds like their their most popular application right now is non-financial which is particularly interesting um as we start to like kind of incorporate those other types of applications onto blockchain um how those applications will kind of pick their chain because now it's it's not so much like well where can we get like the highest incentives or where

should we deploy this application to kind of harness the most Community you know the the solution is almost primarily for solving that scalability trilemma um and hedera has done so with with the dag which I remember was like kind of a it was kind of a meme back in like 2017 2018 when the ethereum killers were all the rage cardano is getting you know and I think I think the main dag was iota back then um and they had just some like critical problems like early on that didn't even it just the change just didn't work or that that you know The Ledger didn't work so I have not heard about like dag technology since like 2018

um but it's cool to to hear about it working in practice and actually solving for those scale scalability problems that are faced by like these non-traditional applications and my understanding of Dags um if we could get into it is like it's almost like a 3D chain where it like a chain is almost like 2D it's like kind of just linear but my understanding of a dag is is it's the dynamic acrylic graph so it's kind of like if you have a chain right it's just kind of like an x-axis that follows just time and it's just a train of transactions but somehow a dag is able to like scale both on the X and the Y and kind of like

map all of the transactions on multiple Dimensions than just like an x-axis that Maps them chronologically so I is that is that like the kind of one way to understand a dag and I guess why has I guess my question is like why aren't more blockchains exploring dag technology good all all good questions you know I think from the trends I'm gonna just there was a lot to unpack there so I'm gonna I'm gonna grab it onto a few things um you know I think transactional volume that has to do with Finance with respect to distributed

ledgers is ultimately going to be such a small fraction of what is logged on a on a day-to-day basis I think we're right now in the throes of going through the same you know thing as what happened with the internet revolution in the sense that you know you and I are conversing right now on on um these devices and we're using Zoom but you might be on some entirely different piece of technology than I am it still works just the same we're getting the exact same experience um the utility of It ultimately Bears out for both of us in this interaction and so I think that that's sort of the same thing that's going to come about

with with dlts is you might have a very large contingent of the population that doesn't even understand that you know what is undergirding what they're using or the utility or value of a service that they're getting is underpinned by blockchain technology or dlt's or dags and so I think you know we're just in that infancy stage still we're 13 years in and we're still just starting to explore the functionalities let alone you know with AI and everything that seems to be coming along now all of that is going to interplay over the over the coming decades to to create some you know very interesting things that that we haven't ever seen before um in terms of hedera as an ecosystem you know it is it's developing and

growing a a healthy D5 ecosystem just like most of the other networks um I think there's around three or four dexes that are live right now I think um saucer swap Ali swap um Pangolin exchange and and a few others um and as well as nft marketplaces and and a burgeoning ecosystem for that so I think a lot of that is is coming along and it's sort of part and parcel with with um people learning about you know oh there's there is an ecosystem here um you know that is similar to the ones that we're currently on but to get back to your point about about dags um the way it works at least with hedera there's a there's a property called

gossip of a gossip it's a very interesting property in the sense that um and and it leverages something called virtual voting so what ends up happening is there are two tiny little bite-sized messages um that get that get put inside of each transaction that's submitted to the network one that houses what that node just recently got from the last transaction or from the last log transaction of the network and one of what they're doing currently with with with their existing transaction and by doing that and sharing those things inside of each transaction on the network all of the nodes can infer basically what each other would have

voted had they actually taken like a physical actual vote so through a bunch of very very uh beautiful math essentially um you can arrive at the conclusion without ever having to to have done any of the actual heavy lifting which means it's incredibly lightweight and as a result you get that scalability of of the transactional volume with a dag structure in particularly with hashgraph is it something called asynchronous Byzantine fault tolerant so that and I know that's a that's a term and a half but uh basically think of it as like Bank grade security or the best type of security property you can have

at scale for a distributed Ledger and I believe hedera is one of the only if not the only networks in existence that has this property so when you you know again when you look at all these these factors as a whole especially if you're a an organization looking to come into web 3 at scale and do stuff um you know the network ticks off pretty much all of the boxes you could want with respect to to building out a robust implementation for a for a Next Level uh application so it's it's very exciting I mean we get to see a lot of the the use cases being developed behind the scenes um very very very promising and I mean over time I just think that there's so

much cross collaboration that's going to happen between the ecosystems you know other networks could very well potentially eventually Leverage as a consensus mechanism itself um you know the hederic incentive service lends itself to private permission blockchains or ledgers literally tapping into the public uh distributed Trust of the network to be able to to you know gain that functional trust to what what they're doing um you know one of the other things that the the network really [Music] um a lot of times takes flak 4 which which I would would just tend to disagree is the the governing Council um a lot of a lot of times you know

you'll hear that oh it's just a it's just a corporate chain or it's uh you know it's it's just a bunch of big big companies however when you really break it down and you look at it because they've there has taken a painstaking efforts to decentralize this network so right now I think there's about 28 out of the 30 eventual 39 member governing Council comprised of industry-leading organizations um you know like Google IBM Dell Technologies across the board there's there's a who's who but they really are decentralized in in the stake that they hold the geographic location that they're in they've even gone so far as to you know industry obviously is all

decentralized as well so it's not you know there's no um lumping in of just one any any one set of industry but they've even gone to to the painstaking effort of making sure that um the infrastructure like the actual Tech technological Hardware that that's being run these notes are being run on they don't have very much overlap so either they're running these orgs are running it internally to themselves or you know one or two might be running on gcp Azure Amazon web services Etc so that there's there's it really has been been provided with you know quite robust decentralization out of the box and when these organizations are looking at you

know building out on a on a decentralized network if they see a lot of orgs that that are doing the same in kind um it just lends to to the growth and proliferation of that and not to mention I mean over time um there's going to be trusted Community nodes that get rolled out I believe this year and then eventually fully an anonymous decentralized uh nodes that anyone could spin up and run they've just taken a very pragmatic approach to how they've went about decentralizing so you basically have a an entire chronological history of how that how hedera has gone about decentralizing the network um whereas a lot of other networks you

really don't know who's behind which accounts or you know whether they actually well and truly are decentralized I won't go into to that debate here but um I think it's it's been very valuable for them and I think it will only serve over time uh as more and more businesses and organizations look to get into the space and they they really start paying attention to what matters which is is are these networks actually secure and decentralized are they you know doing what we need them to do that stuff's going to become more and more imperative I think as time goes on yeah one comment on the the decentralization of some of the other networks out there I mean you can even look at Bitcoin and say the mining companies there's maybe two or three

that own like over 50 of the hashing power which is it is scary for Bitcoin um but they they've gone back and forth I mean like early on it was super decentralized and it's actually been trending towards more centralized whereas other other chains have kind of like taken taken alternate paths some have started centralized and Gone Gone more decentralized and it sounds like hedera is trending in the right direction and over time they're letting more permissionlessness into their their Ledger and as a node operator which I think we've seen pla like play out over the industry in in the past where

Bitcoin is kind of like uh is kind of a lone wolf in the sense that it started so decentralized because we've seen all these other networks start off very centralized to bootstrap the the growth of the network and then decentralize over time um but some of them just don't don't do it as smoothly as I think we would like um it's such a very it's such a varied problem there's no right answer to this the question of what is decentralized enough or what is insufficient for decentralization you know what level of functional trust do we ultimately need to run use cases at scale that we have a you know fairly certain probability that that nothing nefarious is going to

happen and depending on you know how stringent to use case or how valuable it is might necessitate the need for even more astringent you know requirements when it comes to to decentralization but I mean it's just never has there been this many um you know real world studies or tests happening at scale at the same time it's very it's very very fascinating to watch it all all unfold every day um and and to see this stuff because it really is just all feedback ultimately to to iterate and grow upon um so it's very exciting yeah and it sounds like hedera has taken learnings from like other networks in the industry where they are not reactive to certain problems after they happen

um you know they're taking very preemptive approaches to decentralize their technology like making sure that all their servers their node operators are in kind of a distributed geographical region to prevent against like a natural disaster taking out a significant portion of the stake so I I mean they're they're really approaching it from like a very secure point of view and they're also able to balance a scalable Ledger by concentrating staking Within These you know 28 30 node operators and then kind of adding incrementally more decentralization uh from that Council so

I'm I I mean I I think I think it's just almost like a no-brainer like hedera just has like the potential to really serve like a significant portion of distributed technology um but like you mentioned before I think we hit record like they just aren't getting the awareness from Community Driven approaches to build uh to build on on the applications I'm curious why you think that's the case yeah I think it's it's a couple things obviously whenever you have you know several other networks that have first mover advantage and are the predominant um you know way of of doing things uh

and you have a very new and novel technology it takes some time to permeate uh you know the consciousness of of the existing prevailing sentiment essentially it's the same it's the same way that it was a slow and and you know gradual spiral upward for for Bitcoin and then ethereum and then these networks slowly you know I I should say they every successive generation of networks seems to to get on faster and faster with with the adoption um obviously I'm not saying that that you know it's no one knows about it but I just in terms of the broad scale testing and implementation and working

with the network itself and having you know a a Wellspring of Dev suddenly be like oh my God this is this is incredible like I I didn't even know this was there that's really that's really sort of what I'm talking about is the the awareness level just needs to rise to meet the the technical prowess of the network to really see some some fireworks I think and some some very cool things come out of it because that's ultimately what it's what it's going to take like you know atma.io it's a great use case and what happens when there's 10 15 20 of those running at scale on the network and and suddenly you're getting transactional volumes that are you know not in the hundreds but in the thousands maybe even tens of thousands

like consistently like that's an entirely different conversation and and I believe will lead to people really you know pausing for a minute and saying hey like look look at what's happening here let's let's go check this out I think who knows when it'll happen but I just feel like it it's it's a matter of when not if it would spike gas on these other chains and they just wouldn't be able to handle that that type of throughput right but but hedera has has built their their Ledger in a way that that it can support it so they never can the network can Shard too so once again once once a given Shard fills up it can just simply spin up a secondary shard in a different

region and basically scale linearly right so you could ultimately you know at scale if you had hundreds thousands of use cases running in in different locales you could be run like globally you could be running millions of transactions a second yeah yeah and and the the support for that amount of throughput you know it like you said it's a matter of when because these other chains ultimately run out of block space and then there's also um kind of like the accessibility where kind of the features that that it sounds like hedera is building out now um are opening doors for developers to to kind of Port over into hedera

um through the evm equivalency that that you mentioned they now have access you know once I hear about it maybe they didn't want to abandon solidity or some of the tools that they were familiar with working on um at these existing chains so with evm equivalency they're they're able to just one click Port over their contracts and go over over to hedera that should be there that should be the case yeah eventually yep the the other thing I'd like to touch on kind of like as we wind down is is what the incentives look like for someone you know obviously a forward-thinking developer may may see hedera as a flourishing ecosystem and and see how um an application reaching scale can

ultimately It ultimately has to live on something like hedera but is there a sense of urgency for these developers to kind of migrate over for some sort of incentive or like a an early mover type of uh opportunity that that's on there at hedera yeah I think there's there's several foundations and and Grant giving uh programs that are out there I believe the uh the HR Foundation is is one of them um also you know relatively newer uh the hashgraph association there's also one um they're they're I believe more focused on the the Enterprise um side of of the equation uh but yeah there are there are grants and

opportunities to do that um like I said there's there's a growing defy ecosystem over there as well um with reward pools I think um you know ultimately the network still needs several key infrastructural pieces uh in order to really deliver on the on the promise of the network one of which would be a native Oracle service um hashboard as a platform we're actually working on developing a a native Oracle service for for the ecosystem um and so you know over time uh you know we'll really look to to just round out those those key components that that uh you know developers are are looking for

um you know with hashboard we've really tried to focus on sort of um how do we you know in in in the easiest way possible um you know with being as secure as we can migrate assets to and to and from hedera to all of the supported networks and so we're sort of with with our our validator set on dashboard we've taken the approach of um sort of emulating what um the hedera governing council is in terms of the nodes so we actually have nine validating members on hashboard and we're actually leveraging the hederic and census service for those transactions so anytime a transaction comes to hashboard any one of the nine

validating members will sign that and then they'll turn around and submit it to the rest of the rest of the validating parties and then only when we reach super majority does that transaction get immutably logged on hedera which then triggers the the the minting or burning function um from hashboard and so we've also comprised the validators of of you know from the industry really well well-known world-class organizations like the H bar Foundation polygon is is a validator on hashboard Galaxy which is a decentralized social media app from Spencer Dinwiddie in the NBA basketball yeah basketball player uh hex trust which is one of

Asia's largest digital asset custodians um world pick from FIS which is actually I believe one of the first uh Fortune 250 companies to to ever join as a validating member for for a bridge and is actually a publicly traded company stable node which is like a sister company of maker Dao and the die stablecoin anamoco Brands which is which oh yeah um yeah Mega company over over in Asia um yeah they're starting to dip their toes into blockchain and wet their applications as well all of these are validators on hash ports Bridge yeah so they're all individual validators much the same way that there's nodes for for the hedera network

um and rounding it out is lime chain which is our systems integrator and build partner and then bcw Group which is a fintech focused uh Venture studio and uh between these nine members you know um it's slightly different than a lot of other interrupts sometimes you get interrupts at least in the past with a lot of the compromises where it's like there were two out of three signatures required or you don't really know who the who the validating partners are uh we've tried to be more transparent with with what we're doing and follow sort of in the same vein as what what hederas tried to do just to provide that level of functional trust to users migrating assets that hey the the assets that are

being multi-sigged on your behalf while you're you know while you've migrated between networks is via companies that um it would be not in their best interest to be doing anything anything nefarious so um we've really tried to to take that uh principle and practice and also we don't have a platform token um it's really been about interoperability at its core and not necessarily trying to add additional bells and whistles or or you know frivolous features and functionality that really just isn't to getting you from one network to to the other because that adds complexity when you add complexity you add you know vectors that that weren't there before so we try and use you know battle tested code as much

as possible um and yeah it's just really about providing a a great experience to the user trying to to be it you know users coming into hedera or devs building on hedera looking to you know expand their their platforms reach onto all of the other supported networks and reach out to new communities and you know um show show what they've built so it's really just about enabling access and when it all comes down to it awesome well uh you guys are steadfast on the mission of scaling blockchain uh technology DLT technology in general um thanks for for coming on and um looking forward to talking again kind of like as we can track uh the growth of

hedera it'd be really cool to just kind of like you know kind of kind of follow up and and see how the industry uh and the applications that progressed absolutely yeah I'd love to do that anytime thanks cheers buddy appreciate it