Sandeep Nailwal: Polygon 2.0 - The New Value Layer of the Internet? Ep. 509

Transcript

welcome to the epicenter the service talks about the Technologies projects and people driving decentralization and the blockchain revolution I'm Sebastian and I'm here with my co-host Philly get Ernst today we're speaking with Sandeep nailball he is the co-founder of polygon and he was last on the show in 2020 almost three years ago back then the project was still called Matic and was sort of an idea that had not really been built yet obviously lots of time has passed since then and lots has happened and polygon is now one of the largest ecosystems in crypto and recently they announced polygon 2.0 a brand new vision for the future of a polygon which will get deep

into here on this podcast uh but before we do that Sandeep how are you well thanks for coming on and how are you doing yeah thanks thanks for having me and uh here and uh you know I'm doing very well uh very excited to uh I'm very excited for this chat well so are we um obviously like I said you know polygon has become such a huge uh part of the broader crypto ecosystem and certainly of the the crypto narratives take us take us through the last three years right when you had this idea uh which was you know called Matic back then which was sort of one of the very early ideas for a layer or two on

ethereum what's you know how has your life changed in the last three years so you know before uh going into the last three years itself like you know uh but the starting of uh polygon are starting off medic network was basically you know I and my other co-founder who funded also we were building apps the apps actually on our uh this thing like of course we had some protocol level uh understanding but we were building the apps and we realized that you know ethereum is not ready for scale and uh you know I also personally like I am you know sometimes I call myself like

web3 fanatic like you know sometimes I question myself that you know am I giving too much of uh or over indexing on how much the world needs this trustless decentralized world and all that but generally like I've been very you know kind of passionate about that you know this is the this is the world or this is how the uh the the the next phase of the evolution of humanity is going to uh happen right like you know we came from those Empire States where the King was the god right like King can do anything that that he wanted to do and then uh you know we had we came into these nation state systems where everything became an institution government began institution and people

were electing the governments but then you know those institutions also uh in the last 40 50 years with social media we started realizing that you know how much corruption is there in these institutions and time and again they have proven these institutions have proven to be prone to corruption and somebody who gets enough power they start uh you know misusing that power and eventually I feel that this is the third uh you know stage of evolution of human systems wherein uh you know these trustless applications would be there and then even the businesses will be built in a community owned you know as we say community-owned businesses and things

like that and and they will you know Empower provide more freedom to individual human beings uh in all the in more aspects of their lives basically and as somebody actually Harvard uh actually did a case study on polygon and I was there and somebody asked me what what exactly web3 reduces the cost of like because every big technology reduces the cost of something like you know cars reduces the cost of Transportation um internet reduces the cost of uh you know information and all that what does web 3 reduce the cost of and I said that web 3 reduces or blockchains reduce the cost of Freedom the cost of providing Freedom or cost of providing democracy into the system right which is we know that how costly it is to you know have them so that's where we started Matic

Network you know we we truly believed in this and we realized that the infrastructure is not ready for building those kind of applications and businesses so we went into that and at that point in time plasma was a solution which uh you know looked like okay what was the hottest solution in that in the space and we committed that okay we'll build a layer 2 using plasma but with an evm on the layout and in 2020 we launched the launch the chain at that time we launched a working plasma version but then most of the people did not use the plasma chin people started using the evm side of the chains even like pure evm part of the chain and then the chain actually even though the chain

had plasma built in layer to built into that on that but most of the people used only posit right and then it kind of you know was was the you know kind of a you know this confusion in the terminology whether it's a commit chain or it's a side chain or whatever it is but then the expl the usage kind of exploded and it became one of the biggest uh you know uh blockchains even now I think by daily active users and uh you know by the number of applications deployed it's probably the biggest blockchain but in the last but as I said that the vision was to provide this web3 a scalable infrastructure and that infrastructure can only come in if you have single zones of security right like you know

you don't have like right now as we have seen in the past like we have so many blockchains and we were just discussing before recording also that we have too much infrastructure not many apps right but those infrastructure when we say too much infrastructure that infrastructure is there but these are all die separate security zones and to connect them you have these Bridges and every other month we keep hearing that you know some of the other Bridge gets hacked and things like that so essentially what I'm trying to say here is that even though we have a lot of block space that block space doesn't have one single unified security Zone like each of the zones or each of the block space has a different security assumption and you know people need to use this third party tools and all that

to do that so in order to achieve that web scale for web 3 we believed uh you know once we launched the chain you know we also evaluated optimistic rollups and we realize that optimistic rollups are kind of the Maybe be the next stage but they are not the end stage because you know you are you have to put all the data back on ethereum and then you have to have a fraud proof it takes seven days to have those thought proofs fully granted as hard to build also those those for proofs like uh currently uh you know I don't think any layer 2 has a you know fully permissioned uh Rod proofs only I think arbitrary people have you know permission fraud proofs but most of the other optimistic develops don't even have any kind of

troops whatsoever so at that point itself we are decided in 2021 that ZK is the end game and we wanted to go big on ZK and then by that time like you know we in 2021 we merged or onboarded some of the top most ZK talent in the space a must one or two like Hermes polygon like the Hermes product project which was building a zika roll up they merged with polygon Network similarly the meal protocol must with polygon Network and today we have two three die separate teams who were building it and uh you know the benefit of these different different teams was that in the last four years people there's multiple projects who have been trying to build these uh zika roll ups but having those multiple teams they were able to

contribute to each other from different different angles and you know trying to uh or were able to tell the teams that where can be some gotchas that you will find three months down the line and the result of that was that in March of this year 2023 we launched our first like first full-blown zkevm which is audited fully mature source code and all that and we we launched it in March and uh you know that is actually the first full-blown uh layer to uh to exist with the with the validity proofs and uh you know since then we have done like a lot of leaps in the ZK technology that we are building uh some of our ZK technology like a plonky to uh pill this is being used by large-scale uh amount

of developers all the all across the space whenever somebody is building on ZK people are using this technology and you know like Jordy I think you guys know Jordy balina who's one of the co-founders at polygon he's built.com which is kind of the first you know uh first programming language you get into when you start to build ZK circuits and things like that so yeah a lot has happened and now today polygon is a ZK Powerhouse and uh as you as you said that one of the largest ecosystems in the space but the goal from here of polygon 2.0 is to is is the goal is saying the mission is same how do we get web 3 to the mainstream how do you how do we play this role uh to get in the next evolution of humanity I call it web 3.0 as Manatee 3.0 so how do we play a

bigger role in that and the goal is still the same that you know how to provide this infinitely scaling infrastructure for web 3 which also has uh you know same security zones so that the value can move into seamlessly from one place to another uh you know meaning that the entire block space should look like one single blockchain one single block space instead of like you know you you you kind of uh you know moving your value or bridging from one chain to another and things like that kind of getting the similar kind of qualities that the web 2 today has for information it's infinitely practically infinitely scalable but it is also uh you know seamless same same case with web3

infinitely scalable block space but seamless moment of value that is what is polygon 2.0 that's the whole Japanese cool so I think I understand the value proposition for polygon 2.0 um in a nutshell um how will it look or how will it be designed just so we can kind of Deep dive into the individual um bits later absolutely great question so it's very simple like you know so we believe that under the fundamental layer of this trustless uh you know whilst web3 is ethereum and that's where the most of the value will be created or more than created I would say most of the value will be secured right and so

that is the settlement layer where where all the value is being settled secured and and things like that but on top of that you will have hundreds and hundreds or maybe thousands or millions of chains which will connect back into etherea using some sort of a proving mechanism which we believe that ZK uh and most of the biggest researchers in the space believe that ZK is the end game for that so you know you prove all of the execution on all of these chains back on ethereum and then because every chain is proving the ZK uh their execution back on ethereum the value can move to and fro between these chains just by relying on those right so that's the simplest idea about it and between these chains

and now how it will look is that you know you have ethereum you have hundreds and hundreds of these chains all of them are proving back to ethereum and they can rely on each other and the value can seamlessly move between each other so all these chains connected to this common Bridge or ZK proving layer which currently we call it lxly bridge but we are moving it to an aggregator layer so it will it will be aggregated together and with with that aggregated layer all these chains connected to this aggregator layer will feel like one single value Network right instead of just like the way internet feels today like you are sitting in somewhere in Europe I am sitting in UAE we can create exchange share this information same way uh you know with polygon 2.0 We Believe

should be possible for the value infinite amount of scaling more blockchains more applications need more block space they can spin up and dedicated block space also not publicly shared block space they can spin up their own Chase but their value is still secured anybody can trust their value uh because it is being ZK proven on ethereum and then that value can move around cool so we'll deep dive into the interoperability part of this later let's kind of um look at the ZK part first right so basically there's two different chains that are in principle possible and that you guys also operate right or are going to operate there's kind of the zkevm which is kind of the full full-blown

roll up with oil costs associated with it um and then there is the so-called validium which which are transitioning um polygon POS into and maybe that's kind of back up for a second what is a validium so what's the distinction between a validium and a ZK roll up essentially when you are doing these layer 2 scaling what you are doing is you are having some computation some or somewhere off chain so and then you just prove back on ethereum so you don't have to do the execution or the computation on ethereum and then uh it is happening somewhere else but ethereum is still securing it and primarily to to prove the computation fully like you have

actually two things like let me take you with the optimistic rollers first in optimistic rollups you need to have both two things the two things are the proof of the execution and then the second is uh the data like what were the individual transaction data was right and with optimistic load up because it is by by Nature it's optimistic it's assume everything is correct so what you have to do is you have to take the whole data put it back data on the on ethereum and also put the state proofs and all that and then you assume that optimistically everything is correct but if something is wrong somebody from the community can come and you know uh do this thing called fraud proof right and

run something over that's why you have to take you have to you have a withdrawal delay of seven days from optimistic rollups because you need to give enough time for anybody in the public to come in uh you know they raise a contest or uh you know raise a fraud approves on on Theory up whereas with ZK with ZK what we are doing is and this is the power of the the Magic Magical Power of ZK is that you can have millions and millions of computations on some of chain layer with ZK you can have a very concise uh proof of that computation and just prove it back on ethereum it's called validity proof it's not called fraud proof it's called validity proof the moment are ethereum smart contract velocity smart contract accepts the

validity proof you can you know everybody can be rest assured that all the execution the the the the computation that has been done on that layer 2 has been done as per the rules of consensus right assuming immediately you are 100 sure so you don't in case of ZK roll ups you don't even need data on ethereum to prove everything right so you can keep the data off chain which is called validium so in case optimistic rollups or even zeker web and you want to keep the data also on ethereum and the proof also on ethereum it's a roll up and when you keep proof on ethereum and data somewhere off chain that is called a validium right and validium in case of ZK because whole computation is being proven on ethereum it is as secure

as roll up in terms of security only difference is like there is a one particular attack Vector that they say which is a very Corner case of an attack Vector where a particular sequencer or operator is running a validium and that validium uh you know stops or or kind of starts hiding the data it doesn't show the data to the users because users need data to exit the platform right so it's called Ransom attack so user the sequencer in case of optimistic rollup they can steal the user's fund but because of the fraud proof that is only protected using the throttle in case of ZK roll ups the the sequences cannot

steal the user but they can't touch it all they can do is if the data is not on chain they can hide the data stop showing the data and try to do this Ransom attack to the user where they say you'll give me this much money if you have one million dollars give me 200k then I give you 800k back or something like that so this is a but then there are multiple mechanisms these days where you have forced you know transactions and things like that and it can like you know people are building these Solutions where if the sequencer is not giving you your money you can sequence your transaction first on the chain and even if the ransom attack occurs like you know the the the sequencer has to process your transaction so there are multiple ways but there is still a very

small element of this small data availability so but which can be extremely minimized if you have a decentralized set of sequences it and with ZK that is possible right so we were even discussing like imagine nauseous change starts proving back on ethereum right and nauseous chain already has hundreds of like you know I think 45 000 or like you know some insane number roses chain has like nurses China has 140 000 validators so you know if these validators are running this chain and they are proving back on ethereum the data is also fairly decentralized that you don't need to rely on this one so that that validium is almost as secure as like not theoretically but practically as secure

as a full bone roller so that's the only the position may I kind of just back up and kind of try to explain the attack in slightly different ways so basically what you kind of need to kind of exit the Chain by forced inclusion is you need the exact state of the chain right and kind of if you want to go from um checkpointed image to check pointed image you kind of you need to know um which transactions have happened in since the last state so you can reconstruct the exact State and if if basically at you know one transaction from from that entire set is missing you can't reconstruct the state and you can kind of force an exit which is kind of

the attack vectors right so basically it's kind of it's It's I I agree that it's somewhat 10 years and it kind of also um requires um the collusion of two-thirds of um the validators which in your case would be 67. um so yeah so I I totally I totally understand that and also if you kind of look at the costs associated with being an angel the majority of the costs actually come from the data availability so basically just posting everything it's Square data at the moment or basically posting everything um you know in a in a data blob as soon as we have tank sharding um it is

um The Lion's Share of the cost it's like 99.9 or so of the cost only like point one percent of the cost or so is the actual proof of the state as you said basically what you can do is um you can prove that the state is correct malicious actors might still be able to kind of um freeze the chain but uh basically that's the best they can do they can't steal anything okay so I think now we kind of have um have established very clearly the the delineation between um a validium and the ZK roll up so there's this um there's this diagram that the Celeste team has put out and I think a lot of people have seen is like

it's this chart where you have on one access like ethereum-centric uh applications and celestia-centric applications and on the other axis you have the different layers of the blockchain stack so data availability can sense the settlement and execution and then there's like the monolithic chain you have Roll-Ups validiums I'm sure lots of people have seen this graph and it sort of it sort of shows the different ways that one can construct a blockchain with these different layers I just want to get a sense of uh where polygon sits in this mental model so for the ZK roll up um execution is happening uh on the polygon CK roll up but consensus settlement and data availability are happening on ethereum with validium the

data availability is on ethereum and then the consensus settlement and execution are part of the polygon stack is that correct in case of validium the proving settlement is on ethereum but then data availability in case of like you know validium especially let's say let's talk about polygon positn which is one of the examples right in case of polygon POS you have 100 validators and these Undead validators can buy you know can as well serve as data availability you know members of this chain also right so these validators are only proving on ethereum so settlement is on ethereum but the data is is on polygon pure right but then if you see other polygon uh you

know chains for example let's take an example of Z KVM so ZK VM both the data and prove are going to ethereum it's a full-blown roll-up right now the execution is single sequencer but that we want and we will be decentralizing this the execution of this Zig AVM chain so there will be multiple zkvm executors right so in this case consensus will remain of chain but the whole data and and the approved will remain on ethereal in case of polygon POS chain only settlement is on ethereum but the consensus and data availability is of shared similarly you can have some other kind of let's say you talked about Celestia a kind of chain which is which

has single sequencer which puts the proof on ethereum the settlement layer but puts the data on Celestia or any other data availability chain for that matter its own data availability layer or its this or even polygon ecosystem with that staking Hub and you know and we'll talk about that like in multiple roles in the ethereum polygon ecosystem in polygon ecosystem uh the validators will also be offer able to offer uh this role of data availability we call them tax like you know they can be ldax local data availability committees because if you are running let's say gaining app like you know your game is a small game you still want the value to be fully secured by Theory you don't want all of

your data you know being put onto ethereum L1 or like you know some other Global layer like even Celestia that will also become costly if it starts getting filled enough right so essentially you might need your own like five or ten validators which are providing very low cost data availability to you and when your scale is small you are happy with that once you start becoming let's say from 10 000 users to a million users to a 10 million users you might want to change your data availability assumptions and we want like just like on AWS you know when your startup is growing your Com or your product is growing you change the configuration of your servers and improve it as per the uh you know the configuration of the the users need

similarly we also want that polygon for the developers to have a full-blown stack where they can change these configurations as they go along so so yeah these are the different uh you know kind of uh configurations where we uh kind of want to play role is obviously is on the execution layer where the validators like you know we believe that a lot of like app chains for example immutable X which is one of the biggest gaming players they use all the Matic validators on their chains so they want their change to be magic validated but still the CK proven on material so that's a double kind of benefit they want to be validiums but decentralized validiums with ethereum as the final settlement layer uh you have uh you know

many other chains where they have their own set of validators but they just use polygon to settle back on ethereum like polygon ZK proofs so these proofs so for that let me introduce this concept of especially as a part of polygon 2.0 aggregator layer so the aggregator like in the in the current setting let's say you have 100 chains all of them are proving on ethereum some of them have Matic validators some of them have single sequences some of them have their own consensus mechanism own validators all of them are moving on material and everybody is proving let's say every half an hour so everybody has to pay ethereum gas fees for half an hour proof right which can be fairly costly 50 to 100 and then you know they are able to

prove only 30 minutes so any kind of interoperability we call it lxl by Bridge needs minimum 30 minutes because once you put the proof then you can move your funds around the other chains so but with the aggregator layer what we are introducing is because we we have plonky2 which is the fastest recursion library right you know you can combine ZK proofs into one second so with this aggregated layer what will happen is all these chains can submit their proofs to this aggregator layer where it will be aggregated like let's say thousand chains 100 chains all of them put a proof those 100 proofs get aggregated and just one proof gets goes back on ethereal so the cost of proving to the change becomes extremely low now and

what it enables is now the change then can prove every 10 seconds in 20 seconds so the cross chain interoperability between the chains become much much faster because the moment you are on chain number let's say you are on IMX game chain and you are playing a game and you you made thousand dollars playing that game on those tokens and now you want to swap swap those tokens on to let's say gnosis pay chain for example which is let's say assumingly it's connected or or you want to swap it on ZK evm so you know the moment your chain the game chain publishes the proof 10 minutes uh into this aggregator layer now you can take this DK proof and go to the other chain which has the visibility of the aggregator layer and the proof

has come in they can actually run your cross chain transaction quickly and then you can take it back in 20 30 seconds and that is the ultimate goal of polygon 2.0 wherein you are on your own chain wherever you are playing game another you don't even care where your money is you just do like okay Swap and then in 20 to 30 seconds just like ethereum blockchain main chain kind of finality somewhere else you use the liquidity somewhere else it gets swapped and you get the USD back on your on your chin so again as I was saying that all these chains should be like one single that's where the polygon wants to play the role some on the execution layer but mostly also on this aggregated layer where all the proofs are being aggregated and the value as we

say value layer of Internet like you know we want to play at the value layer of internet where all these chains are providing these execution layers and then polygon is allowing that information or value to seamlessly flow flow across these executional environments I think you kind of already touched on this but can spell it out fast so basically if you if you kind of talk about like these two um different scenarios of kind of user sharding and application sharding so basically the first being where the user kind of lives on one chain and kind of does everything on that chain where whereas the second is kind of different applications live on different chains and users kind of um seamlessly switch between those two you fall into the second Camp I assume

yes yes I mean I also see like one important part of polygon 2.0 is we don't want to be we try we have tried to be as less opinionated as possible like if you see in the current Internet 2.0 like which you called Web 2 world the protocol TCP which actually ended up becoming the backbone of this whole internet is the least opinionated uh you know protocol right so what we believe is our job is to provide the seamless and secure movement of value across These Chains right so our architecture doesn't put a very strong opinion on that whether all of the things should happen on one chain like all

applications would exist on one chain or they exist on other differentiates what we believe but I believe is more of a more practically uh what will happen What will end up happening is that you will have some of these public chains which will have massive amount of liquidity people swapping and doing some very high high value stuff but then apps each of the apps because apps want dedicated capacity right you guys are building this amazing like you know noses pay uh you know system where you want users to be able to pay within a millisecond right so you do a click and then okay pay and pay payment after so you would want dedicated capacity for your change like you would not be

looking to have a you know scenario where there is a you know some nft pigment is happening and now my payments are taking you know 50 minutes 50 seconds to go through right so people need or applications need dedicated capacity and their own uh scalability space to exist some of the chains will be like we believe like and this you know IMX will be the first uh kind of we feel it will happen is that they will themselves be a cluster of chains right because they have 150 AAA games even if one of them explodes heavily that chain that game will acquire or kind of like you know uh will occupy the whole chain

itself so what I what we believe is public change lot of liquidity some high value stuff going on app change long tail short tail very very very very big uh kind of ecosystems plus then you have these ecosystem chains where some of the ecosystem like there's a gaming ecosystem there's a social network ecosystem and all that and it's like these will act like more like servers like you know like Twitter is not running on one single server somewhere right like it's running on hundreds and hundreds of these coordinated servers and that's what so we want we wanted to have that if the way internet has grown today for information we wanted to have that architecture in mind and that's one of the reasons how polygon2 power looks

like this so I don't fall in any camp like you know I believe that the world will look like a very mesh space some of them will be you know kind of dedicated chains app chains some of the middle ecosystem didn't sound a little weak High liquidity public chance let's talk about trigonomics a little bit so how does Polygon 2.0 impact the economics of the network and I guess maybe a broader more hyper level question is here is how does Polygon make money and you know fund itself as a chain as an ecosystem polygon ecosystem basically when we started as Matic Network that time the

plan was to have one single chain even we had not thought through like you know I mean of course we knew that it will become a multi-chain scenario eventually but we at that time the toker economics and everything were designed for a single chain and you know now uh with this hyper blockchainized world that we are looking at like you know in next one and a half two years I feel that there will be hundreds and hundreds of these chains there are already hundreds and they will keep on growing like this and uh the token actually should reflect that ecosystem so how we have you know like what we call pole token which is the you know upgradation of Matic over it's not a new token magic token will simply upgrade into poll token and you know we call it like this

third generation hyper productive token why why we call it all that is that you know it started with BTC like for example BTC as a BTC holder you cannot do anything with BTC you can't stake it into Network you can't provide the security to the network with that this channel this was changed with ethereum where ethereum as a token like you know now you can stake in the network try to provide this the the security into the network and uh you know you can earn the yield on that and the kind of token polygon is is becoming and we believe that you know many of these infrastructure protocols will become like this is the third generation token wherein you can not only validate on one chain you can validate on hundreds and understand you can stake once and validate on multiple

multiple chains kind of like the you know we call it multi-staking mechanism not like restaking but multi-stick like one place your circuit stick then you you run multiple chains so that's one part so not only you can validate on multiple chairs you can also well you can you can also provide different kind of roles so you can provide definitely a validator or sequencer role but you can also provide a prover role right like you know eventually we intend to have a prover layer you can also provide a data availability layer uh wherein you you know provide data availability to different different chains and then finally you can also play a role in this aggregator layer where you become an aggregator and you know because this layer also will have to be decentralized so uh you know these four different

different roles or on this one how uh you know this becomes a sustainable effort like how polygon makes money so this polygon is a is supposed to be an open decentralized protocol so this doesn't have a revenue per se right but but with pole uh token what we have proposed is we have proposed one percent uh inflation per year which is like you know almost like ethereum kind of uh inflation and less than Bitcoin location which goes through the validators like all the validators who are validating they will get this particular part of the uh inflation but second part is that uh the the second part is the ecosystem growth tragedy or something like that so for that we have proposed for next 10

years or Community can decide two percent for five years or one percent for ten years or whatever we have decided that you know there will be one percent token treasury token inflation which will be used to grow the ecosystem back and eventually there can be mechanisms where validators actually donate some part of their transaction fees or whoever is making any kind of Revenue everybody donates but there is no way to force that piece as of now like hourly at least we are not clear right now how we can force or like the net it can be built into the protocol where everybody has to do it uh and in future like you know if it becomes exploitative you are taking 10 the validators can simply say we are hard working and we don't want to pay this 10

transaction fees right so right now that's the only way that there is this inflation for the growth of the protocol uh but in future there can be some donation mechanisms also where validators will donate or the revenue makers will donate to the ecosystem but we will you know for 10 years we believe that this infrastructure Wars are going to stay for next three to five more years Max it's almost timed out over it's very hard for new infrastructure players to now come and you know start a chain ecosystem from day Zero you know in three to five years they are going to be settled and in those three to five years we are going to you know we believe that this ecosystem treasury is good enough and post that it can become a fully uh Community run non-uh you know non-single party uh or non you know kind

of incentivized growth just like we see ethereum is almost reaching that there's only one network Bitcoin which is able to do this ethereum also like you know Foundation has to spend like I think 80 hundred million dollars as per their last report uh to grow the ecosystem but eventually like in in three four years I think ethereum will reach the place where they don't have to spend any money as Foundation same we also believe that in five six years polygon or ten years are pretty reach that base what were um the staking ecosystem look like for a polygon in the future so basically currently there's a set of 100 validators and there's an application to kind of become a validator and there's like some checks and stuff right so is that going to be decentralized is that

going to be opened up yes absolutely So currently all these validators are not polygon validators they are polygon POS validator they only validate polygon psca but now we have multiple chains and what we are going to do is we are we have we have we call it staking Hub so the staking Hub will be will live on ethereum so you own magic tokens you stake on ethereum and then once you have state your tokens into the network now you can subscribe to different different kind of change so you can subscribe to polygon POS you can subscribe to when zq EDM becomes decentralized or IMX chains at this and that so all those kind of sticking logic and mechanism can happen on uh on ethereum uh for you so that's how it will look like it will be a

permissionless ecosystem anybody who has enematic they can stick and then they can choose to validate on any chain uh where they can you know earn their transferences very simple and very open and permission permissionless and this mighty's taking it I mean as you said it sounds pretty similar to restaking and restaking's been um somewhat contentious in the ethereum uh Twitter verse um over the last year or so with people claiming that it kind of overloads um the consensus um are you worried at all for a polygon that similar things might happen I think like the the bigger problem with the current risk taking mechanism like eigen layer and things like that on

ethereum is that it's extra protocol it's not a part of the protocol itself right so it introduces a lot of additional kind of risks into the system which where the system or the base system can lose control of if the larger amount of economic value is coming from these networks you know it can create very crazy scenarios where uh you know the protocol loses it goes out of hand for the base protocol in case of polygon it is a part it's an enshrined restaking like you know you can think of it like that so the protocol can enforce any kind of socio-economic mechanisms like slashing and all that at one central place in the protocol itself so it's that's why it's very different it's like enshrined restraking in a way if you

have to say that so where we believe is like you know it's fairly uh much more secure than the extra protocol restate so let's talk about the protocol architecture a little bit so on in your documentation you have this staking layer the interop layer the execution and the proving layer we haven't really talked about interops so much yet so can you tell tell us how interoperability will happen between applications in the polygon ecosystem talk a little bit more about the protocols there and you know I'd like to you know after that talk a little bit more about interoperability in the broader sense uh in terms of connecting polygon to other ecosystems so yeah maybe starting with the in-rop layer

within polygon and broadening it out a little bit uh outside the ecosystem absolutely so I actually you know use this word aggregator layer before like interrupt layer is actually that aggregator layer only which I was explaining that you know all these chains currently and this is already built out today so all the chains who are using polygon Proverbs they can connect to ethereum and we call it lxly Bridge so you can move from any chain to any chain once you have submitted your ZK proof uh without coming back to ethereum like you you can directly jump from one chain to another because uh you know there is a master smart contract on ethereum Master Bridge contract where all the individual chain bridges are

enacted so if you are moving something and you have put in a proof you can actually directly move the value across the chains but then this actually chain this layer exists on ethereum right currently LX L by Bridge which is very costly because all the chains have to put their proofs back on ethereum and which is you know which can't scale Beyond let's say 10 20 50 change because it will become prohibitively expensive or very is slow to move funds around so that's why we are introducing this interop layer or aggregator layer we call it where all the chains can submit their proofs back on this aggregator layer and this aggregator layer combines all the proofs and just puts one because simply combines one ZK Brew puts that ZK proof on this one so each of these

chains are still like layer twos they are directly connected once your proof has been included in ethereum you can move your value from your chain to ethereum or your chain to any other chain in this aggregator layer right so the value can move freely without any need only next of any external Bridges uh and as I was saying that because of this aggregator layer you can now prove much faster because this layer will be much uh you know kind of cheaper so you can prove every 10 seconds to this layer this combines and puts up proof back on ethereum but within those 10 seconds all the chains have a kind of a partial proof of your ZK right even though your proof has not been submitted to a 3D right now in those 10 seconds but you

know you know that this proof is uh here and the chain has provided valid proof whatever that chain is so you can have this interoperability very fast interoperability 10 to 20 second interoperability between these chains so that's where like you know we believe that the value can move around and across chains yeah and notably you can have this level of interoperability also between low and higher security chains right depending on kind of where the uh how the date availability is handled for each of these chains because each of them is going to host um a CK proof um to the uh to this intermediate layer um so do you foresee a future where kind of

um daps will kind of separate out components that are high security and components that are low security and kind of build apps that live partially on a high security um roll up and partially on a village I think like you know that kind of complexity going on to the developers is very kind of seems like unlikely like I feel that eventually you will have fair enough data availability you know kind of I would not say Global chains but kind of clusters where you can have good enough data availability and everybody

like that's why I was telling you that we don't believe in a single data availability layer but you know essentially with the same sticking Hub somebody can actually launch a shared data availability chain right which is basically five like hundred people come in and you have a decent deal of data availability and then people are sharing but also this will be this cross chain value transfer will also you know will also be governed by the individual uh sequences of a particular share right like you know they like users don't need to know about it apps don't need to know about it if I am an app which has a off-chain data availability with one single sequencer I know that the ZK EDM public change

validators are not going to trust my value and they are going to wait for my transaction to go on ethereum proof to go on ethereum and only then you know take my transactions uh which are coming in right or for data availability also they there will be some other mechanism so but the base layer of security for everyone is that ZK proof so you are not cheating on the digital level all you can do is for some users you can try to you can hide the data and do all the kind of stuff right but for that those users that the freedom is with the user right like the users who are are willing to rely on the token right let's say there is a game chain and that chain has one single data availability

provider and you have 10 million dollars on that chain which you are now bridging and you sold to someone else so the other person who bought that token right that person is relying on some level or lying on some level of Trust on your chain that because he's going to when he's going to claim he is going to come to this game chain and ask for those 10 million dollars so I think the free markets will you know generally tend to take care of these things more because a particular chain a particular app will not grow Beyond a certain point unless they decentralize their datability a bit more their communities will put pressure on them that you know this is this is like uh not a secure chain and all that and they will fail to capture more and more uh value on that on that chair and

they will have to you know decentralize their data availability but I think for data availability there will be multiple multiple avenues for people to put and you know L2 beats and these kind of like you know catalogs will provide you decent enough uh you know a kind of security on the data availability side of things like I'd be like for example once ethereum has this availability like who's stopping gnosis chain also to add 4844 to that right and with 130 000 validators for a lot of change they will use simply gnosis chain as data availability or people will launch layer twos or not system updateability and you know it will be on the users to trust that particular how much to trust on that particular chain so for us interoperability for us the base layer

is that ZK proving and then beyond that it's we leave it to the free market and uh you know other kind of social games uh to solve unless something in data availability some big explosion happens where you have data availability layer twos and things like that then then we can we can see so you were in Paris uh during HCC week and you attended Arsenal Khan and uh and also modular Summit so you know my question is here you know what was the purpose what was your purpose for attending these Summits and you know what what kind of I didn't see your Target oslook on unfortunately and I was like looking for it on YouTube but I couldn't find it um but uh yeah curious like how you see

polygon you know interacting with these other ecosystems and what is the role you know like you you know polygon 2.0 builds itself has wanted to be the value there for the internet that you know when when you say anything that wants to be the something it kind of feels I mean to me I read it as like it is the definitive thing and all these other things are perhaps going to you know perish or or not be that important so you know do you think that there is a role for multiple you know independent uh layer ones domains of State application blockchains and how do you see polygons with interacting with these different ecosystems and you know particularly I'm quite interested in polygons interactions with like the

cosmos ecosystem and uh and the Celestia ecosystem yeah so I I think this is a very good caller like we should not call it the value layer like you know actually brand new layer of internet or we want to call it a value Network or like you know we have to come up with then a like slightly better than this is the good color that you know somebody will think the our vision is that these chains that we are talking about like you know on top of ethereum ethereum is the settlement layer but then on on the on on this other layer I'm saying other layers some of them will be layer twos but many of them would be Sovereign layer ones also like right now in Cosmos let's say a lot of Cosmos chains and you know big shout out to Cosmos Community

like I I think after ethereum like I always feel that if I could actually join some other community being in web 3 it will be Cosmos community no doubt and uh it's it's super decentralized super uh you know cool and intelligent people over there but with Cosmos chains what ends up happening is that most of these Cosmos chains in themselves get a lot of traction but they are still kind of islands remote islands of liquidity they are not you know plugged in into the main liquidity layer of the of ethereum where the largest amount of liquidity is there so how we see polygon playing this rail is this aggregator layer is for example right now we have ZK proofs

where any evm chains evm ZK proofs any EDM chain can prove uh back on this aggregator layer but we are already you know uh seeing and helping other teams to build let's say ZK was a kind of Proverbs right so where you can prove a wasn't chain back on ethereum right and all of these chains so this aggregative layer then kind of enables free flow of information a free flow of value between these chains whether it's layer ones Sovereign layer ones uh layer twos single sequencer multi sequencer own token stake whatever it is oligon just wants to provide that Central layer of uh that that layer of

value moving across These Chains securely in a particular single standard uh value approval at a value move movement across these chains and uh you know beyond that leave it on to the free markets as I said like instead of we putting in a lot of like this thing now all the chains should have magic like we don't we don't mandate on that we in fact we believe few like 10 20 chains will have Matic stickers or you know few more than that or app chains will have it but then the larger ecosystem like osmosis uh you know a lot of other like you know Cosmos ecosystem uh other layer ones which might be built on wasms and all that and right now there's this thing everybody is trying you know all

the layer ones realize that they are in the remote islands of liquidity they need to be kind of layers we don't we believe that you know they don't even need to be layer tools they just need to settle on to its area uh and and you know like that's good enough for their local like basically this kind of bridging provides them a trustless bridge ZK bridge to it video right and after that they have their own sovereignty and they they can keep growing their ecosystems as they want to grow but the value can move to and fro very frequently around them so this idea that everything should settle through ethereum I mean it it makes sense I think on the face of it but you know I I think that there's there's also a case to be made that

you know if if blockchains are going to secure or in most of the value in you know the economy that resiliency means also having other uh other things to settle on right like other blockchains to settle on and obviously like Bitcoin and ethereum have the most security and are uh are are the the largest says like um points to which you know people could settle do you think that this argument makes sense though that that we need more kind of you know layer one layers of State uh in order to have a more robust and um and secure World Global Financial system

running on blockchains conceptually obviously you know you need decentralization on decentralization itself right like you know resiliency like actually the whole purpose of ethereum blockchain or the Bitcoin blockchain to have B decentralizes that then you don't have to rely on one single party so when you are even even though we are saying ethereum as a collective one layer but it's actually a layer which is highly highly decent like say in case with Bitcoin but I feel that how the world or the in practicality how it plays out is there will be always in in today's Financial World also like US dollar is the base layer of value right largely but then let's say 70 80 but then you

there there are other value layers also like you know gold other some of the other Sovereign currencies and all that they also have value people trust some of that value but then if you see because Finance has this great like I know this great saying that liquidity begets liquidity especially in the larger and larger globalized world you need free flowing liquidity uh you know across these applications or you know across the world across the economy and I think due to that you know the network effects of a single liquid layer uh become larger and larger so even though I can say that yes there will be like it's okay to have other

layers where the value will be trusted and will exist but I think the large percentage of that will still be governed by one single layer and which seems to be like right now ethereal like unless like let's say Bitcoin tomorrow comes up with a mechanism where now you can have validity proofs on bitcoin and now you can settle and as of today like Bitcoin is like still much bigger than ethereum in terms of his Global brand and all that then that might be a you know formidable competitor for ethereum but otherwise like I I find it really really hard for any other layer to become that segment layer Fringe settlement layers sure but main settlement layer I think uh it's like the Pareto rule right like you know one of them will have the

largest uh share which is ethereum Seb you don't like hearing this right um no no I think this makes total sense I I think it's like a it's a perfectly you know sound like yeah I think I think do things do aggregate are they like aggregation Theory you know exists also in blockchains and and certainly there's going to be aggregation um you know to to the larger sediment layers whether that's between or ethereum and that there are you know much like you know I do like this nation-state idea and you know study talks about this a lot too like blushings in the context of something like NATO um I think one one thing I would love to see happen is this idea of shared

security also um expanding outside of like what's currently you know a very kind of small uh network of chains within Cosmos to um to you know different ecosystems right where like different ecosystems are also uh layer ones are also securing each other in this nato-like fashion I know that we're very far away from that happening but uh I think it's like a lot of a goal to do you want to move towards I want to bring this kind of Full Circle in the very beginning you kind of you talked about kind of the thing that blockchains kind of lower the price off and you said you think it's democracy um so tell us what kind of applications you foresee having actual actual you

know know me users on blockchains in the you know coming years so what kind of things in the future will settle on blockchains um and why I think like you know for the next three to five years you will you will still see blockchain largely confined to the financial sector only but I also definitely believe that this is the best financial rails that you know Humanity has ever seen and eventually most of if not all of finance will move on to these rails so I personally feel that initially the the use cases where they require

value to be transacted and value to be uh held shared exchanged these cases uh you know will be way more so obviously D5 is a is a segment which is automatically we understand but then for example gaming also gaming also like these days gaming is like one like what's the number like I think 150 billion dollars uh revenue or something like that in U.S itself like there's a Netflix documentary which talks about like you know the gaming in US is bigger than Hollywood uh basketball NBA NFL NHL everything combined right so and these are like digital only uh things so and value exists over there like people transact billions and billions of

dollars in value over there so uh they definitely it makes much more sense similarly uh only one or few use cases that I feel uh you know for blockchain right now have started emerging is maybe some form of this uh uh you know your social network use cases right like where because people are as I said at the in the starting of the program that what blockchain reduces the reduce the cost of they reduce the cost of Freedom that it is the cost of democracy and uh you know for these social networks we definitely uh you know it these are kind of Social Network apps are kind of the peak of the applications which need this freedom and

democracy you know starting now actually so I feel that that could be one segment also apart from D5 and gaming and other value related use cases like RW is like when we say D5 is like kind of the niche Finance but then the rwa or traditional finance and you know some of the people uh you know in the in the Canto space like their leaders uh Scott Lewis uh you know is coming up with more like you know night nice nicer names for this which attracts this traditional Finance into this but basically that like you know D5 gaming rwa or traditional Finance use cases and you know even stock markets you know moving over to uh this thing like right now we have these

stocks and all that like there's a large amount of management goes in the background for Clearing Houses and all that blockchain actually obliterate most of that uh you know use cases because you you are actually settling real time uh to the end user itself so so that plus like the only non-financial use cases I am seeing is is in the social side so those would be the larger like kind of focused applications currently okay one more thing is basically nfts but nfts you can argue that they also have value but I feel that nfts have a huge huge potential I'm not talking about art nfts and other things nfts have a huge potential basic pfp or some other kind of an FPS have huge potential to get to serve Brands because I I talk

about this term or like you know I came up with this term called effective eat like eat effective attention time right and for brand it's super important right now brands are like you know fighting for this uh user's attention span right so you know active attention span for them for brand is super important and uh that is where I feel that these nfts can play a very big role like Starbucks an FPS that you see Reddit is doing very well in these are many many Brands will will utilize nfps to you know kind of have brand campaigns which brings them more uh attention so these are the only few use cases except Finance I have but in finance whatever you see in finance that that's a huge huge uh Market that

sooner or later should uh you know migrate towards blockchain based Financial wins what what needs to happen for the uh in order for uh for for that to actually take place because I I totally agree that kind of these uh and the use cases where blockchain rates 100 make make sense I mean we are all on Twitter we all know it's kind of not gotten better um so yeah I mean I I totally agree that basically this would make sense but why isn't it happening at scale right I mean it's basically if you look at actual users in the ecosystem it's very few if any so basically it's most of most of us we're kind of dog

fooding stuff but no one's kind of you know in Earnest move to lens or anything what needs to happen for that is basically like we keep saying and at the start of the the recording also we are saying and this is becoming very popular amongst the VCS that oh depth 3 has a lot of infrastructure but then not many apps but I would argue against that I don't think that we have actual uh deterministic scaling infrastructure for blockchains as of yet we have these separate separate blockchains today you can spin up 100 of blocks hundreds of blockchains but then the fundamental point is having that aggregated liquidity or aggregated like

you know value which then starts getting fragmented and each of these chains or each of these block spaces are ineffective uh you know end up becoming an effective databases where the security assumptions are also separate so what needs to happen according to me is all these value should have a place to aggregate with each other like you know all the value should be aggregated with each other across the chains and the security assumptions need to go down like security assumption they should be up you should be having one single security assumption across all the chains right okay that you know the value cannot be stolen from me and execution cannot be done in a wrong way and I think and then I think slightly

more slight more thing is basically smart contract security like you know we do we can't afford these many hacks that we go through but I think that's a kind of a learning cycle that uh you know this whole Space is going on that's why ethereums uh you know ZK ebm or solidity you know Network effects are also very strong because those smart contracts have gone through years and years and years of these hacks and battle testing any new blockchain you will bring in any new blockchain programming language you will bring in they also have to go through this and these Network effects compound over time so uh I believe that you know more Security on Smart contracts but yeah like aggregated liquidity single security zones for everything it should feel like one

single block space and you know more uh robust smart contracts so polygon is probably one of the ecosystems in blockchain that has like really strong Business Development and that has been a really big advantage in terms of getting uh you know contracts and sort of uh getting institutional and larger Brands to come and use the platform that's not the case on every ecosystem I think there's like a gradient of you know kind of centralized coordinated Business Development and really very decentralized uh uncoordinated Business Development and I would put polygon on one end of that and Cosmos in the interchain on the other

and you know Avalanche Falls in there somewhere you know like Solana and ethereum also do it to some extent in terms of pushing technology forward and having the ability to like build Tech that is robust over the long term you know which approach do you think will will is likely to wane out and you know one example I think like one example for the decentralized um more decentralized decision making uh Paradigm is Linux right and like Linux has always been a very decentralized government decentralized in this in in the people who are building on it and also its governance and and also like the business

development and it took a really long time but you know in the end now after 30 years like Linux is powering most of the World server infrastructure most of the devices we use on a daily basis and that I think that wasn't obvious that that would be the case like 20 years ago so yeah in that context like how do you see that playing out yes I think like you know there are two parts that I can discuss on the Linux uh thing like first of all I think Linux technology was always decentralized and uh always like open source uh which actually you know encouraged a lot of smart or the smartest people in the world to contribute to the operating system

levels whereas like some of the other operating systems were very close source so they could never attract the talent in case of blockchain ecosystem the technology that level is actually at par because you know even for polygon though the technology is open source and it is becoming more and more open source like you know with ZK and all that we are also attracting a lot of zika tell it so I believe that that gets compensated over there but with with blockchains also if you see that blockchains which had a really mover Advantage like BTC and ethereum they kind of survived and you know built those Network effects uh you know in those days because there were very few uh you know kind of players in the space but then you know

now if you see for any blockchain protocol to get any meaningful uh you know traction on it right they will they need to have some level of distribution because there's just too much noise in the in the ecosystem so you need some level of distribution but I also keep saying to to our team like for example polygon Labs like which is you know one of the largest com contributors into this polygon ecosystem now although there is a very large part like for example all of these brand uh you know brands that keep launching on polygon not many people realize that more than 50 percent or even sixty percent of them we don't even know that they're they're going to launch on polygon right so because now it said become like a kind

of a uh cell propagating machine but uh I feel that I keep selling to our polygon Labs team also that our eventual goal is to kill ourselves right like we have to take it to a place but we also keep growing our uh you know community and organic stuff and all that where polygon Labs at one point in time cease to exist or remains a very small contributor maybe maybe it Still Remains a small contributor 10 20 and that's and all these models of you know these Community owned businesses these are being done for the first time in this world like we don't really know how these community-owned businesses right now we're talking about infra but what will happen to let's say a social media

application right which comes which is a decent as social media application I think they will always have a nucleus like or set of like one or two teams which are actually contributing to their core development like even for Bitcoin you can argue that there is a core developer Bitcoin code Dev ecosystem same case with ethereum for development and then even for the I think your question is more directed towards the the business development I think for the application layer you will see that these Community owned businesses kind of business models will evolve where there will be one or two entities in that ecosystem which will contribute to the to the nucleus of that uh you know continuous growth and then you know the

community will be contributing from outside but at least 20 30 40 you will see these teams so that's where like we also don't really know we are also playing this that as this ecosystem evolves it will be very wrong to say that we have a exact you know Playbook that's how they are going to do but if you see most of the current infrastructure protocols they are all adopting oligon's Playbook like they all are trying to play something similar to what polygon did while we because slightly being ahead of the curve like we are now you know kind of as we say progressive decentralization so we are kind of continuously reducing the footprint and increasing the uh organic footprint but yeah like you know I mean obviously ethereum and uh Cosmos and

Bitcoin communities are super super like organic communities and you know for it's a dream come true for any protocol founder to have that kind of uh community and we have to also change a lot like see when people say you might have heard also a lot of people saying like you know polygons Business Development ecosystem has been very uh you know kind of aggressive or kind of very concerted concentrated and everything but then if you see that bare polygon came from like polygon didn't come from this Silicon Valley background like it had no like credibility like people most of for the first two three years people consider polygon scam right like because it did an IO on binance and things like that

right so so it had to fight hard but now you know we also realize that we have to make it more and more organic and Community growth and everything and then I think ecosystem as a whole is you know making those changes to become like you know become like great communities like you know Cosmos or ethereum or Bitcoin so it's a work in progress great well I think that's a great note to end on uh thanks so much for coming back on the show and uh and sharing the vision for polygon I think it's really really fascinating and also so impressive you know the the growth of that ecosystem and what do you guys have accomplished in the last three years and so I wish you and obviously the polygon mucus is lots of success uh and uh in uh

building out this Vision so hopefully we can do this again in the next uh two or three years and polygon will be even bigger yeah hopefully it's thanks EV thanks thank you