(Re)Staking In The Modular End Game | Stanley He, Thalita Franklin, Tina Haibody

you want a little help with your mic e hello everyone thank you for joining us we are going to get started on this next panel that we have in store for you reaking in the modular endgame on our panel today I'd like to welcome Shan ' Conor Shan is chief of staff at block native where he is working to improve the observability of public blockchain networks next to Sean we have talita Frank who uh is a network lead and part of the research team at chorus 1 with a BS in computer science and MBA in capital markets and derivatives next I'd like to introduce Stanley H Stanley is the co-founder of linear protocol the biggest liquid stating staking protocol on near finally we will also have uh Tina hiot joining us probably just maybe running in on stage while the panel uh has already begun she leads uh strategy and product over at Igan layer and in the past she was leading product at fuel Network enjoy awesome thanks so much for having us we're really excited to dig in today uh want to start off today and ask your panelists to First can you just Define what the modular endgame means in the context of reaking sure um what the model what the model in game is on the contest that First Take can you start yeah sure um I mean like modularity generally means you know you you you you separate different parts uh uh in blockchain and making them like individual um components and which can be like combined freely um like basically like in know in a blockchain system you have settlement you have execution you have data availability and you know in the beginning those are you know those three are like all bonded together within a single blockchain like ethereum you like in the you privacy on ethereum you know you set on etherum and the and the execution client execute everything and also all transactional data are posted on etherum so that's what we call a monistic blockchain and today most blockchains are still monistic but you know we are right now also entering you know a modular stage where we are kind of um you know separating those parts you know we have um chance like slasher who's specializing in data availability and we have etherum you know who's trying to become a settlement like Hub you know for everything and also we have you know specialized like execution layers like layer twos um who who who Who's only like executing transactions but posting data on da layers and settling on eum or other chance so like with RIS taking I'll say everything will be like more um unified on the raking so it feels like you know we're like breaking chance up with Mo with modularity but we are like kind of Comb combining together again with raking because um raking basically you know allows you to reuse security provided by a CH so you know with um so like in the context of modularity like like today you can basically use ethereum to secure a DA layer that's not etherum with really and you can use yeah like uh ethereum again you know to like secure you know another layer you know that's not ethereum that but in the modular system so yeah I think that's that's um my defination yeah thank you yeah I I would say that to complement with that is that on the end game of modularity would be where the incentives are aligned for all the players in the in the chain let's say so for example for node operators who has the overhead on the operational side and for stakers who are engaging with uh more complexity and that can bring more risk to to their strategies so the the economic part and also the interoperability because the modularity requires you have um you tend to have much more uh fragmentation of liquidity so would be ideal that uh not only raking is implemented but also a way in which you can move this liquidity across all these uh applications running on top of the same ecosystem yeah I mean the ethereum road map is so focused on modularity going forward and I see reaking is going to only exponentially increase our ability to get there because you don't have to bootstrap liquidity for your protocol from day one you can Outsource a lot of that Economic Security to the second largest base layer out there after Bitcoin um as we're looking to get into it I really want to dig into your perspective as a validator what are some of the challenges that you foresee for the validator ecosystem as we look to adopt reaking uh I think for what we have seen is that the node operators are um getting adapt to the increase in operational uh work and also responsibilities in general because you have uh we need to implement for form of governance that you can represent your users that the people is taking with you for example when you choose which AVS is you're going to on board and there it requires a lot of research to make sure that you're are not engaging with projects that are that will only increase the risk and not really reflect on good apis for example for your users um so you can also have regulatory concerns in which you can do that without uh being classified as an asset manager for example so um we have seen a lot of these discussions but is a leing thing and most of them don't really have a clear answer right now yeah no there's a lot of regulatory ambiguity and I think we're going to have to pathfind our way through this Stanley anything you want to add there no I think that's pretty comprehensive um like as a liquid staking provider like we work very closely with you know with not operators and you know like staking I'll say uh Solutions and U you know for us it's like you know R theying actually change the whole theying business you know either sticking or liquid scking yeah because you know previously everyone's just securing a single Chan and just collecting That Base API know just very little room at least on the yield side you know for you know for different solutions to actually differentiate but right now you know with risk taking I think we're actually transforming the sing service into a you know like like at least from the LST side it's like a liquid wrapper of a general purpose security provider like you know a not operator can operate so many things but but still under the umbrella of let's say e serum um so I I I think that's you know what makes things so so much more fun but also so much more complex yeah yeah Stanley I want to double click on something you said there as a liquid staking provider what what are the implications or the difference is between native reaking and liquid reaking and how are you thinking about that yeah so um that's that's a good that's a good question I think um like probably Tina will have a better answer yeah but uh from what I from what I know um so like native raking is the most Al canonical way of raking so like basically a etherum node ethereum node optin you know as a you know and and basically restake that that's 32 is in in in in the node to AR later so I think and and and that that kind of like you know binds the security of that node to whatever you know race staking service you know the node is providing so I think like that and I think that's also why you know people are you know people were like discussing whether you know risk taking will overload consensus because you know there can be like a Cascade slashing you know if a node get slashed in AVS you know probably it's you know it's also going to get slashed on ethereum which will make ethereum Network less stable um and I I think that for AVS you know for applic for applications who you know who want to achieve ultimate decentralization they will they will want to choose you know native race taking they probably will only allow native race takers to you know to secure their Network and with like liquid raking or like State like raking with ls St let's say s or R you you deposit them on directly that's like kind of um I don't know like there's there there's there isn't much thing can be done on the LST side so like you know it's purely user activity uh I think you know they they obviously you know it feels more centralized and U you know it's not that closely binded you know with ethereum based security so that actually could be a kind of you know in in some way a better solution for many application who don't want to you know mess up ethereum um yeah and from our perspective you know we we actually want to support um both so um like we are like right now we are bringing all layer one assets to ion layer B basically allowing I AVS to use not only ethereum but BDC Sana near atom for security and we're going to like allow for ultimate flexibility which means you know you can do like you know vanilla like liquid reaking you just use over like you know the most fundamental lsts but also you know we will like offer you know risk truned products you know basically you know and to to users who like prefer a a a higher like Risk profile so yeah very cool anything you want to add to that yes I think if you think a little bit more on the technical side that's where on the operation uh on the Node operator perspective we are more concerned about is that the native is taking it's something that is implemented on the protocol level so the protocol recognizes what is taking what exactly is going on there and when you go to uh restating and liquid restating you are adding complexity to the protocol layer which is not really recognized by the protocol and so you are actually engaging with an application that has a direct impact on the consensus layer and with in the the layer on protocol and security so not only developers but not operators and uh users need to keep that in mind and I think this is also something that we'll be uh watching as it develops I think it's not really obvious the the real Dynamic of applications impacting the the protocol layer it's a bit abstract but this is how I I tend to think about the differences to to steal an old phrase there's no free lunch and that extra yield is coming from increased risk so where do you see this changing the governance landscape for both etherum and applications that decide to Outsource their security to reaking protocols uh I would say governance will play a very relevant role as we have seen for example on the liquid staking part that we have Dow who tend to coordinate many things on which operators are part of the of the protocol and uh a cap that we use for example for interial that needs to be less than 30% for example I think we we might tend to see similar things for raking what is the ideal cap for liquid staking the protocol uh because R taking and the capital efficiency let's say perspective can be seen as leverage and Leverage is risk yeah so I think governance will need to be reflected as well on for example as I mentioned before how do you make sure that the applications are really reflecting the uh the base layer users that are really staking with the node operators because you have the node operators on the middle so what is really the uh how does this mechanisms going to work uh the there will be you don't have really onchain uh governance for example right now as we have seen Cosmos because Cosmos has now a liquid staking module but this is implemented on the protocol layer and the governance is also a chain so it's easier to make sure that uh all the the decisions are really reflecting the community yeah yeah I mean um like there is no unction governance eum but you know if you look at the reality you have to you know you have to admit that you know the ldo token you know has you know some some some some um sort of uh governance power at least you know on eum whatever whatever that means because there's no no governance for for eum I think like you know in the context of raking things will get more extreme because with abs let's say you know you know in the future if most of the new applications new node you know networks are launched you know with risk taking like ethereum layer one and ethereum holders and raking uh you know pipeline players will have a a a a a very I'll say a a a very strong say you know on ABS so I think that's that's I think that should be the part that you know where the governance mechanism should be focused on like we have to make sure that you know it's not about the AVS themselves but also about you know uh like re like raking providers like Ager or like you know lrts lsts you know they have to you know um like distribute their governance power more fairly you know to users and like otherwise it's not only about their own protocol but it's about like a whole world of you know ABS you know projects and what we do want to see is a is a is a governance you know Monopoly you know like this one token actually govern governing like almost everything I mean I I'm pretty sure like a lot of people want to build this cuz you know it sounds super profitable but um you know we we actually don't really want to um you know we we don't really want this you know dystopia to to to happen so yeah so I think that's that's where you know we are looking at now you know we're trying to just to avoid this future but also you know make making sure that you know there's real you know value acral to different layers of of of governance yeah and we've SE seen social consensus mechanisms already in play with like against Lio per se for reaching thresholds that while not baked into the protocol are deemed by the community to be worrisome and potentially problematic I I could see us reaching a state maybe this time next year where the community is starting to talk about what those thresholds are for different liquid staking providers and when we need to pump the brakes a little uh palad I was curious if are there other lessons from the Cosmos ecosystem or other liquid reaking protocols that you think ethereum should learn from and take some best practices towards um I would say that is risk taking is also quite new in the cosmos although is already uh implemented as I mentioned uh but the way that is implemented right now it's called Uh replicated security so that there is a governance proposal in which um users the takers and old operators vote to be on board as as a consumer chain and then doing the parallel to etherum and restating on Ean a consumer chain would be an AVS and then once this governance passes uh all the validators on board that IC so that's why it's called Uh replicated security that would be very different from what we are we expect to be implemented in a uh because you can actually opt in for uh each AV s so not sure how how that would be um comparable let's say but I think as I mentioned before the governance I think would be uh one of the biggest uh lessons to be uh inspired from from the cosmos I think awesome hey Tina thanks for joining us sorry some of your time got slashed um just pull the mic about two inches from your mouth and I'm going to throw a question over to you to Jump Right In can you give us a little bit of a sense about data availability and the how reaking is going to change that ecosystem yeah so for Contex I work on product and strategy at igen Lair and I work both with the stickers and operators team and end da and I used to lead product at a rollup which was Fuel and um I think the ability to enhance uh rollups is like the biggest aspect that igen layer has for the ecosystem um a lot of people just think of reaking and igen da to siloed products but the big is issue that I saw working at directly at a rollup and trying to bootstrap a proof of authority launch that would transition uh eventually to a proof of staking launch was that um finding liquidity for the initial launch and then finding a validator set is very frustrating and a lot of these rollups actually end up choosing um LPS that are either within their existing investment arms or their existing investor pool or validator firms that are also um in their existing investor pools and this is a large centralization risk so um the caveat is that Igan lay actually bootstraps those two biggest problems the problem of liquidity and then the problem of getting a validator set we have um 5,000 operators last I checked I think it's 5,388 right now and that is the highest amount of uh validators in the ethereum ecosystem outside of ethereum itself um so that is the best way to actually have a decentralized rollup with an existing validator set and liquidity that is with eth itself yeah I I think the we're on the cusp of Da really taking off and this reaking will enable an increasing amount of l2s to potentially shift out to Da how how do you view the da landscape as changing over the next 24 months as restak and coming online would you like to start no no you go ahead I want to know your viewpoints as stakers and Staker firms as well well I uh anticipate a lot of um different chains uh offering daa services and I imagine that people will be like applications would be trying all them and there might be uh a convergence to what is the really value added by the da layer that uh we we already have this uh the idea of the need for it but how many do we need and what is really the price that applications are uh King to pay for it uh because since you every time you increase the price the cost in the the whole chain for an application you reflect on a smaller API for for holders and so this is a big challenge of increasing the level of layers and intermediaries to achieve uh the um the same goal let's say so I think this is what I I'm most um curious to see the result yeah yeah um I mean like there's currently nothing stopping you from using Google sheet as da right so we yeah I mean like so and and and and and that tells us you know what we truly care about da is you know stability security decentralization so um like right now obviously you know like you know ler to is using you know eum call data it's probably like the the the safest way you know uh SDA because you know it's as safe as theem itself and then you after 444 it's going to be BL space you know still you know as safe as system itself um like right now we see there to you know some layer to moving to Celestia like external D layers because you know it's simply uh cheaper uh and some other services you know they're just moving to like offchain you know they very you know commit you know if they don't really care about like you know it de that much so I think with reaking what we will allow is a is a more I hate to use this word but a more aligned da da layer like you know right now like cesia is probably like the the hottest you know D out there and is you know it has nothing to do with with etherum I mean I think it's a good Chan but um like I think there there there could be a premium that people are willing to pay for a DA layer that's more closely connected to to the sement layer like um because um like first you know on the I mean on the technical side there's a bridging problem right so you you know like violators and smart contracts need to have access to that data on da when they need and so there's so there's this you know bridge problem there's this bridging problem and the second um I think it's it's purely from from I don't know from uh from social consensus perspective you know if you are using this Chan as settlement you probably also want to use a relevant sort of service for da and that's no that's just my my gut feeling I mean there's nothing again you know there's nothing stopping you from using other Solutions but I think RIS taking actually you know give people an opportunity you know to use a cheaper da but that's still somehow connected to you know to uh ethereum so I think that that premium is something people are willing to pay that's my guess yeah and I also think like alignment's kind of a meme and is actually originally used by scroll first so Hots off to their team um but I do think that U because we work closely with the ethereum uh Foundation then um it is a benefit um there are a lot of other benefits that include like cost and speed and um because we're not live on mainnet yet um I don't think there's a direct comparison to Alternative Solutions like Celestia or ail um I think the Ben biggest benefit for users is actually that it's similar to a cloud cloud service provider so it's kind of like this package deal where we're doing um a lot of Integrations with rollups as a service and different rollup Frameworks like optimism and um arbitrum where we're offering um kind of package services with them and um let's say like arbitron's antitrust um with conduits um self-served deployment service and gelato self-served deployment service because developers aren't going to be going on forums and trying to verify and validate which of um these modular package systems or develop um package systems all go together and it's very frustrating as a developer to do that but what they are going to do is based on let's say their you use cases like gaming like Di and based on the transaction volume or the trading volume that they're going to incur and the burn of eth fees that they will foresee they're going to select a package of services and I think the case that you're seeing right now is like optimism is known for a rollup framework for um uh these different daa solutions for particularly like nft use cases and and arbitrum is known for um defi protocols and having cloud service provider packages like that actually makes the developer um product um experience a lot better and the last thing I will know actually is that really other than that like user experience and developer experience uh developers really only care about cost they care about nothing but cost I was talking to like multiple def Founders that were doing maybe 40 to 100 eth in Burn um month and they were going to go bankrupt if there wasn't an alternative da solution so some of them are onboarded two SLA because it's the only solution that's available so it's not because they doing tradeoffs but it's because they need What's um available right now because there's uh company will go bankrupt and when there's a more competitive market that's better for developers as a whole so I think all solutions are great it's just different use cases and different benefits yeah so you heard it here first next year we'll be be Google Drive da and we'll move on from there as an ecosystem uh it no it's a like the costs of writing to the Bas layer are prohibitive for a lot of individual end users and as like I I want to dig into a little bit of the title of this talk modularity as an endgame like I question if that's actually the endgame of ethereum as a whole I know we've talked a lot about it as an ecosystem but modularity without interoperability between the different layers seems to be setting us up for a world of pain as an ecosystem and I'm wondering where does reaking fit into that and how will reaking help to increase interoperability between the different modular parts of the ecosystem start well as I mentioned in the beginning I think reaking might be the first step on etherion to adopt a more modular approach but we definitely need to do better on the interoperability side uh I know the pro even like raking will probably allow that with for example this idea that uh I've seen shiran mentioning of like watchtowers and instant finality so perhaps you can have like AVS is implementing uh layers of communication between all these applications which I think is uh it's great and yeah definitely this would be in my perspective something that would be required for the end game so I think raking is just like the first step yeah I can I just add one more thing I just thought about it I think also part of the game would be more um M Solutions on the avss because now this is uh very relevant happening on the the base layer and if we have we might expect seeing most of the execution move into the application layers instead of the of the layer one and we have a very strong me model happening on ethereum right now but we should expect seeing this also be implemented on rollups and other avss yeah yeah yeah I think Tina should probably you know on board SW you know as an ABS right uh yeah um I think like this you know monistic versus modular debate has been going on for for years um like here I I do think modular is the future because like you know blockchain is you know is a replicated Leisure basically so you know it's for you know it's for trustless decentralized consensus which means it's you know it's it's inherently less effective less efficient you know than than than centralized server and there's no way there there there's no way to to bypass that so I think like you know the key like the core value a CH can provide is security it's is you know is consensus and I think what you know aular is doing is to you know to I say to make the best use of consensus and security um so I think you know this centralized more or less centralized execution and decentralized verification uh and validation I think that's definitely the future I think that looks like future to me uh yeah I mean I think like obviously you know there can be and I don't NE think like you know monistic and modular they're like uh you know uh they're like a a a a one and two sort of um sort of uh choice so I think they probably going to you know finally you know merge like a super super powerful monistic Chan you know like with I don't know millions of TPS and probably you still want to you know borrow security from a more decentralized you know Network so I think you know probably they're going to merge in the you know uh in the future and you know and hopefully you know we'll see you know reaking playing a you know a vital role in that process yeah reaking as an enabler Tina any thoughts yeah so I actually think um the interoperability issue I the most contentious solution right now is probably puer networks and um I think you started to mention it um at the beginning when you reference Watchtower networks um and my favorite possibly is witness chain that works directly with us as an ABS um and as we have more abss that are um doing actual proofs of different balances of uh validations and signing um on igen Lay's Network um and retaking on igen lay as a whole um that might be a potential solution but there are also tradebacks of or trade-offs of using um prover networks and I think that's not being discussed yet um and I think it's because a lot of the um co-founders and researchers that are working on prover networks or solver networks um don't want to point out the security risk that are involved with um a lot of people working on um constricting different proof systems and once there's a security risk or vulnerability in a proof system that's made in an attestation on one chain um with another attestation then we're going to see a lot of potential hacks or vulnerabilities come about so this is definitely probably my favorite solution that re researchers are discussing and I um I love the potential of of ABS as using it but I also wanted to point out um the risks another thing that I wanted to say is I I think modular is just a narrative and I think it's a great way to sell the product and it's a very great way to make it feasible and accessible to developers and users to understand what Celestia is but I don't believe that right now the developer experience that we're building is modular from the way that developers currently deploy a DA layer to the way that they deploy a rollup to to the way that they even set up a validator there's nothing modular about it right now it's very hard the developer experience is poor and modular is a narrative that we sell for having prepackaged systems and systems that they can customize this experience and it's really great to onboard them and help them understand um kind of what it means but I think we need to think past that and then how how we can improve cloud services and the developer experience as a whole yeah if we want to move the entire world on chain we need to make it easy for developers and we need to have high transaction throughput which I'm excited about the potential for reaking to enable that and to help drive more shared security across the ecosystem we're running towards the end of our time for this panel is there any any final thoughts or closing thoughts from the panelists yeah based on the last discussion and Tina's comment I think that perhaps the developer experience is uh great example of something that we can try to borrow as well from the cosmos but what I have I have heard from the developers from Cosmos developers the experience is very uh fluid there it seems so yeah perhaps there will be um more for us to to be inspired from from the cosmos I would say yeah um so I I think the last thing I want to say is you know although we are like reusing security with raking I think the future will still be like multi chain so uh I don't think you know like any one chain will monopolize you know security providing and what we are trying to do right now is to is to actually connect those chains and to make the best use of the security that they provide you know not only cumos so you know um BDC or near or so um I think that's that's the that's like the end game in in overhead and yeah it's a lot of discussion yeah I would say we're only live on Gorly testnet for our operators and abss right now so if you're interested in um joining our rollup uh working group or becoming an ABS definitely come up to me to chat or um um message us on Twitter um and um stay tuned for our main net launch that is going to be very soon yeah I think it's going to be an exciting time for reaking applications and thanks everyone for the time and great conversation if anyone in the audience wants to catch up the panelists will be around afterwards and uh appreciate all the time thanks eth Denver Thank you thank