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 at leite solution engineering at scale labs and we are um a layer to side chain that enables um scalability for the ethereum network I'm Carl creeder I'm the CEO of plus I'm also the inventor of the phonon protocol um so phon is a uh Hardware enforced uh layer zero offchain scaling solution um that allows people to trade any asset from any blockchain um offchain with no fees um and it has infinite scalability so there's 8 billion people using the phone on network we can do 8 billion transactions per second oh cool oh yeah thank you for the introduction so uh I guess before we talk about the state of scaling why don't we uh Let each panelist uh describe how do you perceive scaling or how do you guys Define scaling I guess starting with Carl since you still the mic okay um yeah so I mean f 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 um there's there's definitely solutions to scale where you can break or moderate those guarantees in some way uh where the ultimate moderation is effectively like using a database that's run by one person um that's that's creating State transitions right so when when we talk about uh SC in if it's layer zero or Layer Two or whatever it is um I think we also have to be like always very conscientious about what tradeoffs we're making uh to understand what we're actually achieving in scaling uh and what uh security uh economic and consensus guarantees we maintain with whatever systems we create all right and I think um the question was about the how do you define or describe scaling yeah so the way uh scale Network defines scaling it's pretty much um 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 etherum is a great layer what we're saying is that with the scale network if you want to run within the scale Network you're able to take your application that um 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 suddenly 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 to any other volatility within the network by other projects but within this multi-chain world you're able to have the best of both worlds you have the your own space but then you are also able to interact with other change within that Network um we call this new Hub model so we have liquidity hubs we have nft Marketplace hubs and because it's a gasless environment you can go back and forth between all these different scale chains in record time because it's um all the transactions settle within 3 seconds um um but you're also able to take advantage of the um no cost and I think that that's a really interesting way of tackling um scaling by removing the frictions that developers are seeing on ethereum and having those aspects run in the scale Network I do believe that there's um definitely space for all types of scaling um out there and I think that there's more um you know use cases that can be handled by other networks for for sure but I think our approach is to um pretty much help Empower and um uh make like gaming and NFC marketplaces and um I guess liquidity and dexes running a a better environment thank you uh 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 so um yeah when 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 uh through which humans could collaborate and I think we lose much of that objectivity with proof of stake um so the scaling solutions that in layer one that I find most interesting are the ones that are using proof of work um specifically in that realm I think kadina is doing interesting work uh I think conflux is doing interesting work and I also think uh qu Network um is also an interesting thing uh so they're all using proof of work um I personally think quiet network is the best one because of kind of how it's doing uh scaling through hierarchical merge mining um but yeah I think I think there's going to be um 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 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 there still are like a lot of networks are I'm sorry to say it 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 um blockchain really grow and I've been at scale 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 oh that's that's a good answer 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 offchain 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 um 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 scale Network to ethereum to binance smart chain to polygon to salana like um like connect is one of those Hopper is one of those po 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 uh if there's any interesting ideas or innovations that are happening in offchain protocols that are building on ethereum as opposed to layer ones which is the previous question yeah yeah okay um I mean per personally I think you know optimistic rollups from my perspective are 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 uh and let's say that that optimistic system goes Rogue and it needs to collapse back to ethereum um 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 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 ex exactly um so so if if if you don't mind because because I didn't um kind of give an overview of phone on if I could do that at some point I was about to say I was about to ask that as the next question oh okay I guess we can segue to 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 enforced uh offchain 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 Fess 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 uh it's interoperable with any blockchain so when I use the word layer zero I mean it in a very literal sense um because it doesn't depend on any protocol the only thing phon on 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 layer zero um did did I get 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 cash 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 get it mined into a ledger that's publicly viewable by nodes um I simply take a bill and I 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 phod 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 eim in it that supports phon on 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 um we did this in a verifiable way we did this in a unique way and we did this in an infinitely scalable way uh the magic that's actually happening there is we're leveraging um sort of the security guarantees that we can get from um these uh secure enclaves that you find in smart cards SIM cards or the embedded Sims on phones uh and this basically allows us to create a key pair that we can guarantee only exists in exactly one spot on a card uh we can guarantee that these cards can't be replicated and then we can guarantee that we can automically 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 doesn't have a ledger doesn't have nodes doesn't have miners 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 on this card and I could give it to you so the answer is also it doesn't need electricity you add that L 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 AAP 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 scale chain for your application um 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 um 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 um in a one-chain model where what does that really mean if there's a thousand um applications running on that one chain uh versus having with your own um scale 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 foul storage some for the interchain 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 like combine these scale chains in a modular way I think it's a 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 um and never crash I think within the scale Network what's really also unique is that the only thing that can happen within scale network is it 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 ins skull Network so you 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 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 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 I'm big proponent of Qui Network um they're making a scalable evm proof of work merge mind Network um they're in testet right now so I think that still counts as a a research type typ thing um you know I think it's interesting one of the interesting things about scaling um generally and and why I think um it's going to be an interesting couple 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 charting liquidity out right so if you have different scaling solution or if 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 um you know maybe that's you know charting with ethereum maybe that's another project um and there's a lot more availability there I think people are going to uh more seriously uh think about the tradeoffs and the economics of moving into whatever it is if it's phonon as an L zero or if it's U you know scale or optimistic rollups you know as an L2 um I I think those tradeoffs are going to become more apparent and it's going to um people are going to start to identify them and then use the systems that kind of really benefit what they need to use them for so there's going to be like a consolidation in liquidity and there's going to be kind of like a um an attrition of of scaling Solutions I think uh as we get more L1 activity all right um I was trying to think of something else but I think this is probably the best example internally uh we have a research um sort of just like sector and our engineering team and they started to research what would it look like to deploy machine learning directly onto a blockchain and as we were researching that we realized we need it somewhere to actually store the train models and that's how we came up with foul storage so it's kind of like ipfs but instead of having it outside of the chain is 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 um you know nfts are all the raids right now but there's also this issue of the 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 nft really represent whereas if it's all wrapped into an actual um verifiable object on the blockchain I think that is a really interesting way of uh creating an asset that supposed to be governed by blockchain and so while we haven't released machine learning yet we have released um file storage with the promise of releasing machine learning which means that you'll be able to run train models directly on the blockchain specifically scale and have it sort of um maybe let's say determine what pictures um get saved to the blockchain determine um what words um that you want to like exclude or include um and 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 um uh you know thing that we're doing internally that I would love to see pushed out to the world let me 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 coven sorry crypto coven crypto coven oh yeah the one with the the ladies I can only say the word uh Carl [Applause] board ape Yacht Club board AP ape yach 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 to do that I just say Bitcoin utxos they are non-fungible okay so so uh just one more women rise as well is a really good project yep okay so back to more like know back to more serious topics I guess I guess NFS are also pretty serious but you know back to the topic at hand uh E2 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 uh 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 skill Network it's a a neutral change I think we love to see it we're excited to see it come um however I'm I guess I'm I'm worried about what will happen once that um 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 is it's pretty neutral like regardless of the changes that ethereum makes we are built to support it so uh we will support e2.0 the same way we support e1. so I I would say phonon itself is extremely neutral because all we do is trade key pairs so we don't care whose key pairs we're trading from where you know uh the more skill you get on chain the less need you potentially get for certain applications offchain um but you know I would you know say we 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% of stake and unlike a proof of work system when you have 51% of stake where you can simply eclipse the network for a given period of time potentially do a roll back or you can start censoring transactions kind of uh if you have 51% of a proof is 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 Chargers 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 uh 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 uh but if I want to say something really controversial if that happens the federal government doesn't need to make a fedcoin they can just Co-op ethereum I think the actual number is 50 5% 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 keys not your crypto not your keys not your chain so if you have any money on centralized exchanges you should withdraw it I agree buy lce one from grid plus and put your uh keys on there okay so uh one topic we haven't really brought up yet so far is uh zero knowledge proofs uh people are pretty excited about the scalability benefits or scalability potential of the usage of zero knowledge proofs uh 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 proofs 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 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 is super interesting uh privacy through things like tornado cache is uh 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 and how to do it um I will say and maybe this is a little bit technical um some manifestations of uh systems uh that leverage ZK technology um they're uh they're having to leverage something called a fine coordinate ECC and um they're interfacing with uh systems that don't natively support a fine coordinate ECC so uh like metamask or like a grid plus wallet um or any wallets or any hardware wallets for that matter U they don't support it but a fine coordinate ECC allows for like easy provability in ZK narland um 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 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 cash so that's like my one gripe against it but otherwise I love DK smart that sounds very scary okay uh Christine are you yeah and I know we're out time so I'll just say that um you know we love ZK proofs and uh for the scale Network they can run within the scale Network youm 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 scale Network by going to scale. network um and definitely reach out to us or come see us at the booth uh we have a booth here here or come to our support station if you're hacking um you can learn more about uh phone on at phone on.

network you can learn about grid Plus at grid plus. uh we also have a grid plus Booth um yeah so you can get phoneon cards you can buy lates uh come talk to us join our Discord all the above okay thank you so much appreciate it