The State of Scaling Nick Dodson Fuel Labs; Christine Perry Skale; Elena Sinelnikova Metis; Karl Kre

okay hello everyone welcome to the state of scaling panel uh my name is john adler i'm subbing in for nick dodson in case any of you guys were expecting him uh i'll let the panelists introduce themselves now starting with this lovely lady on the end hi everyone i'm christine perry i lead solution engineering at scale labs and we are a layer two side chain that enables scalability for the ethereum network i'm carl creator i'm the ceo of grid plus i'm also the inventor of the phonon protocol so phonon is a hardware enforced layer zero off chain scaling solution that allows people to trade any asset from any blockchain off chain with no fees [Music] and it has infinite scalability so there's eight billion people using the phonon network we can do eight billion transactions per second oh cool okay thank you for the introduction so uh i guess before we talk about the state of scaling why don't we let each panelist describe how do you perceive scaling or how do you guys define scaling i guess starting with carlson's new whistle with the mic okay yeah so i mean fundamentally scaling is um increasing the availability or throughput of a blockchain by still maintaining the uh security and consensus guarantees that the blockchain is offering there's there's definitely solutions to scale where you can break or moderate those guarantees in some way where the ultimate moderation is effectively like using a database that's run by one person that's that's creating state transitions right so when we talk about uh scaling if it's layer 0 or layer 2 or whatever it is i think we also have to be like always very conscientious about what trade-offs we're making to understand what we're actually achieving in scaling and what security economic and consensus guarantees we maintain with whatever systems we create all right and i think the question was about how do you define or describe scaling yeah so the way uh scale network defines scaling it's pretty much the idea that not everything needs to run on the ethereum network like we are high believers in ethereum network like a lot of developers are there a lot of projects are there but they're running into a lot of friction around transactions and cost and um speed right and so while um you know ethereum is a great layer what we're saying is that with the scale network if you want to run it within the scale network you're able to take your application that is written for an evm model and deploy it within the scale network which is also based off of an evm model so your solidity code on ethereum works in scale but we're doing things a little bit differently instead of having one chain to rule them all where any application can subtly bring down the network because it's having too much transaction or too much throughput that the network's not able to handle scale gives each application their own chain and so as you can imagine when that happens it means that you're not subjected to any other volatility within a network by other projects but within this multi-chain world you're able to have the best of both worlds you have your own space but then you are also able to interact with other change within that network we call this new hub model so we have liquidity hubs we have nfc marketplace hubs and because it's a gaseous environment you can go back and forth between all the different scale chains in record time because it's um how the transactions settle within three seconds but you're also able to take advantage of the no cost and i think that that's a really interesting way of tackling scaling by removing the frictions that developers are seeing on ethereum and having those aspects run in the sky network i do believe that there's definitely space for all types of scaling out there and i think that there's more use cases that can be handled by other networks for um for sure but i think our approach is to pretty much help empower and um make like gaming and nfc marketplaces and um i guess liquidity and dexa's running a better environment thank you so so on the topic of other networks and so on uh what layer one other than ethereum do you think is doing something interesting to tackle the scaling problem it doesn't necessarily mean that you know this layer one is doing everything well but just is there some interesting innovation in one layer one outside of ethereum in this in the scaling space [Laughter] so um yeah when we're talking about layer one specifically um you know i think satoshi nakamoto introduced something very interesting in proof of work and it basically created a strictly objective system through which humans could collaborate and i think we lose much of that objectivity with proof of stake so the scaling solutions that in layer one that i find most interesting are the ones that are using proof of work specifically in that realm i think kadena is doing interesting work i think conflux is doing interesting work and i also think kwai network is also an interesting thing so they're all using proof of work um i personally think quiet network's the best one because of kind of how it's doing scaling through hierarchical merge mining but yeah i think i think there's going to be advancements where you are able to scale in layer one in an evm context using proof-of-work i was trying to think of a better network outside of ethereum and i couldn't think of one that's a perfectly valid answer so i know you know there are other networks out there and they're they're doing great work but ethereum is where the developers are and where they still are like a lot of networks are i'm sorry to say it's still kind of ghost chains and ethereum is not like you still have so many projects that are making it work with the friction and now taking the other scalability projects that are helping to advance the space to take it further um so i think ethereum plus all the scaling solutions that are proof of stake or proof of work or whatever you want to use are definitely helping the foundational blockchain really grow and i've been at scale for four years and our whole goal has been to support ethereum and i i really believe that this is going to be the network that's going to definitely dominate so sorry i don't really have a good answer for it oh that's that's a good answer yeah okay so now we're going to do something tricky which is that rather than another layer one one outside of ethereum can you name some interesting innovations or some interesting ideas that have come out from off-chain protocols that are building on ethereum that are not your projects of course let's see i want to say that one of the few projects that i've really impressed with is seeing the projects that are trying to take a holistic approach where they want to connect all of the chains out there to make it so that way regardless of where you come from you can interact with the blockchain and by that i mean bouncing between the skull network to ethereum to find that smart chain to polygon to solana like um like connects is one of those hopper is one of those poly network is one of those there are some really interesting projects that are really looking to make those connections happen and i i have to say i appreciate that sounds good carl sorry what was the question again uh if if there's any interesting ideas or innovations that are happening in off-chain protocols that are building on ethereum as opposed to layer ones which is the previous question yeah yeah okay um i mean personally i think you know optimistic roll-ups from my perspective or one of the best sort of ways to do layer two scaling um the the issue that you run into though but um let's say we replicate uh a sufficient amount of state on uh an optimistic system and let's say that that optimistic system goes rogue and it needs to collapse back to ethereum in that case i think it is questionable how readily doable that is so like you have a guarantee but if everybody had to cash in on that guarantee with like a lot of state it may not actually be there from a time point of view and also like an economic threshold point of view um so it's it's difficult as you move more state and more complexity out like if you thought of trying to collapse an ethereum blockchain back into ethereum that that would be super problematic especially if that ethereum blockchain was doing 10 or 100 times the tps yeah exactly um so if you don't mind because because i didn't uh kind of give an overview of phonon if i could do that at some point i was about to say i was about to ask that there's the next question oh okay i guess we can segue into the next question which is what is kind of the kernel of technical uniqueness that your project brings to the table awesome thank you um so so phonon is a hardware and forest uh off chain layer zero scaling solution so i'll tell you kind of what the properties of it are and then i'll give a brief technical description of how we're accomplishing it so it's feelless it's infinitely scalable because with every new network participant they you're adding one more tps so it scales linearly with the number of network participants it's perfectly private there's no need to broadcast or advertise your transactions outside of anyone but your counterparty it's interoperable with any blockchain so when i use the word layer 0 i mean it in very literal sense because it doesn't depend on any protocol the only thing phonon understands is public private key pairs so as long as we support the signing curve that is supported by a blockchain we support that blockchain so if you think about it as a traditional technical stack it's below the blockchains because it doesn't have dependencies on the protocols of the blockchains hence they are zero um so yeah i think i got all the properties um what that functionally looks like is and in the truest sense we've recreated something that looks like digital cache right like bitcoin claims to be digital cash but when i use cash i don't have to sign a transaction broadcast it on the internet and get it mined into a ledger that's publicly viewable by nodes i simply take a bill and i hand it to someone so so phone on is exactly that we can take any asset from any one of these monetary systems we can wrap it in this phonon layer and now it becomes tradable just like a dollar bill so as long as i can communicate so her phone probably actually has a esim in it that supports phonon so does mine we could just scan a qr code create an ad hoc bluetooth network and i would physically well take a unique physical thing that's a phone on on my phone and it would go to her phone so we did that without the internet right we did this in a verifiable way we did this in a unique way and we did this in an infinitely scalable way the magic that's actually happening there is we're leveraging um sort of the security guarantees that we can get from these uh secure enclaves that you find in smart cards sim cards or the embedded sims on phones and this basically allows us to create a key pair that we can guarantee only exist in exactly one spot on a card we can guarantee that these cards can't be replicated and then we can guarantee that we can atomically swap them so you can take any asset put it in phonon you can trade it one to an infinite number of times and then withdraw and take it back to layer one so what we've fundamentally done to wrap it up is we've created something that's a blockchain except it doesn't have blocks doesn't have a chain it doesn't have a ledger doesn't have nodes doesn't have miners it doesn't need the internet there you go phone on but does it need electricity sorry does it need electricity well technically i could put a phone on this card and i could give it to you so the answer is also it doesn't need electricity correct yes okay uh christine awesome all right thank you that is pretty magical i must say um i think you know what's unique about scale is uh what's really cool is that it's an adapt that's running on ethereum by that i mean we have about 40 different smart contracts on ethereum that help to orchestrate the network and when you want to acquire a skill chain for your application in order to speed it up and remove the transaction costs you are able to stake scale into an ethereum smart contract and have your scale chain appear once your scale chain is created again you're not sharing space and i think that that is a very unique take on scalability for applications because you're so used to thinking about transactions per second in a one-chain model where what does that really mean if there's a thousand applications running on that one chain versus having it with your own skill chain it means that your possibilities are endless you can have one chain for your application or for some of our projects that are running on the scale network they have multiple chains that they're using some for file storage some for the interchange messaging protocol and some just to run their game or their um their application um you know code on another chain and so the ability to be able to combine these skill chains in a modular way i think is a new approach to thinking about scalability where typically you are just given one chain and you have to expect that that chain is going to do right by you and never crash i think within the scale network what's really also unique is that the only thing that can happen within the scale network is you can simply pause it cannot crash and we've had it running for i think arguably since october 2020 without incident and i think that that is really unique in the space and very exciting um so yeah i think yeah a lot of really exciting things happening with install network so you would say that scale never goes down right well it hasn't gone down which is awesome that's great thank you yeah uh let's see so with respect to uh blockchain scalability uh what beyond what you guys are currently uh working on right now do you see any interesting innovation that hasn't yet been implemented or that hasn't been deployed yet something that's like in the research phase essentially do you guys see any of that or something that you would want to implement in the future in your projects yeah i i mean so so as i mentioned earlier i'm a big proponent of quai network um they're making a scalable evm proof of work merge mind network they're in test net right now so i think that still counts as a a research type thing you know i think it's interesting one of the interesting things about scaling generally and and why i think it's going to be an interesting couple of years is it goes back to this concept of what guarantees are we giving up and like what are we gaining um and depending on what you're doing there's like good trade-offs and bad trade-offs but you know uh moving in certain ways isn't a panacea there's usually a compromise of some sort um and it'll be interesting you know one of those compromises it's just like sharding liquidity out right so if you have different scaling solution or you have many many blockchains right you you have issues about what's accessible to whom under what security guarantees and like how long it takes to transition so i think as we hopefully see l1 scale you know maybe that's you know sharding with ethereum maybe that's another project and there's a lot more availability there i think people are going to more seriously think about the trade-offs and the economics of moving into whatever it is if it's phonon as an l0 or if it's you know scale or optimistic rollups you know as an l2 um i think those trade-offs are going to become more apparent and it's going to um people are gonna start to identify them and then use the systems that kind of really benefit what they need to use them for so there's gonna be like a consolidation and liquidity and there's gonna be kind of like a nutrition of of scaling solutions i think as we get more l1 activity all right i was trying to think of something else but i think this is probably the best example internally we have a research sort of just like sector in our engineering team and they started to research what would look like to deploy machine learning directly onto a blockchain and as we were researching that we realized we needed somewhere to actually store the trane models and that's how we came up with file storage so it's kind of like ipfs but instead of having it outside of the chain it's directly within the chain and so you're able to store documents and files directly on your blockchain and have it proved right and so i think what's really cool about that is you know nfts are all the rage right now but there's also this issue of the breakable link because if you have something stored somewhere else and something that's gone if it's stored on google cloud then what does that nht really represent whereas if it's all wrapped into an actual verifiable object on the blockchain i think that is a really interesting way of uh creating an asset that's supposed to be governed by blockchain and so while we haven't released machine learning yet we have release file storage with the promise of releasing machine learning which means that you'll be able to run trained models directly on the blockchain specifically scale and have it sort of maybe let's say determine what pictures get saved to the blockchain determine what words that you want to like exclude or include um and even further yeah if you're familiar with machine learning you can pretty much do infinite things with it so i think that that's a really exciting i think research you know thing that we're doing internally that i would love to see pushed out to the world for them to see that sounds amazing okay on the topic of nfts you only allowed to say the name and no explanation but what's your favorite nft project crypto kevin sorry crypto oh yeah the one with the the ladies i can only say the word uh carl [Applause] board ape yacht club board ape yacht club okay good thing i'm not on this panel because then i would also have to answer but it's for me to know and you guys to find out later let's hear it my favorite nfts are ens domains man if we could do that obviously bitcoin utxos they are non-fungible okay so uh just one more women rise as well it's a really good project yep okay so back to more like no back to more serious topics i guess i guess nfts are also pretty serious but you know back to the topic at hand uh east 2 is supposed to launch relatively or not launch it's supposed to provide sharded data we hope relatively soon maybe in a year or two give or take first of all what do you think about charted ethereum and secondly how will that affect if it's positive or negative or neutral how will it affect your project i think for the skull network it's a neutral chains i think we love to see it we're excited to see it come however i'm i guess i'm worried about what will happen once that is deployed because you're going to have i guess assets on a layer one that arguably will like live in different locations and um while for layer two i definitely see a place for it for layer one i think the expectation is that everything exists on like one single like container right and so um but for our project it's it's pretty neutral like regardless of the changes that ethereum makes we are built to support it so uh we will support each 2.0 the same way we support each 1.0 so i would say phonon itself is extremely neutral because all we do is trade key pairs so we don't care who's keepers are trading from where you know the more scale you get on chain the less need you potentially get for certain applications off chain um but you know i would you know say we're also neutral about it um however if you're asking me my opinion about uh eth 2.0 uh you know i think sharding is great however i don't think moving to proof of stake is great and the reason i don't think moving to proof of stake is great is because if we did it today coinbase kraken gemini binance would control 51 percent of stake and unlike a proof of work system when you have 51 percent of stake where you can simply eclipse the network for a given period of time potentially do a roll back or you can start centering transactions kind of if you have 51 percent of a proof of stake network you can change the rules and you can change the rules in perpetuity and the problem that we have is that those entities that are going to control the majority of the stake also have banking charters and their principal business is interfacing people with fiat currencies and so if the regulators come in and say if you still want to maintain access to the western banking system via swift and via whatever else we need you to only process transactions on the ethereum network that are in kyc accounts i imagine that they might all do it and then that would fundamentally change overnight like what ethereum is because 51 of the stakers have a conflict of interest which is keeping a banking license so i'm less uh optimistic with moving to proof of stake we'll see how it works out but if i want to say something really controversial if that happens the federal government doesn't need to make a fed coin they can just go up to ethereum i think the actual number is 55 for those few exchanges so that makes it even scarier exactly right so you know maybe that's um a warning to people to not keep their money there and to have independent validators but if you ever go above that threshold in a proof of stake system you're in trouble so basically what you're saying is not your key is not your crypto not your keys not your chain so if you have any money on centralized exchanges you should withdraw it i agree by lattice one from grid plus and put your uh keys on there [Applause] okay so uh one topic we haven't really brought up yet so far is uh zero knowledge proofs people are pretty excited about the scalability benefits or the scalability potential of the usage of zero knowledge proofs what are kind of your thoughts or opinions on the state of zero knowledge proofs how applicable are they or not so i love zero knowledge proof um is is my hot take so uh since bitcoin has been invented um when people would talk to me about crypto i would tell them they should look at zero knowledge proofs because it's the most interesting thing that's happened since bitcoin was invented and then since uh we've kind of came up with the phonon model i say that's the most interesting thing besides dk starks that's been invented in uh in um in crypto um but yeah i'm super bullish on it and i think there's great use cases for it i think there's great demonstrations of how it can be used uh multi-party computation is super interesting uh privacy through things like tornado cash is needed and interesting um i i think fundamentally if you're wanting to maintain some of those like economic objective guarantees from an l1 in scaling like you need some form of provability and that's how to do it i will say and maybe this is a little bit technical some manifestations of systems that leverage zk technology um they're having to leverage something called a fine coordinate ecc and um they're interfacing with systems that don't natively support a fine coordinate ecc so like metamask or like a grid plus wallet or any wallets or any hardware wallets for that matter they don't support it but a fine coordinate ecc allows for like easy provability in zk snark land but what some systems are doing because of that is they're basically using a signature to seed a private key that's cached in your browser when you're using these l2 systems which is removing all security guarantees from that and putting it as a key in your browser cache and the users aren't actually privy to any of this uh so you could be sitting there with a hardware wallet thinking your cards are like in this great storage situation you get onto an l2 and your private keys are actually in your cache so that's like my one gripe against it but otherwise i love dks markers that sounds very scary okay uh christine yeah and i know we're out time so i'll just say that you know we love zk proofs and uh for the scale network they can run within the scale network evm compliant so no complaints there um but um i guess you know we're at time so what i will say is uh really great i think being here on the panel with everybody yep thank you so much and how can uh how can people learn more about your projects yes so you can learn more about the skull network by going to scale.network and definitely reach out to us or come see us at the booth we have a booth here or come to our support station if you're happy well usually um you can learn more about uh phonon at phonon.

network you can learn about grid plus at grid plus dot io we also have a grid plus booth yeah so you can get phone on cards you can buy lattices come talk to us join our discord all the above okay thank you so much appreciate it