How LayerZero Will Power A Multichain World | Bryan Pellegrino

Transcript

this episode is brought to you by bitmex the og crypto exchange that is back and better than ever you'll hear more about bitmex later in the show [Music] [Applause] all right everyone uh we have a really amazing episode coming at you we got brian pellegrino co-founder and ceo of layer zero uh hilarious before we were uh before we hit record we're just talking all about it's like what'd you do you know after school you're from new hampshire uh he's talking about how he traveled uh saw like 80 countries in eight years playing professional poker then built a daily fantasy sports app sold that uh then wrote some machine learning uh models sold them to some sports teams uh has just built an incredible wealth of

knowledge in the ai and machine learning space built several companies sold them and now he's taking on his biggest challenge yet uh trying to create interoperability uh and just solve one of the biggest issues in crypto with layer zero they're coming off a massive round 135 million dollar round co-led by sequoia ftx and andreessen uh some other folks that invested coinbase ventures paypal ventures tiger uniswap and per usual our friend mr santi so uh brian welcome to empire thanks so much for having me welcome brian welcome welcome brian i want to just start really really big so you've built all these companies uh brilliant like machine in the machine learning space you've built these great ai models you built a

daily fantasy sports app you could make a whole living and you did playing poker why of all of the companies in the world and why actually maybe i should just frame it as like the challenges and the problems to tackle why is bridging and like interoperability of crypt of different layer ones the biggest problem that you want to tackle and spend the next 10 20 years working on yeah i mean ultimately i think i think about this a little bit different than most in that most people like want to be a founder they want to start a company they want to build something like i've streamed my co-founder from my prior company was exactly like that this is like the only thing you wanted i've always just wanted to like solve hard problems like that's i i just kind of have been down this path and like things

are interesting to me and i try to solve it like that's like that's what led us here uh you know this didn't start from this is the thing we're gonna tackle this started from bse launched and every single day i was getting spammed with messages like finance smart chain has more traffic than all of ethereum and like all this volume and everything and it was like you know the first time anything happened meaningfully outside of ethereum at all we're like okay that's interesting and kind of like as technologists the way we think about things this is like toy models we're like we just make this little game and we'll just play it across both chains and just like prove out this example started to build this and very quickly realize like there isn't any way to like make these contracts do something without just like having a centralized

server like dictating things and we're like well but bridging works like how does it work and we actually looked into all the other bridges and we're like whoa like we would not trust any money to any of these existing models like this is insane um so we i started we're like okay well let's just build a better bridge and we started building a bridge early like this was actually the earliest version of stargate um and as soon as we started building that we had to we were like inventing our own transport layer to again make the communication function and very quickly just realize that like oh this thing is actually like this generalizable piece is is the problem to be solving um and then we just went went through the normal routine of like try to break it try to harden it try to break it try

to harden it and just build a system like what is what is the system that like would be the easiest like what would we want to build on top of and what do we want to basically provide to the consumer or like using our applications that are building on top of this thing a lot of what i'd like to ask founders when i meet them and i think i ask you this question early on is why hasn't it been built before and so why don't you just start there yeah i think one it's not like interoperability like uh communication between chains is not necessarily a new problem right like cosmos tried to do this in 2017 so it's been like five years um but if you go back 18 months in time it literally like wasn't like it was not very clear at all that it would be a

very multi-chain future like people were not thinking along those lines when we started this problem uh again finance marching had like just launched it was the only thing where anything was happening and so we started building because we loved building we wanted to like build an awesome solution and in those 14 months like the world kind of coalesced around like this being the kind of holy grail problem to solve because all these other layer ones finally started like coming into fruition so i actually don't think it's that nobody has tried to solve it before i think that it wasn't obvious that this should be solved and we happened to start working on it way before anybody else did and start like really making something

uh that is meaningfully usable way before anybody else did yeah absolutely maybe for the general audience like can you describe like the problem that you saw and and what is it that you're solving and from a user experience like why does it matter yep 100 so what we saw was one again the word we wanted a game right we wanted to build a game that passed messages backwards something was happening on each of these chains and it was affecting something on the other chain and there was no way to do that so there were bridges people every before we announced every single project only cared about value transfer that's all you ever had you had a user with a bag of money who's going to walk

over a bridge and like land in some other you know land and uh you know go around and use the money over there and we decided very early on that value transfer is just a special case of generic messaging like what you really want like think internet you really want to solve for like packets right you want to solve for generic messaging arbitrary contract invocation the ability to just do anything at the contract level and if you're sending value amazing you can do that too uh and so i think that was one way that like we meaningfully approached it differently than anybody else at the time um was that we weren't focused on value transfer at all it was purely solving like the most extensible primitive and then all the other things we built around this were for consumer experience so like how do you make it

like the thing that i've been thinking about for a very long time since starting this is like how do you make it so you have this like robin hood of crypto style app how do you make it so a user can have a wallet that's connected to all these rpcs and they can go acid a on chain x asset b on chain y this farm with twenty percent apy that farm was sixty percent apy nft is all of this without ever needing to know the underlying chain connect to this use this rpc the underlying gas asset how do we abstract all of that away from them and so that was one of the really big components in that like you can execute this really complex contract flow of like six calls on two different chains and the user just signs once one transaction on the source chain

a whole flow gets executed user never thinks about destination gas they don't need both eth and soul or to claim it on the other end uh all of that gets abstracted away and i think we're moving uh there's a bunch of things that like we haven't talked about we're moving even more and more towards that direction uh giving the application developers the ability to just totally abstract that away from the user side of things you mentioned like messaging which seems like so core to what you're actually building here when i think about what the internet did it made it so that you could send messaging and information in a peer-to-peer manner the thing that crypto does is it makes it so you can send like uh money and value in a peer-to-peer manner for the first time when i look at layer 0 and i'm like oh

you can send messaging now in this peer-to-peer manner my the first thought that comes to my head is we already did this we've got like smt we have the protocols it's smtp and http so like why does why is this a problem that needs to be solved again yeah because yeah you have that in the internet you don't have that on contracts you have this contract that's sitting on ethereum right so a great example of this might be sushi swap sushi swap was on like 14 chains but none of them could communicate together you couldn't so they were just independent silos that may have well been you know completely different projects they couldn't send a message to like do a swap here and do a swap there effect a piece of state here and also synchronize that state on other chains so you have things you know it

can be something very simple like casting a vote in governance uh you have your project lives on multiple chains you want to be able to govern from all of them not just need to hey if you want to participate in governance bridge your tokens back and do it from ethereum or do it from whatever chain and then you have things like games are doing things now i had somebody pitch me the other day which i thought was very interesting like their game is going to run on an avalanche subnet but you have like a twitter profile picture like the hexagon that lives on polygon or ethereum and you do something on the subnet that's very high you know a thousand clicks 200 hours and when you do you kill a boss you're in an achievement you do whatever it sends a message mutates the metadata of your nft

on polygon or ethereum and that automatically syncs to your twitter profile picture which like updates so you like have a crown now and without needing to like do anything or say anything right so it's actually like think state share think um the other thing that's like pretty exciting to me is is application design being able to change so everything designed right now is like fairly monolithic and that you know early internet we would write uh an application and you'd like host it on your computer in your house or if you're lucky you'd like put that server in a data center uh but everything was like just all the codes just on that one server you're looking like modern application design and everything is microservices you have things that are hyper optimized for compute and for storage and for all of these different things and so now

if you have a seamless message layer you can almost treat chains and microservices so now you can have an application that can do something that could never do before like it's way too expensive to store all this stuff on ethereum but now we can put all of our storage on our weaver ipfs and then you can take that and bundle it up and do this really complex computation on solana and then roll the result back to ethereum right and so i don't think anybody else is excited about this yet and i'm not sure they'll play out that way but i'm excited about like seeing the evolution of this and like having the potential to really change the way that applications design or like what that can look like the complexity of applications that can be built and so i think there's a lot of cool unlocks at

pure messaging layer we had a ilia from near earlier uh on and i think i think we touched on microservices this was huge for the internet this like a lot of software investors out there would probably recognize like the thing that allowed you to stream video and run all these super intensive applications like netflix on the fly is micro services and that like architectural redesign of a lot of web applications the thing that i i want to get your take on is it's all i always go back to yes architecturally like you can borrow a lot of these concepts but it comes back to when you're making these state transitions like you got to make sure that like what happens in one chain like ethereum is super secure but another chain may not be as secure and and what like how do you work around

that which to me is always you're only as strong as your weakest link and so when you're connecting a lot of these different chains how do you kind of solve that issue um of security okay so this will take hopefully you guys don't mind me going on a slightly longer rant we like going down rabbit holes here all right so i think it's important to understand the way that most systems work right now so the way most systems work is you have two chains and they want to talk to each other and kind of the way that people solve this is you'll write a transaction here you will put some consensus mechanism in the middle that will come to consensus as to like the validity of the source so we'll say okay that's a valid transaction and then it will write a transaction out to

the destination chain and the problem with that construct is that that middle chain is ultimately the arbiter of everything it holds the parameterization of security it writes all transactions out if that consensus mechanism is ever broken um doesn't matter if it's for a short period doesn't matter at all um it has the ability to arbitrarily write messages to every application on every paired chain so breaking that basically wins everything catastrophic risk plus unlimited contagion um so like that itself is scary right you have this mechanism that controls five billion and okay maybe that's great maybe that's acceptable but then like unit swap option and it's 20 and ave opts in and it's 50. and basically every new

application opting in is creating this adversarial incentive for every prior application unless the bond in the system is growing like non-linearly which has never ever been the case would be super capital inefficient so you know they're making it less and less secure because there's like a larger and larger honeypot at risk um and so that was like like as a principle that was a system that we didn't think could ever scale viably long term you're you know ultimately you're gonna be collecting connecting hundreds of billions if not more in value across these chains plus contagion effect um and it's extremely unlikely that you're gonna have this chain that sits in the middle that has bonded you know a trillion dollars basically in value um to have like economic security so the

construct that we went with is a couple of things one is you're doing this ad hoc block validation so you're basically taking this block and validating the other side you split up this block into two pieces uh block header which has a receipts route transaction proof so mpt for evms combine it and do the walk directly on the destination chain but how it's being split up is being split up by these two parties that we call oracles and relayers a little bit of a misnomer because people always think traditional oracles or relayer networks like they work now but really you can just think of these as two arbitrary systems the oracle is passing a block header and a relayer is practicing a transaction proof and so the difference here is that there is no broad consensus that sits in the middle

there's no like sybil to attack there's no round robin every application opts in to exactly the oracle and realer component that they want and there's a bunch of reasons for this one is just a sharding of risk you can take some broad system um i don't know pick your favorite oracle and say it costs two billion dollars to attack and maybe you win like five billion dollars if you attack it uh so eventually like at some point in time this will probably happen and this thing will get attacked and you'll win five billion dollars um or there'll be five billion dollars in damages i should say but now you can take this oracle and it still costs two billion dollars to attack but you can start it by splitting up a bunch of relayers and now even if that oracle is attacked even if it's in malicious collusion with relayer

a you're only winning this very narrow band of risk of exactly applications using that oracle and re layer a so anybody using relay or b through z anybody relaying their own transactions anybody using any other oracle stay completely unaffected so what this means is that the price to attack the oracle hasn't changed at all and yet you're only winning 130th or 1 300th of overall system of risk so like the effective attack on the oracle now has gone up exponentially but more than that is the ability you know small applications whatever your normal mid-sized effort they're going to say using chain link as my oracle and coinbase as my relayer like i'm fine externalizing or pricing the risk that both chain link and coinbase will not be

simultaneously broken and malicious and colluding against me like many will say okay there's a price that i'll pay for basically not needing to deal with infrastructure side of things but you're a huge application your curve your ave or whoever now you have the ability to run one of these components yourself and if you run one of those components if you run your own relayer even if 100 of other network participants are malicious there is nothing that anybody else can do to affect your security there is no like takeover of consensus unless you're colluding against with the oracle against yourself which obviously you would not do there's nothing that anybody else can do to affect you so it gives also this is part of the thing that i think is really important is moving this parameterization up to the application layer where now the

applications there's defaults if they don't want to think about it but now the applications basically can create this line of you know there's a direct correlation between cost and security period right if you could have better security for cheaper costs like of course everybody would select it so you have this this like pareto frontier of cost and security and you can create these structures maybe it's chain link and coinbase maybe it's 100 nodes maybe it's 10 000 nodes maybe it's a bonded node system you can create this line and applications can basically choose where they want to live on that line of cost and security and part of the reason for this is something i thought was so insane about the current structure in that all of the parameterization lives at the technology layer and not at the application layer was like

the example i always give is you have two things that are happening one is like a game that wants to verify on chain b that it owns like a copper sword on chain a the other is somebody trying to send 500 million dollars like in what world should they be opting into the same set of security parameters either somebody is wildly overpaying or somebody is not getting nearly enough security right there's like somebody is so far out of bounds and probably both are so far out of bounds um and so like there just isn't a world i think where parameterization lives at the technology layer so all of that gets moved up the stack and i think like we really focus on modular uh like application design they should have the ability to choose this construct of security we have the ability to put out

new validation libraries so like a new zkp like state proof generation speeds up a thousand decks tomorrow fantastic we can take that put in a validation library anybody who wants to use it can now point to the state proof generation like zkp validation totally fine like it's meant to be modular this thing that i'm even describing to you like the oracles and relayers that's just one thing that's our ultralight node that's one single validation library in layer zero of which there can be thousands because we are not at all convinced that any validation mechanism that exists today will be the defective validation mechanism five or ten years from now we built with that in mind we're just like we're gonna build something we think is better and more modular in terms of security and application choice than anything today but uh we're not gonna build it in such

a way that like this is the system and we're gonna tell you like yeah this is only system overviews it'll scale it'll be perfectly secured now uh for us like we're very on top of security research and like the goal is to just progressively get better and give applications choice always so in this in this world where there is more choice um for the application how do you envision that actually playing out so going back to your example if you want to send 500 million dollars and also if on the gaming side if you want to send like a trivial amount like a sword or whatever who is actually making that informed decision of where to where in that continuum is there a market is there the application that is making that how do you how do you work this out the

application can make it because they can run one of their own but i think what's most likely like almost certainly there'll be some narrow parameterization there'll be like five broad parameterizations where like 95 percent of applications fall within right and it's basically on this curve you want to live here here here here here and basically there'll be a measure of how much risk is in basically each of these bands and so people might want to say i'm going to take the same band but off to like a different relay or different oracle so broadly the same construct broadly the same kind of system or parameterization um but at the end of the day like i think most people will live on default uh or just choose one of like these presets that everybody else is using

because that's way easier than like needing to choose yourself but it also opens up a world where i don't know ave wants to make again ave wants to make like their own security around this and they create like an ave net relayer and all of the ave users can like bond ave into this relayer and basically perform this action it like gives applications a choice to like play a role in their own application security and like doing all of this right and i think that's really important uh as well so that's really interesting because now if if you're avi you're competing against compound and you're competing against other protocols jet and some other protocols out there money markets so what you're saying is then it is sort of like a very interesting go to market where these applications that may want to retain users may want to attract

users are going to are going to start you know offering these services and being built on top of you guys to you know maybe give it's like the analogy would be like verizon giving everyone 5g for much cheaper than what a t give if 18 only gives you 3g like it's a bad example but i'm i think this is where applications own the the customer relationship of course yeah i mean uh like they will unlock both lending borrow like in in which is one of like the broad use cases i'm most excited for and we can talk about why i think wrapped assets suck and like that is clearly the future um but then also like obviously if they make this really network well sure they're using it but also like a huge number of other applications are going

to say they're using it like it's good enough for me basically and we'll default to that rather than using like this prior construct um so i think there is this this huge unlock that allows like tokenomics that they can kind of mix in like there's a bunch of things they can do that are like broadly good for ave and incentivize other users and yeah from a validation standpoint there is still some assumption there that you're making that people are validating correctly um and there's a robust validator set i'm making that assumption is that true so again it really depends on the system so you can have a system that's for chain-esque and everybody bonds 150 and like that's a deal you bond bonded value into the system and like you get slashed

if you don't validate correctly you can you know there's there's for us it was very intentional to basically not have like we'll publish some reference implementations for how we think we'll publish something to make it very easy to like make your multi-sig in oracle or relay well like we'll do things to make it easier for people but broadly the only like an oracle is just any system whose output is a block header and a relayer is any system whose output is a transaction proof and what that looks like can be anything any any take any crypto economic system that exists today and apply it no that makes sense and in terms of um like what do you see as the so you just just for for listeners like just

the the context is you you recently launched um and what are some of the maybe what has been kind of your learnings so far since you launched and and where i'm going with this question is kind of where do you see the biggest like security like attack vectors for for a network like this yeah so it was funny i mean we launched and like within two weeks we have four billion dollars of tbl and stargate which was like the fastest growing d5 application of all time and naturally like we said a million people trying to attack it all the time right so we're sitting there watching like attacks come in from every single possible anger all these external contracts attacking uh the stargate on the other side trying to forge messages trying to do all of these things so

there's like a couple things wait wait a minute wait a minute let's just pause there because i want people to conceptualize how adversarial crypto is like of course like it's like how stressful is that as a builder like you're sitting there i saw pictures of you guys like the team is just like deploying it and all of a sudden you know you would think that the world is a nice place right which is like great we just launched this what is a novel tech and all of a sudden you have all these trolls like immediately try to like hack this system like like what does that mean about like just humanity in general you know i mean i don't think i don't think it's trolls i think it's like when you have a when any sort of market like when there's an inefficient market like a hedge fund's

job is to go in and basically attack and exploit it yeah that's a very friendly way to to describe that i think this is not activism investing yeah i think this is we want to we want to take four billion dollars and run away that's fair that's fair but brian like tell us about as a builder like what do you feel when you see that so i think broadly like like humans on a broad scale not individuals but like humans on a broad scale will always just do whatever is like if you give them an incentive the incentive is going to get taken period it doesn't matter what it is right there isn't you can't put money in a contract and expose the keys and hope somebody doesn't take it so like the thing about crypto is it's either like 100 perfect or it's totally broken

like there is no in between if there's a flaw like it's going to be exploited and so for us broadly like we you understand the week of launch we stayed up for five days straight to launch layers here on tuesday stargate on thursday we were rotating like two hour naps on these bean bags in the office michelle from sequoia was like there just like trying to support us um it was literal madness and then post launch we just saw tvl just start going like this and then we started to see these attacks coming in and obviously like we did every possible thing that we felt we could do from security ahead of time and even still there's like like you're just terrified right because like you don't know and we see these and we're like we're inspecting

everything that's coming through uh as it's happening and we're like okay like that's gonna work like nope this is fine fine uh and just like checking going back checking everything and then you have you know somebody funds a wallet through tornado cash and somebody reached out to us and says hey like this guy just funded from tornado cash is doing this weird thing like okay check that um and so you know fortunately everything totally fine and then we got into like okay like how long can we do this for and what can we do to basically change it and so like there were three broad things that we did after that that we spent like we expected to spend the next three weeks like just like integrations new networks everything we literally just spent the next three weeks on security nothing else which is like not what we thought

we were going to be doing um you know basically the three big things we did is one we made this thing so at the relayer level we made this thing we called the dome which was just like no external contract can ever send a message to the ua on the other side so if you're not coming from stargate you will not talk to stargate on the other side so like that's one thing step two is this thing we call pre-crime which is basically you take a message and it's going to the other side and before you deliver it you take it fork everything run it locally and verify that it meets these invariants your variance can be very simple like solvency etc uh and then if it does then you get to pass it and if it doesn't basically you know it's an attack and you discount it does that

introduce latency in the system or like basically zero effectively zero um yeah uh and so now you have this message coming through and before you you know hacker would be clever and he'd like stuff a bunch of bytes and try to trick the message uh the contract on the other side and say yeah you know look it's verified i put 20 million dollars over there give me 20 million dollars over here and now this thing checks and says hey we're gonna give 20 million dollars over here does the system still add up so things like ronin and a bunch of the other hacks right using something like this would have just been like of course we're not going to give the hacker all the money because like there isn't money on the other side to confirm it um and so it allows application to do that and that actually

we thought was like we were just like hey like we need to do this thing this seems like this this will protect everything like ensure what we need and we talked to a bunch of these like white hacker groups and they're like this is the most exciting thing that we've seen in like a decade like in this like this is incredibly cool um and so like we didn't realize as we're building like how cool it is but people are super super excited about it and then we're working into like how all applications basically can set these invariants and like roll it in the relayer set and then the third thing is we put up uh the two largest bug bounties ever of like 15 million for both stargate and layer zero um but no it was like it was terrifying like none of us were sleeping

we're still all on constant pager duty um yeah it's a you will never get over that in crypto like i'm sure eventually you learn to sleep okay but like it never goes away yeah i think there is no such thing as going fast and breaking things but talk to us about your journey in building this um i heard you say earlier that you know i think my estimations a lot of founders in this space see an opportunity to go quickly you'll try to build fouls because it's super competitive web 3 world code is open source anyone can fork you like you're always on the edge but there's also what you're saying is like like most people kind of don't think about security and like stuff breaks and it breaks like you're done like it's really hard to recover users get hurt but how do you make that

trade-off and and maybe tell us from your experience like how has this journey been for you to get to where you are now yeah uh i mean for us again we didn't approach this from the stance of like we want to build a huge company we're into this big thing like it's me it's two of my closest friends in the world started our first company together sold it did academic research together i've known them 16 plus years we were just building a thing that we thought were cool so actually through all of our fundraisers we've never had a pitch deck we've never gone out and been actively raising right we were building something we thought were was cool we're excited about it we're showing it just to people around like this thing we think is pretty awesome and then we got preempted our last round we are

preempted like six times so for us we haven't approached it from like this builder so we built 100 in stealth before we announced to the world like the protocol was done the paper was done in may the protocol was basically totally written by the time we did the last one and then uh since then everything was just making it better everything like i think we cut gas by a factor of three uh every you know we did 12 different security audits from all these firms we spent like a million and a half dollars on audits uh we have an entire team auditing ourselves everything was just like okay we built this thing it works we've used it we're playing with it on test net we built contracts we published this demo showing like unit swap v2 forks doing this native to native swap uh composing

stargate in the middle which was something we were super excited about and then everything like we wanted to launch then we thought we were gonna launch last october um and it was just like not good enough not good enough not good enough um and so everything from then till now has just been that and like we launched ultimately when we thought it was good enough and like we saw us losing like slowly other people like applications who were excited about building on us we're building on other people because like they had to launch like what are they gonna do they're not gonna wait six more months for this um and so like every day basically we had that like thrown in our face of like you're losing market share you're losing market share you're losing market share or like the

competitive edge of being early is going away uh but it's just like you have to get through and do it right and ideally the delta of like what you're offering and how much better it is than everything else like then fixes all of that um so like from from our mindset it was it was just that like yes we absolutely like as a team collectively we're 27 now uh the entire time we've been in bahamas like we basically are in the office seven days a week basically nine a.m to ten and eleven p.m like nobody's it's not in force we have no set hours and it's just like as a culture we're there because we very much recognize we need to run faster than everybody else like to win like period um but uh yourself to do it right so yeah

my submission is that i think you want to build a really strong foundation and that might take a long time but once you have that it allows you to go much much faster than perhaps other people that might just die along the way um you know like wormhole very close um i am curious before we get to i want to get your take on like what does this really unlock for the space what does it actually mean from a user perspective from like a scalability perspective and adoption and use cases before we get there um just on the fundraising itself um i think i can't think of a more stacked group of like just traditional investors like this is i think it was correct me here but like this is sequoia and paypal like folks that have never even like ever considered or have been skeptical on the

fence of maybe making a decision of who to partner with because they see the spaces early how are those conversations and and maybe just give us some insight into like why why was it you guys that they finally decided to like just jump on and really like make a very explicit bet on a piece of tech yeah i mean ultimately i think it's a probably you know probably a question best for them um but i will say like most of these groups got it pretty early on like uh impressing lisa and paypal was similar like paypal you know this was a big pivot for them this is the first time they've ever invested in a token ever they had to change the structure paypal to be able to hold tokens they had to figure out

how to do all of these things but like they were willing to go through that process with us and like make that bet and it was like pretty apparent early on that like they wanted to go through the work to make it happen we interrupt your programming with a special announcement empire has a new sponsor santi and i are very excited to welcome bipmix that is right bitmex is back the exchange we all know and love is back and better than ever we're gonna be dropping a couple updates on bit max over the next couple of months this first one is a big one coming soon bit mex is rolling out their spot exchange and they're giving away 500 000 in bitcoin to new users that's right listening to empire has got the alpha santia and i got you five hundred

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good segue into like what i want to go next which is what does that mean what does this mean for crypto uh we've seen all these competing l1s there's a lot of maximalism but ultimately i think like to your point around finance smart chain just users are willing to go where where the best service is is at without maybe necessarily appreciating all the really technical nuances so what does this really mean for the space and how do you see this kind of impacting of the next six kind of 12 months two years three years down the line yeah there's a bunch of things there's a bunch of things i've found interesting uh one is like from the adoption side so even just talking about paypal like most of the conversations that i've had you know i've been in the space for nine years so like i've

like there are things like okay early like on the balance sheets of s p 500 companies and like legal tender in a country like that surprised me that was like five to ten years earlier than i expected same thing now we're like you know yes we got paypal on the round but we also spoke to every single consumer fintech product basically that exists every major financial institution like conversations that i thought were very very clearly five to ten years out are happening now so i think there is this huge push broadly for like what that looks like in terms of mainstream adoption or the potential for this truly underlying like really significant rails uh in ways

that just like people have not been thinking about or considering and then like within the space broadly i i think it's exactly that in that at the end of the day application developers want to make the application like security is a it's a prerequisite everybody like it should be the base plate everybody needs it nobody should be able to do anything basically that that isn't secure like that should always be the prerequisite but once you get over that you have a system that you think meets that criteria then everything else like application developers want to build an application that gets used by consumers they're very clearly optimizing for like maximum use and consumers want to use something that is like easy to use right and so i think people are you have a lot of people in this space that over engineer solutions i feel like

i think you see it happen all all the time um and you have these really really complex things that they think you know unlock this little bit of extra gain but make the consumer experience like 10 times worse and people just like aren't willing to bear that the application developers want something so any amount that you can add to unlocking consumer experience any amount that you can add to like abstracting away making the entire thing more of a a singular system uh i think is just valued so so so highly by the developer side of things and just completely underserved where do you think we are in like this crypto adoption phase like there have been attempts to build like consumer-facing applications like social and gaming

uh but it has always felt that like even like actually unfortunate as it is but like the running hack like it feels to me like we still uh are in this infrastructure layer where we a lot of rare a lot of really kind of basic stuff needs to be built first but we're kind of trying to do this all at the same time um you guys are obviously focused on the infrastructure layer it sounds like you are um but i'm curious like where do you think we are in the adoption phase and maybe if you can like do the analogy with the internet and how that evolved yeah i mean i think it's just i think it's messy i think people are running in a bunch of different directions at the same time like i so again 16 17 years ago when i was working with my co-founder when we met

my co-founders we worked in a testing and conformance lab doing like ieee early internet technologies right and like i was there writing test tweets and conformance suites for some of these standards for products that were getting rolled out and do every single like household in the world every data center in the world and the amount of times that those things were just like broken or non-conformant or just like totally didn't meet the standard and were going to be put everywhere was like it was way way way way messier than people like to remember and i think we're basically in that phase i think we're in the phase where technology is like the technologies that unlock all this stuff are being developed and they're being developed like on the fly like that's

incrementally happening right now it's unfolding and i think applications are trying to run like faster than infrastructure is catching up and that introduces like up yeah a lot of things are breaking a lot of things are messy but i think like the internet like it's it's all going to get consolidated it's all going to resolve like i think it's just a natural part of like massive expansion of any space and we have had you know the craziest expansion of anybody so talking about the internet stack like there are standards now https tcp there's just one standard and a lot of times people like to make that analogy and say and make the claim that there will only be one chain through them all whether it's bitcoin or ethereum or some other chain um

what do you what is your response to that what is your view in terms of a multi-chain world yep so i think i think treating the chains as the standard is like not necessarily the right approach so like early internet right you just had these clusters of computers that were like sitting at universities right the intranets you didn't have internets right so you're like these small systems of connectivity and you could do some things where you couldn't do everything it wasn't until you had these standards and obviously run the cable and did everything to like make them connect uh that basically everything could start talking to each other and like i think that's sort of where we're at now like again i think the chains themselves are more if you're treating the chains like standards the question is like will everything live in one chain so you're

really asking the question of like are you going to have ethereum with a bunch of l2s that all conform to a single set or are you is there a world where we have a bunch of l1s and competing systems uh and i think the chains themselves are more like programming languages than anything else like i think like that you you you know you use c plus plus you see use cuda when you need to use python or javascript when you can because like it's easy and it's fast to do right and i i think it really is is more akin to like those sort of properties where like yeah i do think like i have the personal opinion that chains that are very small iterative like shades of grey so you have like ethereum and you have something that like lives on either side it's like mostly ethereum but like a

little bit more scalable a little bit more something like as technology gets better like they will have a hard time maintaining any sort of competitive advantage as ethereum scales but like chains that take very strong orthogonal trade-offs um so you're talking the solano's of the world things that are again throughput storage etc like i think those like ethereum will just never do those things as well as those chains period like it's not going to happen even ask like the most ardent supporter of their own chain like vitalik anatoly whoever like none of them believes that like their chain will just handle all scale of everything like it's just nobody has any state of belief that like that is going to be the case um and so yeah for me

i think it's more broadly like that like when you compare like you know uh react to ruby or like you know whatever similar similar constructs similar languages uh you're gonna get like one winner who like wins in this vertical uh but when you have these big orthogonal tradeoffs again like you're just not doing in python what you're doing in c plus um right yeah brian brian what are your thoughts on the analogy to uh different l ones being different like cloud providers like almost like um aws verse google cloud um first microsoft azure where like we're we're recording this thing on riverside i've got like a google doc pulled up here i've got telegram i have no idea what service these things are running on in the background and that the future

might look something like i have no idea if the game i'm playing is on ethereum avalanche or solana i certainly hope that is the world that you have no idea where it is i don't equate the chains as much like maybe right now because it's messy everybody is trying to be a cloud provider in that everybody like all the cloud services are broadly trying to do the same thing i think the end state of the chains is that all the chains are not necessarily trying to do the exact same thing but they're trying to optimize for like one thing extremely well uh so again i i really think about the framing and like strong orthogonal trade-offs where they're going to do this thing better than anything else um but in terms of like yeah i mean there's there's definitely

like relationship between cloud services where like you have this thing that is running on this effectively peer-to-peer like system of nodes of validating nodes uh so yeah 100 from from a use case perspective uh when i first heard the pitch it was it was very much defy centric i think like doing a swap and that doing multiple hops how do you um i'm curious to get your take on the i mean you could do so many different things when you're connecting all these different chains but where do you see most of the activity today where do you think it's going to happen over the next like you know 12 months um like from a use case perspective and what does that mean from a user they might just like be using you know a wallet like argent or whatever yeah so we absolutely came with

everything at like a very very defy sku there was like a couple of use cases we were highlighting all of them were d5 and then we announced in like fifty percent of our inbound was gaming and nfts this is similar right we launched we launched stargate huge success but like shortly after like ghostly ghost this random nft project launched and like sold out instantly became the number one trading nft on openc like immediately after that like 100 other nft projects have launched and every nft project is basically looking at this so there's been huge factors and the same way of trad fi interest was like not what i was expecting but again we're talking to every single consumer fintech and like all these neobanks and all just things that i did not expect to they're like all these different verticals so people

are interested i still think the broadest immediate unlock like for me the thing i'm most excited about is i'll go my wrapped assets to engine now is i i think there are like a couple elements of just like pure like potentially systemic risk at scale and i think wrapped assets is one of them in that you have this construct now which is how most bridges work we're like you want to bridge from chain a to chain b you're going to lock some asset up and you're like mint a synthetic asset on the other chain like that's just how bridging works today for 99 of bridges and the thing that i i really disliked about that was that if you have a huge amount of outflow if you have a hundred billion dollars of

outflow from chain a to chain b you will lock up 100 billion on chain a and you'll mint 100 billion of synthetic on chain b and the problem is that you have that 100 billion of standing risk forever uh that as long as that as long as the synthetics are in circulation you will have 100 billion sitting in a contract that's at risk forever uh so if the consensus mechanism ever breaks if anybody can ever figure out a clever exploit at the contract level any of these things it's gone so this wormhole saw this bunch of other people have seen this right this has happened many many many times before and so that always seemed like just not a great way to do this especially when you end up like daisy chaining bridges so like you

bridge ethereum solana and then you bridge like solana to near and then you bridge like near to finance smart chain and to avalanche and like all of a sudden you're like adopting like five different bridge parameterizations of like security right where like if any of them break everything breaks um and so that's just like broadly scary but so when we made stargate one of the things that we did was stargate works but you just have like two pools of native assets and you incentivize people to rebalance the pools you add to one subtract from the other and so you could have in that sort of construct you could have the same outflow of like 100 billion dollars with simple like 100 million dollar pools on each side so without ever exceeding 200 million dollars of overall risk assuming you can re incentivize rebalancing you can have

the same exact outflow with none of the standing risk and so like seeing people move in that direction i think is hugely important but what's more important is like the real question of wrapped assets is do you need it like do you actually need to have saul on ethereum on phantom on whatever and like my argument is that you absolutely do not like nobody wants to have solemn those chains what they want is to leverage the purchasing power the spending power of their salt right they want to collateralize solid solana and then like borrow against it on another chain they want to unlock like access to capital without losing their salt exposure and so like i think the entire premise of wrapped assets is really silly that you're going to take your eth to another chain you're going to take

your salt to another chain like you don't need to do that there's no reason we need salt pairs or salt staking on phantom like it just doesn't need to exist um and so that is like the single thing i think i'm most excited about in the near term the defy side of things is this cross-chain collateralization where you collateralize it rather than having wrapped assets everywhere rather than taking your assets that aren't being used and don't have a protocol on the other chain and just like having a million assets over there uh being able to collateralize and borrow against them in a way that actually makes sense and i think there are some reasonably sized hurdles that need to get solved for that to be able to done be done like very elegantly but i think it will be by far one of the biggest

unlocks in the space i think it will change both the overall like surface or construction of risk and all of this and also the way that people interact with it by a pretty big margin is there an instance where i think like you know for instance if you want to swap and you want to take advantage of yield in another chain but you have assets in ethereum you see a lot of activity on avalanche okay you want to swap quickly take advantage of that and maybe it's a quick r maybe it's just a farm for a week or whatever um is there a version where like that like the cost of interacting in the system to doing that like is is higher than the benefit of just making this like operating across

multiple chains because a lot of what we've seen now is this kind of mercenary capital like rotating very quickly but these yields are getting back in the day when i was like you know yield farming like maniac i still do but like back in the day early on like early d5 summer like you know five minutes like the first five minutes of the first day it was just it was it was very lucrative and you know it commensurate to the risk now it's sort of marginally just gonna come down like these opportunities go away really quickly there's more capital there's more people playing there might be a state of the world where like it's just not worth the cost the time to to to hop around and do all these operations

what do you say to that like do you agree that do you is that like just not a state of the world because historically these hops haven't have been happening through layer zero they've been happening through bridges and all these other yankee solutions yeah no i mean i i think probably what you're describing is a system that like you have enough latent capital on every ecosystem to like fulfill the demands of that ecosystem right and so like the question is like in terms of capital efficiency in order to have purely enough it means it's like sitting there mostly inefficient and when like these high demand periods have it's just like immediately serviceable without anything else right and so i think what is much more likely

is that you have these systems that have broadly elastic supply and it's it's easy or seamless to like move in and out of these ecosystems or take the broad constructs of like insert stable coin here and allow that to be anywhere rather than having these isolated like we're going to have a billion here and 10 billion here and x billion there and like it's just gonna be sitting there a billion of like inefficient capital that's like not being put to use or produced at like incredibly low yields uh and then magically like when this huge shock comes this demand shock and basically uh you need to have it there like it's just gonna have been sitting there ready it'll get armed out immediately uh like no i think i think you need some system for doing that broadly uh but i do think in in with

everything like and there's a huge interest of like the trad buy side of things like everybody wants to argue about these yields there's not a world where i'm not sure we're gonna get defy summer again where you know in in 20 minutes you're making your like six month of yield right um you know i i don't think basically like as these systems become easier and easier to again move this capital around it will just always get armed out faster um yeah kind of zooming out from from layer zero i just want to get your take on like what you're just your almost thesis for where you see like the next six to 12 months going in crypto it really feels like last year was there's so much [ __ ] going on it was like starting with d5 summer in 2020 and then

like we moved into like the people 69 million nft sale kicked off like a crazy just it's been like the last 18 months with nfts have been insane and then the metaverse narrative kind of came and went really quickly but gaming is super hot and so like i just want to almost ask you like what are you really excited about uh kind of two questions like what are you really excited about right now but also where do you see like the next six to 12 months going in crypto yeah so i think it's been a weird period where there been a lot of times i was excited about a lot of different things the last like 12 to 18 months outside of the problem that we've been working on like i in this maybe that i've been so like blinders on focused on what i'm doing uh

but there like hasn't been anything that got me really excited i know a lot of people i think are sharp we're excited about like celestia or evelyn sumnet's just like the modular blockchain construct which i think is interesting that's a world of you know maybe the world develops that way um i think the last thing i got reasonably excited about was was probably bancor v3 i still haven't made it through the 70 page paper now they've actually released a detail but the construct of bancor v3 especially around like the consideration of what we're doing was broadly that you can take this system where now everything is two-sided pairs so everything is x to eth whatever and you across all these chains you have all of these

two-sided pairs you basically have all this redundant capital use and bancor v3 is proposing a model where you have single-sided pools of all of these assets everywhere and like one pool of bnt that sits in the middle and you can effectively go between them and again i still have not spent enough time going through the pure construct but if they have created a system that prices those well and allows you to do that then you can imagine a system where now a dex that lives across a bunch of chains looks like single-sided asset pools everywhere and let's say like a pool of usdc that sits in the middle right like you have this single asset that's kind of the pair and pricing mechanism for all of them and now rather than having x usdc and why the usdz and ada ustc and

so on you can have single-sided pool of zos with a a broad pool of uscc that lives everywhere and you can go like x to ustc ustcy like very very very easily across all pairs across all chains um and so again that is broadly what they were presenting in the early material and i think that's still what they say they're presenting but i have not gone through in-depth paper to do it but that concept of like taking the dex construct and reinventing it in such a way that you're almost like 2x more capital efficient can deal with long tail and can have this kind of like flow between without needing to have like multiple fees of swaps like building something bottoms up from that especially across a bunch of different chains was one of the things i got like

most excited about of like i like this will be very interesting i want to see this happen it's funny you mentioned bancor because i have respect for the team like i think they generally have i think most people don't appreciate like deep deep cryptographers and technical people on their bench unfortunately it's sort of like the ugly duckling black horse of of crypto because they raised a big ico which other protocols did too like filecoin and dfinity and you know like people forget but somehow the market is selective and they get a lot of criticism i've talked to the team a lot i said look they're i think the way they frame certain things like in permanent law solution was like you know it didn't do them service but i do think it's one of the more under-appreciated teams out there uh at least in d5 um

what is your take in in just generally the you've been in the space for nine years as a builder as an investor like how do you think the spaces change and like you know where do you kind of like maybe just i'm trying to get some insight from you on what are the hardest things as a builder because the community can be very difficult at times like i sympathize with founders like it could be very adversarial not just from uh there's all these hackers out there that want to break 4 billion in tbl but it's also the community doesn't help at times um what's been your experience with these communities yeah i think broadly like we've all watched this space change where you know go back to 2013 and it

was only two categories it was pure ethos and speculators like that was it right it was like people were die hard like in the ethos of bitcoin and everything that sort of that had the potential to provide and then it was people were just like speculating this is like feather coin and like you know every random thing that was coming out was just people who were trading [ __ ] coins in the same way that they do now like speculators have not gone away in the space uh and slowly again you had this like renaissance in 2016 2017 that ethereum brought up this entire new like pure ethos of people of like okay this is not just bitcoin store value monetary this is like you can build really interesting things you have the ability to like do

something build systems that broadly change things more the way you saw a [ __ ] like a bunch of incredible things and then especially towards like the later half of that into like 2018 just so many terrible things so like you saw that entire cycle and then like things die and like all those people went away and you came up and like defy summer same thing like this is incredible financial rails and like maybe the space got ahead of itself and that like pricing everything as it was like pure had already achieved like mass adoption but like clearly the potential was there and i think everybody inside the space outside the space like use that and recognizes the potential that all of this has i think as a builder the broad experience was like even even on the vc side of things when

we raised the round uh you know people ask like what are we gonna use the money on where we gonna do all of it like our focus broadly is to build period we're not going to spend like you know we've raised a lot of money we're not going to just spend the money because it's there we loaned out all of our money at eight and a half percent we're like we have positive burn we spend less in salaries we spend less in expenses than we generate an income on the money that we have and our goal is just to build for a very long time it is we're not going to be a team who like blows all the money and does all this you know we spend zero dollars in marketing promotion like none of that so our goal is to build for like a very very long

view and build a system that scales and has absolute mass adoption like that is the only thing that we care about and so yes when you go through the community and um you know you launch something my promise to people is that we will build and we'll build the best possible thing that we build we'll make the most usable system and i will get as much integration adoption as we possibly can like that is my role right build the system that is most usable and get the most use on that system everything else is extraneous to that everything else is either markets and outside of my control or like that so when people are like you know on both sides of things oh i bought stargate at 25 cents and now it's four dollars and amazing amazing we're

like oh it was four dollars and now it's like two dollars something uh terrible you know like that kind of stuff there's so much noise there's so much like everybody you haven't spent time talking about this thing like you're focusing on these other things and not on this thing uh you know it's just like a constant 100 messages every day about this stuff and as a builder like i want to spend my time building and designing the best possible systems and getting adoption and like that is the thing that i'm focused on that's what i want to do so so you say you solve this this idea of interoperability you you can you build this connective tissue across chains what's next you're gonna have a war test you're gonna have probably a lot of tokens from different protocols you're gonna have all these integrations what

do you do after that i think for us that the pure focus now is like get adoption right that's very clear like do that thing uh and i think on that pathway like the main goal is get everybody else to build on top of us and then take things like if nobody else is going to build things that we think are huge unlocks within the system then like we will likely build some of those things so i'm sure we will build things that are purely value additive to like the broader ecosystem but like like the security features that you mentioned earlier yeah like that might be a standard of excel for other protocols absolutely um so just anything like that um and so after like post-broad adoption

i try not to think about it too much in the same way i try not like people always want to see this super long vision and i think one of the problems with that is like when you commit to something even if it's just in the back of your mind you like you have this sunk cost you start dedicating like mental capacity and space to like oh eventually we're going to do this eventually we're going to do this and like if it gets to a point where like maybe it's better to not do that you feel like you've spent all this time designing and thinking about and doing this thing like you want to go down that path anyways so for me like i try to really keep like the broad view is connect every single contract on every chain like period like that is the

ultimate goal that should be the guiding light no matter what but like from here to there is just like figure out what you think is the highest value thing in like some fixed time window and like focus on that thing um and so i don't allocate too much time to thinking about anything else around that other than just like make the system better get adoption for the system um for all the builders out there people that are perhaps on the fence trying to find a vector to kind of build on um and crypto what would be you've done both web 2 you've built there you've been successful there you've come to web 3 it may be different in some many ways i think the same but like what would be

your best advice for folks that want to get involved in the space and and come and build i think my best advice by far is just broadly like be interested in what you're doing right like again like we didn't approach this as like company we approached it as like we're going to build something cool that we think is interesting we're going to get better we're going to do that and then like you'll eventually find this problem that is like you can't you can't turn your head away from so i think one is just like actually enjoy building right like play with the technology build contracts deploy things uh build toy examples of all of this and then the other thing i think that we've done is like it's very very easy like we've hired almost exclusively outside of the space and i think that's

like not super common um and we're a little bit advantaged because us three founders were all like very very native and had built a bunch of stuff in this space and that we could catch everybody else else up to speed but i think people there's like this really insane delta right now where you can get like like your two options for a higher is like a kid who did a coding bootcamp and like published one solidity contract that got low to medium usage or like a distributed systems phd who you need to like teach solidity right like that those are literally your options right and for us we've always taken like try to get the best possible people we could working on the problem and then spend the extra time to get them up to speed

leverage your network whoever else to get like this is why we spent so much on audits is why we spend all of this we want to be working with people to say like here are the flows you need to be thinking about here are the things maybe you missed here's whatever right so i would way rather get better engineers get better people working on this and spend all the extra money that i would have spent on getting like insert solidity engineer x and spend it on auditors spending it on advice from like the best people who architect and build and like you look at other contracts look at the best protocols built like use those as sort of frames of references um and i think that's a mistake i see a lot of people is like they're gonna build a company and like they're just

pick any three so these are like the three solidity engineers i can get so like i got them like no find the best possible engineers you can like get them excited it's always a little language you can you know you can learn it yeah yeah absolutely what's the best way for people to get involved and then we'll get to like where they can learn about you guys i mean obviously we'll link in in the pod and everything but like if someone wants to get involved once a bill wants a tinkerer like what are some of the resources what are some of the opportunities out there for folks yeah so our goal is to make it so the docks and bottoms up experience is like by far the best in the space right like we want to be the stripes in that regard and our penance right now is what i tell

the team is that anybody who doesn't have that experience of just like sitting down and just like being able to build bottoms up without asking and like with having everything presented and handheld and fed in a way that is super digestible our penance is spending the time so if you are building like reach out to the team we will help you write contracts we'll spend time with you we will fix the docs when we find things that you didn't understand like until we've gotten to the point where that bottoms up process is like just unbelievably dead simple and straightforward like we have i don't know 500 telegram groups with people who are building on top of us who we will spend a time building in there with you um so like if you're interested in tinkering around jump in

the development channel on discord like play around there's other people who will talk to you all day on like things they found do this do that this was interesting look at this uh and we're more than happy to jump in and like assist however we can uh and that is exactly what i tell the team i say anytime somebody has a question that they cannot solve from our doc structure like that's our penance we spend the time we help them and then we go make it better that's awesome well brian thanks so much for coming on the show man i'm obviously super excited with your building uh and and i hope this has been helpful for for folks trying to you know get an understanding of what you're building and why it's so exciting for the space which i always like to tell people like

again abstracting away the complexity of of interacting with these chains like no one ultimately is gonna care and have a lot of uh you know affiliation or passion about these layer wands as we see today it's gonna be no like just i wanna use a certain like use case i think we're moving from this small tribalism of of groups and clusters that have big bags and certain chains to just a more consumer mainstream centric focus of around a particular use case and i think that's what gets really exciting that we have workable products there's real utility in the space it didn't exist five years ago three years ago now there is and now it's incumbent upon the community and builders in the space to just build really seamless layers of infrastructure that connect

all of it and stitch it all together and i think you guys are coming at the right time which is super important people ask my uh my five to ten year goal like where do i want layer zero to be and i always say like my goal like in an ideal state in five to ten years from now like nobody knows what their zero is in the same way that nobody thinks about tcp nobody thinks about ethernet like if you take a networking class and cs degree in university like you'll learn a little bit about it but otherwise like not a single person using a consumer product thinks about those technologies but it underlies everything that we do and i think that is the broad goal and i think many of the layer ones like have the potential to also like if that up if

that level of abstraction happens um then it's the same users users will not care like developers care whether using aws or all of these others they care about the tooling they're using they care about the thing that they're doing but end consumer doesn't ever think about it hey bro thanks so much man uh really appreciate you coming on the pod i know you're super busy and so uh you know we'll obviously link to your twitter and player xero and all the resources out there um and hopefully it's a word of encouragement for everyone out there listening to you know check out one of the more exciting protocols in space anytime guys thanks so much for having me all right do well brian [Music] you