The Modular Appchain Thesis with LayerLabs

Transcript

welcome back to the rollup High Roller Community as always nothing on the rollup is to be ConEd as Financial advice we are just an Educators in the defi space toss us a quick like give us a share a repost send it to a friend who may want to watch this and finally give us a sub or a follow it means the world to help support credibly neutral educational content in def5 we're here to educate Empower and enrich you and let's jump in app chains why app chains what is an app chain Ras rollup as a service do we even need a th rups many questions to be answered um today we have Jackson co-founder of layer Labs Asian oxv other

co-founder of layer Labs um yeah I would just love to hear from you guys just briefly as we jump in just like what you guys are building and the problem that you're solving and then we can dive into some more of the theoretical conversation great yeah thanks Andy um so uh well ler Labs is really a holistic provider for um you know Sounders and uh projects who wants to build an app chain and go towards an app chain future um and we help connect them to um all the partners um you know for whether it's like cross chain messaging purposes um they also want to you know get the best oracles to to have start on their app

chain um and also at any other grants they can get from you know whether it's op stack arbitrum polygon cdk um that's where we position ourselves and come in and a lot of that comes from I guess um my experience um having been with synthetics I you know we were the first team to build on um optimism so the layer 2 roll up and then you know this kind of vision that we want to push forward to scale eum is what L Lads is kind of working on um yeah um a Believer then in the in the achain thesis like look basically Cosmos

started with this horizontal scaling right all these different there's like 80 chains now athum decided to like have one sement layer where ethereum uh basically uh ensures the security of all the erc20 is whereas cosos was more of like mesh security where um you know each app chain is is secured by its own validator set based on the tener kind of stack and now it seems like these two ideas are converging where K is trying to figure out how they can bring all these together in a more seamless fashion better ux and have a a better like mesh security design and them is trying to figure out how they can scale all these different applications with app chain so yeah me I'm just curious what you guys thoughts are on like on

this on this kind of convergence here of these two ecosystems and like how we got here yeah like um yeah I mean like you're you're seeing a lot of app chains start to you like deploy like on celesia and and all these other things so like for example the most recent one is like Lyra uh Manta network uh there's like mode Network coming online soon as well there's just lots of different applications um that are just deploying in order to cater to their to their own use cases there's custom use cases so like Lyra is focusing on options mode is like doing like L2 that's like kind of D5 focused um so you're just seeing lots

of like different app chains that are looking to launch as well as like the synthetics app chain um which me and Jackson are working on the proposal for so it's just interesting to see this Narrative of like app chains and not just app chains but like app chains and modularity as well um like modular Stacks in order to improve the the functionality of like the consensus the execution and like the data availability layer we double go ahead Jack well I was going to just say you know like like we we talk about Cosmos as well you how they've kind of like been shown that AB chain one of the pioneer that would say the

cosmos ecosystem like we we shouldn't forget that parach chain and and poked dot was also one of the first ones who who showed hor horizontally scaling was probably one of the ways to go but I think evm having e as this kind of security settlement layer um I'm I'm a beat believer in aium and and the evm stack so I think that's why roll up and ZK evm is the way to go um yeah Robie was the question yeah so I I'd love to dive deeper into what it means for a project to be an app chain

because there's a lot of like terminology that gets thrown around and a lot of times I think we refer to some projects either you know maybe they're maybe they're an L2 maybe they're an app chain maybe they're both so I'd love to hear from you guys about like what what makes an app chain an app chain like what are the what are there what are the defining characteristics that take a project that you know is maybe like a modular oriented project and in this world of modularity like a lot of these projects are kind of like conglomerate of like modules so what about that configuration specifically makes a project an app

chain right um I think this question is quite interesting that I think we see app chains um from a technical perspective there's a benefit of having your own block space um higher TPS um transaction uh finality um you know ensuring that you're not having to share uh block space um with a lot of other protocols which you know beyond your uh protocols control and this is more applicable to your um your amm your dexes um or per trading dexes that is very popular right now um because you actually need to ensure that trades uh

especially during High volatility you want trades and liquidations to be done in an orderly manner I think that's where app chains have really kind of shine like at the moment you got dydx on a V4 um and then uh the the beauty of something like app chain of on evm on on op stack you could actually invite other um participants to deploy on yours um on your app chain to actually have um it's kind of like you don't lose that composability you can still kind of have shared loock space but you probably don't want everyone else on it that's not relevant like like what you I guess the the the point you become a

generalized chain is when you start having moreing like nft games you all building on the same chain yeah you what's interesting though Jackson is um like for example so what we're seeing is we're seeing projects choose to go the app chain route and then slowly go and try to build out more apps on their app chain and then kind of revert back to the general purpose chain route it's really interesting like Avo has launched an OP um app chain with Celestia for da uh for their perose and options and now they're also trying to build out other D5 Primitives within their own app chain so it's like it's almost like about there like this desire

for the customizability and um profitability of the sequencer changing your da layer and um also having control over your ecosystem it seems like more than anything yeah I mean the the sequence of profits are a big business case for um app chains and protocols so um I think youting that flywheel um Andy um did you share it on your your Twitter this week where it's kind of like pretty much everyone starts off as an app chain then opens up become generaliz layer um yeah it's it's it's it's what will happen uh but you have you know kind of like give or take um you you

want to still make sure you're not you only want projects that benefit each other on on it because otherwise you lose if you have so many people on the Chain again and and games and nsts and all pretty much any protocol I think that that what happens is you then go back to the same step one like you're now have congestion on the on on the on the sequence side you you have like gas price spiking really high um I think yeah that's a fine balance yeah I think some of the the nonm capabilities can solve this problem as well I was listening to a recent podcast from Empire and they're saying like you know without paralyzation in

local fee markets within um within a a a a virtual machine there's just no way that any evm rollup regardless of the da is going to be able to scale something like these high throughput blockchains like say aptose salana swe Etc um you know so I'm particularly excited in like seeing app chains bu built off like the moood VM or svm or other VMS uh and kind of moving away from evm um because I think that in the immediate term these high throughput blockchains will uh will um dominate adoption compared to even rollups because like what we saw with friendtech was like effectively friendtech was an opch on base like sure

there was like who other apps that were getting some traction but what we saw was immediately the the the the fees on frch were were were were were quite High um and so you know I I'm after listening to that podcast and really thinking about it deeply like it really doesn't like the evm is just I just don't know if evm app chains can even scale like something like a a non evm based app chain with all like a non evm based app chain with alternative da is like I think it's pretty damn close to something like a salana so be interesting to see how these play out and which rollup stack providers and Ras companies offer these you know uh wasm VMS uh M VM svm uh ctiy VM like uh risk five be very interesting to kind of see

how this plays out yeah exactly I think I think I I think someone the salon and have mentioned that they they technically could have salana app chains um like like a like a s salana but um it comes down to the interop interoperability because I I I know speaking with the op um Team they've they've got this um super chain um where if you're in the super chain stack you can actually have composability between each other so that's some of the interesting stuff they're working on and they have the different consideration each um Team um building an AB chain would have to consider um but yes scalability is definitely like move and

um like non evm well even evm side Andy like what do you think of like uh the the guys that are working on the you know CK EDM and and know the knowledge proof rollups though those would be quite scalable as well I don't know I'm curious what Rob say as well but I think there EX ZK just a proving time and the proving cost is still problematic it's just like nothing in evm is comparable I think right now to uh like uh these high through of blockchains obviously the other conversation is like oh they're like way more centralized um you know but I think ZK gets there eventually yeah um and and I think also with with the amount of um you know we we've seen

the numbers as well like um bu building app chains is also a very very um you know selling block space is very very profitable for um a lot of protocols to if they have the a number of transactions and the user base to to to support R PID for the sequence of the I think we're going to see everyone would want be wanting to build app chain in in the next six to 12 months yeah like we on some um on like synthetics for example and um like using Celestia da we were estimating like anywhere from 60 to 70 East on on profits um using using LP

stack uh and Celestia da and uh okay yeah that's that makes sense the I mean the the next kind of um and I'm just kind of picking and pring at the apch thesis to really try to understand like the bullishness um CU I'm I'm quite bullish on it as well but I just really like to understand um you know like the holes in the thesis which like the holes in the app chain and sequencer based profit thesis goes for a lot of these is like I mean shared sequencing decentralized sequencing But ultimately I don't think optimism or arbitrum is gonna go in that direction anytime soon one thing I'm starting to realize

is that it's possible uh to internalize a lot of the revenue from the those from the sequencers I think that's one of the main value like one of the one of the value propositions of launching your own app chain is going to be to internalize that revenue and kind of like run your own sequencer um and I think it is starting you know I I think with some of the tools that are coming out um it's possible to internalize that sequencer Revenue without launching your own app Shain and that it it's like okay well if the only reason you're launching your own app chain is to get the

sequence of Revenue um that's fine but like you know I think there's I I think there's got to be more to it because if you can internalize that without launching your own app chain then there's there's not a whole there's no like technical advantage to taking that leap if you can do if you can capture the revenue without taking that leap and I think what I'm starting to realize is that a lot of the value in launching an app Beyond recouping sequencer costs is going to be like the community benefit it's like it's like your own ecosystem um and I think there is value in having this like Island where if

you're on this application and you're on this app chain like there are no there are no other like Intruders there's no foreigners there's no like it's all about that one application and I think a lot of that is going to be to build a moat around the community and a lot of the advantages of launching an app chain are actually offchain there are a lot of like community-driven benefits to launching an app chain and having a silo Community we yeah Robbie definitely um agree with you there like it's um not just the only consideration is to internalize the revenue of block space um you know that there's been some

suggestions um quite interesting things that we could do even um during when we were working on the synthetics uh app chain kind of proposal the idea that came out was you know we could actually share uh rebate some of these um sequencer fees that it's generated by an app chain back to Traders um to the incentives to the the Traders but the the powerful thing is now the community you build around that narrative like if if Traders are going to go and trade on hyper liquid or trade on dyd but now if you trade on uh synthetics um app chain and you get a rebate of the sequence of

fees as the trader that that that that's something that you couldn't do um unless I I do know Robbie some people are looking at fee share with with developers I think that the EIP um think eight something that that people are talking about like Fe Fe share with the the the developers yeah there's also mod was doing that like sequency sequencer fee share yeah that's where we saw it from yeah but they're more general purpose but they are I think they're G to Pine I mean obviously blast is doing like this rebase native yield and then there's going to be like a no gas chain next and

there's going to all these different initiatives but MO doing sequencer fee sharing for devs referral fee sharing for if you refer users to the chain you earn a percentage of all their fees and sequencer feed shares I think for Grants and different things as well I mean that's what optimism does for for the Retro grants um Robbie you're saying something there well I think this is kind of like the like the idealistic path that we're on is to eventually redistribute all of the pro like those revenues that are generated by users but being paid to the block Builders and the sequencers and getting like all kind of like acing at the protocol or the chain level the Utopia that I think we're

heading towards is that all of that value ends up flowing to users right now yeah we're in like the dystopian phase where all of it kind of collects at this like generalized inefficient bureaucratic like chain level eventually yeah then then you have to do this whole even the Retro effective grants a very clumber and process at the moment you know we we we kind of finally see with you know the op and I think the giving back to users of a chain is is is a Utopia it'll be great something that we could really get behind yeah and I think Cosmos and its horizontal uh scaling model is probably

in the best position to capitalize on the redistribu bution of sequencer fees to the end users um the reason being is that they're already or the the cosmos ecosystem is already organized in such a configuration that you can see where all of these transactions and all these orders are coming from and so I think it's the it's the easiest uh model to redistribute to those chains because they're already broken into these pieces and so you don't really need to like hash out or uh dig too deep to figure out where the

water flow is coming from um Cosmos is oriented in a way that it's all kind of like uh already modular to kind of like reuse that word and as a result of that like that whole model getting blown out it makes sense to just kind of like keep that Revenue internalized in its own chain and that it makes it much much easier to redistribute that to the users monolithic chains are in a much tougher position to reallocate because all of the all of the orders all of the the transactions get get pulled in like a single men poool and that it's very chaotic right so no the transaction originates in the user's wallet it ends

up getting mixed up with all of the other users from all of the other applications in this one giant men pool to to read distribute that revenue from all of those transactions it means like un think about it like it's like a tangled up pair of headphones and you got to untangle like all of those transactions from all of those applications whereas the applications in like a cosmos model are just threaded like they're all like neatly untangled already in their own Lanes is that is that more bullish for for Cosmos dude it's Mo mostly just an observation I think it's like I think it's bullish

for Cosmos users because it's going to be easier to allocate sequencer revenues to those Cosmos users than the users of the monolithic chain um but it's not to say that like it's not possible to uh to distribute revenues to the end users of a monolithic chain I think it'll just be easier in Cosmos and probably as a result of it being easier happen sooner interesting I mean yeah it's interesting we would love to actually um um actually Asian here for quite close he he's he actually works with quite closely with the cosmos ecosystem as well um you know

I I personally am an advisor for Eclipse Finance to is a Launchpad on Cosmos ecosystem and um that's something that I think the in the EDM space we we could keep an eye out on and actually learn from um how think that you know how AB chains are done in in the cosmos ecosystem yeah it's just an interesting point actually um because on some app chains such as like thorchain and Maya and chain flip uh that are Cosmos SD based you can actually uh in their models you can split like all the fees between like nodes who are validating the network and also like the liquidity providers who are providing assets to

the network and as like there are for example more validators and LPS or there's more LPS than validators like the incentive can actually swing so let's say you know right now it's 50/50 because the the network is in equilibrium but let's say there's too many people bonding in like a validator we need to incentivize more LPS like most of the rewards will shift over to LPS to incentivize what people to provide liquidity so you can these things are actually already live on cosos like on those three chains I mentioned um but yeah it's it's the tradeoff I find that is that um bootstrapping that sort of like validator set is very Capital intensive but also um very hard from a like

decentralization standpoint especially when you're first starting them when there aren't that many validators it's easier to attack the network of course um but yeah that's like that's that's I guess some of the trade-offs for the cosmos stack is that like just generally it's more technically um harder to maintain and like bootstrap from from nothing yeah yeah and uh as the rollup Centric road map plays out on ethereum it tends to converge to this Cosmos model where things are like more modular there's more rollups and there's more of these ecosystems and it tends it tends to resemble the cosmos

ecosystem but not the cosmos like consensus mechanisms because all of these rollups end up sharing the security principles of ethereum and the validator network of ethereum whereas the cosmos settlement inherits the security practices of like all of these fragmented validator sets and Annie made this point in an earlier conversation I think earlier this week about how it'll become very very easy to inherit these security principles by launching like an AVS on igen layer and then those app chains will essentially automatically like inherit the very very high cost of corruption

and the very very like robust security model of ethereum interesting I kind of want to take you guys on a practical level of where you guys fit into this um for those who have you kind of listened through this um you know how are you guys look to position yourselves with layer labs and and help teams kind of what what is the process of working with you guys um you know and and how can people kind of reach out and find you um yeah great um Andy yeah so with with working out with L Labs um you could reach out to us um on Twitter um also through Telegram and also we really

want to work with Founders who are ready to start looking at building in an app chain um and we can actually explore U more than just the technical side um so we've got some of the best Partners you know with partnering with old layer um and also with Caldera um Wormhole P we also can uh then build out a holistic plan um for the specifics of the app chain so whether you're a per deck or you want to be a gamei project um similar to like yeah mutable or gamore we can Custom Design um pretty much what's the best for their needs so um and then also a kind of like a token

strategy so like how do you launch what's to go to market plan um and we work with like some of the best marketing um web free marketing agencies or or Dev teams to actually um help them you know bring bring that to do fruition you know to see it to actually go from not just concept not just proposal but will you know be able to help them actually uh be there while the chain goes live I think that's the difference um we we're not like your we're not like your big four tech consultants who will write you a proposal and he is a proposal walk away with a lot more handson yeah and I mean really it's kind of like the non- tangibles right A lot

of these Ras R service providers tend to bring on the technical side and really do a good job with deployments but um you know when it comes to everything else a lot of teams can kind of struggle with with with the with the ins and outs of of building a community you know grants and all these things and these can these can kind of make or break the entire operation so very very important um yeah I mean I any closing thoughts from you guys as we kind of come to a close and Habit to keep the conversation role and um but I mean if there's anything pressing that you guys would like to kind of touch or or make a clear point or I'm you know happy to to explore um yeah we we we we're actually

um looking at more opportunities as well to how to actually uh you know people who are like researchers um we want more people to join our community um especially uh to to share more information about uh you know what's the best da what's happening you know there there's stuff happening at IG layer at the moment Rey um so we we're looking for more researchers uh people so people to write articles um also like the roll up Andy what you're doing is great love love how you guys are also sharing the r rollup thesis um app chains so yeah there's also um any kind of development work that we're looking at at the moment like

dashboards um you know toolings that can really help people to build their own app chain or kind of make the jump um yeah so kind of like al2 beats I really love what they do there as well um you know how you can see everything all the volume and TV or out2 ecosystem um yeah I think I think that's another area that layer Labs will be uh looking at doing as well um just developing out the dashboards and touring yep all right guys well thank you so much for uh your time and for coming on and kind of talking about app chains and some and some Theses and yeah excited to kind of push this out there and see what

the community has to think I think this will hit on some on some people who are you know in in in the trenches thinking about this stuff Builders and um you know hope that we can make an impact and uh you know kind of help some help some early stage Builders really come to come to uh um make some better choices with regards to the community and and brought her offchain in some onchain things so yeah thank you guys and um look forward to to seeing the success with layer laabs and um you know the apch thesis in 2024 and onwards thanks for having us on thank you very much Andy Robby appreciate