Building Between Chains w/ twMatt (TapiocaDAO)

Transcript

[Music] thank you over the last few months the way I've been thinking about ethereum has been changing I used to think that the most important the primary purpose of ethereum was as a platform for credibly neutral transparent decentralized Finance and while I still believe that a new Financial system built on a foundation of eth will become the primary system at some point in the future and becoming more and more convinced that the purpose of ethereum is trustless compute and not trustless

Finance beginning with last week's episode strangewater 16 with Xerox Toki I began and will continue to be exploring expanding and wrestling with these ideas the most rewarding part of creating this show has been the privilege of following these Concepts back and forth with people much smarter than me and so I hope that you will enjoy the journey as we figure this all out together so with that being said let me introduce you to today's guess TW Matt co-founder of tapioca functionally tapioca is a simple borrow

lens stablecoin protocol but what makes tapioca special is that it is Omni chain it does not call any one chain home base rather it is native to all chains this conversation has packed with so much so here are a few things to listen for in particular how layer 0 works and how tapioca leverages layer 0 to be omnichanne how tapioca has customized the standard layer 0 configuration and how this customization allows tapioca to augment on-chain protocols with off-chain computation and if you're feeling really ambitious

make sure to keep ZK cryptography on your mind at all times in particular think about how a snark can be used to validate arbitrary computation without having to actually run the computation directly one more thing before we begin please do not take Financial advice from this or any podcast ethereum will change the world one day but you can easily lose all of your money between now and then all right enough with the introduction let's bring on Matt Matt thank you so much for joining me on the strangewater podcast oh thank you so

much for having me I'm happy to be here man no I'm super excited for this conversation because I think that um you know what attracts me to tapioca is like is you know this alignment with a lot of the new uh crypto thesis that like I have in my head so super excited to get like really deep into it but um you know I'm a huge believer in like the builders behind the projects and like the really only thing that matters is like the people and the uh stories that brought us here so with that in mind uh Matt would you just like kind of introduce uh yourself and like tell us like what brought you to ethereum and um yeah and outside the financial system uh no yeah I mean a great great way to

start this off and I I you know I feel like I don't get a chance enough to bring this up so I I like uh like going back a little bit but yeah no so um for people who know me I'm uh I'm Matt I'm a co-founder at tapioca and basically to kind of go in my in my history of of how I kind of ended up in this crazy Place uh basically I was a product manager for in a lot of uh gambling technology back like 2015 to 2017. um and uh yeah the company sold off and I was actually integrating um crypto into into uh the tech stack and so sorry to interrupt but when we're

talking gambling are we talking um like I remember that I think that was like the FanDuel time is it that kind of gambling or is it like Casino style gambling like what are we talking about so specifically Sportsbook um and and like eye gaming so uh the company I work for is called open bet so it basically was like a an infrastructure where any like gambling outfit uh again mostly like sports book gambling um and more gaming style stuff they could use the tech stack to build whatever they want on top of it so like we didn't actually build the games like other companies would build the games on top of our Stacks I almost think like Unity engine for games and like you know

regular like video games so like we were kind of like the unity engine for like gambling type games if that makes sense yeah for sure for sure but uh but yeah no so I mean basically I did that um you know for uh quite a few years there and uh I was always super interested in um crypto defy um and just you know this like I said this kind of crazy space here um I mean back then I was heavy into like bit shares um you know like Dan larimer's old stuff and um you know all all types of very wild and wacky experiments um and then yeah actually bringing us to ethereum when the ethereum Ico happened

and we started talking more about like smart contracts and things like that that's when I got like super into um everything and I really saw that where this space could go um but you know I was still working full-time and everything like that um so the company opened that sold in 2018 and that's when I kind of you know I took a step back I was really heavy into researching it and just you know being involved at it in in kind of like a third party um you know you know kind of lurker type thing um and then yeah when covet hit and you know we were all kind of at home that's when I spent like all of my time on was just kind of

um you know involving myself in you know the ethereum ecosystem defy everything and uh yeah I mean basically when late 2021 was like was when I was like I got um what I think is a great idea um and I started meeting some developers and I was like let's let's do this and then uh here I am yeah awesome and so like you know it's like totally makes sense that you're at this gambling place like gambling and crypto is like a very uh Perfect Fit just because of like um you know whatever we don't need to talk about that but like it's one thing to like be there and integrating it and thinking about like okay how do we use

this technology to achieve a goal and another to like like hear the call of the world computer or I guess at that time of um you know like satoshi's Vision or just to be like hyperbolic about it right but like to hear the call and like to understand that like this isn't this is something like you know big and and worth like dedicating a career to and like you know I guess my my two-part question is like what why did you feel like what about you um allowed you to hear the call and number two like when did that happen in this uh Journey um I think it I think really what drew me to

um ethereum was it and just it kind of like you said like this you know Financial computer of the of the world you know that we're you know that we're all kind of collectively building um it it really is just the the fact of um you know I I love the idea of a public Ledger that is transparent that we can hold each other accountable um you know obviously all this started from you know banking collapses in 2008 and you know here we are you know a decade later kind of in the same boat um and I think you know and and really it like a crypto obviously like back when you know I was getting involved was was gambling I mean 2017 2018 you had

the Ico craze and everything like that but I really did see more to it like I I saw that there was a lot more that we could potentially do with this to make the world a better place you know and really you know just put you know Finance I think is kind of like the base layer of of like society and I think putting that onto a public transparent Ledger is a really powerful concept and I I think we've already started moving way past just you know degenerate gambling and we're finally now seeing some fruits of building things that are a lot bigger than us like just to name a

few like lens and um you know just you know all these you know base layer applications like uni Suave you know there's a there's a lot you know it we really have built like an alternative Financial system and just seeing it mature is incredible in of itself yeah well there's a lot to pick apart there um and a lot of it I think that we'll get to throughout this conversation but just to cue off that Insight that you had uh finances the base layer of society like I I have uh come to that same conclusion in kind of like a different way but um you know like through you know for another time we can talk about like the books and like the why Like My Views are

like deeply rooted in in like how I understand history but like I too believe that like um Finance is like the base layer of society and like particularly that is because that like what money is in 2023 and has been for you know hundreds of years now is like how we as a society represent like energy and like exactly exactly like it's how we coordinate like what's important and how we change the world and like the despots who have control of it like really shape the world and so um yeah I I uh you know if I can go off on this thing like I really believe that like um money being like energy means like money has is like gravity and like the

more that it accumulates the more it draws like more and more money and like um you know that's why I like having this like uh credibly neutral base layer that is like ethereum is you know so um so powerful but like you really need to be down the rabbit hole to like to even be like grappling with this conversation no but I I think I think it couldn't be more true though and I mean like it's like you know you're you know when you're like if you if we Zoom back to like a 2008 or even like right now what's going on where you know people are putting their their time and effort in to make money you know US dollars or whatever country they live in and then those dollars are held by banks that are collapsing or failing or misusing their

money and everything like that and it's not just theft of the person's dollars it's it's a theft of their time and energy like you just said um and and why I think you know ethereum really changes that and and this whole system we built is just because again you know like we both said you know it's a credibly neutral you know uh public Ledger that's transparent that we can all kind of look at one another and know that everything's an equal playing field and what you put in is exactly what you know you should get out you know because it you know we were able to um you know audit that at any time so I think it's I think it's a lot bigger than what anyone like I think once you

realize that you realize the magnitude of what this can be and I think that's when you get that spark of excitement to build on it yeah well I think um one of like the conclusions I've come to in the having this podcast is um to be clear I've only really been speaking with westerners but like the conclusion I've come to is that like that is such a um first world and like American and probably like Western European privilege to just like have to realize the power of like um credible neutrality and like uncensorability and like you you know we can talk about like the things that are going on in South America with like

inflation like especially Venezuela we can talk about how like for like 60 years in my opinion and like I I've actually been to Iran like so in my opinion like it just doesn't make sense the like the economic War we've been waging on them and like the people there love us and it's just like it's so stupid um and then like for me like the the like you know my fiance's Russian and so like I have like her whole family still lives in Moscow and so um you know I've been experiencing like these like what it's like to be on the receiving end of sanctions like as a civilian um for for like you know whatever year and a half now and so I just I think um like in America we come to this from

like Tech and from like gambling or from like asset whatever or whatever but um you know I I think one of like just the things that I try to do to stay humble is like to remember that like our grand realization like that the world computer is the world computer is kind of like table Stakes for like most of the people on this planet yet no no and it couldn't be more true as far as it you know definitely I'm coming at it from uh obviously from a western perspective but if you if you put you know this concept into Zimbabwe or Cuba or you know different places like that now you have like Revolution actual revolutionary stuff that can honestly change the

planet to be so much better um it's it's just it's a really broad concept but I I think like I said the more people who kind of delve down this rabbit hole and see this um will then start to understand what this is all really about and it's you know it's not about building stupid meme coins and stuff like that there is a lot more to ethereum than meets the eye and and you know the blockchain in general yeah and like we do have uh problems like the the reality is is like because of the economic incentives like when people say like the majority of crypto is like scams and ponzis like it it's actually true yeah I agree yeah and so I

uh I I don't know what to say I mean like honestly I'm like very sympathetic with like whatever the like current like democratical like um Administration is that like this is like Anarchy and like we really need to like figure out what's going on here because like man like SBF like the 3ac like I mean even like Gemini and Genesis and um got like everything man it's a Celsius well and and you know touching on that I I actually just had was having a discussion about this funny enough and and someone was saying like to me um who you know it's always tough when

when people who aren't like inside the game and they'll meet me in real life and they'll go oh you're in crypto like that's all scams and stuff and you know they'll bring up you know those characters and to me I I always kind of and and I may be wrong in this analysis but nonetheless um I'll say it anyway I think if you Woulda if you remove crypto the equation in svi for a 3ac they would have existed in in you know in the regular you know traditional Finance world and I think they would have been able to carry on a lot longer and hurt a lot more people because there's no way to you know like until they would be audited or something

like they could go on for Infinity honestly like and I think the blockchain allowed us to stop those people um to a certain degree um and and call that off but I think I think you're always going to have that like in any Financial system you're always going to have scammers and you're always going to have bad people um and I definitely think it's a uh true that a majority of crypto is scams and bad people but I think it's I I think there's enough good that you can't throw away at all just based off you know X Y or Z like I think there's enough good in it to to not you know just you know kind of discount the whole

thing obviously yeah I mean look like my my fundamental thesis of like ethereum and like how I've like oriented my life tour around is that like it doesn't really matter if it's good or bad it doesn't really matter if people think it's good or bad like ethereum is inevitable and like the the thing that really just like cemented that in my head was like what happened with Russia um when the war started and like look I have like Ukraine's a victim like it things are like the world's crazy um like but it's like civilians are not involved in any of this stuff and just like to see um the what the actual impact is like

the people are like because ethereum is an option because bitcoin's an option people are going to opt into it like both at the like individual level and at the government level when like they're cut off from the Western system or when they realize like the Western system isn't neutral at all and so um I think like it's inevitable and like I um you know I'm here to like like contribute to that and like shape that and um yeah I was just gonna say you know I think it's really true with like the Russia situation or anything you know you you do have to remember there's a lot more innocent people that did nothing to deserve any of this and that are suffering like the people are in

Ukraine or vice versa maybe not as bad I mean it's not in an olympic race of who's of who's doing wars but I I think it's nonetheless you know everyone deserves the ability to have um the ability to transact with one another and it you know it's great that ethereum is able to be there as a mechanism to allow those people to continue to transact um and still have some way of of you know kind of being above board so to speak in in a in a way to you know facilitate transactions with one another and families across the world and things like that yeah I mean I look at it in two ways right like the Russia's story

is like perfect for me in two ways like one is at the individual level and like today I I keep a major like a major portion of my net worth on chain like specifically in mind like how crazy our country is and like that things could go really like bad and that like I wouldn't might need to flee the country and like could like walk away with like my net worth you know within on like a piece of paper in my pocket or whatever and like that is informed by like what's happening in Russia right now and watching my like in-laws go through it um and I think like the other side too is like on the government side it's like you Russia is like a like Global biller or sorry it's a pillar of the global

economy you can't just like cut them out you know like you can't just like wish away 100 million people and like they are gonna like look for Alternatives and so um again I just like I I what I say all the time is like I really believe it's possible that like our government does something stupid like make like even like holding ethereum illegal in the U.S and like all I have to say to that is like I'll see you guys in Dubai or Singapore because like in 10 years I'm like one billion percent sure they're gonna undo that mistake but like much to the Chagrin of the American people much to like the detriment of the American people and like man I'm not I'm not I'm not falling for that yeah no and you and you already see that happening to some degree with

all the all the lawsuits that are going on stuff like that and I think it's a major uh problem that the United States hasn't allowed like I I I it it's just it just kind of bewilders me that um and I I guess it doesn't at the same time but at a political level that the United States doesn't see what this technology offers it just creates a uh you know some type of framework that is you know workable for you know the United States to participate in it that you you don't see all of like kind of you know crypto people just moving to those countries like Singapore you know wherever Dubai or whatever um you know it's just but nonetheless

just just one of those things yeah anyway well that's the place of like all this in the world let's uh let's bring it back to stuff that's actually like uh manageable or like you know at least like effectable um but anyway so like why don't you just like Fast Forward us through like you um like covet hits like you've realized that like ethereum has like really interesting stuff going on like take us from that moment to um basically like uh you know the start of tapioca or I guess like where we are today like yeah how how do we get from here to there yeah no and and this is the good part of the story I promise so um basically you know when you know

obviously 2020 hits you know Euphoria hits on on crypto you know halfway through the year or whatever um and what we saw pretty quickly was you know ethereum gas fees get really high things like that you know B and B chain launches a lot of retail users move from ethereum to BNB chains to kind of still be able to transact um and since then we've seen like more and more layer ones pop up and then also scaling salute like Layer Two scaling Solutions um you know optimistic Roll-Ups now there's like uh you know all the zero knowledge roll ups have popped up so what I kind of fundamentally saw uh was and everyone else did was you know

number one it's hard to move your money between these different networks you know number two you're you're fractured anyway between all of these networks and the problem has become worse and worse as far as now there's hundreds of chains and also the other thing as well is the bridges that allowed us to move between those chains have all been exploited hacked you know are very slow or costly Etc et cetera so basically um as we kind of went through that whole um you know Exodus to BMB chain then we saw the scaling Solutions and different l1s pop up that's when I got the fundamental idea for tapioca as far as

you know a we need a way to kind of move um from a you know at a user level I have kind of a thesis that users should be more um interacting at an app level instead of a chain level meaning like you know you're just utilizing the assets that you have and you don't even know if you're using ethereum or what chain you're on you're just interacting with your assets and that really makes the ux a lot better for an end user that they're not having to bridge swap deposit and then Bridge swap it you know like all these multiple functions and also just having to interact with a wallet which already has enough

um stop gaps for people to get involved um and I kind of looked at like okay well what is the base um kind of principle of what D Phi is and that's generally gaining yield on assets so that's where I kind of came up with the core fundamental idea that to move D5 forward um what would the most appropriate would be a len borrow Market that is cross chain compatible and that can you know people can transact with their assets on any chain and be able to gain yields on them and that's basically where like I said where tapioca kind of first blossomed um and yeah and and that's uh

you know basically after that I met um the guys at layer zero and we started building on layer zero we were one of the first protocols to do so and yeah and I basically since then been championing you know that we need to kind of like I said move users to more of an app level um you know in interaction and also move things to um composibility that users can don't need to you know Bridge around and have all these headaches of how to interact with their assets yeah no for sure I mean I um again I've come to like the same conclusion but um in a different angle which is like I very very much believe that ethereum again like part of

my inevitable ethereum thesis is that it is just like the next stage of development of the internet right it's the property layer of the internet the internet native property layer and I think that um like if you like can buy into that analogy um or even if you can't like if you just understand how the internet works it's like you and I right now are exchanging like literally billions of TPS packets or like UDP packets um like back and forth and then like that is going through like all these different you know protocol layers with like SSL and then like um you know like video like codecs and like all this stuff but like

how do we experience this like I sent you a link and then I hit record and like now we're talking you know and I like I really really believe that like saying all these things twice like I really really believe that ethereum will be like HTTP one day we're like yeah well I kind of like vaguely understand it as like eth these letters mean something and like they'll be there but all of the stuff that like we're messing around with today private Keys bridges like player zero any of this stuff um like the whole point of technology is to abstract it away to create like experiences and magic for people yeah and and and to add on that too a lot a lot of people when they first you know

find out tapiovas cross chain they start talking to me they generally think like um I'm gonna be a a big supporter of a lot of the all L ones and I'm actually not um but I think uh you know with scaling Solutions with ethereum like optimism orbitrum um you know side chains stuff like that um I think we're going to see more and more of them for more specialized things like you're talking about like you know there's UDP SSL um HTTP you know like basically that blockings would act like that um like different um different kind of translation layers almost and different execution layers uh as far as different layer twos and things like that and I think the only

kind of real push forward we've seen to kind of abstracting all that stuff away is like uni swap with their mobile application like a user just has their mobile app it's a wallet and they can swap between two assets and that and that's it it's a very simple it's a very simple use case to to move things forward but I think that's where things need to go and not users you know figuring out what's layer zero and what's uh Axel are and what's Cosmos and what does this do and this do I think it's really just like an application that sits in front of you just like you sent that link to me like you know tapioca just being an application there's you know any asset that you have

in your wallet there's the yields you can get on it that's it and there's no you know all these all these kind of minuti's involved as far as like you know bridging or um you know swapping between two different assets or you know needing to move between multiple wallets or something like that and I still think we got a lot of things to go there especially in like account abstraction and just making the wallet ux fatter and things like that but I think we're slowly but surely getting there to abstracting all this stuff away and just having an app just like from the App Store that the user opens up and then they can immediately use it without you know going through all this other stuff yeah so I guess

just to put this bluntly right like my um I think like what it basically comes down to for me is like understanding why tapioca is like this Vision can can happen is like you have to have this like unshakable faith that layer zero is is providing this infrastructure that allows you to like credibly call yourself um existing like between chains or like chain agnostic or however you phrase it um so can you talk a little bit about like um one if you take take issue with any way I just phrase that but two like um like before we like really talk about like the interesting things that are

going on at the application layer like why um I think everyone who's who who has like heard from me or is listening to this podcast can agree that like it makes sense to build on ethereum That's The credibility neutral thing like that's why we're here but like why does layer zero move like if not up to that level like right below it for you um so why I I totally agree with what you just said and the reason why is I think the problem with Bridges is in general is just the fact that their shared security models where everyone's kind of building on the the same um you know the the same monolithic security and that security is generally really weak and you know you're you're

like we just saw with the multi-chain hack or even if we go back to like Wormhole or Nomad or any of those you know they all kind of were exploited in the same regard and why I got so excited with layer zero and why weeds set out to build this was that layer zero is a lot more like ethereum in that we can Define our own um you know everything's isolated to the app level so it's just kind of like the app defines its security model it defines its configuration everything is customizable just like smart contracts are on ethereum so it makes it makes layer zero a lot more just like a simple generalized messaging infrastructure than being like a you know this this

monolithic you know uh provider that you need to build a top to offer these um different functionalities usually at the cost of centralization and you know obviously security issues so I mean the the the great thing is even at the even at the uh infrastructure level of like um node providers and things like that we're able to isolate it completely to Tapioca And basically use nothing of layer zeros besides like their endpoints which are kind of like mailboxes on each chain and the great thing with layer zero is is those are immutable so basically we don't have to worry about like those being modified or or changed

or anything like that so I think it gets pretty damn close to being a fully immutable way to send messages between these different teams and scaling Solutions and really offer uh you you know users at the app level a way to just transact without even knowing what chain they're using so is the idea here that not necessarily that you are eliminating all of the risks associated with bridging like at a certain level right like there has to be pooled usdc that is like the collateral that people deposited on some chains somewhere that like could be a honey pot right but like the idea is that like because of how

layer zero Works you're able to like internalize that and configure it to like tapioca standards and therefore like uh you know basically layer zero is just providing like templates for you so pretty close so basically um layer zero doesn't pool anything how it actually works is is there's a um there's it's basically like a two-party consent um config so basically how it works is if say you want to send a message from ethereum to like optimism what actually happens is is the user sends a message to their endpoint which is immutable and that message is picked up by a relayer which uh layer 0 allows for you to build your own relayers like we have Pearl

layer um and then there's the default layer zero relayer so that relayer pulls it generates a proof and then that proof is basically matched up to an oracle's proof which you can use any Oracle you want with us we use chain lengths so basically um that proof that our relayer generates has to be matched by chain links uh proof and then once those two proofs are confirmed uh basically then the message is executed and then on chain whatever the on chain operation is is actually executed so by what that buy that kind of configuration um for something to basically go wrong

or inexplate to occur or something like that what would have to occur is is a relayer would have to relayer would have to generate a fraudulent proof and then the Oracle and again in our case chain link would have to confirm that uh fraudulent um that fraudulent proof so in in that case being a block header so basically those that allows for a lot of security and that it's very tough to you know obviously have two parties uh agree on something that's fraudulent kind of like you know how ethereum's uh consensus is derived or um and anything else and basically the other thing as well that

layer zero does that's really cool is it's called pre-crime and what basically it does is is it runs that message um on a local blockchain off chain and if that uh if that message operation results in uh breaking any of our rules like you know you can't take more liquidity out than you put in or different rules like that then the message will fail out even if the Oracle and relayer confirm it so there's a lot more modularity customizability and more a better security model than like oh here's our multi-sig and you know we have a relayer that you know it's just a

one-party consent and then you know whoops multi-chain we lost uh we lost the private Keys now anybody can do whatever they want um you know with that two-party consent configuration so yeah so okay let me let me try to sum this up and tell me you know tell me if I've got this but so the idea with layer zero is that they're providing like really like if you want to use layer zero Bare Bones all they're providing is like endpoints on every single chain or at least their support chains or whatever and like what these endpoints do like is they confirm that um the proof from chain link and when we say proof from chain link what we're

saying is the like um we're just confirming the block like and the ethereum block header right like yeah okay we're confirming the block header from chain link with the block header that came from The Trusted relayer um and and we need to confirm this block header because in that block is an instruction that needs to be replicated on the destination chain as I write so far okay and so like out of the box you have the option to use the layer zero like centralized trusted uh like relay Network which like could just be one node on AWS or they could set it up like a blockchain and like hint hint that's

probably where like the layer zero token is going to come into play is that right yeah yeah and just to point out one thing real quick too so if if people know of like the L2 beats article where where they were like you know layer zero isolated security is no security what they were pointing out is that every layer zero application right now uses the default configuration so it's defaulting to L layer Zero's relayer and layer 0 is Oracle so in that case it's two parties but both parties are owned by the same entity and that's where you have a centralization question with it because

of course it's a three of five multi-stick I believe I may be wrong on the size but it's a multi-sig that layer zero controls on their relayer and on their Oracle and that's why uh L2 beats is pointing out like this is hyper centralized and this this could be this could be knocked down at any second um you know because it's just you know two multi-cigs with the same people that are agreeing on the same thing um and that's why uh tapioca is actually the first protocol that's not using the layers you're a relayer and that's not using the layer 0 Oracle and we're not using the default configuration um so that'll kind of be the first time

layer zero is being shown of what it actually can do as far as um isolating all this stuff down allowing applications to customize it and change it and maximize the decentralization as far as you can anyway um to perform like something as complex as messaging between two blockchains that um are don't normally know how to talk to one another got it and so obviously like the reason that everyone except for tapioca is configured like their default way is because like to make both each change incurs in New costs right like I'm sure you guys I don't know if you can disclose this or not I forgot how like chain link works but like I'm sure

you guys are paying in some way chain link to access that header data and then on the other side like if you're running your own nodes like that's like I mean I wrote an ethereum no it's like it's a real cost um whether like you're running physical computers or Cloud servers or whatever and so yeah what you're saying is that tapioca is making the like expensive but like forward-thinking choice to say that like um we just like want to use the end points um and like we could probably be like decentralized and safe by just changing one of those things like just the chain link Oracle or just the node network but like we're going Maxi on this and by the

way like if there's room for a network that sounds like room for a token well well yes so bait so basically you're you're dead on that you could just change the Oracle and then you could say okay these are now two totally different parties and you could make an argument that that's decentralized and I'd probably agree with you um also you can you can immutably set um the messaging libraries that are used so like even in all of the messaging libraries are Perpetual um so that you know if you if you define them then they'll be in service forever over and then you can just have them forever and that's and that's what we did so we went like full on um you know to do this like at the scale

it it should be done as far as um basically you know how I think players zero look at it as is smaller applications that don't want to you know go through all that because you are right it's costly like our AWS and then our Google Cloud uh stuff it's all expensive of course and then paying chain link you know is expensive too so smaller applications could actually piggyback off of our off of our relayer and bigger applications like us can Define our own so it'll it allows for that that scale of like if you're just a smaller application and you know you want to use this type of functionality

you could just point to the default configure hours and then for bigger stuff you know you can do what we're doing where we're going full you know full custom full purist on trying to get as far decentralized as you can yeah and by being the first real layer Network like if you guys release a token then you can like tell new projects like hey instead of paying layer zero their lzo token to do their relay Network you can pay in top tokens but you don't have to answer that yeah no I mean there there's something there yeah I've already hinted a few places yeah that we will we will be allowing other other protocols to to use our relayer in Oracle and there isn't there

will maybe be a a feast structure that uses our token but yeah cool and so like final thing and then we can kind of move up to the application layer but do like um like when you send usdc to let's say like the ethereum layer zero um endpoint do you all is that usdc pooled with like Stargates usdc with all usdc or D like I'm wondering is I call this like the Sam kazemian mess the method of like uncensorability but like I'm I'm wondering just like how um you know your exposure to centralized assets is like mitigated through this construction yeah so this is really big as far as this is why we built a stable

coin we have USD go which is omnichine USD and what's special about it besides it being a pure decentralized stable coin that's only backed with gas tokens and liquid sticking derivatives no uscc backing or anything like that is it is a native oft which is an omni chain fungible token and that super standard allows people to teleport usdo chain to chain with no fee uh instantaneously so you could you could say Okay I want my usdo that's on arbitrum I want to put it on ethereum that basically it'll burn on arbitrum and that the burn the proof of the burn will will be you know grabbed by the

relay in the article and once that proof um has been taken that the tokens have been burned then basically the relayer tells the end point which tells the relayer on ethereum to Mint the the applicable amount of usdo on that chain so it based allows for a lot of composibility um that you know we have our own relay and Oracle set up um and we're able to have a truly decentralized stable coin that also can act as a base layer of value in that it's a stable coin that can you know mint and burn to any chain and you don't have to use any Bridges whatsoever to do it um Stargate Works differently in that

there is a pool of usdc on like ethereum and arbitrum and then basically when you do it when you when you transfer using Stargate you deposit your usdc into the pool on arbitrum and then it basically unlocks the respective amount of usdc on ethereum to then be withdrawn by your wallet so that does incur like you have pools on both sides like a normal um bi-directional Bridge would have um and and that's basically what we're trying to uh abstract away from what tapioca is that all of our assets are ofts so that we're able to have that mint and burn functionality with all of

them yeah so okay so okay yeah man like I wish we had like six episodes or maybe we can do success but okay so first like let's let's like really pick apart why um you can like Min and burn um what what's it called U.S sorry what is it called usdo usdo but it's like a zero right it's not a o uh so we did that at first that we did USD zero but then we dropped it for an O just because it gets a little annoying on like Twitter and stuff like that you can't have a number in the cash tag so we Dr we just dropped it never forget all you finance pros and computer science nerds that like branding is important so

anyway uh yeah yeah it is so like let's like the reason that you can um basically mint and burn sorry the reason that you can transfer it instant land for free is like because it um all this like computation and checking is happening through your relay Network right and like you you are like picking up the bill and like probably in perpetuity for like your um you know homemade applications like you will pick up the bill and um and like and and then the computation can be super fast because like you don't need to be as like decentralized and as um just like methodical and like you

know accessible to raspberry pies or whatever is ethereum and so like first of all like the the reason why this is happening essentially is because you are offloading like all the computation into like basically this new like tapioca computational Network that is using like layer zero just as templates or piping or whatever yeah and and I mean that's that's a basically 100 accurate now we will allow for anyone to operate a node um on um and be an infrastructure provider on our on our Network and that's going to have on our uh not on our Network per se but you know our relayer Network I always like to say that because some people think we're

we're building like an L1 or something but um but so anyone could jump in on that um uh but basically with um the mint and burn how it works specifically on the on the fee side of things again not that there is one but basically gas cost wise um what actually happens is is when you pay for the gas to do it um from let's say again arbitrum to ethereum what actually actually happens is is you pay gas on both sides up front on arbitrum and basically your gas will be air dropped to ethereum so basically um you know again if you're going that

direction you you know you pay your gas on arbitrum the relayer grabs the gas brings it to ethereum and then pays it on that side as well so that's the only you know the only thing that you're basically paying is just normal gas on both networks but it is both networks it's not just arbitrum um but yeah and then basically a mint and burn in actual time to confirm it and everything like that that we've tested it's about 20 seconds total so it's it's pretty you know basically block time of both the networks combined and you're all done you're right there yeah 20s or 30 seconds is essentially double uh ethereum's block time so yeah

there we go ethereum is always going to be the slow on like fun fact uh but anyway yeah yeah yeah yeah so okay as I mentioned before we started recording like I I think that the like D5 part of this is the least interesting so like I'm gonna ask this question and like just why don't you give like the the um you know like the official answer and then like let's get back to the computation but so it sounds like the whole this whole thing is basically premised on the idea that like you can put your native tokens or like your lsds which were treating like native tokens um you can put it on each like Source chain and then mint usdo on a destination chain and like the the big like what if they're or like the big

like important piece there is that you need to be able to like sell your usdo or or maybe use it for more borrowing and lending or something but usdm needs to be supported and integrated and have like deep liquidity on like really every destination chain so like how do you think about uh what's the strategy for that yes so that gets into a long can of worms but basically we throughout the entire incentive model uh a common D5 protocol with like liquidity mining pool two stuff um what we've done is is we've created an incentive structure that we call DSL or Dow share options um what that does is basically it's a call option incentives

um if why we went for call options is because every time they're redeemed we create liquidity from that Redemption and then that liquidities protocol and liquidity or Pol and then basically we can deploy that Pol into being permanent LP for usdo on any chain we want so that allows us to really build up a lot of liquidity on all these chains so that we can facilitate really seamless trading of usdl on all these you know many many different networks so the idea is basically build up Pol so that you can project it onto like the networks that you know that your users care about and then a combination of that plus like strategic assets like

um you know you didn't say this I don't know if this is true or this is a question like CRV and CVX and like those kinds of assets so uh we're uh primarily targeting uni V3 with a raucous but it's something probably we'll look we'll look at uh you know as as we grow and everything like that of going going for curve and everything like that but basically one of my one of my thesis was with with curve was just that the fact that um we looked at we get a lot better swap execution on unib3 we get a lot more um but we get a lot more for our dollar with LP just because you know when you're doing dollar dollar pegged uh you

know concentrated uni V3 positions it's basically like taking out a ton of Leverage on the peg so you know if we put down a million dollars in LP on univ3 that's pegged at a dollar we can facilitate really large trades versus with curve you know we have like if we have um you know you could move the a factor up really high and everything like that and it sort of goes to the same concept but Unity B3 allows you to really go you know uh Balls to the walls on it and really push the push the uh you know the utilization of the liquidity really high um just because we're looking at supporting dozens of networks so we really need to have the ability to

facilitate trades you know as you're pointing out on all these different chains um and even big ones and things like that so yeah man I totally hear you and I think that like one of like the interesting insights about um doing what you're doing is that like you always know how much usd's o is going to be minted on each chain and therefore like you know exactly how much um liquidity you need to provide and so like you can be really um aggressive with leverage because you like can basically say like okay we know we're super leveraged we know if we go off Peg then like immediately we're going to be wiped out but we're just going to make sure there's enough liquidity based on like the amount of outstanding usdo that like we can't get wiped out exactly exactly yep yep yeah

cool all right so um again I I like the reason that I'm so like interested in like in what tapioca is building and like living between chains and stuff is because like I really I the thesis that like I am developing and like becoming more and more convinced of is that like like we understand that nft craze as like something that was like pretty crazy and like yes like crypto punks will probably have staying power like maybe even board apes and like nft technology like matters for sure but like the the things that we saw like I think we can all recognize that like great for gambling like it'll come in

future waves but like it wasn't like what crypto is for you know and I I am like becoming more and more convinced that like the defy that we like know and love today is like the same thing it's just like the same thing for us like Finance Bros instead of for like the art Bros or the internet Bros or whatever right and like I think like look like my background I came from you know I used to do uh corporate finance for Anheuser-Busch um like I was in charge of like 20 billion dollars a year it was like my job to just like get money from um like our bank accounts in New York to our bank accounts in Belgium to Brazil like that was just my job and like a huge reason that I believe in ethereum

is just because like you ever tried wiring a billion dollars like it sucks man it doesn't work and like uh like ethereum is just better you know and and uh you know like uniswap like I believe in right um of it like I believe in but I believe in them is like technology Primitives that like I fully expect JP Morgan to like fork and then like put all of like the Western capital of the world in their own proprietary version and like the things that we know and love today like might be swept aside um and so I yeah and so like I I like I'm becoming more and more convinced that like to be

um to be focused on like the things that were really exciting last year as like where the energy is going to be in the next Bull cycle like just once the money's ready is just like this um it's like a misunderstanding of like what ethereum's for you know and so like which brings me to like my thesis and like what I think you've already like inherently understood is that like ethereum is about like computation you know and it's about like um providing this incredibly neutral platform that like gives us the ability to express uh you know like identity and like immutability and like um transparency and like all this like stuff um but

like what what we're gonna figure out is like how to project more and more computation into like the extremely limited evm and so um like I think that's exactly like what layer is look sorry layer 0 allows and like that's exactly what you're doing with both like the tapioca application but more specifically the tapioca relay Network and so I'll pause there take a breath and like just uh do you have uh any thoughts or any response to all that no yeah I I told I mean I was gonna say basically I I think when people say like oh we have all these D5 Primitives and they'll never go anywhere it's so patently absurd like it's it's such an

immature space and we're still kind of learning to walk so to speak and you know ethereum at the development level is all about experimentation and pushing things forward and I I think we've we saw a little bit of it as as we went through you know 2020 to now but I still think we're at like we're at like the the really fledgling beginning of it that you know there's no there's no like moat of of anything right now there's there's you know popular applications that people use right now but they could change in a month like you know people could release something that is a

hundred times better that people adopt or like you were saying like a JP Morgan could you know make a uni swap competitor and have instant adoption tomorrow you know it at the end of the day though it's all anything that brings more people to the ethereum um playground uh so to speak is is great to me I mean um I think the whole point of being a developer is to get more people to adopt the the concept of what this space is and get involved in it and I think that's something that crypto has succeeded at is you know you know if you look at it from like a user conversion

ratio of like someone touching crypto for the first time do they continue using it I think a lot of people become really passionate um people that stay around long term and it's just really about finding more and more of those people and uh onboarding more and more of the world into um you know ethereum and I think that's already slowly happening you know as the days go on that we're you know we're finding uh more and more adoption um but but we're still at the beginning you know yeah yeah I mean you know with with every like good Builder that comes in we also get like more dokons and spfs and like it is what it is but

um I just like again focusing on like this idea of like what's next is about computation like like tapioca or like you know what you're doing is like taking The Primitives that we learned from last cycle right like borrowing and lending um and stable clients essentially right and uh and I guess uniswap V3 like you're that's like a core part of your strategy right and uh but like when I hear about what you're building and now after speaking with you for you know almost an hour like really understanding how you're building it like the real product here is the relay Network and like I I think like you know what you'll find is that like yes as like you bootstrap users and tvl and

like interest through um you know just like The Primitives that we are all comfortable with today I think you'll find more and more that like what's interesting is like the ability of this like relay Network to like reach in and out of these like you know everything from like the perfect pristine like trustless evm into other um environments and like you know project like much more complicated stuff and I think like earlier you made a comment like we're not like trying to create an L1 but like you know the more I think about it like the more it's like there we shouldn't like the ethereum is the backbone like ethereum is the pristine like the perfect like nobody

can like with it like that's the point of it but like everything after that like I just like what's the distinction between like an L1 and a like relay Network especially if you like consider like money and like um information to be like analogous just like uh E equals MC squared you know yeah no there's definitely there's a strong similarity and what in in how the models are and and also the the longer we built tapioca The more I've kind of put a lot more importance on um you know the stable coin side of things as far as I I think it's really important to have like that 2019 die

that is a true like decentralized medium of exchange I definitely think ethereum um works is that as well of course but just basically saying you know for people you know people still want dollar denominated assets to a certain degree like a stable dollar denominated asset and one of the things I really hate is all the people that are trying to push D5 more into like a a cd5 type thing where it's like oh let's bring t-bills on chain and let's you know do this and this like I really one of the things with tap yoga is kind of saying no to that and pushing things back to um being more on the decentralized side of things things

um and more along the core tenets of what D5 is supposed to be as far as a decentralized financial layer and I I think that's important in of itself but I definitely agree the the you know the relayer side of things um will unlock a lot of uh potential value in moving between all these chains as we we see more and more especially layer twos um I'm really excited about all the new Layer Two scaling solutions that are coming out and you know and just being able to transact between them easily I think is extremely important so yeah well I mean I think like um I I don't ever want to like tell you like you shouldn't be thinking about uh like the things you're building today

and like I'm not here to tell you that like the stable coin is going to become irrelevant like if anything I think um you'll find like as the and again I'm just talking out of my ass here what do I know but you'll find like as the stable coin like grows and you have like more and more like tvl and all these different chains like your customers will be saying like Okay like it's cool that um you know I can just like take out the usdc on this chain but like you know why why don't you like build a product for me that like automatically invests it and then the question is going to become like why you know why do it within the evm which is like incredibly expensive and slow and like all these things when you can do it in this relay Network well

I will say we already got that we are we already do got that we have uh Bento Box V2 we built which uh what what it does is uh basically apply usco or actually other assets of well as well to um Omni chain yield strategies so basically your liquidity can be active and utilized on multiple teams simultaneously um so that that is one of our our core products that I'm really excited about as well no yeah and again like again building on like The Primitives that came out of D5 like that's perfect but like I think the next iteration of that is like um like for example like why did we not see like perps on chain until arbitrum and even then they're like a little bit

janky it's just because like the computation was like too crazy to do um in ethereum and so I just and like the the secret magic sauce that like kind of ties this hole together and makes me like so confident that like the relay network is gonna be like your big product is ZK cryptography and because like with ZK cryptography allows us to do is like do all this incredibly intense computation off chain and then like push it on chain and then confirm that like it was like legitimate and like and and fair and good and like all of our like conceptions of like centralization go out the window when like you're running stuff on AWS but you

can confirm that it was done fairly on chain and so like that's the future that I'm excited about yeah I I totally agree on that side I think there's a lot of like a ZK at a like as far as like a ZK sync or like a polygon ZK evm I'm not as excited about but like stuff like scroll or um I think even like railgun uses ZK as well I may be wrong on that but I think there's a lot of use cases for uh zero knowledge proofs as far as um like you're saying like taking specific things to to validate off-chain um interactions in different regards I think it's going to be an extremely big sector so yeah no for sure and again I think uh just to kind of like close this

up and wrap it in a bow I mean I think like what's so like spot on about what you're doing with tapioca is like the realization that um you know like ethereum is like home base and what we all believe in and like no one is giving up on ethereum but like as part of being acolytes of ethereum it's the recognition that like we don't stop with HTTP we build layers on top of it so that like we get to a point where like it's just a part of daily life and it's not like technology anymore like our phones aren't really even technology anymore they're like almost appendages right yeah I mean it it's definitely a thousand percent I think the future that

ethereum becomes the the settlement wire of the world and there's all of these execution layers on top of it and even beyond that to do more and more hyper-specialized things that they all still settle on you know the like you said the home base of ethereum and I think that's 100 the future yeah and and I think like the the real Galaxy brain take is like we think of settlement as like financial and about like capital and money right but like in this you know like post internet World in 2020 and Beyond like information really is capital and so like like ethereum being the settlement layer

of um of the internet of humanity or whatever is like also about like the settlement layer of information and like of Truth and like man like deep fakes and Ai and like all this stuff man like ethereum is um inevitable yep I totally totally agree great great way to cap cap this one off I think so before I let you go away can you please just uh like let the audience know like where they can find you where they can find tapioca and like if they're interested in getting involved like what do they do yeah no so uh if if you listen to this uh much love definitely um you know check uh if you want to uh come uh give uh give me a holler or follow us uh I am at uh TW Matt with

three T's on Twitter uh tapioca is at tapioca underscore Dao uh websites tapioca.xyz and uh yeah we got the Discord that's a lot of fun um that you should totally join up we also have a podcast uh tap talk um that you can check out um it's more D5 Focus uh but you know a lot of fun there a lot of a lot of joking around and whatnot so you can always uh chat with us there as well but uh but yeah no it was awesome it was awesome to come on here and uh talk ethereum yeah awesome man well yeah I've always been ethereum focused but like my whole uh Center has been in D5 so I've only been on this like computation kick for two episodes so I appreciate you uh you coming on this journey and um man

this is a this is a special conversation thank you so much Matt absolutely likewise much love everybody thank you