Modular March EP 11: Permissionless Interoperability for the Modular Future

Transcript

welcome to modular March I'm handy this is Robbie and we are the rollup modular March is an educational experience about all things modul [Music] enjoy [Music] [Applause] [Music] here today with John jcole not the

rapper from hyperlink if you watch our recent interview we had a really short conversation about modular expansion and today we're gonna expand upon that so John welcome in um and would love to learn more from you today and hear about modu expansion yeah no Andy it's good to be back always fun to be on here with you boys whether it's you know when we're recording in person like we did in Denver or you know another more like Studio episode like we did before I'll uh I'll spare folks you know a broad introduction and like life story if people want that definitely they can check out the first episode we did uh we had a bit too much fun on that one um so I'm here from hyperlane in like just a little bit of context what

we're doing with hyperlane is we are building the world's first uh truly open framework for interoperability something that should let anyone connect any chain and do it on their terms kind of what I like in it too is um yes in 2024 there are ways for you to connect your chain with others but it involves generally like this offchain back room conversational BD type process you need to go and prove to one of these interoperability providers they kind of worthy of their time investment and despite your best efforts the moment you get outside of the IBC ecosystem like you can do things yourself you can

maintain you can't do them on your terms you can't do it uh well maintaining your sovereignty until hyperlane comes in and so what we're doing is we're taking what was an offchain and kind of opaque you know BD process and we are putting it on chain we're making it transparent we're letting anyone uh do it so to your first question like what does modular expansion really mean to us well you know the reason we started kind of using that phrase and throwing it around everywhere is because we've had what I consider to be like the big bang of the modular ecosystem uh somewhere in Q4 last year call it right around beginning of November that was the culmination of a

bunch of events Celestia's launch was the headliner it gave us the first alternative da layer and so really open the gate for it but it wasn't just that it was a few other things all coming together at the same time notably right the continued like maturation of the rollup Frameworks right so like the amazing work by people at arbitrum and optimism with the rollup Frameworks the great work by the rollup providers like Caldera and conduit and ALT layer and others all of these when put together made it really really really easy for the first time to create your own chain your your own rollup so much so that like it could actually be done in you know hours to a couple

days and soon will probably be minutes versus what was a multi-month process beforehand and so start seeing okay this big Bang's happening or we're getting an increasing number of rollups now this is moving towards the expansion phase you're starting to see these coming out on a regular Cadence but what we've believed in hyper what we've argued is that like it doesn't really make sense to talk about the modular sa without talking about interoperability you have all these Trends and all they're doing is like driving down the cost of creating the next rollup well that's great that means that more and more rollups are going to be created but how do they connect to each other how do they connect to existing

chains how do they transfer value like you think of right A lot of people I'm one of them like the anal of like blockchains As Cities as population centers well like how many people want to move to a new city that's in the middle of the desert and has no airport no roads you can't connect you know like there are some people who would want that who completely want to live like Off the Grid generally speaking you want to have Commerce and trade routes and you want to have a way to go between that City and the established one that's how cities can grow much more much more quickly and so hyperlane by this virtue of it being a completely open framework that anyone can use to connect any chain

now serves this role of being the connective tissue and the thing that really accelerates the modular expansion and so that's um kind of how we view it I'm happy to get into like much more detail about what that means in practice how we help uh bring this about how we work with different teams and you know anything you or the audience might want to know for sure so when it comes to kind of connecting uh these execution environments these rollups together is there any process that if I'm a new rollup that is launching is there any process that I have to go through in order to be deemed um like uh ready or appropriate to connect to hyperline such that other connections won't be affected

if I was a uh malicious rollup or if I went down great great question um the like most honest clearest answer there is not no because hyperlane is a totally open framework anyone can use it to bring it to any chain and now that chain is um kind of eligible think of it as now having the correct Parts the right so you know uh plugs and sockets to connect with any other chain that has hyperlane but does that mean that like hey if I put hyperlane on my chain Am I by default connect it to Every Chain in the world that has hyperlane no it does not so in hyperlane like an integration

entails three moving Parts uh and let's cover them like at a really high level one hand we have the mailbox think of this as like the base contract that people interact with this is the things that sends and receives messages between chains um it's completely on chain and so far as like the different p uh parts of the system our second part is a security module and hyperlane instead of saying like Hey we're the smartest people in the world we know how to secure this thing we figured the crypto industry is full to the brim right it's teaming with innovators on the security front so much so that like

the state-of-the-art of this year is going to be junk by next year right uh for myself you know I've been around since 17 and like you could really see how every year you know the the state-ofthe-art kind of obsoletes everything that's come before it and so it was imperative to design a system that really could absorb anything any type of security mode the system can adapt to so a hyperlane security module really what it is it's a basic wrapper on anything that provides either a state at station think like a validator system a staking base system um or a state proof think like you know some light line verific some ZK

magic anything of that sort so we need at least one security module to be operating on the Chain if we're going to have an integration so that was the first two parts mailbox second part security module third part uh is the relayer it's basically like an offchain bot it looks at the different chains that you want to connect so let's say like your chain and Robbie's chain and it just needs to look at the mailbox it sees Andy is trying to send something from his chain to Robbie's I see Andy's a nice guy he's paying this fee cool I then look at the security module that is uh operating on Andy's chain and I see that it's signed off it

provided these signatures I take those signatures to the mailbox on Robbie's chain and now mailbox processes that message checks if the signatures are valid and So within like if you have these three parts operating that means you have a hyper L connection established but in practice what happens is with those three things there any developer can now use these Pathways but when they do that what they're saying is like let's say someone comes to to your chain Andy they now can connect with any other chain that has hyperlane but they need to Define and they need to say hey I want to accept something from ethereum I see that there's these three or four

different security modules running on ethereum I like module number B the best it's my favorite one it seems to me the most secure maybe that's the one that runs like with some ZK magic and that is the module that I'll accept for my applications and so in that sense it's very much like an optin system right so no one on Andy's chain yet received something from hyperlane just because we put it on there uh no one can deny us from receiving something but once it's there now as a developer I can choose I can say hey I want to receive messages on Andy's chain I want those messages to come from ethereum and I want them to

come through like that module and so in that sense like someone would basically have to um create kind of create like a malicious module and then fool people into choosing it and so that of course can happen right like bad people do you know there scams everywhere there are bad people doing bad things um but that's the I guess the set of trade-offs you get with a totally permissionless system so we built a system that's very permissionless we create it in with this very much like an opin type of design but still still people can opt in to something that is uh fraudulent like

there was one time in my uh you know early Beginnings in crypto I opted in with my money into some wonderful coins that I thought were great uh like deep brain chain great project from 2017 and I may have opted in something that wasn't very real uh but you know I I certainly thought it was very real I was totally into deep brain chain I remember that one was a great one yeah I think sure it's still going I'm sure they're still working hard that's the beauty of blockchains people don't understand is that they just run in perpetuity as long as some some entity or entities are validating

the network or mining it so I'm going to pick and a theyve been building AI ever since man G to pick and PR a bit about kind of like this wrapping process so basically what you're explaining is that you're almost you're almost uh like an API rapper for uh a lot of these projects do you feel that like there's some sort of um uh problematic scenarios which can come from kind of the that wrapping process of these of these different projects totally yeah now um I think you know right like from our perspective We Believe very much in like transparency and and uh in openness maybe it's like the direct nature of like the Israeli

and me but it's it's much easier to just like start off and talk about all the things that could go wrong right and like just being very upfront about so in this world anyone can create can create a module right and and we hope that the people who create a module do it on the up and up and that what they're doing is like they're saying hey either I created a certain security innovation or I have observed an open- source security innovation and I want to rrap it and so um based on that we hope that everyone will do the right thing and we'll just actually wrap through Innovations as security modules but

someone else could say hey look at me I follow the instructions I have created a module that you know I call I'll call it let's say the um wonderful ZK module and so like they could totally like wrap something malicious right where they say that it's one thing but in practice it is absolutely not that thing they could advertise for it they could do everything in their power to make it seem legitimate maybe even operate it legitimately for a long while and kind of you know create a sort of like long con and then one day after they've had enough uh you know hardworking honest developers kind

of using their module they could rug uh in the same way that like you know a project can like a defy project can say you know uh run legitimately for a really long time and then just like rug all of its depositors or something like that and so it is totally possible and like the things that we can do to combat that are more again keeping everything open source like never never ever allowing uh for a module to like receive some type of stamp of approval unless like all the contracts are verified unless everything is open source unless everything is like totally visible um I would say actually

like I'm less concerned at this point with being malicious then I am concerned with just honest to God good mistakes you know like people who are well-intentioned and then still things go wrong right like if you think about most of the security incidents in crypto especially in our sector almost all of them are actually like exploits that are born out of a CO you know a mistake in the code and so those are much harder to to prevent right like if someone's doing something nefarious like you take an eye to it you might be able to spot it and it would take a really sophisticated like long con to to fool you know talented developers that code

that isn't malicious sorry that code that is malicious isn't what's much harder to catch is like just a tiny tiny mistake somewhere that in the right conditions can be used to like upend the entire thing and that's always like the danger of again a totally open and permissionless system it's why like actually if you think of the world of like Computing in general you know uh on PCS everything was like totally open you could install whatever you wanted but there was you know like I guess I'm a little you know I'm old now but uh all my friends I was like The Tech Guy or you know like the tech nerd

and people would want me to come install stuff for them or like when they were downloading they would ask me my buddy like where should we download from Because the Internet was like a very you know dangerous place you didn't want to get a virus on your machine uh then with the Advent of smartphones and the App Store you finally got like a much more curated version and so it was sort of open like anyone could create something and could petition to be on the store and then could go through a process and yes they could get revoked at any moment in time sometimes without any notice about why but it actually like I think Advanced Computing because it opened it up to a much like less sophisticated crowd um and right like people didn't

have to worry like you rarely worry that something you download from the App Store will be malicious and so that had to be like a curation experience from like apple a massive company that even at the time when it wasn't you know one of the 20 largest companies in the world and wasn't one of the larg just two like it is today they still had the resources to enable that but with a crypto system how can we use like the incentives uh that you know crypto crypto systems afford US to create a much more open version of this curation such that like maybe you have incentives towards like call them like different little Watchdogs which is like

trying to decide which are the clean modules like how do we you know keep an eye on them and expose and Elevate the good and clean ones and completely distance ourselves you know meaning as a community from the bad ones either because they're you know either they're bad because they're genuinely malicious or they're bad because like there's just an error there that no one's caught like how can you run a sort of like immuni or like cod Arina process on these different modules is there a was just real quick I was trying to to get into that because you guys are pushing like permissionless very hard um which is great and I think that's very important for the space um but if you if you kind of are missing some of the

security components you have to either like isolate the risk somehow of of of these uh different chains as you kind of said that you've done or basically what you have to stop is you have to stop somebody from creating a chain integrating the Hyperion SDK and just like basically mincing a bunch of assets um you know from just a random chain um yeah because I mean there's no yeah now the good thing that that actually like isn't a huge concern because again like people have to kind of opt in to receive a connection from that chain and accept those like and so that that part like in and of itself is not very concerning the more concerning one is like the two I mentioned before it's either like a

malicious you know person creating a module that looks you know genuine and then like letting you use it and then one day just like pulling it or a totally wellend mentioned good you know good actor that just misses something right like sucks but that's probably going to happen uh at some point right like it's happened to some of the best teams in crypto and like uh you just have to have like security practices uh at all fronts and like no team can get you can never like um have like hubis on your team such that like you know maybe there's someone who has an elevated status in a team it's like oh well we're not going to review their stuff because like they're

super they're so good like they're a security expert they would never make a mistake like everybody makes a mistake so they are like certain best practices you can do in developing the software to mitigate that and then I think as a you know as a secondary and perhaps even more important measure like how do you tap in to the structure of these open networks to the advantage of everyone who uses them right like one way is to let anyone create the modules but another is like let anyone audit them let anyone like kind of Express an opinion about which ones should rise to the top and which ones should kind of flounder so so you you mentioned how it's not so much about the chain uh because people opt into which chains

they want to connect to it's more about the security modules and right now it's permissionless to create these security modules are you doing any and you mentioned that like anyone can audit them which is kind of like the validation mechanism to check double check if there's any vulnerabilities with any of those modules is there an incentive mechanism or generally how do you how do you think about the potential vulnerability of a either malicious or buggy security module like what is the current practice to mitigate that now and if there is any practice I'm curious if there's an incentive mechanism that you could use to

incentivize secure modules so there are two processes right now which are uh the first which I mentioned is basically like internally multiple eyes on it like anything that is going to touch funds anything that's going to like serve as the substrate for different modules goes through multiple reviews and multiple reviewers um and that includes yes because um right like before something is kind of merged at least like the core team will have multiple I on it now again we can't stop you from like doing something in your own repo but like if it's going to get

merged into like the core repo right by now it's not just like our uh core development team that runs that there's a bunch of different contributors um to that repo but still like try to get eyes from um multiple sources and then of course like uh audits on some of the more prom ones and the second thing is kind of you mentioned incentives like having open bounties um through systems like imuni but I don't think it can end there I think there has to be uh something more so now like us in conjunction with other teams are thinking through like which systems can you put in place because

this is only going to get bigger right and like we knew that hyperlane as a mission is way too big for one team to execute it's why we've taken this open approach it's why we've encouraged outside contributions that eventually led to like the mitosis team building the km wasm version the eclipse team starting off with the salana version the movement lab team the movement Labs team building both um uh Aptos move and S move versions of hyperlane um and again now other people building like their own modules but how do you extend that to not just providing the security but also like the additional eyeballs like who is going to be kind of like what I

mentioned before with those uh this concept of like the Watch Dogs yep so I'd say we're still like still a lot of work to do um but we are kind of you know in constant elaboration with other people in the hyperlane ecosystem to like how do you scale this even further because these modules again like are to the benefit of everyone who uses hyperline like once one is out anyone can use it wherever it's operating and so we all want to have more of them and we all want to have more effective ones and so everyone who use like you're a chain that's using hyperlane like it's in your best interest for there to be like cheaper faster better like ZK modules and so

shouldn't you spend if you have the capability to audit those or like help in the building of should you spend some time on it the answer is obviously yes uh but how can you sweeten that Arrangement thinking through I would maybe push back on like if I was like a rational hacker or a rational attacker which is like a term that someone used on a space just a little while ago um if I'm a rational attacker and I see that I can get I can get X from exploiting this and I would get y from an immuni bug Bounty and X is bigger than y then I would choose to attack the protocol

rather than contribute to securing it so I think it first for sure like oh sorry I didn't mean to cat you up well just that from the incentives perspective this is like the cost of corruption like this would mean that if there is a higher cost to corrupt it than to protect it then we would expect an attacker to to do whichever one's in their economical best interest you to you would for sure now what I'll say is the best part and this the first time I'm like pretty happy not for the first time I've been happy about like the presence of a justice system most of my life that's a pretty you know Western

Civilization is pretty sick I kind of I think it's awesome um I love Living in America I love having like a pretty well functioning despite all the people who have complain about our Justice systems like generally is like well functioning with with some exceptions there's legal in that incentive calcul correct yeah so like the cost of corruption folks we will talk about that you know depending on like what let's say in like a proof of stakes there are things that you can do that actually look like corruption or clear like forms of maleant that don't fall under like they're not actual crimes per the Justice luckily you know it is stealing money and um the justice

system has been pretty clear and I think that's why you've seen pretty much if you look at like the last 18 to 24 months of hacks um they are all from people who are completely outside the system meaning like folks who that system does not recognize in any way right like the let's say Lazarus groups that's a criminal Enterprise that is completely outside the bounds of the system so of course like whoever they can attack they do but like the you know the standard hackers who like maybe in 2018 19 2020 even would have like taken the Money and Run now they realize that like that's very very difficult to do and so that's

why you're seeing all these negotiations you're seeing this like hey I have your protocol hostage I demand you know uh you mentioned right like I can get X or Y I demand y to be like some percentage of X like say five% 10% um in that way converting them into like if you want to call them white hats because they are kind of still doing something kind of nasty but um yeah converting them closer to the path of the light with uh with dollars and and so you have to still be worried about like uh those extra judicial actors right because like they're completely

outside the system they will always go for X because there is no point for them with Y uh they just have a complete different calcul the thing with them they were never going to like support your security and so they're just like you know there are bad guys in the world and I'm not like here to you know decide on their morals but like they do things that we would consider to be bad things and you'd have a hard time changing them I think with the emergence of um the justice system into our space right like whether we want it or not that has basically helped redefine the bounds properly such that if you don't want to deal with that like now you're much more likely to think

about y than you were about X almost irrespective of the Delta because like the calculation is now it's it's not just oh I can you know I can get y or I can get x x is much larger I'm G to get X so I can get X and then I have a cost associated with it which might look like you know a certain uh prison somewhere in United States like you're not a place you want to go to yeah or ending up in like a non-extradition country or something but who knows who knows where you're GNA end up somewhere in like the buling or something yeah so it's basically what can you like what can you not change like we're not GNA be able to change the way that people like Lazarus or you know

a focus of their capabilities and motivations are and then how can we work with the ones that you can change right someone who maybe like two years ago would have done something nefarious but today is like much more incentivized to just like notify you of the ISU give them a big Bounty because those people are actually really useful right like immuni has been useful for hyperlink into you know thousands of other projects as well yeah I mean I think you're you're either you're even furthering um this idea behind like like security for um interoperability and not so much just like with the with the legal ramifications but like the incentive model but even still like I'm going to press some even further like I think

this idea of like unified API is not necessarily as strong as like unified security because security kind of forces liquidity fragmentation so you know let's say you know let's throw it back to like Harmony Harmony got hacked and even before they they were hacked the bridge was sketchy people were kind of sketched out about it um and and so you know the WRA tokens there were a little bit lower like usdt was 0.98 or or a little bit lower uh the yields were higher right because you have to incentivize people to come over um and so then you kind of had these like pockets of liquidity across different chains based almost on like the pricing of the wrap tokens as well as the yields

based on like the the the security um so I'm not sure that like this like unified API of all chains is is is as good of a model as like a unified security model for sure like the I think you know you can make make like good arguments on either side the if you have something like unified security say like shared Security in one pool across everywhere it does mean that a single like contamination right contaminates the whole pot and so if you think about like what the modular movement represents we started this off by talking about like what modular expansion really means if we were going to deal with say

like a well-known wellestablished number of chains call it like couple dozen something like that then you could you know you could Envision some like standardization emerging and like we could all be civilized within it we could police that really well but the modular movement is creating basically like a complete open border policy anyone you have a chain and you have a chain everybody gets to have a chain and so in that one right like the concern that you first raised is like the correct one in that shared security like either I create like a very very difficult call it like immigration standard which is oh if you want to join this pool like you got to be this tall you got to have like this good grades

you got to have like this track record Etc which is of course going to be like a very limiting factor uh for the modular ecosystems growth but at the same time like is kind of necessary because you don't want just anyone to be able to come in benefit from this pool and then also contaminate it and so the the biggest you know reason for us to opt for this model is well you want to give people more sovereignty then like they can't just be immediately opted into shamer pool and you have to Silo the risk such that again like you know One Bad Apple because there's G there's going to be more than one bad apple we already know that right like not even by intention just by virtue of like we

talked about you again more security incidents have happened because of well-intentioned people making mistakes than there have been because of someone like maliciously you know creating something to rug people like the ruggers most often are like hackers that are exploiting well-intentioned but mistakenly written code um and so I think that's like that's why for this ecosystem in particular I think this model it's true it has its faults but we just have to build around them and kind of like make do with them because the alternative of just a completely shared model it's too risky and then everyone is even yeah like even the best

actors would be in that model because they're all sharing the same like basically you know you don't want to Poison the Well yeah so you're permissionless but because you're permissionless the trade-off is you have to um Silo this risk and or basically do some sort of like permissioned deployment of a sense where you guys have a team of reviewers who review these things but then also in each individual component cannot affect the rest um yeah and basically like people have to opt into communicating with you right like you know in that sense I could get you know if I wanted to accept assets from say like if you wanted to accept assets from my chain and say like my chain becomes contaminated then like

only once you've opted in can you like you know get get this sickness right here can get this contamination U but the fact that like I have contamination on my side until you opt into that like you're in the clear um and so right like no free lunch as they like to say call that the E Denver cold don't want [Laughter] that the modular day after party cold H people didn't opt into that one you know that was that was a share we all shared in the same security of being in the same space and you know a couple of germs walk in and let before you know it everyone leaves uh with five days of decommission I had another analogy but I

think that one was even better I wasn't you know Andy brought it up I wasn't even thinking about that well I think I'm all out of uh questions to grill you with John i' I've I've checked all my lists off Rob do you have anything love it my my last question was gonna be an analogy to uh cross margin lending markets and isolated lending markets if that's a fair analogy but well and and yeah that feel free to answer that question but I think the eth Denver shared security model is even even more accurate of an analogy so on the on the cross margin one like it it is similar in the sense to where like you

um so if basically like you chose to if the asset you chose to accept as like your cross margin collateral if that becomes like shitty or unavailable for whatever reason then the entire system is now while it's working and while it's great everything is is you know everything is wonderful because we can Galvanize around this like uh singular you know margin asset and that's very convenient but the moment that that falls off and so like that's how you could have you know that risk not being siloed can affect the entire system and that actually like is why you know when different venues like which extend the

margin to their clients like you know I used to work in Morgan Stanley like our Prime brokerage one of its key things was trying to have like a central risk book to understand like what are our risk you know like we are we are extending margin to all these clients and like we have to understand what does our risk look like at any point and when as soon as you start spotting contamination like they basically do the it's kind of like equivalent to amputation it's like that there's something wrong with that client cut them off um makes sense and so in crypto that's like it's very difficult to design a permission system and do that at the same time because like you lack the ability to cut things off in a coordinated sense uh and so it's

actually like no it's a I would agree I would say it's a pretty good analogy got it yeah the idea of a contagion I think makes a lot of sense too all comes from disease models so you know that's why the Denver one made sense yep yeah yeah I think relatively healthy after Denver I don't know about you guys maybe I me too I gotta say the immune system you know you go to enough Denver's uh you know you're just build different by you learn you learn how to operate it's like when you're interacting cross chain on hyper You're Gonna Learn which modules to choose that's right yep that's right John I think I got one one more which is that um uh some of these some of these contagion can start to start to arrive

when you're um when you're communicating these messages and if you do have a chain or security module that gets compromised um theoretically and I realize it's still so early ZK is supposed to solve that so that there is no uh contagion that can happen when you're sending something with a proof is there a world where hyperlane adopts ZK technology and goes the share route like uh yes but basically like the way that that would happen is so hyper like already has uh so just last week one of the uh a module that kind of wraps the

succinct Pro kind of reached its code completion phase um and previously there was one from electron Labs um so in that sense like ZK is available through the hyperin system where the limiting factor is well where is that module running and so again you know like yes it's running on ethereum so like you can use outbound for eum but is someone running it on like you know Andy's rollup not yet and so like once some ZK technology becomes completely ubiquitous and is so easy and cheap to run that it can be run everywhere you can definitely see that becoming like shared within the scope of that module and people could have even

like silos of of that if they wanted to but it becomes far less like imperative to do that and the nice thing is like right that's not happening tomorrow but it could very well happen in the next five years and so with hyperline we wanted to design a system that people can build on without being concerned for like well in a year's time two years time three years time as the state-of-the-art advances do I have to have do I have to rip everything out and start from scratch or can I just keep everything I have use the same interfaces and then hey I was using this module over here and now I can use that module over there and basically like that that uh change process looking as

simple as like updating a single contract to like change it to different address or you know redeploying uh like a new version but either way like keeping everything else the same uh because we definitely like you know we are big Believers in this technology uh I've spent a lot of time on the ZK front both like seeing the hardware that accelerates uh as well as like the latest on the software side it is coming like there it is sort of like inevitable it's but it's the same way that like you know 1995 I remember like we had a 64 megabyte hard drive trying to install like the first command in

conquer was like what it's 40 megabytes this is bananas it's going to take up but 3 years later like the storage space expanded by an exponential relationship and now like you could go ahead and you could buy like a terabyte um you know like SSD drive for like basically nothing so that is all to say that I think by the end of the decade ZK is going to be much more ubiquitous and so we are trying to build a system so that it can adapt to that um in with like minimal disruption in practice does that mean there's a modular consolidation to a single security mod there might be it's like it's through time you know how

like um a lot of people will say that like all of Tech has been like the bundling and unbundling of different services and so like right now we're in this great unbundling where like things are you know separating and now we need to build a connective tissue to do that but the next phase of growth might be a consolidation and then a further unbundling and a further consol validation um I think actually if you study you know the history of you do actually see like a lot of these bundling and unbundling or like expansion and consolidation Cycles that's it I'm out yeah this was great guys this is a lot of fun anytime I'll come on anytime you guys are the best