DeFi by Design EP#101: How LayerZero Plans To Takeover The Digital World with Bryan Pellegrino

Transcript

foreign [Music] by Design where we talk all things blockchain and cryptocurrency while striving to educate Empower and generate what's going on guys welcome back to D5 by Design podcast hosted by Yours Truly at the roll-up episode 101 today coming off the hangover of the GM 100 space we actually had Brian on there which is pretty exciting um got a lot of good feedback from that space actually a lot of Builders were excited to just be able to jump on five ten minutes chat about what they're building give some insights and get out

of there and get back to work um so really really was quite pleased with that feedback and um yeah back again with another longer form podcast today Rob good morning how are you doing sir GM 101 I'm doing well I'm doing well I think this is this is a great like 101st podcast like the only way to one-up what we did last week I think is to have this podcast now so I'm I'm totally psyched uh Brian thank uh thanks for coming on um we I mean we can jump right into it like we were talking about um kind of like the on-site work style uh that you guys have up in Vancouver and and how cost of coordination is good on chains sometimes and and online

sometimes but not always uh not always the best um so I mean you know just kind of broadly like how are things at layer zero um and then you know we can we can kind of dive deeper from there yeah I mean it's been it's been wild so you know we were I I've been remote for like 15 years prior to this so I'd always been 100 remote with everything I've ever done uh we were 100 to remote to start the company went to Bahamas for five months and just like pulled everybody there while we were there and we just realized we were like that was getting through to launch and we were just like we are so much more productive in person I'm I mean that five months in Bahamas was like uh it was like a war room constantly uh we were seven days a

week in the office I was like from 7am to 11 P.M every single day basically um seven days a week for five months but like what we got done in that period I I would have taken us a year and a half at least um at least uh if we were remote and so after that and we grew We Grew From about we're probably 12 people when we got to Bahamas and we grew to like 23 or so uh 23 25 we were there and we just told everybody like listen we we basically like if we're gonna win we have to be in person uh we said everybody has to kind of make the decision between uh either either packing up their lives and moving or not uh every single person did uh so we got 100 100 of people here we're 63

people now and it's been uh it's been it's been awesome I can't imagine doing it any other way right now just because we've been able to ship like so so so quickly So based everybody joins everybody yes 100 man you know I think we have four Canadians like real Canadians on the team so it's like 59 people have like packed up their lives and moved here which is this huge litmus test of conviction it's like the people who are here are just in it um which is which is awesome it's a great culture yeah that's that's absolutely amazing and I mean this month has been insane for you guys too eh just absolutely all I see is on on your Twitter every other day new all-time high new all-time high yeah yeah yeah I mean it's been uh the

whole thing the whole thing has been really just wild in general um I remember when we were launching in Bahamas I I sat with uh with Ryan my co-founder and Isaac our Chief Architect and we were talking about messaging and we're like you know we're not going to need to worry we're talking about scale and everything about million messages months like that was so far out for us I told him I hoped to hit a million messages by like the end of the year um for the first year um and then now or you know we've had days where we're doing almost a million like mid mid 700s in a single day um so just like the engineering challenges that come with that uh just in general I was talking about it in a tweet the other day right like not only are we this this messaging protocol

that's doing like massive scale like as a message delivery system um I mean we're doing I think we're pushing like 40 billion RPC calls a month right now like like it's really really kind of crazy expensive inferior bill yeah it's fun so how did you guys do it like how do you guys scale I mean ultimately it is uh it's a bunch of incredible like the company was founded when we were 30 people we were 23 Engineers engineering focused org we have a bunch of people who have scaled systems to uh many hundreds of millions of concurrent users from scratch and So like um it's all it's all just engineering problems it's absolutely solvable uh but you're gonna be able to like build a

system that actually uh scales and um you know we we care like deeply deeply about really two things like the three pillars of how we built are basically like immutable permissionless and censorship resistant like permissionlessness and censorship resistant uh we are obsessive about we've made so many design decisions that make our lives a million times harder in order to scale the system to make sure that like no packet can ever be censored against an application's will um but it's just like you just got to do it and so a lot of it is just like fun we have I I kind of talk about it a lot like Ryan and I as co-founders like our style is to sit in a room and like argue

and we will like yell at each other for like eight hours straight like we will have a bunch of people I think early on people think we're like insane um but like ground truth is the goal and we'll have like very heated debates but at the end of the day I think like we arrive at [Music] um I I mean I I we've thought through it with every lens and I can't think of a single architecture that's even close to as good for what we're trying to accomplish so yeah it's been great yeah yeah I mean that's such is the way with decentralization right just Dows take longer to make to make choices uh things that could be done in a more centralized manner are are often easier than um you know doing them in a trustless and permissionless way and kind of just want to rewind a bit for our audience

and everybody who's listening you in all your speech of these all-time highs in in your um in your conversation just now about the uh the act of being a messaging protocol what does it mean to send an omni chain message or a cross chain message um I assume you you prefer Omni chamber what does that even mean yeah yeah I mean um the way that I mean most people think about it as as kind of like this this abstract like thing that the way that I frame it to myself internally is literally identical to a packet on the internet honestly you go you go back in time we had all these uh isolated execution environments you had DARPA and Stanford and all these

University groups and like if I had a program or something that I wanted to run I would need to physically take my data and like fly to Stanford to run it on the server there that like had the program that I need to like run it against um and they were like invented the Internet stack and like it gave us all of this awesome stuff and like the base primitive that is just like a packet it's just two computers uh with an arbitrary you know amount of compute so like do some compute generate an array of bytes move the bites over and like ingest those do some more compute so compute bite compute um and that gives us everything that we have today that's how we talk now that's how we do like everything and still even with the internet you know 99 of the

world's compute uh still happens locally on a single machine but like the internet is still the internet cross chain is amazing there's like this fundamental layer of like moving packets matters and so when we're building this like I view blockchains ultimately is the same thing they're isolated execution environments some of them are very good at something some of them are very good at other things um and this is you know whether it's um are we for storage or Solana for throughput or ethereum or any of the l2s or you know however you want to construct this whatever it looks like you still need some way to like Pass State data between those things so like layer 0 is literally just arbitrary contract invocation with a bytes array so it's like invoke a contract here

generate some bytes move the bytes do something with the bytes same exactly the packet on the internet so I see there's no difference it's just moving generic Blobs of data and then once you start doing that really well so I was mentioning okay great where where this uh message passing protocol um or this messaging protocol that's like moving a single cross-chain messages now you can start to do things like okay now as a message delivery service we're actually doing some stuff that's really interesting now again 40 billion RPC calls per month um that the amount that we're putting into change we are the number one and often number two and three gas consuming contracts on like eighty percent of chains literally like eighty percent

change we put more messages to those chains we write more messages than any other we got to the point where we were breaking layer twos because they couldn't handle sequentially ordered messages uh fast enough like they needed a rewrite code we need to rewrite code like all this stuff and now once you have that piece of like message delivery to a chain there's so much that you can do with that um and I think uh without they're dropping too much offer like talking too much in general like uh you know the next series of uh series of months people like people will start to see what what we mean by that we're pretty secretive in general about what we do with like people have only uh even when we launched we like okay we came completely out of stealth and like

everybody paid attention and we didn't tweet like a single thing for like six months and then like and then we launched everything you know uh so like we're pretty prone to that in general like just to be heads down building uh but we have been building some like really unbelievable things um and I'm convinced some of the stuff we're gonna launch soon is as as transformative to this side of the space as as anything we've ever done including launch so uh yeah it's it's awesome uh I love working with this group of people and like we've really uh built some pretty special stuff so yeah it should be exciting hell yeah hell yeah dude yeah no I mean taking it all the way back to the to the packets of of the messaging and the

Blobs of data kind of in the web 2 world now right we have the the transferability of of digital assets online right so through through Stargate we can Bridge from chain to chain and uh do transfers of information from these contract calls like you're saying but also in addition to that transfer value which um that in and of itself is a huge like once you kind of cross that chasm in your mind of like whoa this is possible um you know it starts to be it starts to become um kind of what else can we do and I and I just feel like you're pushing the boundaries of like what else is possible in this kind of omni chain D5 Realm yeah yeah 100 I mean I think ultimately like when you have these Atomic

environments it's great you can do a bunch of amazing things um but it's very similar to like I don't treat it like a like a a bank again an execution environment any server cluster any data center any anything like once you start moving around like okay great now we have all these chains like now you need Clearing Houses but like you don't want to have this intermediary sitting in the middle so there's like there's just all these things that end up um like that we have the ability collectively to to recreate and discern disintermediate if you can create the system of of moving that state data uh in a in a way that that makes sense and scales this this is painted a really like vibrant mental model for me what what you're saying Brian like you guys

and you you have to build to what you're saying like you've made it extraordinarily difficult on yourselves to build a generic a system that's generic enough to spread these Blobs of data and you guys have built out this internet post office and like spun up these uh Atomic environments that basically are able to like act as a post office where like someone can go there send their blob of data to the other post office it ends up getting delivered on that execution environment like and you guys have have made painstaking like engineering decisions to build that system as best as you could my question is like where where does it

go like what is the bigger vision of and of that that configuration yeah yeah I mean I I talk about it a lot now we're like great right now we have 98 market share in terms of messaging volume right like in terms of cross-chain messages being sent you know we have the the super super majority of everything but like if this is the end State like what am I doing here right you know this it's like not enough in terms of what exists now and so um I I think there is an unbelievable amount more that can be done and I think again some some of that will sort of start start to come out uh near term and started that is this separation between like a pure message passing protocol a

message delivering the difference between like all of these things but but I think ultimately like I think the goal is we really like again early on this is not something that we wanted to build like we were just like three friends uh we just random technologists were like building stuff together for years we've been building together for like 16 years now um and this started because uh we we the miners were colluding against us we had to like roll down our like uh our our Bots that we had built or before flashbots got got Bill and so like the miners were colluding we couldn't do this anymore uh B and B chain was like spinning up and and finally like there was another chain where things were happening and it was like fast and cheap and uh just totally different than ethereum at the time

um and so we were just like oh like that's kind of cool you have this entirely different execution environment like maybe I wouldn't want my stuff this is early days like maybe I wouldn't want anything to live there long term but like we could build a game there right you could do things that like are meant to be ephemeral and then move that state data back to ethereum so we built like a game we built a little toy game that was um it was uh you would open up packs of gladiators the Gladiators would fight on BSC and they would if they died they died permanently forever and if you won 10 matches you were like freed from the arena and you would mint a permanent nft back on ethereum so like that was it we just built over ourselves it was like what is a cool thing like how let's

figure out how this stuff works um and then we realized as trying to like mint this stuff back to ethereum like you couldn't actually do this without some Central coordinator just sitting there and triggering events on both sides we're like well that sucks um that basically is entirely centralized um and so like we looked desperately for like any system that could just do us we wanted to like do this we want to build the end application and then we realized all the bridges were terrible they didn't do this and so we started building a better bridge and we're like even then we still need the transport layer so like this has been something not that we wanted to do but something that like we viscerally like felt the pain of and wanted to solve and and even now like my big problem with middle chains in

general as an architecture is is just there is zero guarantee around uh around censorship there's nothing there is nothing that Associates a packet on source and a packet on destination it all gets routed to this like black box that sits in the middle uh there's no guarantee of delivery there's no non-serter enforcement which means like if a governance vote is happening I can just conveniently like forget to deliver the packets that don't align with my viewpoint um if I'm doing like um Financial transfers right so you're doing swaps you're doing stuff between Banks or defy or whatever it is like I have the ability to now not only front run and back run every single transaction that goes across so you know that's that's

hft now great okay you can front around you can kind of do this I can also hold everything in the middle and rearrange the messages so that I can extract like maximum value across the entire surface of messages right there's just all this stuff that's so fundamentally broken that if we start to build systems long term on top of those structures like it's just such an enormous tax on the end consumer uh that was a whole like most of us I'm 11 years in this space right most of us who got in early got in from like a very libertarian like um disintermediate um like that was our skew early on and I I like to think like a bunch of us like still like really kind of have that lens of ethos and so

um no I think the first part is like making the system that that does that and can functionally be the building block to build and then after that there's a near unlimited amount that you can do um yeah I'd like to go real quick on a on a disintermediation tangent and then I'm sure there's there's questions there to ask about mental models and how you think about middle chain omnichine but I want to ask about like this this system that you've built I'm thinking of it as like an internet post office and and to me that just sounds like email you know so like is is that part of the bigger Vision like build disintermediate the email providers build a decentralized email service provider so again for us it's the packet right so like if I give you the ability

to make that packet you can make email you can make bridges you can make Banks you can make anything that you want right ultimately my job how I see it is to build that base primitive of the packet and make it as safe easy and cheap as humanly possible for you to be able to move that and like sometimes those are trade-offs right like sometimes are you going to verify transactions directly on Chain versus doing in a black box like yeah that's going to be a little bit more expensive than a middle chain you will be able to get cheaper but the trade-offs are immense right and so it's this this sort of like Contour of all of the things that you want but the goal is is make that base primitive that is good enough for your your smallest possible nft project moving you know whatever it is

uh po apps for like your local games Club all the way up to like the D5 protocols dealing in multi-hundred million dollar liquidations the people moving on board onboarding you know tens of billions of dollars of real world assets like you have to make the Primitive that meets all of those use cases and is good enough for both yeah the whoever came up with the name layer zero is absolutely genius because it might as well just be like layer underground of everything online because this just the vision expansion outside of just um basically what what's currently building as you said like if if all you've done is just a build for what we have currently which is like fun fun um you know fun nfts and D5 games and and

financial Primitives then like you know you failed right but it when you put it at that lens of like underpinning what could be um let's just call it the future of the decentralized web uh the the name layer zero starts to really just stick so so Props to whoever came up with I was that was all Ryan that was all all my co-founders so I'm I'm god-awful at naming uh he's he's come up with every good name we've ever had nice nice kind of uh shifting gears a bit towards some of the uh practical things that you guys are doing in D5 so I saw uh in the June recap uh I think you pushed 16 million messages in June uh and 35 million total so nearly half

of the entire total here of messaging happened in June and I think a lot of that has to constantly do with some of the Integrations that you guys have have been doing it seems like the BD an Integrations team has been really putting in work there so I'm just kind of curious what that what does that look like for uh kind of the integration side so you know a project approaches you or you approach um let's say for for example recently arbitrary Nova and scroll scroll test net were both um integrated what does that look like um kind of how does that process happen um you know and I guess um what's kind of the the unique um kind of selling point or um aspect that that these teams want to connect or you want to connect with them

yeah yeah so I think there's like two types of Integrations there are the chains uh so basically the End Laser is meant to be a hundred percent permissionless right so any application wants to come build uh they just come and deploy contracts they don't ever talk to us they don't ever do anything like if they come to us and they need Dev help integration help like looks at code whatever whatever that is Discord us directly uh tons of people are like around doing that but like there should never be a gatekeeper for anybody to deploy so 100 permissionless we've actually had some of our largest Integrations have deployed without ever speaking to us ever ghostly ghosts actually just like pinged me the night before they launched I'm like Hey we're gonna launch this thing like you want to take a look and we're like yeah sure

like we'll just look through the code uh so so that part has always been that way for chains themselves um layer zero Labs goes into poison endpoint on that chain and it's usually like the thing that we index on more than anything is just like where is developer activity ultimately like we want to be everywhere where like devs are being active um we care so much more like part of the benefit of raising a ton of money doing all these other things is like our Runway is is basically infinite right so like we get to take a really really really long-term lens on things and for us it's just like we want to be the places that that people are active we don't care if people like somebody being like I'll pay you 500k to deploy an endpoint like it doesn't matter it doesn't move the

needle for us at all um we're not there in any form of like that it's like where are the developers like that's what we want to capture because ultimately like every single new integration on layer zero now ends up um you know everybody else built on gets to compose that so like Stargate was a great example right Stargate built on layer zero there's like hundreds of applications using Stargate right Wu Finance uses it Sushi swap uses it all of these people now started to integrate around Stargate um because you have this primitive and so it just becomes like these Network effects become incredibly powerful uh where again like applications building just draw in more applications because they want to like utilize part of that functionality or the asset base or anything else it's around that so uh

that part has been has been awesome in super super interesting I think we're up to like I have to check the most recent numbers I think we're very close to like 10 000 contracts on mainnet which is wild um yeah yeah yeah I think that first point speaks to kind of the conceptual design of layer zero really kind of being that permissionless and trustless layer where teams can just come build without ever having to be in contact I mean that's that's really the ethos of D5 and of itself of Open Source Code of kind of what we're doing here um you know and then you can kind of take it to the next level with the uh change the chain development we're requiring a little bit more Hands-On but um strictly for for the purpose of just you know making sure things are done

properly and where and you're getting the technology into environments where there's a lot of activity and frankly we are the roll-up right so we kind of had this Rebrand shifted towards um this kind of friendship of the Roll-Ups the roll-up Centric roadmap uh really just kind of seeing that okay if we're gonna onboard the next helmet however you know tens of millions into billions of users we want to bring them on to roll ups because we think that's the best environment for them to thrive um you know in in terms of security user experience um you know ZK Tech all these different things right so um generally I'm just curious uh from your personal perspective uh we are a little bit biased and if you're not as bullish as as us but you're not going to

get mad at you but uh what's your general thought about uh the state of Roll-Ups where we're heading with ZK Tech um and kind of how layer zero fits into that yeah yeah so um as a company uh we've taken the stance of like we like we're we're always remaining agnostic right for us it actually doesn't matter if there's like a thousand orthogonal layer ones or like ethereum only as a settlement layer and a bunch of layer twos and actually one of the most interesting things is that uh our most used nodes by far are arbitrary and optimism and there I always thought okay people have this you know they have the arbitrary Bridge they have optimism Bridge they're going to use those to go up into it because it's free and why wouldn't you and like

people will likely pay a premium to bypass this this seven day window to like come back so I thought it would be l2s to ethereum that would be the most used pathway by far uh coming from the l2s and it's actually to each other it's horizontal composability for the for the layer twos like as soon as people have made the decision to move from layer one to low fee Layer Two they treat them largely as fungible across them and the amount of activity of the like people whether they're on optimism arbitrum Nova any of these like what they don't want to do is oh great I like did something here now I need to wait seven days to go back down to ethereum pay another L1 fee to go back up to the other chain and do it so they just want to go back and forth and uh so like like

Roll-Ups have driven an unbelievable amount of volume to us we're very very uh bullish like a a roll-up Centric road map we think it'll be incredibly powerful for us in general um and that was surprising it was definitely not to my original thesis uh in terms of Roll-Ups in general I think there's there's still like there's so much open work right the ZK stuff is is being so actively worked on uh decentralized sequencers shared sequencers are being so actively where like all of this stuff is very underdeveloped and I think we need to see like what that looks like before you'll be like yeah this is this is the way that things will definitely evolve long term but I think it's interesting and the teams have been great to work with

from a general perspective of running a business and raising capital and um you know just executing it in the best way for your team and for your company I think being agnostic is is is a no-brainer and it's a it's uh to have a bias in the world in the market is to lose out on opportunity right and so I think that that's a that's a pretty base base Choice there yeah and I I joke about it a lot like I you know I found Bitcoin in 2010 I was mining Bitcoin like a ton um racks of miners in my garage in 2013.

I was minting gen zero crypto kitties uh I was farming yams at like 300 million percent apy like and in none of these was I like you know I wasn't minting Ginger or crypto kitties and like yes I see the nft boom that's coming or like same thing with yams right um so like you want to be open-minded enough to like be early to all these things and like get exposure like I like playing with new and weird things uh but I I it's not like I I have this magical like can see the future right so I I don't believe in my ability to predict my goal is Build That Base primitive that applies to all of the use cases and just like work with the people doing interesting stuff and like a bunch of that will turn out awesome yeah because those those people will surprise you

like 100 I have been surprised many many many times before so I you know I don't leave it up to me to to be a good good at predicting so and I think that's exactly what you're talking about bro like like a bias is a limiting belief and you're cutting yourselves off from If You Think You're Gonna know everything you're gonna miss out on what people will surprise you uh you know what what they build and how they will surprise you so I I I I love the the uh architecture choice that you made to make it more difficult on yourself but like bask in the light of this this like entropy that you find yourself like absorbing because you didn't limit your beliefs early on and you didn't limit your technology you're

able to now absorb all of that surprising energy and use cases that people build on top of layer zero yeah 100 I think this kind of takes us back to the last podcast as well which was with uh the founder and CEO of leafy um kind of a similar concept as far as the the kind of protocol as a business model which is build Tech that can be used by everybody in the space no matter where they are and just kind of focus on the tech Integrations focus on activity um you know and these types of applications I can see can grow so infinitely large so fast compared to something that is much smaller like

let's say like just a single dap even if it's like uh omnichannel or or a multi-chain gap not that those Builders aren't building something incredible but the scale of the reach of let's call it the infrastructure layer um is is almost infinite yeah yeah and I mean like listen I I promise you vitalik did not Envision like meme coins and ponzis as like a core use case of ethereum and who's building it right but like you know what I mean like you you build the thing and like you you end up like the use cases come after you build the thing that has the maximum utility and like uh you know that it's definitely not his end state vision but he's not uh you know ethereum's not like oh like we're going to eliminate those

or maybe you know it's just an open system and like people are going to use it how how they're going to use it you make something that's that's ultimately useful and go from there even vitalik was surprised dumping them all right Brian I have a question um how do you guys make money like in this protocol you know integration world yeah what's the business model what's the what when you were doing this this raise what was the you know what was the business model yeah so I mean ultimately again build the most useful system and then stuff will emerge from that what we see as our role uh like okay later this is layer so there's sort of three

components have spun out of this ecosystem there's like Stargate the protocol layer zero the protocol layer zero Labs the equity entity right uh Stargate the protocol layer zero the protocol they all have their own sort of models and structures layer zero Labs the equity entity our goal really is to be sort of like what consensus is to ethereum right so we will build things that have direct utility to the layer zero sphere or ecosystem overall that are additive to that um but that also are so in consensus case okay you metamask and infuria and all of these things that like get used every day and allow uh the broader ecosystem to sort of like grow and flourish but they make a ton of money

from those things directly right and so our goal is to do that our goal is to build tooling that grows the layers of our ecosystem as a whole this can be things like pre-crime um this can be you know this can be a bunch of different things that ultimately are you know third-party services that are provided but uh we don't want to have so again when I talk about those those core pillars of how we built um permissionless censorship resistant immutable right so immutable is easy great contracts are 100 immutable cannot be changed ever uh permissionless is like you don't need to rely on us if our team disappeared from the face of the Earth you never saw us again government shuts down bomb goes off what you know whatever crazy thing could

happen like the layer zero protocol will exist until the end of time or until ethereum makes breaking changes like it will be there forever anybody will use it no application will be like oh they got some noted like something happened now layer zero is dead and all our applications are dead right and that's like like very very important to us as a system that that there is no way that some external thing can happen no Builder should have to be reliant on us and again big issue with like middle chains where like it's very easy for like one knows to be like dead every application built on top of it dead all of this uh huge issue and so um that's one thing and then the censorship resistance is just the same thing it's just like uh in the same way censorship

or if our like if our goal was to be maximally adversarial so now layer zero didn't disappear instead we've gone Rogue our only goal in life is to try to harm you as an application like we're gonna try to rug you we're gonna try to Center messages do whatever we can uh there is zero ability for us to do that if you select your own parameters like you have full control that you like again layer zero will exist forever and even when layer zero Labs is a complete rogue agent trying to destroy applications on top of layer zero they can all just be completely unaffected right and so I think like building in that manner matters just an unbelievable amount uh and I I think ultimately it's just like what drives a lot of this yeah I think if you if you pitch that

Vision to non-web three native or non-crypto uh investors the idea behind the blockchain being basically uh able to run through till the end of time and I it's probably more than likely one of their first times hearing a pitch of a of a technology like that it's kind of mind-blowing to yeah because again like we're we don't have our own chain right there is no layer zero chain like we have an endpoint which is a library of smart contracts that lives on ethereum that lives on polygon on all of these other chains uh as long as those chains live and survive anybody can interact with that smart contract so all applications can do it and then the

network for people to pick up and move those messages and how that gets assigned and all of that that is 100 permissionless and that in the worst case again everybody goes offline everybody dies there's a terrible like you can just go and run that infrastructure yourself as a project as it can Community bootstrap thing like there is always a fallback um you should never be Reliant or no application should be reliant on some third-party service provider as like the end um you know the end Arbiter basically on the life of your project and funds like imagine it was like to unlock funds and then you get a government shutdown you're like oh those you know 15 billion dollars locked forever like sorry guys um it's just crazy

yeah it it helps you guys not be inter disintermediated um and it it's like that like that is a moat right like you guys are building this thing it's almost impossible to Nerf like by yourself or someone else coming along and nerfing it like nerfing your thing for you like there may be a better system that comes along and you guys are building better systems every day and kind of layering that on top but it's not like someone's going to come along and just shut it down like it's going to continue to run as long as it's useful people will use it and then it'll it'll kind of like interchange interconnect interoperate with with other you know components out there and kind of like ebb and flow in terms of how useful and productive it is

like plugged into these other these other pieces um what are some of the intermediaries right now like that is one reason that protocols and especially the in the infrastructure layer is not able to be disintermediated what are some of the some of the like easy targets like what are some of the the intermediaries right now in the web 2 world that you're just you think are prime for this intermediation I think there's a couple of surfaces there's like immediately obvious one is obviously like look at the Trad Phi slash hft world right it's it's literal Insanity tens of billions of dollars per year by simply just like having a bad system where it's like an order pings to

this exchange and they get to race you and just like front run you right and now we have Mev we have everything here but there are like plenty of ways to reduce that surface uh like that should ultimately long long term be be commoditized as much as humanly possible where the people will do it for the absolute minimum amount such that the maximum amount goes back to the End customer should be done so like okay now you have like the surface of transactions that are happening themselves then you look at at tradfy themselves right like um how like send a wire right do remit money do anything like all of this stuff is insane right now the the fees that are layered in like uh there's just so uh you know the list is is near infinite uh in terms of just like

gripped and just like um you know how stupid it is in all traditional systems so yeah yeah it's pretty yeah wires are ridiculous um especially when you're so used to sending uh eth around for a dollar or less than a dollar fifty cents 25 cents if you get it when gray is low and actually brings me back to an idea that you said earlier which is uh some of these inefficiencies currently in the crypto Market specifically not just the broader uh uh Trad fire or kind of World Markets um are all just basically like another form of attacks and like you said I mean if you're here right now in the crypto space if you've been here for a couple years you've likely got that libertarian mindset uh you know in

ingrained in your mind and so this idea of like existential taxes in addition to what you have to pay to your own nation state is like it's it's if that's not a big enough driver to build something better then then you know you you're not in the right industry yeah I mean ultimately like if you're like attacks on the technology layer like a tax on just the surface of doing anything like that sort of tax um on the end consumer is infinitely harmful uh overall just to like the world to everything like you need you really need Goldman Sachs like taking X percentage of you know whatever three and a half percent uh for credit cards

of every transaction that's ever run basically as everybody moves to like digital uh you know pay on your phone like all of this stuff it's just crazy yeah yeah it's like it it's kind of a consequence of capitalism because it has built these barriers in these walled Gardens where people are trying to limit entry and they're they're building up these barriers so that they can price manipulate so that they can control the price right so like they can charge that three and a half percent because it's very difficult to establish market share in that in that industry and someone can't just come along and build build a solution for one and a half percent because it they have established this Walled Garden that it's very difficult

to enter now we have blockchains it's very easy to just program spin up a new execution environment a new protocol you just interoperate on the contracts that already exist um it's almost like we just have accelerated like when someone has a good idea we just accelerate that all the way down to Bare Bones cost maximum capital efficiency and then we can we're basically running it at break even so that the participants in that economy reap the most benefit I mean like imagine the POS system just imagine the simple credit card machine being a permissionless system such that anybody can deploy onto and say Hey you can use my credit card at one and a half percent one percent here it works for all of

them right because the core technology has been built in such a way that anybody can do that and the core technology has all this network effect that everybody has adopted that right that's ultimately the end goal right right now you have this this POS system um where only like the Visa Mastercard areas they've negotiated like just us nobody else like you're dead you you have no credit card access if you don't do that right it's impossible for somebody to enter But if the underlying technology can be built in a way that is maximally permissionless again immutable and censorship resistant like that changes so so much and yes all of this stuff that is attacked on the consumer will just get commoditized down based on what the consumer will pay for for convenience for you know whatever that

looks like experience whatever it is right POS of course being point of sale point of sale yeah maybe both apply given that given how bad the systems are it makes sense I I totally see see how that that could like just unwrap this like totally decentralized execution like transaction environment where anyone can just spin up that credit card point of sale and just tap you charge one percent tap you charge two percent whatever you know configuration you choose are you guys working with lightning Network because they kind of take that like point of sale angle are you guys doing anything with with lightning yeah early on we've not done and so with the way we handled proofs originally Bitcoin uh basically didn't

have enough smart contract functionality to be able to validate an MPT proof on the on the network itself right so there wasn't enough smart contract functionality to validate and incoming proof uh since then we've done a ton of research on on how we would be able to do that in those systems uh and basically have the flexibility now now to move uh to move to BTC and you know everything ultimate narrow everything else around this and so um we haven't yet we likely will I would say it's not likely to happen in the next six months but you know almost a hundred percent happen in the next few years interesting things coming yeah lightning is is really trying to be that

front-facing uh user experience for Bitcoin kind of change the change the um idea of people's heads at Bitcoins only the store value only uh you know it's expensive to transact with uh kind of fulfilling that digital P2P cash Vision um yeah yeah like as you were talking that it brought up like the whole Bitcoin cash idea and and just kind of like continuing to try to push that narrative a little bit you know like people should to try to scale Bitcoin so that there are some transactions going on change so that when we hit 21 million there's actually some transaction fees for miners not just a block reward like that's I think I think it's important if we want Bitcoin to survive that it has some transaction flow

um in the form of people using it as a currency yep 100 you know you you just brought up vehicle in cash and that kind of threw me for a world because we're just talking about if we uh if you were able to create a new uh point of sale system with a different uh credit card processor the guy you know Roger and Bitcoin cash and Bitcoin gold and all these they kind of just were like whoa we can just create a new POS system uh obviously it's proof of work but call it Bitcoin cash Bitcoin gold Bitcoin SV instead of the original it's just kind of that same iteration but again because of the open nature of of uh of blockchains and and forking and code and much more much more feasible just interesting kind of loop there yeah

yeah interesting what's your take on open source code because I think that's kind of like what allows that programmability and like you know quick acceleration to iterative like like uh maximum if you will yeah yeah I mean I I think engine trade-off I think for anything that's on chain where a hundred percent open source Maxi um we did use uh BSL for our stuff which like gets gets a lot like obviously unit swap has taken a ton of flack with uh with V4 BSL um you know so I think there are trade-offs there um but I think like when we were doing something that was just like entirely new we knew it mattered early on to just be able to like build Network effects

and like basically have that like eventually everything will everything is open source people just can't use it for commercial use yet I will be able to eventually um so the one thing that we get Flack for is that our off-chain components are not open source right now and so there's like a couple of reasons why we do this so everything on chain anything that is related to security at all is 100 open source audited has been from day one then you have stuff that lives off chain so like our relayer the layers your laboratory layer which only deals in like a couple of things it deals in quoting and like a few other things completely external to uh to security and like that is the

thing that layer zero Labs our Equity entity will like run long term um that for us is something that we don't think like we don't need to open source it just doesn't matter and if we did open source everybody would just copy it which is fine but we're very very very uh Vigilant around like client diversity matters and unbelievable another huge thing that we hate around like the middle chain system in general is like everybody runs the same client and like the devs of the change is like push a new client update and everybody just Auto accepts it right like you ultimately just have like a single point of failure and so like right now we already have like polyhedra the ZK like client that came on they wrote their own client from scratch chain link wrote their own client from scratch we wrote

Our Own client from scratch we're actually getting a bunch of other people the right clients right now so that like there will never be a point in time in the network where like everybody in this the eth has had to go this direction a ton right so eth used to be like super dominated by by Geth and they've like meaningfully pushed down guest adoption um with every you know every other client basically because they realize like a bug that gets introduced to that is just catastrophically bad for the network it's like death um and so like there are some reasons strategically why we've chosen not to for off-chain components uh that have nothing to do with security um but yeah otherwise we're like

extremely Pro yeah yeah it's interesting so would you consider the off chain um code and kind of Technology like intellectual property or like proprietary information just not not wanting to give it out yep for sure 100 I think again layer is it right layers are the protocol is going to exist on its own layer zero Labs doesn't have any special rights to layers or protocol layers or protocol like doesn't pay layers your Labs money right like there's no world that we build a system like that that makes any sort of sense at all or that like we knew that we'd never get adopted so this system is going to exist on its own anybody can step in and run execution anybody can

step in and run pre-crime anybody can run any of these things um now again anything that is related to security 100 multiple audits open source everybody be needs to be able to see but when you're talking about like quoting gas across chains and like how you're dealing in execution like there is no Edge for like nobody else needs to have that that end application doesn't care they care that somebody fulfills it because whoever fulfills it um just means that you know they'll the same security assumption for them regardless of who fulfills it so it doesn't change their security assumption their trust assumptions at all but the people who can do it the cheapest will will sort of be able to monetize this for again whatever that like lowest cost

is to the end consumer um and layer zero Labs is an entity once to be able to compete in that market yep yeah that's uh I'm sure it's part of the kind of pitch deck as well to uh investors and just kind of what makes the uh it separates you guys from from the rest uh and just kind of reinforces the uh the state of of Excellence behind what you guys are building so um many props there kind of Shifting towards the end of our conversation here uh to kind of a little bit more of a fun conversation so not that this hasn't been a a blast but I want to talk about some nfts budgie Penguins what's your pudgy penguin story Brian

so I I bought uh I I've kind of managed for us my two co-founders Ryan and Caleb I've kind of managed our portfolio on and off for like 10 years or like a very long time I bought us punks very very early um when they were like cheap and we're like we're just gonna hold these forever um then uh there was this period where like it was like three months and my punk went from being worth you know whatever it is like 50k to being worth like 1.1 million dollars I mean I was like I know we said we're never gonna sell these but like I think we have to sell these and my co-founder was so adamantly against me doing it

um he's still never forgiven me to this day but I end up selling all three of her punks like absolute picotops sold for implements it was great um but he was like he was so mad and he was like we have to find something else and like we will never sell it no matter what um and so we ended up uh you know we ended up finding Penguins just like very shortly after I I bought I must have bought 50 penguins from 0.03 to 0.08 um I I bought you know whatever but a bunch a bunch of all different types and Rarities of penguins back then um so we bought a ton then just because we liked them and we picked a couple that were our um you know our uh avatars

and then eventually way later I ended up paying for the penguin I have now I I ended up paying quite a bit to go out and negotiate with the person and find it and track it down but now I think we're uh I think we're the largest uh holders of penguins um of anybody uh so we're definitely like massive penguin Maxis um basically never sold a single one other than we have this batch we did do experiment uh we we put in pseudo Swap and like we have like five more penguins than we put in there now so this is the small batch but uh we gifted every single employee in the company uh Penguins for Holiday bonuses so we gave away you know we've given away Chad 50 Penguins uh the whole company has them um yeah we're we're big fans for sure

epic yeah yeah I think what they're doing is uh is special big fans as well um was happy to see you guys in that round so that's uh that's a that's an epic wonder I mean when you see a let's just for like another terms of stallion in a in a race with a bunch of horses it becomes kind of an easy okay well what if this works you know yeah there's not really many I mean there's no other projects trailblazing that uh like the physical kind of reality collectible Niche so yeah yeah I mean when we when we bought in the beginning it was way pre-looko it was like right after mint and so we already loved them and then seeing Luca

take this project that had been so like abused and like Community everyone's rapping and you know all these things were happening and like see Luca take over and just his energy and like um sort of Ambitions with the project overall I I said on Twitter the other day it was like one of the easiest checks I've ever written right I it told him I didn't didn't care about the pitch deck didn't care about anything like I very much just wanted to like we already were huge supporters of the project in general and like wanted to support him and the team and the vision and like they've been awesome infinite love for the penguin team I re-listened the segment that you and uh Luca did on our Twitter space about brand culture and and I was sitting in front of a project proposal and it just

like flew from my fingers like the literally the culture from your mouth and Luca's mouth through my brain through my fingers onto this onto the stock love it yeah that was a good one yeah Luca Luca has a really interesting kind of online marketing and uh brand awareness mind it's uh it's a special one um he's come from such a different place in terms of background where I was like a very technical background he's he's full like consumer product Etc but like when I I you know when Luke and I spend time we'll stay up 2 A.M just like chatting going through ideas like the amount that

we agree on is is staggering um so uh even despite all of that uh he's he's a stud man solid stuff and uh last but not least the untouched the untalkable topic uh I I've been seeing some shenanigans on GitHub about this zro thing but uh not what what well what can you share with our our audience that's not going to get you in trouble so zro from GitHub that people are seeing is is in the it's in the code the layer zero code from day one when we launched it's always been there that's nothing new that has been there from the very beginning of time everybody can look at the commit history so frustrated so frustrated about this yeah so that

that has been there forever from the beginning I've said it on many podcasts before anybody who is claiming to know anything um you know has has no idea we we still don't know they don't know nobody knows anything anybody who's saying they have any information uh is lying to you guys heard it here first founder of layer zero Labs CEO Brian knows nothing so he knows nothing there's there's no chance you guys do right all right Brad it's been an absolute pleasure um I could talk for another hour but I want to respect your time I'm sure you have a bunch of meetings and things today busy Mondays so thank you so much

for uh for joining on making episode 101 absolutely fantastic uh touched a lot of a lot of really killer subjects uh and learned a lot today thank you amazing thanks so much guys pleasure cheers