Interop in an L2 World | Susannah Evans, Fig, Brandon Truong & Austin King

partner at archetype we have a great group uh crew here let's start with 30 second intros to my right uh what you're working on and who you are all right rapid fire hello everybody Austin King co-founder of omni Network Omni is basically an interoperability solution purpose built for the ethereum ecosystem we use reaking to pull this cryptoeconomic security budget out of ethereum itself and use it to let rups talk to each other um you know I know it's been a long conference I'm going to intentionally make this a little more spicy so looking forward to this hi I'm Susanna I'm the product lead for the IBC team at the interchain foundation IBC stands for inter inter blockchain communication protocol it's a generic interoperability protocol that can connect any blockchains but it's used predominantly in Cosmos right now um so yeah looking forward to the panel hey guys my name is fig I'm one of the co-founders of squid and Squid is a API and set of developer tools that let you take any token on one chain to any token on another in one transaction and do other more complicated things like buying nfts in one click on any chain staking on any chain uh we're using IBC under the hood as well as Axel uh which is an uh underlying interoperability Network hey guys I'm Brandon uh from data chain and I uh we're working on a Omni chain blockchain so what that means is we connect natively to pretty much any blockchain agnostically and serve a evm programable era where you can orchestrate transfer do anything you want with those assets so the most exciting piece is Bitcoin right now so trying to enable new use cases for using Bitcoin with the rest of Defi and crypto cool so I'll try to make it a little spicy I suppose um I think with ethereum as you compare it to Cosmos one of the issues is that with the rollup Center Road map I think interop is a second class citizen so with Cosmos that's been outlined from the the start and I think now we're kind of backing into Solutions and I think there's pros and cons but high level what do youall make of that yeah uh I agree I actually totally agree so this is why we're building Omni there is no like canonical path towards having interop in the ethereum ecosystem and so what we're seeing is the global Network effects of ethereum are just obviously degrading and so this is a clear problem especially as platforms like salana just offer way better user experience at this point and so uh what we're particularly focused on is just uniting all these different rollups that have created this fragmented ecosystem and particularly we're focused on doing that in a way where we're promoting Open Standards so you know I don't know if people here have heard of like Axel its's layer zero ofs more of these like proprietary token standards fundamentally we think that's a bad idea there's been a ton of hacks in the space a lot of that money went to North Korea pulls a b ton of bad attention into it and so instead what we can do is design Open Standards like xcc2 which is a token to stand that gives asset issuers themselves sovereignty over where the asset goes they can Whit list inter op networks they can Blacklist them get them off they can put rate limits on it it's fundamentally a better design and we've been driving a ton of traction around this recently there's like over seven bill in cumulative market cap that's committed to using these standards and honestly selling it to these teams is not that hard because it's just a better product than what's out there in the market so the way we see this going forward is there's the interop space here where it's like how do people use these tools that should be open standards and then there's the verification of how do these messages get passed around that's really where I think most of us uh not IBC uh are like uh involved in the space though so that's how we see it has not been formally like first like front and center in the ethereum road map but that actually presents a lot of opportunities to teams out there yeah I think like uh ethereum is like clearly like you know a pioneering blockchain and design philosophy of its time and like when it launched it actually had you know lots of core PR around interoperability but that notion of interoperability was between applications built on ethereum and then I I think ethereum just grew so quickly and gained so much traction and delivered so much like value to the blockchain space that it actually kind of like outgrew itself and rollups I believe it I mean it wasn't the first choice for the scaling solution but it enabled more people to get involved in a more active way but all of these people building their own rollup Frameworks bespoke rollup ecosystems they're fundamentally not incentivized to cooperate um and this is like kind of the consequence as well of ethereum not being like definitively opinionated about interoperability and leaving it up to kind of app layer Primitives to decide how that should be and that's like in contrast to Cosmos where you say interoperability should actually be a core kind of fundamental primitive of blockchains and applications can be built with that primitive rather than like leaving it up to applications to solve that well that's an issue as well right because I think what we're seeing is you have you know the op super chain that's doing their own like Flavor of interop you have ZK sync hyper chains starkware fractal scaling arbitrum orbit and uh doing you know so I think that's also a fundamental tension where you seem to have these L2 ecosystems trying to bake in their own like native interop at the same time you're trying to solve for how do you do cross L2 and cross L3 interrupt yeah it's like the xkcd meme like everybody's got their own solution yeah yeah yeah I might take the I agree with everything these guys have said I think the lack of standardization can be seen as a feature though not a bug um part of the beauty of web 3 is that you don't get the protocol given to you you can innovate at the protocol layout and despite the connections between all these rollups it's actually The Innovation that every new rollup brings they're like doing a new type of ZK or a different gas model or how they incentivize Builders and from my perspective our API Aggregates a bunch of different chains and we use Cosmos and ethereum and the hardest part isn't actually aggregating the interrup it's aggregating all the different micro changes that each one of these l1's and l2s has put into their stack so I think the things like uh standardizing the interrupt layer is actually not the biggest issue like we're um we're dealing with getting just transactions included in a in a blockchain can be really hard when you are used to doing it on ethereum um and so yeah I think we should we should move towards this idea of creativity and cre keeping protocol Innovation like possible rather than locking into standards you can think of like email um it's been outdated by Messenger apps like like WhatsApp and Facebook Messenger for example like it's much easier to communicate these ways we use telegram for communication our own business and the protocolization of email did a great thing for making the internet uh connect with itself but it also meant that we had to do this Leap Frog into a new technology um so I think we should keep this fluid motion until we find something where everything's working and then maybe we s un astounded yeah uh I have to Echo what you said um I think there is still kind of like we're still in the state of dust settling of L2 strategies coming up interrupt Solutions coming up so um I don't really follow exactly how the EF works but I my guess is there's not really a clear winner in what interrupt should look like uh and if that should maybe expand beyond the ethereum ecosystem in some way kind of like IBC um the way we look at it is kind of flat so other l1's or l2s in the evm ecosystem are uh kind of right for inter making interoperable so um rather than kind of just sticking to the evm ecosystem can we have something that is standardized across all like expanding XC or C20 or whatever those standards are to General fungibility across Cosmos chains or Bitcoin or what have you yep and I guess from a project perspective when I think about you know the design trade-offs that an L2 takes and just the nature of it being in L2 how do you think about how that informs your own designs are there any key kind of like differences that you are afforded when you're working with l2s and and how that informs your specific projects from either a cost extensibility security perspective like how what's the main difference you think between facilitating interop between l2s and l3s rather than the different l1s I suppose yeah so I think one of the most interesting things here is the amount of innovation that we can have at the L2 layer itself everybody's just building evm equivalent rollups today like cool glad we have rollups but there's a ton of room for Innovation on the actual like VM that is running there it's going to enable us to bring far more developers into the industry at large because people don't no solidity and frankly solidity is not that great of a language to work with so if we can design VMS where people can program and rust that's fantastic other languages as well so Omni specifically we only work in the ethereum ecosystem we built this network very intentionally to be the best product for the biggest Market we don't work with other blockchains historically all interop protocols have focused on bringing assets and like data to other blockchains we don't do that it's purpose built for ethereum it pulls security from ethereum itself uh and intentionally when we started designing this network we did it in a way where there was a very minimal requirement for integration rups don't actually have to do anything to get integrated into the Omni Network the Omni Network sits above and actually observes these State updates itself so one thing that we saw when we started designing this about like a year and a half ago was that there would be a proliferation of VMS here and we needed to empower uh further Innovation to happen at the L2 layer um so uh we don't care if it doesn't make a difference to the Omni network if there's different VMS there and that's the way the stuff should be designed if you look at the Internet Protocol sack there are like very minimal requirements when you move from like one layer of it to another I think in the space we have had just like a very silly perspective and like sometimes teams Market themselves as like the TCP IP of crypto that's nonsensical like TCP IP does not have a business model all these networks they might not be companies but they it costs money to secure them they have a business model they have to take Revenue somewhere the reason the world uses TCP IP is because it does not privilege any specific specific entity that's out there it's just a minimal standard and so that's how we looked at it is just like what is the minimal amount of work or like the minimal data structure and like compliance that we need with these rollups our perspective on it is like the world is going to be built on ethereum like uh right now the user experience is terrible and it's super expensive but by the end of the cycle it's going to look like salana like we are building these externalized networks that still have the security of ethereum itself and by the end of the cycle like we are going to have like subsecond finality from the user experience perspective um so that's how we look at like what how you should look at all these like different architectures that out there require the least amount possible from them so you can cover everything globally um I think maybe I just wanted to know um like IBC is a little bit different in that the protocol fundamentally doesn't extract any fees from people that use it so to be clear IBC is the closest thing to TCP IP we have because it's not a network it's actually a standard okay yeah well okay then I I guess that yeah that that was basically my point just to note that um it is maybe slightly different from what we think of bridges or things like that today um but yeah Mak sense so I want to talk about a couple of different flavors of interop that I think is emerging given l2s one way to do it is through shared sequencing so instead of having an externally verified Bridge you have a sequencer that does the transaction ordering for multiple rollups and so in a way that gives you some flavor of at least inclusion guarantees maybe not execution guarantees some projects have claimed you can do it um why do we need external Bridges at all if we could just have inter out via a shared sequencer Network on an L2 yeah I think uh sh Shar sequencer uh interrupt is something that's really exciting but we want to see in production and um see someone build with it and then what the developer experience looks like for sending a message between two say roll out s share a sequencer and my view is that we've already seen multiple different sequencer projects popups there's going to need to be interrupt between those let alone we still have salana as a you know there's going to need need to be interrupt with salano and all these new Tex Stacks which get built so I think interrupt still has a future um but my viewer is definitely that we should we should still use the most secure stack like say the L2 or L3 native bridge for collateralization of assets wherever that's possible but because often they're quite slow like optimistic Bridges take 7 Days um we still need an extra layer of for making settlement and execution happen between these environments quickly and then you maybe have an even third layer on top which is with intents which gives you instant finality but much worse liveness guarantees for example so I think we'll always have a blend of all of these these different architectures to give the user the best experience with the higher security yeah I think with shared sequences um as you already said it's like if you use a shared sequencer Network and you have multiple rollups plugging into that you can guarantee inclusion but if you actually want to start guaranteeing execution you need to add additional proofs to that and then you're already starting to start building something that's increasingly looking like the inter blockchain communication protocol um so to me it's like with all of these design spaces if we want to have something which is you know has trust minimization um those kind of core principles that we want for interoperability they're all going to kind of converge in this design space of some kind of like client proof based uh interoperability and uh I think the shared sequence or interoperability is going to be be no different especially for people that are looking for Atomic execution as well I I think one thing to think about here as well is shared sequencers are awesome uh this is going to be super cool you know for a long time I think a lot of people viewed decentralization of the sequencer as like a regulatory Arbitrage opportunity obviously there's risk with just running a CPU that processes all these transactions so uh what we're seeing now is you can get pre-confirmation out of shared sequencers and so this is going to be a fundamental thing for the ethereum ecosystem like the leading shared sequencer team in my opinion is espresso for example what we're going to be able to do in collab op ating with espresso is their shared sequencer networks are going to be able to issue pre-confirmation of inclusion of transactions they'll have to work with builders in this but still you can get this down to like 100 millisecond level and this is how we're going to achieve the salon ux on ethereum itself and what we can do is we can relay those pre- confirm those pre-confirmation on the network uh none of these distributed consensus protocols can handle like the real vision of ethereum of processing you know like hundreds of thousands millions of transactions per second so fundamentally there's still like a throughput constraint and that's what's blocking the vision of just like all rollups becoming a big shared sequencer yeah for us like I was saying before we're heavily focused on L1 connection and our hesitation to connecting to certain l2s is we don't have things like shared sequencers that make it kind of like a more sustainable thing to connect to because for us if a chain in our sort of Hub and spoke model is compromised or whatever um that can have Ripple effects to other assets on other chains that we're connecting to um so yeah we're bullish on whether it's something more like IBC or L2 shared sequencers to come to the game to where we can start integrating L2 so we can do L2 to L1 L2 to L2 L3 to x what have you yeah but there is this fundamental tension between security and cost slsp speed SL extensibility where I believe probably the most secure model is a two-way like cine bridge where you're actually doing a consensus proof and I think the benefit of being an L2 is you do have cheaper execution fees so you can either verify a validity proof of the like client or you can actually just do the like client verification directly on the L2 um you can potentially have a like client Bridge from an L1 to an L2 and that feels cheaper so the ideal state in my mind is why don't we just have biral light client Bridges ZK verified or not and then just have that be the most secure model yeah I think that's we're going to make it spicy I think that's a nice picture of the world but it's very practical like if I don't know how like verse the crowd is in ZK but generating proofs for moving well one you need finality on these things so that's a huge problem in the ethereum ecosystem but uh the cost to generate ZK proofs at this time uh and the time to generate ZK proofs at this time make them a terrible solution for interoperability today in like four years are these probably going to be an incredible solution for this yeah like next cycle where we're kicking things off I imagine this will play a very important role in interoperability but I actually disagree with the fundamental premise here that like there's a trade-off between all these things and uh I think that's solved with reaking if you have a network that is crypto economically secured that gives you extreme speed like our Network reaches consensus in under a second and so we have an extreme level of security literally like this will be billions of dollars something that has never been able to have been achieved before with an external network that did not pull a security budget out of ethereum itself but I think that that like used to be the state of the world but just not the case anymore like using reaking you get the best of security and performance down the road we'll play with ZK more it's impractical today though for interop at least yeah I mean I I do think the future will Converge on ZK based Solutions and I mean it's clear on the ethereum road map right they have single slot finality coming up they have a lot of um stuff around snars and snark based proofs um having a proper light client that's not just based on the sync committee like it's clearly coming um but yeah I agree it's it's about the timeliness of it um so yeah there is always a tradeoff until we reach that kind of the technology is ready yeah cool well we're at time unfortunately maybe one last question from my right I suppose how many l2s do you think there are going to be in five years millions millions nice all right everyone so uh now is the perfect time for a break so if you need to grab a coffee take some s or call your mom