A Multi Chain Future 02 Zack Seward; Elizabeth Binks ChainSafe; Alex Skidanov NEAR; Elena Sinelnikov

all right cool so we're going to do quick intros um starting from the end please introduce yourself and tell us what you do hello i'm jules i work for ape works i'm a senior engineer i at ape works we do kind of a plug-in system for development tools for like ethereum and uh basically any chain you want we can make a plug-in for it and you can use that chain in your development process in your scripts i am hasive qureshi i'm a managing partner at dragonfly capital which is a global crypto investment firm hi i'm min teo and i'm a managing partner at ethereal ventures an early stage multi-chain fund hi i'm dmitry berenson i'm a research partner at 1kx we're an early stage crypto fund that focuses on helping founders bootstrap token networks okay so is there anyone investing in the space now who is not multi-chain does anyone here not multi-chain yeah i know you're multichanging you you you rev ethereal but we're all multi-chain we're almost we're all alone we're all about to change is there anyone else in the space who is not multi-chain to your knowledge well there's a lot of ecosystem funds that have to be single-chained but at this point almost everyone who is not getting their bills paid by another layer one is basically multi-chain okay got it so has even sticking with you what is the vision for a multi-chain future what is the opportunity from an investment perspective and why is everyone into this multi-chain thing so i i think the reality is that at this point there was a while two to three years ago where it was a real question whether or not there was going to be one chain to rule them all and at this point the debate is over it's very very clear now to everybody even the ethereum maximalists that we're going to live in a multi-chain world and the right mental model for these chains i recently wrote a piece about this that i think i think has resonated with a lot of folks um the right mental model for these chains is not as networks and there's gonna be one network with a giant network effect that's gonna own everything but rather the right way to think about these blockchains that they're each like cities and because blockchains are constrained you can't have one city that basically is arbitrarily or infinitely big ethereum even in ethereum 2.0 cannot be all things to all men you have to have different kinds of chains that serve different kinds of needs and different kinds of applications and that's why we have very clearly now world where you have ethereum you have solana you have avalanche you have polygon and all of these hit different points on the trade-off curve which is why you see different communities different cultures different kinds of applications coagulating on these different chains and i think it's it's fairly clear now that's not going to go away even with the advent of ethereum 2.0 the multi-chain world is just the reality and we're all living in it now all right man so you have roots of consensus big time ethereum backer ethereal ventures is its own thing you guys have supported a lot of well not a lot of but some multi-chan investments uh over the course of the funds duration talk to me about transition when did that you have that aha moment that it can't just be ethereum bets at this point well i think you know throughout our time at consensus we had the privilege of talking into a lot of other l1 and see them build their own developer ecosystems like and see how they would put to ethereum i think it's really just a natural evolution ultimately it's a matter of developer preferences and for us like very much like what hassive said it's like you know different chains for different purposes you know my mental model for it is i come from the payment space and you know you always think about it like share wallet right it's not because you have credit cards and you know you just people completely eradicate cash it's just not possible so while we think there's a lot of stickiness on ethereum that we also think a lot of teams will go cross chain for the reason of like you know just tapping into different liquidity pools different sets of users trying to get different functionalities into their protocols and as part of that i think we also have like you know have to have like very stable foundations in other l1 um so in addition to multi-chain i think crosschain is also something that's very prevalent today got it jules from a developer perspective like what is resonating in terms of multi-chain are we seeing multi-chain developers are we seeing evm developers who can like you know go across multiple chains because of that what's working in the dev space for the multi-chain conversation well evm still seems to dominate a lot of it but we don't always want to limit it to just that and i think what we're going to start seeing is more tools that um from a user perspective can interact with multiple chains and it's going to be like your metamask and you can be able to connect it to a different chain or something like that rather than having n number of meta masks okay got it all right so algorithm actually just has made some news to to move toward evm compatibility which i think is super interesting do you see that space is where the action is what's behind that move i'm asking you from algorithm oh wait sorry you're at 1kx but i think in general what we've seen is that there's demand for evm block space i think that was the reason why we went with polygon like there just wasn't a good enough solution and so developers needed to go somewhere it was available and so you had this path dependency where you started to have these ecosystems pop up and then it became a go to market for applications to potentially launch on cheaper evms first and then go to ethel1 and so i think that developer pool is still really talented and they have a much better sense of what kinds of applications work well and i think other ecosystems are trying to capture that and i think it's table stakes for a lot of these i think for other chains i think rust has also been um surprisingly uh adopted um but i think the the mind share of the folks that could build crypto applications uh is still quite strong got it you're you guys are in a lot of different networks right you're in cosmos you're near you're an avalanche you guys are all over the place i kind of want to go back to that sort of cultural question right that cultural distinction between these networks these are communities that are distinct and maybe should be distinct as vitalik argued in that cross chain versus multi-chain post can you just give us like a quick thumbnail perspective of these different communities and like no one tweet angry things at hasive if he says something that you don't like but i would love someone to guide us through what these communities are like at this point in time well so the first thing to say is that while i can try to give a snapshot the reality is that all these communities have become enormous to the point where it's like describing what's the personality of paris well paris has like you know millions of people in it so there are all sorts of subcultures within each of these chains now but if i had to describe and maybe you know folks might have a different perspective but i would say ethereum is a giant temple so it's kind of too difficult to describe ethereum at this point i'd say if you sort of go down by market cap i would say that solana is mostly people who are who basically think that ethereum messes everything up and that we should start over from scratch with super high performance and super cheap super high performance that's what salon is all about and all this decentralization nonsense quit whining we're decentralized enough um i would say that avalanche is like we are super aggressive we want to move really fast we want to we want to get wall street on our side and we just want to do d5 better than anybody else um i think near is very idealistic they want to create this ethereum 2.0 vision with their they're very uh they're a lot of dreamers and kind of technology you know sort of a deep technologist and they think that technology should ultimately drive everything um with no chance i think polygon i think polygon is very practical i think in a way it's like it's in a way very south asian of them they're mostly about like just let's just get super high tps let's just get people in the door let's get good games and good user experience um and um who else is there cosmos cosmos i feel like they're very friendly it's very like um we just want everyone to have their own chain everyone should just launch their own chain why not everybody is free to do one and it's a little disorganized it's a little like um it's a little uh more bizarre than cathedral compared to most of the other chains but it kind of works for them um so that would be my description of most these are ones i don't know if you guys want to do the other ones i think that makes sense i would just add that they're so like we've been talking about smart contract platforms there's like application specific blockchains like rwev that just focuses on like doing one thing and i think for a lot of those communities uh they just have an affiliation to like what the problem that they want to solve is and then just choose like the best platform that is specifically fit for the use case that uh they're trying to do i don't like what city that is but it's like i don't know like some specialty shop yeah wait you guys did uh polka dot right we did are we oh you didn't already do polka dot okay how would you describe polka dot like very i don't know like what like a centralized like well like well-run corporation a well-run corporation all right you heard it here that was so good thank you for doing that that was really nice it was bold give this give these people a round of applause thank you um all right so uh i think uh what you mentioned about like those specialized blockchains that do one thing and they're really motivated by that purpose does 1kx sort of have like a thesis as it relates to specialization do you think there's gonna be like further speculation specialization along those lines or we'll see this three four five successful sort of general purpose blockchains over time yeah i think with sufficiently strong bridges and sufficiently well well-designed bridges the end state for me is application specific everything and i we're kind of seeing that i think axi was like an early example of them wanting like a certain ux so they bootstrat ronin and there's a lot of benefits to that because they own the value accrual they get to fork the infrastructure they have their own marketplace they fork their own decks they have their own security model we're seeing that in the rollup space i could imagine you could have like a player in game that runs on like zk sync or start net and then the games token also is the same token that runs the sequencer and then that allows applications to tailor the infrastructure for the thing that they're building and as long as you have a way to move around that's safe and efficient then i think ultimately the developers are going to gravitate to that got it that's interesting so i i i actually am somewhat bearish on application specific blockchains i think that um a few years ago it was not obvious how all this would turn out but now that we're here what you actually see with cosmos for example i mean being the principal example of application specific blockchains the biggest uh application in the cosmos ecosystem is terra which is a non-application specific blockchain it's like a general defy chain um which i think is kind of proven point is that so much of what makes blockchains valuable as we've learned over time is composability it's being able to connect things and make things permissionlessly with each other as opposed to having a one-stop shop where you can do one thing and one thing only and so if you look at the you know the early projects that have come out on polka dot and kasama most of them have tried to be the original story for polka dot was that it's going to be a bunch of little chains that do one thing and in reality what we saw is that okay it's like moon river which is just an evm chain and what was it akala also ended up becoming just another evm chain they just have some stuff on it but there's just more edm and so all the way down we end up seeing you know these people who originally thought that they were going to do one thing instead they become a general smart contract chain and i think that's a broader pattern you're going to see is that the ultimate promise of smart contracts is composability and interaction and creativity as opposed to we know what people want to do and we're going to create one application that you can interact with that lives off in its own silo the things that do that on cosmos like osmosis which is a you know sort of a cross-chain balancer thing for um for for cosmos it's great but it's it's much smaller than cosmos and much smaller than and i think that's intrinsic to what we're going to see with most of these application-specific blockchains so min where do you fall on that we have two differences of opinion does ethereal have ethereal have like a thesis as it relates to a general purpose versus application specific i think you know we definitely are thematically or bullish on the proliferation of like application specific blockchains but i think the question is which ones will last um you know a friend actually at a dinner like recently was like well tcp doesn't really need a product right so like it just works the way it is and i think a lot of like you know the layers that we'll see are pretty thin and they serve a function but you know they don't actually need like the consensus model like the security model they don't need a token um and it'll be interesting to see how like the various layers like you know across l1 from l1 l2 to l2s actually fit together i think we're more excited about how that multi-chain sort of like interstate highway will foot where value will crew where developers will land where we'll see developer preferences grow how we move towards modularity and i think even if application like you know specific blockchains proliferate that's just like people being able to do what they want to do at the end of the day got it jules i'm gonna throw us to you just in terms of developer interest in multi-chain stuff is there anyone that is uh i guess my question is is there multi-chain fatigue among the developer community right we see this profusion of different chains is that a problem at some point or is that just the natural evolution of this industry yeah kind of going back to the last panel it is sort of a natural selection thing so as we need chains we're going to build the plug-ins for those chains and we're going to make them work in our existing apps on an as-needed basis and like what i see is a lot of l2s and ethereum that's probably like the first like multi-chain setup that or it's a big common one that i'm seeing at least in dabs got it for hussey from your perspective can there ever be too many chains or is there like talk to me about this natural selection process how do you see that playing out yeah i i wouldn't think of it in terms of there being too many chains it's like asking the question of can there be too many cities not really right like it's fine to have small cities in the same way it's fine to have small chains um i think the the more important question in my mind is how many of these cities are going to be economically meaningful um i think it's very likely that we're going to see call it no more than maybe 10 chains that are economically meaningful um and that's you know they're just power law distributed we see that already you know if you if you look on uh the sort of you know go and define llama and look at all the chains by tvl and what you'll see is that it's a parallel distribution it fits almost perfectly the same way if you look at you know city populations in the u.s it also fits a parallel distribution the big cities are a lot bigger than the 10th biggest city and the biggest city is like you know much larger than the second biggest city but there are a bunch of cities that matter and after the top 10 it kind of falls off and most cities you can ignore the same thing i think will be true of chains so what's that yeah what's one kx's view on that you know in terms of which cities are going to emerge as those economic powerhouses where are you thinking right now i think that we'll see a proliferation of l2s over the next year or two i think that tech has taken a while to mature but i think we're finally at a place where it's easy enough for for developers to build these applications um and i think like like they could be like specific cities themselves but i think a lot of the choices that devs might make there's also um like a business incentive for them to bootstrap their own um like sequencers and their own l2s uh because they get to capture uh effectively like the like the security model uh like monetary premium so i i want to believe that uh it it would be um like focused on one chain um and i think it still could be most roll-ups are on eth but i think like we will see these smaller cities in a lot of like these larger countries so i think that countries are still going to see a power law distribution but i think we're still going to see a ton of like little cities within there i like the city metaphor this is very nice i mean i think these blockchains are like you know they're like the housing development that isn't built yet you know there's the roads and the pipes but the houses aren't there and instead of the developer of the housing development putting the houses in someone has to come and put the houses in so uh you guys were in the near the 150 million year round and your colleague said hey we want to help new york uh get to a state uh of user and developer adoption that is commensurate with their technical advancement how do you go about doing that what's working when it comes to developer and user adoption that you're trying to recreate with your investments that's a great question i mean the the reality is that today there is no ready-made formula like what worked for the last chain won't necessarily work for your chain because there's always um there's sort of strategy exhaustion right so if you if you think about how solana became really successful a lot of solana's success came from this relationship with ftx and kind of building this marketing engine around the story that salon is super fast salon is super cheap this is the future of blockchains and you kind of can't do that twice right you can't come in and say oh we're also super fast we're all super cheap and we're partnering up with this exchange like come use our blockchain um people kind of see through that and in the same way you know what polygon did is to say like look we're going to be the overage for ethereum ethereum's too expensive come on polygon it's way cheaper and you can bring the kind of the unwashed masses over to polygon and we'll we'll promise that we'll raise the gas limit to always keep it cheap that you can't double that social contract and do it again and so i think for near a lot of their story has to be in finding something they do that's unique relative to other players and for them i think in particular it's around the story about sharding and vertical scalability right so if you look at if you look at solana today one of the struggles for solana despite their their story about being really cheap and being really high throughput is that they keep failing they keep falling over during periods of really high congestion because you know look at at the end of the day it's a single chart blockchain and a single shared blockchain when there's enough demand it just falls over that's the way that every software in the world works and so near stories that look we're sharded and what sharding in principle does it allows you arbitrary levels of scalability so you know every significant software system in the world whether it's google or facebook or anything in order to scale it has to scale horizontally not vertically meaning that you add more machines you don't try to get a bigger and bigger machine which is basically the solano approach um and so their story is that look as the demand for blockchains goes up which we're already hitting right like i mean look at each denver we've got 10 000 people here like you know last time we had denver it was like you know 1 500 or something when blockchain started hitting those bounds of scalability the only long-term way to grow them is out not up and that's the near story and so if that story resonates with developers who are like i keep like solana keeps falling over that's the thing that's going to get them to go to near but an abstract promise of like hey we're in principle better is probably not going to be what what gets people over the line that in developer experience developer experience okay uh man i want to put the same question to you you know i think like a lot of projects in the room are used to uh are increasingly becoming expecting of their investors to provide those services that really take them to the next level how are you going about again bringing value to your investments when it comes to this multi-chain word with css well i think like taking a step back on like the developer ecosystem and experience like you know in a lot of ways i think and maybe from our experience at consensus like building up a lot of the ethereum ecosystem back in the day i think we're still quite a bit of a ways to go in terms of like infrastructure dev tooling oracle's like like the kind of unfun stuff that you know you need like the developers need to have to actually build robust applications so for us you know we're really spending a lot more time on like you know that layer of it like how can we actually make it easier for developers to go across chain how can they actually better understand the trade-offs timelines because there's a lot of pressure for like you know teams to do so but at the same time as an investor like my expectation shouldn't be that a portfolio company should subsidize infrastructure for another l1 right that's not their job to do so um so you know for us it's a lot of time like you know managing like timelines and figuring out what's best for them like you know we do have some d5 protocols that are still on ethereum l1 and it's perfectly fine for them because of their user base right but if you're doing something that's like super high frequency um it's going to be really painful if you're on an ethereum l1 and you know you're going to look to selena potentially sooner rather than later so i think it's really dependent on what they're trying to do and where they're trying to go long term same question 1kx what are your thoughts on that how do you how do you help these unbuilt housing developments become vibrant neighborhoods i think one is supporting the roads that get there we're very active in investigating cross-chain infrastructure and i think there's strategies around how [Music] those cross-chain pieces prioritize like where they're building the roads to and then we also believe that communities are ultimately the things that make successful blockchains and successful applications so a lot of our help is at the application layer and we focus on how do you build community how do you run a dao what infrastructure and tooling should you build how do you scale that down from 10 to 100 people and that then becomes your distributed sales team and the larger the the protocols on top become the larger that sales team starts to bring their friends in and in the communities that they're in so i think the way to to have a successful piece of infrastructure is to make sure that people are building on top and i think that's where we're really good at gotcha do you focus on like i mean part of that infrastructure you know the roads that get there are bridges right and we had a brief conversation about some of the weaknesses in these cross-chain connections is that potentially a big issue for multi-chain becoming a reality what are your views on this cross-chain dynamic in the wake of the whirlpool hack there's a lot of trade-offs i think there there's no one bridge that could do it all and there's trade-offs around what can you actually do like can you just swap assets or or can you do general messages passing um there's like the routes that you're trying to go to are you just focusing on evm or you're doing non-evm uh what is the economic throughput like how much volume of assets can you actually get through and i think that there are many there's a whole spectrum of designs in between that um and i think that in cross-domain like if if you're going from ethereum to cosmos or ethereum to pokedot that's effectively a distributed systems issue that has not really been solved and it is a market risk like if you transfer funds from polkadot to ethereum and polkadot has a rollback what happens to the assets on i think that's the risk that the market is willing to bear and i think that there's a lot of ideologies around it um but i think we're we're at a place where the the economics right now for founders and and for users makes sense so i think that's going to happen regardless of what we think and i think we just need to choose uh the right bridges that are trust minimized to an extent gotcha we went from uh bridge season to angst over angst and pessimism over the cross chain future do you have any thoughts on bridging and these connective tissues between these networks yeah i think what what the wormhole hack showed us was a couple things so one it showed us that bridges are really freaking hard and they're hard not because of some idiosyncrasies of solana or some of those synthesis of the particular chains because anytime you're connecting up to blockchains it's really freaking hard to get all the details right that's always been true and it'll remain true for a long time um the second thing it made us see very plainly is uh is that bridges particularly bi-directional bridges between like chain a and chain b which is the vast majority of bridges today these bi-directional bridges are basically banks they're banks in the sense that they take in assets on one side and they issue liabilities on the other side those liabilities trade and then eventually they come back and get redeemed for the assets that's a bank and the principal way that a bank is secure is by knowing the balance sheet behind the bank right which is why almost all the bridges that are really dominant today are bridges that are basically backed by the lair ones so it's like the avalanche bridge the the you know the polka dot bridge the binance marching bridge the polygon bridge these are the bridges that have almost all the tdl across every single one of the bridges and the reason why is that you know just like happened with wormhole if that bridge gets hacked and something goes wrong those l1 foundations have a shitload of money to make sure that everyone is made whole because if the bank if something goes haywire with the bank you really want to make sure that there are very deep pockets behind it to make sure everything's okay what we saw from solana is that jump basically stepped in and sort of acted as the backstop for the bank and if it hadn't been jumped i guarantee you that solana foundation would have come in and made them whole or ftx or somebody in the solana ecosystem for whom it would have been worth it to keep everything in solana going the same thing would happen for tara the same thing would happen for any of these layer ones for which there's enough of a vested interest and the layer one could make enough people whole so until that changes and bridges become robust enough that we can trust them without having to worry about a potential hack the reality is today that the way bridges compete is not on being the most decentralized but rather on having the strongest balance sheet backing them and that's i think i think we're going to be in that world for a while until we start to see really decentralized bridges start to win my guess is would be probably at least a year or two before decentralized bridges can start to gain a foothold julie do you see any uh work going on in that space to make bridges stronger is there any progress on that front from where you sit i don't i don't know if i see any progress per se but i would like to see more transparency and visualizations on the threats if we know that these threats exist we need to be transparent and tell the users that they know what they're getting into that's interesting so as you were saying you know that's a cost that the market seems to be willing to bear is that just going to continue for the foreseeable future or do we see any changes coming to how secure these bridges end to be i mean you know defy hacks happen every day and people still use d5 and you know wallets that have board apes still get stolen and people still buy board apes so i think users get a utility from it and so i think it's going to continue um i also think a lot of like these like going back to like the bi-directional bridges um they do one thing well which is transfer assets and i think there's like the concept of the you know infrastructure app cycle and we're i think at the point now where we're building the infrastructure for cross-chain native applications and so in a year or so i i think we're going to see some really interesting applications that are natively cross chain and the user won't see that it'll be built with sdks that these generalized message passing bridges are building and so it's going to be pretty abstracted and then you're just going to be going to the same ui of like your d5 protocol that allows you to you know deposit funds in some liquidity pool except those pools are going to be across you know six different evm chains got it i mean you kind of mentioned that some of that unsexy infrastructure stuff is still lacking like from where you sit what is still needed what are the specific pieces that get us to the multi-chain future i think there's quite a few of it but it really depends on the user and one of the things we're seeing is the power user right now is mainly transferring assets for liquidity mining or farming so you know they're going to go with the mvp bridge approach because it works without really thinking about what security trade-offs there are because it's cheap it's fast it works until it doesn't and like haseeb said because most of them are state sponsored so there's an insurance policy eventually the insurance policy kind of runs out right like so people actually start taking hits from getting rugged and i think that's actually healthy because it gives time for a lot of like you know the bridge builders to actually figure out some of the tougher problems you know hussey mentioned some of them there's a lot of peculiarities of compiling to the evm and this stuff just takes time and a lot of technical knowledge so i think over time like you know you'll see the narrative shift as people start thinking more about what they're doing when they're moving assets cross chain we also start seeing more applications aside from just the yield farming be it transferring nfts or you know real sort of like you know dow payments for example where people don't need the latency as like quickly um and we'll also then give time for like you know a lot of the bridges to develop more secure infrastructure to secure the assets across chain got it okay we've talked about natural selection where are we in the natural selection cycle are we in the early innings of the natural selection cycle there's going to be more before the culling comes for for chains or for bridges for chains for chains back to chains um of the things that's interesting about blockchains is that they never really die right like companies die there's if you have more debt than you have equity then you have to you go bankrupt like you get canceled you get deleted you you stop living um chains don't really have that right like as long as there's someone out there willing to run a validator somewhere in a machine that they've forgotten about or there's somebody willing to like keep their bot alive that's trading this thing on this amm then your chain always in some sense has value because someone is willing to buy the token and with unisoft v2 technically you can never buy all the tokens that exist for some project there's always some price at which it's still trading so the answer is like yes or no like you sort of die in some sense in that nobody there's no more creative energy directed at your project anymore um but there's no sort of second death for most projects they just sort of linger kind of forever right there's a lot of stuff from 2016 that's still trading on page six of coin market cap we just you know we don't we don't talk about anymore we don't tweet about it anymore but they're still out there you know slowly being traded occasionally pumped and dumped um and that i think that's sort of like the the graveyard of of half a live zombie projects that's as best as we can say for projects in crypto got it we've got a few minutes left so if there's any audience questions feel free to step up to the mic and ask some of the panel in lieu of that i'm going to keep going for a few more minutes before we wrap this thing up all right multi-chain future we have this conversation next year what's going to be different about the conversation we talked about some of these natively cross-chain apps that we think are coming down the line what's what looks different at east denver 2023 when we give a nod to the other chains that exist beyond ethereum i will start with min well my hope is that we'll be a talking about sort of you know cross-chain applications cross-chain lending a lot more just native to like you know actual bridges and also cross-chain privacy because like that's something that's still probably a long ways away and you know we're excited to see that because you know as a team we're very bullish on privacy as a theme jules uh what is the future of the multi-chain future the future is we're going to get more into the minutia and we're going to start figuring out more problems and next year i guess we'll probably be more focused on that rather than as an abstract what is multi-chain we're going to be like how can we make this work and how can we make it better my new shirt big picture next year what are we doing i would say we're going to start seeing layer twos cannibalize some of the demand for their ones i think right now we're not really there yet the layer twos are still very immature uh especially the zero knowledge stuff i think probably this time next year we'll start to see some of the market share of lair ones eaten by their twos okay last and certainly but not least the future of the multichain future are the are these is this additive is multi-chain additive or parasitic at some point what are your thoughts i think it's positive some i think there's always going to be customers in different geographies and developers with different you know preferences around what they want to build i think we're ultimately giving user choice and developer choice and i think having more of those building blocks ultimately unlocks innovation and it gives you abilities to like stitch things together to produce some unique product that you couldn't really use or like create before and i almost look at it as chains as like community specific or application specific microservices and then hopefully we get to a point where we could stitch that together to something more end user facing that is ultimately more unique and also i think that you know next year we'll be reviewing all the hacks that happened i've spoken to 70 different bridge projects at this point and a lot of it is pretty frightening of the shortcuts that they're taking and i think we'll see many more wormhole type things but that was just a bug and i think we'll see much more fundamental issues and learn actually like what works and what doesn't all right we have the doom of the future hacks to come and we know yeah we have the doom and then we have the optimism of optionality and future innovation so thank you for summing that up very capably all right we're gonna leave it there thank our second panel of backers pundits and wonderful people