The Multichain Revolution: How Interconnected Blockchains Will Shape the Future | KBW2023

[Music] so uh yeah um this panel is called multi-chain Revolution uh and we're really grateful to uh have uh some of the sort of top Minds uh who sit from very interesting perspectives on this topic um maybe we could just start off with intros uh maybe just oneon-one uh maybe if you could just give a quick intro of your projects and what you guys do and how it relates to the multichain yeah uh my name is Zaki Manion co-founder of simier Finance uh we actually use we we were a system by which you can have actively managed defi strategies so we have a product called real yield eth real yield eth is the highest Yi eth yielding Vault on ethereum um it generates uh yield from doing things like Leverage staking of eth um and also uh providing liquidity on uh uh like uh on dexes for eth liquid staking tokens it's Market made over a billion dollars of transactions and eth liquid staking tokens uh it's a really strong demonstration of like sort of the power of our technology which is sort of combining a cosmos chain which does uh security and governance for these sophisticated defi CH challenges with execution uh on evm chains uh and we are integrated with Axel and we use Axel's uh messaging Tech technology to actually deliver messages from the cosmos chain uh to these smart contracts across the EVMS hey everyone great to be here I'm joros Vos co-founder of Axel Network Axel is a cross-chain messaging protocol that allows developers to build cross chain applications uh I'm sure a lot of you are familiar with uh Bridges uh and axel itself is not a bridge it is the underlying technology that allows developers to build Bridges but also many other types of applications like s zis company but we also have a lot of applications building on arway Le technology hey everyone I'm Mike from Archway uh Archway is a new layer one protocol it's designed all around value capture for developers and so the broad idea is that developers are creating a ton of value for underlying l1s if you think about a network like ethereum you build a successful application on ethereum you're bringing users assets transactions to the chain that creates a ton of value for the underlying asset but you as a developer don't capture any of that and so with Archway we've we've built a unique economic model that redirects revenues straight to developers and so you build an app on Archway it starts getting usage you as a developer get a proportional share of protocol revenues for all of the interactions on your your contracts um we and you know we are a cosmos based chain and so we've got interoperability in our DNA we also partner with and integrate Axel to extend beyond Cosmos and um yeah happy to be here and sort of give the perspective of the L1 side of things awesome and uh on my side I'll be moderating this panel uh my name is Ryan as you said on the coinbase ventures team uh Strategic investment arm of coinbase the largest US platform um so maybe we could start off by sort of defining multichain and this is kind of the sort of why should we care um kind of portion of the the panel but you know all of you represent companies at the Forefront of the multi-chain shift um and the first question is kind of why should we care about multichain and specifically why now right because I think our industry always talks about these topics but it always takes a while for them to kind of form and develop and ultimately get product Market fit and it feels like the conversation around multi-chain especially now is quite relevant um so wouldd love to kind of maybe just get a sense of you know what's different this time why is multi-chain more relevant uh I feel like maybe the Axel folks would probably have and not to put you on the spot uh but would have probably the best view here and then I would love to hear from um the arch and somal teams as well yeah great question so multi-chain is the belief that there's going to be hundreds of chains that all are going to have significant economic activity on top of them and at this point I think it's indisputable uh given how many people how many important companies in the space are building cross chain and incentivized to launch their own layer ones I think it's indisputable that the world is going to converge to such a future uh I think the other important reason why we need many blockchains is that a single state machine a single blockchain today is not going to be able to do more than something like 10 million transactions per day and if we want to become foundational architecture for web 2 we need to scale this by an order of magnitude and this is really really hard so really the answer is to scale horizontally and create many many different blockchains right so to me that's that's the inevitable the inevitable future and uh once we accept this as an assumption the question is how does this relate to developers but also the end users right if you're a developer how do you navigate this multi-chain Paradigm do you build on one blockchain do you Deploy on many different blockchains and it's a very complicated decision and there's a lot of confusion in the space right so with Axel what we recommend to developers typically is big one blockchain the best blockchain for your use case and through messaging allow users from any other blockchain to access your application and you can you will be able to do this with seamless a user experience from any wallet directly with one click right use any asset on any application on any chain so really like the cross chain movement is about how do we enable simless user experience in a world is fragmented and there's many different blockchains so I guess the one of the powers of having multiple blockchains is the ability to like sort of deeply customize a blockchain for your use case the so-called app chain thesis uh we've seen that app chain thesis sort of play out with similer and the sort of strengths and weaknesses of building in a multi-chain environment uh ethereum L1 uh the uh uh evm environments generally have the richest defi experience the most transaction sort of uh value transacted and the biggest opportunities for strategists on top of similia to build uh differentiated strategies uh that generate high yields um and you know we've we've seen that across the sort of successful strategies on simila but what we what was key to making simier possible was having a customized blockchain that could implement the sort of regulator the sort of regulatory self-regulatory and governance aspects so that we weren't actually providing putting user funds directly under the control role of the strategist um that the strategist aren't just a glorified multii that there actually is a protocol here that is validating uh trades and decisions that are coming by strategy that can step in uh if a strategist disappears or something goes wrong uh this sort of multi-war security architecture is why you know we've been successfully growing TBL in selia uh past $30 million uh and you know there's just ever more e sort of under management of the protocol yet we're and we're able to safely do all of these sort of sophisticated strategies in a decentralized setting we also are seeing like increased demand for like the real for the tokens that come out of the strategy like the real yield e token to be used in defi protocols on sort of other layers so uh you know we have both Cosmos chains and E l2s that want to use real yield e as a representation of the best sort of the highest possible eth denominated yield uh in their D5 protocols build things like perss and lending protocols on top of it so this sort of like layered composability increasingly is going to be the pattern we I think of the strongest apps uh in blockchain and the reason why I've been working sort of in interoperability for all of these years yeah I think these guys hit on it well the I think about scalability as as Georgio said horizontally scaling across multiple chains as as zucky said sovereignty and the ability to configure a chain across the stack to meet your community's needs and PR references not everyone wants to exist and operate within a singular monolithic system people want to tweak things across consensus security economics governance um and then I think the other the other big thing for us is allowing Builders and developers to expand their addressable Market just to tap into new chains which which bring new communities new users new assets more liquidity um it's yeah you can't exist in an island there's there's very real benefits to Social and economic integration and the way we think about things around just creating sustainable economics for the developers that are building on the platform multi- multi-chain is a is a key component to that right so to summarize sounds like a little bit mix of the ability to have flexibility um on the project side U both on a business and Technical perspective uh as as well as the ability you know for scaling in the horizontal thesis that a lot of people here have chatted about sort of previously this panel as well um I think on coin bases side of it as well you know I think we definitely took this view of the multichain approach kind of when we were thinking about incubating base which is a new evm compatible L2 that we recently launched um so I think this is definitely sort of top of Mind especially as we're seeing um just chains across uh different Frameworks whether that's in Cosmos or evm um you know think it's it's it's good to start at the high level there um maybe it would be good to zoom in a little bit on specific testimonials or examples or benefits that multichain specifically provides to you guys so um yeah you know I think we have really good perspectives across your three speakers but maybe it would just be great to hear if you could maybe each share like a use case or story where the multi-chain approach made like you know an actual impact for you guys uh managing or building the application or whether on the user said and Zachy I think you kind of tapped on this in the answer to the first question I mean I think the other thing that has been the case is that you know when we first started building simier we actually had to like sort of build our own vertically integrated Bridge into the protocol um and that that was a huge barrier to entry um for for any Builder who wanted to build and if you know I believe that like the sort of similer design pattern is going to be a more common design pattern that other app Builders will follow that like having uh you know uh like Rune from from maker is sort of talking but a very similar architecture right now for like the fut for sort of the maker end game which is like you have governance sitting on one chain you have assets custody on any number of chains and that becomes like sort of the the sort of uh uh F that could become a foundational architecture but having infrastructure providers like axar come along and provide a common base layer so that you don't have to deal with like building your own sort of individual sof like vertically integrated bridge will decrease time to Market so where multi-chain applications could have taken years to build you know in the last you know in the past you know it now becomes possible in a matter of months to spin up uh a sort of multi-chain uh uh system on top of ax and another team that builds on top of axar that I've worked very closely with this squid um which builds a sort of multi-chain exchange protocol where you're able to sort of seamlessly swap so there's no like bridge then swap you're just like I want I have eth on eth L1 I want usdc on base I can get there uh and you know it's one quick one signature uh uh experience that kind of user experience again you need like this sort of secure base infrastructure and not having to build that yourself is a huge enabler yeah so there one comes to mind an application called astol on top of Archway it's it's an amm they have a pretty unique model where they use Liquid staking derivatives as base pairs within their decks and what they do when you provide liquidity they mint the derivative and then they they transfer that underlying token to its native chain they stake it with their validator and then they tap into that staking yield and send it back to their application on Archway and use that as protocol earned liquidity and so if you were going to provide liquidity in atom let's say you mint the atom derivative they send the atom to the cosmos Hub stake it with their validator and send the staking yield back to Archway uh which is really interesting because they're able to put their liquidity to work they're able to draw income from the assets that they host and really it's it's interesting because they're they've they've built a real sustainable business model because they're tapping into the staking yield from all the connected l1s and and assets that they support they've got trading fees on the decks and then they're tapping into the contract interactions on Archway and the protocol level rewards and boom all of a sudden you've got a a real actual business model which isn't entirely common in the space especially for dex's and so that's a unique one and it is uniquely made possible by being multi-chain and and tapping into all of those connected one l1s for staking yield great question and uh yeah obviously like I'm personally a big fan of uh you know SOA like squid that also zachi mentioned they've been around for a while and very successful in the cross chain ecosystem astol is another partner so I think we covered many of the interesting applications and uh I think this is a great question by the way it's something I get a lot you know like a lot of people ask me you know what is the killer application for for cross chain and just to give to give the contrarian view here to me like crossin is not really about an in Noel applications right if if you look at the use cases any single use case you could build on a single state machine on ethereum right on ethereum Main it it may not scale as well but you can still do it and when you go cross chain it's more about how do you enable those same applications to thrive and offer the the same user experience while you know having users in many fragmented ecosystems right so to me cross chain is about how do we make it so that any user on any ecosystem can access any application on any other ecosystem but at the the end of the day the applications that are exciting on a single blockchain are still going to be the most exciting ones when it comes to cross chain that's a really interesting point um you know I think from the coinbase perspective you know integrating new chains and contracts is very tedious because we have a very you know High bar on the security side for you know adding a lot of these things and we have to always balance the cost of integrating this as well as making sure that the ux for the user doesn't really change in a crazy way um I think to your point the the concept of sort of extending that application right I think for a lot of application teams they likely don't want to deal with a lot of the hard blockchain you know sort of lower level things um and so I think in some ways utilizing Bridge technology or or general message passing technology um can certainly kind of make that easier in terms of themi being able to Traverse sort of these new l1s and l2s as they they come live so um I think up until now we've kind of covered you know the use case and benefits and why we should care uh would maybe switch it back to sort of the cost of integrating uh the multi-chain into your guys's applications because I think that's something that is not uh quite as well appreciated obviously from the developers perspective so um yeah would be good to understand what it takes to add multi-chain capabilities today and any related challenges uh that you know yall have run into uh with that and obviously ax you guys are on the other side of it to kind of make that easier for the developer but we love to maybe hear you guys' perspective on this so until now we've all of sili's vaults have always been designed um so that all the assets are not bridged and all the assets stay on one chain so if we have a a a vault on eel one it stays on the assets stay on eel one users enter and exit the Vault on eth L1 same thing on an on an L2 or an ALT evm uh uh we are actually we we have been you know working on a design for multi-chain vaults where vaults can actually move where assets can where the Vault can uh assets can move across multiple chains be allocated there one of the I think the biggest challenges for developers is that like moving to multi-chain like will change many of the sort of fundamental assumptions and design patterns of your apps like the idea of being able to sort of like let's say a user is adding liquidity to your application if the if the user you know figuring out like what the total amount of liquidity in your app and the price of everything can all be done automically if you're on one chain if you are trying to price in uh like you know adding stable coins to a vault across multiple chains now you have sort of asynchron now you have to deal with the fact that like you have assets across multiple chains you can't instantaneously price all of the assets across all of those chains so you know the user experience you have have to account for this in your system design um and there are you know various approaches that might be suitable for various kinds of products and various kinds of defi products but like very much the fundamental nature of your app it's not simply just a matter of oh like I can just like add in multi-chain uh the sort of core economic logic of your application is frequently affected uh by designing for a multichain environment yeah completely agree with ziki here I think cross chain is just a new implementation Paradigm and you lose synchronicity right so maybe you want to do a cross chain swap you commit to a rate on the origin chain when the message ends up on the destination chain the price has changed right so you cannot fulfill the swap anymore and at that point you have to deal with a bunch of s cases so uh that's a lot of work that the application developers need to do to figure out around the specifics of their application um that said I think to get started with cross chain it's not that hard and maybe Z can conf confirm but if you want to send a message right now from an evm to evm chain you're solidity developer you can go pretty easily you know on our website read the documentation probably get started and send your first message with 10 minutes right but it is really like this new uh implementation Paradigm where you lose synchronicity that's really hard for developers and you have to account with all these complexities that uh come down from that yeah great points the within Cosmos you know you're the beauty of of IBC is you're getting interoperability within Cosmos out of out of the box for for us we're a cosm wasm based chain that's the VM and smart contract framework um of Cosmos that is really tightly integrated within the cosmos stack and IBC enabled by default and so to Georgio's point it simplifies quite a bit within Cosmos but then um you know I IBC only goes so far I would say that's that's the the the primary constraint and and limitation for dap developers and folks that are building on our platform today is native compatibility with Cosmos chains um but then hitting a wall thereafter and and Native IBC is um it's being implemented across other chains but it's going to take some time um but yeah we we base everything on km awom yeah it's a interesting answers I think um generally the the costs or even integrating the concept of cross chain will likely go down over time just as you see more uh developer attention and traction you know I think on the coinbase side of things the big announcement um at least from the circle side was usdc being able to be natively minted now in a lot of new chains which was not possible before um but I think is it took a long time for that to happen right and so um you know I think that's maybe just a first story or example of how a lot of these these things will uh probably go down over time in terms of cost and exraction I mean and usdc is becoming like a flagship example of like a natively multi-chain asset um with cctb sort of cctb which is circle Bridge sort of incorporated natively into every us like almost every usdc appointment and I expect every usdc deployment means that like you have an asset and it's a flagship asset but like the asset sort of almost natively incorporates bridging uh directly into the asset I think that also is a pattern that I think other asset issuers will exactly and um yeah I think stable coins um yeah I think there's a lot of sort of Technology standards which are now I feel like barrowing a lot of the concepts that have become popular within the ecosystem and so hopefully as you know native issuance of usdc into chains uh becomes a lot more prevalent uh as we think about putting maybe even real world assets or or other um stable coin pairs that are non-usd will hopefully also follow as as well so um maybe uh kind of moving on uh wanted to actually Focus the last section of the talk around just multi-chain Frameworks in general um you know so today we have many Frameworks around app chains um just to name a few a lot of you uh are are built on Cosmos SDK and and sort of related Technologies and IBC bridging as well um you know at the same time on the ethereum side there's been a lot of interest uh specifically on optimism's op stack as well kind of enabling that for the ethereum communities uh you know of which coin bases new L2 is built on as well um i' just be curious to hear kind of two things I guess one how each of you views the landscape of Frameworks uh in general today uh and then secondly I guess the adoption curve for these Frameworks over time um it's meant to be pretty high level so uh yeah for answer how you guys see it yeah um so yeah I I would agree around the convergence of of architectures and it seems like there's there's a fair bit of momentum behind Cosmos and the op stack at this point on the cosmos front it's it's pretty well adopted and and battle tested at at this point and I think as far as native interoperability it's it's it's tough to top IBC um when it comes to the op stack the launch partners that they came with were pretty extraordinary in in coinbase and Zora and a few others and they they brought instant legitimacy and and you know there'll be a massive scale of users that that follow um the the network effects around etherium I think they can sort of ride in that wake the developer Community the liquidity even things like wallets will will go a long way I think where they where they really diverge is Cosmos remains based around sovereignty whereas the op stack is is kind of following the this unifying force of ethereum and the community is able to Rally around that that's something Cosmos was never really able to figure out this this singular correlated incentive whereas theop ecosystem is able to just inherit that from ethereum and that probably to your second point and question around the adoption curve I would assume that that um you know Ops came out of the gate pretty hot with with base and I assume that momentum will continue at a at a good clip given given the network effects around the broader ethereum ecosystem for for Cosmos it's been a steady March over the years um but as you guys have have pointed out there's there's quite a bit of momentum around native usdc coming to the ecosystem dydx will soon launch a couple days ago the company behind pubg announced their their Cosmo based chain so I um you know I think they they both have different Pockets within the space and they they can Co coexist with uh Cosmos focused on sovereignty and and uh op kind of orienting itself towards uh more ethereum alignment yeah um I think it's worth also delineate a little bit here between native web 3 uh companies and then like some of the more traditional Enterprises like financial institutions uh from my experience at least today I would say Cosmos is definitely dominating on the Enterprise side right most of the financial institutions we talk to are building on Cosmos uh a few are building their own evm chains uh and then many are building on different Frameworks right like between Avalanche uh polygon uh some of the newer ones like ZK sync and uh I feel like all those different ecosystems they have very strong goto Market teams so I'm more of a believer that there's going to be like five or six different Frameworks and maybe some oneoff ones uh like Solana but um yeah overall it seems like everyone is doing good work so it's more about the goto Market here right and I feel like a lot of the different Frameworks will be used and then in defi uh net3 Native Wave 3 staff yeah totally agree that optimism has done an incredible job Cosmos obviously has been around for a while but uh yeah still I feel like everyone is doing good work and I do personally expect that there's going to be like six or seven ecosystems that are going to be quite strong for years to come so my sort of competitive analysis of the ecosystem is incredible momentum behind the op stack um and I think the big tradeoff is and I think dydx is adoption of the cosmos SDK is like is a sort of perfect example and like will hopefully be the like core will be like a really good example of like what what can be built on the C OS SDK uh so op stack very good for building something that's almost like ethereum um and then like has small incremental changes from ethereum benefits enormously from ethereum Network effects around wallets explorers Etc Cosmos SDK incredibly powerful and able to do things where you know block production is incredibly finally controlled by the application you can Implement sort of Novel me mitigations you can experiment with like completely different ways accounts work um you can sort of natively build in margin and leverage into like the account layer of the system you can natively build in like order matching into the block production system you can come up with novel me medications incredibly sophisticated stuff the reality is most Builders are not ready or don't have needs or don't have a use case that's V vetted out where you need that level of sophistication and I think like one of the biggest questions that going to sort of emerge and I think with these adoption curves is like are the are things like the O uh op stack going to gain these sophisticated capabilities uh By the time developers need it or is it you build your prototype and your first version on op stack and maybe you build your second or third version on the cosmos SDK I think all of these possibilities are are out there in the future is unknown yeah so to summarize maybe it's like the the scope of application and the level of flexibility that the application requires um it feels Cosmos has has a lot more ability to meet those types of Demands but the question is kind of are the things that are useful today in crypto are things like op stack like good enough already for a lot of those things and I think that definitely definitely fits the mental model I think of a lot of just like builders in crypto in generally when they think about which ecosystems to go to um I know we only have one minute left but just wanted to do like a quick hits like outro question you let's say we're sitting here on the stage one year from now um where's multi chain in a year what do you hope to see I think we'll see I think that it's going to become I think in general the trends are going to be ecosystems are going to look a lot more like each other um and end users and if we get all of these things like you know usdc CCP bridging protocols like Axel it becomes more and more invisible that there are multiple chains um like that should be the goal of every multi-chain Builder to make the fact that there are many chains invisible um and and that's that's the end to end execution 100% I think to on board a a billion users or or even a million users we need seamless user experience right and right now it's extremely cumbersome to use blockchains and to have the seamless user experience we need more and more people to to integrate cross chains so my hope is we have more developers integrating cross chain and more people using the technology next year and just adding to that I think an elev ated quality in in the products better products that have some stronger degree of product Market fit and and sustained meaningful traction it's you know the interoperability infrastructure modal tooling all of this is great it's exciting but it's a means to an end we um you know we need to focus on real products that solve real problems for real people and so um yeah looking forward to that next year awesome well I want to thank uh Zaki Georgios and Mike and um yeah hopefully we can talk about this in a your's time and we were're all right so awesome thanks guys thank [Applause] you