DeFi by Design EP#63: Cross-Chain Swaps Made Easy w Li Finance

Transcript

welcome to d5 by design where we talk all things blockchain and cryptocurrency while striving to educate empower and enrich it's your boy andy and welcome back to the defy slate youtube channel smash the like button on this video that really helps us out and sit back and enjoy the content thank you very much what's going on y'all welcome to episode 65 of the d5 by design podcast here today on friday january 28th and we are going to be talking about the multi-chain world how you guys can get more active in the multi-chain uh how you guys can basically be as efficient and effective in your yield farming swapping and you know what the world kind of looks like where we're headed um you

know how how we're able to use uh protocols like lee lee finance which we are here talking with philip today from and and and how we can aggregate all these all this liquidity on all these chains you know to really get uh you know the best environment for for everybody we kind of foresee a future of defy where you're using an app like cash app but you don't really you don't understand or realize that on the back end there's all these different protocols and chains and liquidity kind of forming so excited to kind of learn more about the multi-chain world house shaping up for 2022 uh also going to be touching on uh stuff so on the roll up front um and kind of what that looks like as well um

so excited to chat here today with phillip uh we got connected with with phillip through his his buddy henry at eth lisbon so guys make sure you guys are attending some of these conferences this year because yeah they're dope here today of course with robbie robbie's in sunny florida he's having himself a day how you doing rob uh yes sir it's another beautiful day in florida uh yeah hanging out it's friday january 28th and uh it's looking good uh markets are a bit choppy but you know what we're still building we're in we're in complete build mode um and and that's what we're here to talk to uh to phillip about is kind of what they're building at lee finance um and you know how it connects the the entire multi-chain um and and it empowers d5 users to really

start navigating the chains um more seamlessly and more fluidly so i'll uh pass it over to phil let him introduce himself and uh we'll get right into it yeah thanks rob i'm super jealous i'm here in berlin it's cold it's gray it's rainy it's you don't want to leave the house uh looking forward to eat denmark as andy said like check out these conferences eve denver is is going to be great i'm so much looking forward to it um yeah i'm phillip i'm one of the founders of lee finance uh le is for linked finance we are interlinking the most crucial parts of d5 means the taxes and the bridges so we are in the core bridge aggregation protocol aggregating

all the cross-chain bridges connects hob a sea bridge any swap wormhole all of them and then we connect them to the taxes and dex aggregators on each chain which is important because the bridges are limited to stable coins native currencies and it's so important that we get that whole end-to-end journey right you have a certain token on a specific chain a and you want another token on chain b you have cake on bsc but you want to have magic on arbitrary so with refinance you can simply use our interface and go there and basically just pick any token you have and stop it into any other token we figure out the best route think of us like one inch or power supply crosstrain and we make all of that tech available as an sdk as an api

for developers so if you have a dab and if you're a protocol developer simply uh check out our docs it's a well documented and we provide great support around that development and integration process and yeah get us integrated go crosstrain well first and foremost i appreciate the magic show as that's been the only bag of mine that has done anything in the last three weeks so that's good uh they just launched bridge world they just launched year-long staking that thing's going to the moon anyways so let's talk about kind of the process so i've got i've got as you said i've got cake on bsc and i want to get the magic token on arbitrary kind of walk us through like what the technical process for that

would be um and i'm going to take a stab at find the best bridge uh with the best rates find the best aggregator that has the best rate and then kind of kind of like put all those transactions into one and get one gas fee or something like that but kind of walk us through it more in depth yeah exactly yeah it depends a little bit so the first first of all it depends on which token you have and which token you want on which chains and depending on that we need to choose the right bridge who supports that route and that's also about how big is your desired swap right so we need to check for available liquidity because as of now there is not sufficient liquidity for all the different routes on all those bridges so

doing a liquidity check is another thing we have to do and then obviously we have a couple of ways to compare different bridges based on security factors and based on on on coast direct fees gas fees how gas efficient their contracts are and whatever there's lots of factors and we try to figure out the best bridge but as you mentioned we not only need the bridge quite often we also need the decks on the source as well as on the destination chain because yeah the limited uh have to pile up a huge amount of liquidity that's why they are mainly um reduced to stable coins and native currencies uh and that's why we need swaps on the sourcing destination chain and depending on which bridge we are

using in between doing these transactions and swap bridge swap journeys so to say is easier or harder to do and sometimes you have to sign more transactions sometimes it's just one transaction totally dependent on the bridge we are able to take if that makes sense gotcha and that you mentioned kind of the the finding the right bridge aspect there you know there's there's different criteria there that you look for uh sufficient liquidity as well as some of the security uh you know the some of the security

measures that that uh you guys take to really secure the the bridge from one chain to the next um i'm curious what what different types of bridges are out there uh and then where it is where does live finance kind of fall in into that those different types of bridges i know one of them being like one of the types of bridges is a mint and burn bridge where a token is is kind of minted on one side and then it's burned and or excuse me it's kind of burned from the origin chain and it's minted on the destination chain so you're kind of destroying it and minting it again

um almost like the way you know i guess like if you were to teleport from one chain to the next you would kind of destroy whatever's on the original chain and then you would mint it over on the next chain um is that similar to how uh live finance bridges work or is there another mechanism uh that allows you to cross chain so this is the most important differentiation right we are not a bridge at all we don't fall into in in any of these bridge categories because we are a bridge aggregator that means um all the different bridges no matter how they work if they have burn bridge or if they're synthetic as a representation bridge or if they you know the light client base bridge there's so many so many types of bridges and and we could have a very

long conversation about that um but basically we aggregate all of them and we have a default pattern how we prioritize them so basically the the default pattern we take is is security over um speed over costs uh basically saying the user is willing to pay for security and speed right um because he rather pays a little bit more gas but then he gets the api the the shiny apy uh sooner right that's that's kind of the idea um so they are willing to pay for ux and security and the security is is is a totally different uh aspect so um for example one major differentiation is

how trusted or trustless is a bridge so we have bridges like any swap that our wormhole that have an mpc model right so multi-party computing so we have to trust us a certain amount of parties here and then there are much more trustless bridges like connects on top and they really care about decentralization so they have like so what what we have to understand here the bridges and they always have kind of a man in the middle there's always someone in the middle that either passes messages from one chain to the other um or checks on both chains hey have the funds been locked and do we have finality on the source chain yes then unlock on the destination chain stuff like that um and and and this this

man in the middle system this is kind of a huge attack vector right so that's where we have trust assumptions uh from the user perspective and uh chains uh bridges like connection top they basically make sure that this man in the middle concept is decentralizable as much as possible hop calls them in the middle system bouncers connects calls them routers and and it's very different difficult to to make that to incentivize a fair behavior here so first you need to incentivize liquidity providers to host these men in the middles and then you need to um implement things like um staking and slashing so that people are actually getting hurt if they would misbehave and

that basically yeah it's busy like like its own small chain so to say and that's also why it's very fair for them to to launch a token to secure the network and but for us all of that doesn't really matter we implement all these bridges um obviously after a certain priority pattern and not everyone but but we implement most bridges and then we grade them on a security level uh so for example the one is npc the one is mpc plus proof of authority which would be wormhole for example and then we basically say hey probably this is more secure than that and then there's connects on top oh they have a decentralizer model model it's it's trustless it's not npc based great here they are even more secure and then

speed and all of that is also an option and what we do then is um two things number one we create a lot of content around that so we want to educate our users our community and the ecosystem around these bridges and the security factors at the same time we our our platform as well as our sdk and api they are very flexible so we have whitelisting blacklisting and preference pattern so you could basically say always prefer connectshop over the others because they are more trustless or depending on your use case if you have a retail use case and they're only moving a few thousands right small amounts then you're fine with mpc based models but if you're moving if you're a dow and you're

frequently moving like maybe a million or more because you have to move large funds then you probably want to blacklist certain npc based bridges and simply say all right we just go with the trusted ones even though they are slower we we go with them right and so we educate we give flexibility we consult our integration partners and i do believe this is how we can offer the greatest flexibility and also provide the best yeah security for the whole ecosystem yeah the users get a choice based on whatever they prefer in terms of their security speed

um and slippage um and so that's something that on the on the on the ui that that they can adjust because on the ui there is an advanced options yeah advanced options menu you can click on it you can whitelist this or or blacklist certain taxes and and certain certain bridges and uh yeah so right now the current website is very b2c-ish um soon we're gonna launch uh for real so right now we haven't even launched yet we haven't announced our funding around nothing right um so um so we are over 20 people team already uh we have our huge launch quite soon and then and then uh yeah you will see much more uh all the stuff we do

yeah the ui is a little bit of work there buddy yeah it's super ugly it's it's the hackathon result from last june no no it's it's true like i hated myself like to be honest but but we decided you want to strongly nobody want to focus as you know yeah yeah you want to focus on what's important and the execution right tech behind yeah yeah exactly yeah yeah it's it's a design comes there i remember talking to henry i remember talking to henry at the bar um and he was explaining to me and like you know i was like four or five you know drinks deep you know i was having a good

time and uh henry was telling me the idea and i was like you know i was probably on like three or four chains at that point you know there were there wasn't really a whole lot of of roll ups out or a whole lot of other chains but you know there was still the need and i was like wow this is going to be huge like i think my first question was yo can i invest and he's like nah i think we're already closed and i was like dang come on but yeah i mean the way that i see it is why do i need to spend all this time like i spend i've probably spent so much time you know just trying to get stable coins then trying to bridge and then taking stable coins and swapping them on the other decks and then getting into

the yield form i can just take my coin and opt for whichever preference that i want which would likely be in order for me uh slippage then security then speed and then basically basically just move quickly back and forth with like a click of a button i mean that's like that's golden um i've spent way too much time clicking getting stable coins finding the best bridge getting back to stable coins getting to the decks it's just like uh such a repetitive process um what is the the gas fee or the fee that one will pay uh let's just exclude uh ethereum ethereum from this because nobody uses that chain anymore who even touches the theorem anymore no i'm kidding but

um is the gas fee relatively like is it a relatively expensive transaction for like say on like avalanche or phantom or arbitrary or metis or whatever it is like is it is it a uh is it a complex transaction um on those chains and like how does the fees work for um you know liquidity providers if there are any only so so as we are not a bridge you can't provide liquidity at lea finance and it is uh it is a fairly simply smart contract simple in a way that it's just an abstraction of the communication to all these bridges that means the the real heavy stuff is happening on our back-end side that's where we have the

the most effort and it's the same for one inch in periscope right they are running so many servers to get that scalable and fast and that's the same issue for us so um the smart contract level we don't add much gas overhead and we don't take a fee ourselves so that's good news we might do in the future but in general we aim to drive the same business model and revenue a stream that one inch and parasol by having and that's basically if you are a dab and or if you're an integration partner of any kind and you're integrating us you can monetize on that so our sdk is monetizable and if you take a fee from your users we're going to take a cut from that the market standard for that is 15 but

it doesn't concern the user enemy or how much how much we take of that right so it basically depends on our integration partners if they want to monetize on that and we don't have any influence on that yeah by using us right now no additional way yeah exactly and that doesn't what that does that stream without having a token which i'm sure you know we can get into if that's coming or what your thoughts are on that but that gives something immediately that communities can own a part of uh without having to have new token emissions so it's like there's already value being created which is this value is going to be just massive over time uh especially once we

get that that ui fixed um and um that will allow the token holders to have like in basically a stream of revenue that doesn't rely on new let's call it leafy tokens to be made which isn't even in existence yet and that's huge um kind of having that product uh and revenue model before the token even launches um you know it's something that that the community will once get a part of and i mean we can dive into that now if if you like if you have any thoughts or or any alpha leaks that you'd like to share so there are no alpha leagues um there is kind of a bit of a story max and i we have been building companies for the past 10 years and there's nothing more satisfying than

seeing people using what you're building right and so our core focus is to solve a real problem we wouldn't do any just random fork it's just we we want to solve a problem that's what satisfies us and that keeps me motivated uh to spend long days working and so we want to solve the problem first once you have solved the problem we still need to adjust the product so that it fits the market you want to serve and that's our major mission making our integration partners happy and providing value right as a business you have a value proposition we want to fulfill that and do that in a way that our integration funds are really happy with us

and if we are at that point then we can think about a token and let everyone participate um but that comes second or third place like first let's build something let's think long term build something sustainable and and and then a token can come and then we can all have a fun and a fun and exciting event and yeah obviously we want to tie the token to the final product final because it's never final right but but we have a token model that really fits what we do and is in line with all the stakeholders in our product and there are many right we have the bridges we have the integration partners we have the team we have our

investors we have the end users so there are so many stakeholders we need to take care of if we design tokenomics it's going to be tough and yeah there are some great ideas around that but yeah uh i think a token is basically a whole new product uh to come up with to maintain to market to message around right and uh we wanna wait with this with that and until then stay focused got it what are some of like the kpis for y'all now like what's what's some of the growth that you've seen let's call it users transactions volume you know has that been hockey sticking recently

how's that looking yeah so uh the north star metric for us is probably transaction volume and uh we haven't tracked it too much and the reason for that is we try um so uh so the way we we kicked things off was without any smart contract so basically we calculated the best route and we put a lot of effort on the back end side of things and then all the transactions were triggered in the client side um so it was completely non-custodial no smart product nothing right um it still is non custodial we now have a smart contract it's even on mainnet but we just launched it actually yesterday so

silently and um uh yeah uh what what we know from bridges we are working with is that we have brought a few millions in uh transactions monthly and we have a couple of thousand users uh once we tried tracking on the client side with google analytics and stuff all of that got blocked very inaccurate numbers we even did it with a custom domain all of that but still so the proper way to track it would be on our backend side and it was not a priority to do that right now but we just know from reference that spend a couple of millions and a couple of thousand users per month for sure that's what we can see on the server side so server locks right yeah

that gives you a ballpark but we are getting integrated right now by quite large players so it's uh not only it's not yeah it will be a hockey stick quite soon so looking forward to that sweet sweet yeah i'd like to kind of get back a bit um backtrack to kind of the bridge conversation that we were having i know that this could go this could go on for hours but i'd like our our audience to kind of understand um kind of what bridges really are um and kind of the security so so let's just work through a couple you know maybe the ones that are up to you i would love to kind of hear like again i know you probably talked for hours about

this but um you know like you know perhaps you can name a bridge or two and then kind of give the security model of how it works as you did um and then just kind of like pros and cons just so that you know when our users are are using lee as well as other bridges you know um you know themselves they kind of understand like like what they're getting into the reason behind this is because again today there was another bridge hack for like 80 million um on like quid bitter or some some like binance smart chain bridge i think oh really and unfortunately i think we're going to see a lot of these um yeah exactly so um let's just kind of dive into a few of your choice and then i kind of want to also dive into how how you might uh be preparing for anything

like this in the future i know it's kind of a dark subject but yeah let's start with some of the existing bridges and their pros and cons to their model and um just so our community is aware so go ahead and pick the first one yeah sure it always depends a little bit on on how trusted a bridge is right like how how how much do i have to trust someone else with my money um if i if if if it's just a few people i have to trust with my money then basically it's very easy to manually manipulate these these few people right um it's very easy for me to to go there and find a vulnerability and and use that vulnerability on all of these people and

it might be um it could also be you could actually you know it's not only about uh technical security and maybe it's even about social engineering um if you talk from that on like just on the human perspective if you only need to come around three people it's doable yeah first you try to uh to to sneak around them doesn't work all right then you simply beat them but one more stronger so you couldn't beat them all and then the next is maybe you bribe them oh bribing works right cool so there are ways to get around this so

the more you decentralize the system the better and now we have mpc based bridges um which only live within their own computing cloud let's say any swap i think any swap has around 30 servers or something like that um and it's probably all within their own aws account which is fine but if there is is is any chance to dive into that right um send a malicious email to someone um of the team and it gets open and you're into the system it's not that hard to uh to have an undetected virus or undetected trojan horse right like these things are like if you if you're in that

uh security space like it's it's easy if if you have one particular target it's it's doable right and um so uh this is this is one thing and then we have like yeah we have bridges like wormhole um they also have an npc model like any swap um but they have an another model on top they call it proof of authority so they have basically say we have a certain amount of people which we should trust because they have a large reputation um it's their validators i think they have 19 validators which is basically players like chorus one and lido and and so on like like i think staking providers they

are using mainly for the validators and yeah this again like if there's a vulnerability i only need to figure out these 19 players and i can easily go through that as well and it might work for a certain amount of time but at scale and if the incentive is large enough um some solid hackers because no system is safe that's also something you know no system is safe that's some that's that's a ground rule and um and that's also something um uh which is in general something i'm criticizing about that bridge industry everyone is talking about audits no one is talking about pen tests so pen testing is a process whereby you let a security expert hack your server and

that is black box pen testing so basically they don't know anything about your server right and then they try to hack it with all the security know-how so basically you you you basically pay a hacker to hack your system and then there is white box uh pen testing whereby you give him all the information and you give him code access and he can really like he can has the full freedom to search for vulnerabilities that's what you do at the next step no one is talking about that no one is doing that but that's what you're supposed to do and there are always like i bet you could even run some port scanners on your foot five you would find open ones at some of those bridges and then we have bridges like all bridge which is then basically i think just one centralized server and that hacker that

got access he doesn't have to use that that that open door directly right he simply waits for that one large transaction of of two million and redirects the route redirects the transfer to his own wallet and he's like thanks i'm rich now um and we're gonna see that quite often quite sure uh yeah and so yeah i've been seeing a lot of um sorry go ahead uh yeah i was just saying the more secure bridges are the ones that care about decentralization and trustlessness and on the token bridge level we have players like connex and hop on their arbitrary data messaging

bridges which is a really important feature and wormhole supports that seabridge now supports that as well right but on the arbitrary data messaging bridge it's basically nomad uh like it's a fork from optics um you know james pressridge uh is james prestwich is a candidate you have to take a look into he's been on a lot of talks about why bridges are burning check it out on youtube you can learn a lot from him and yeah these guys really care about trustlessness so they for them it took years to build a solid trustless decentralizable system and they are slower they have drawbacks there's

another great article from arjun bhuptani from one of the founders of connects it's called the interoperability trilemma so you always have to make certain trade-offs you can't get it all and these guys are simply picking the trade-offs for greater security and in the long run i'm quite sure that these bridges are going to make it and we see so we are we are seeing over 50 different bridges in the space right now 46 are shitty to be honest um just from a security they they have a different so so i'm not i'm not i'm not even saying that that they're doing a bad job it's it's simply it's it's simply that they have a different target group they focus on

retail on small transactions and you always have to decide so from from where on do i need to put an extra amount of security or even or it's not even there they're basically saying hey we're going to start this as a business so we started lean so we first take care of go to market branding growing and then we take care of security and i think that's even on any soft road map so they also taking huge crowd so they also caring about security all of them care about security don't get me wrong but the question is always what's the priority of that and one of the best bridge designs yeah yeah that's the new one

yeah what was that that that uh that last part you mentioned about the uh you know kind of the interoperability trilemma and how there's there's quite a few different um bridge options and frameworks that are out there uh what are what are some of the the i guess first could you could you unpack this interoperability trilemma uh and describe you know how how live finance is dealing with some of these trade-offs um and then i guess how some of these other poorer bridges are are uh handling these trade-offs and and you know

what what's the reason for live finance kind of uh taking the route that it did yeah um to unpack it completely is maybe too much but there's basically speed um and coasts and uh um there is there is uh security and then there's also generalizability so how flexible is the system and all of that so so how do we deal with that it's it's difficult to say because these bridges decide on their own what's important to them and um we let our integration partners choose what's important to them right so we we we are basically inheriting the best

parts but also the worst parts of all these bridges so if they get a new feature we get it if they have a new security model we are inheriting that so so the only thing we can do is stay up to date continuously learn about these new changes and concepts and we what we try to offer is basically um certain thresholds for certain things so we try to make things quantifiable and for example the topic decentralization uh we could simply we could basically try to track how decentralized this hob and how decentralized connects by by seeing how many men in the middle players do they have roll out already and thereby their security increases by the more decentralized they are and

these other things we can do right so we can learn about their concepts and we can we can then basically say all right is this mpc based okay less secure than x y so it or there's basically a point system if you're npc based you get less points um if it's proof of authority it's less points than the completely trusted system and then when you're trustless okay what's the degree of decentralization so there are qualitative and quantitative factors we can take into account and that's how we deal with these trade-offs and then we basically let you as integration partner or you as the end user decide what is important to you and um that's how we deal with it we we pass it on so we educate we give the flexibility but in the end you decide

but because we don't want to prevent you from taking the fastest most insecure bridge to get the your 1k you still have left and not deployed in any protocol get it over as fast as possible get that apy right if you want that it's fine it's only understandable so we don't want to be like well we're going to take the most secure it just takes you three hours um we're just gonna take hey take that one uh it's a little risky but you're gonna get that fast right um and sometimes that's exactly what users want i mean you know things things are freshly launched guided in first hour first two hours um yeah yeah i mean

so far this conversation has has made me want to yeah yeah and i hope you guys do some stuff on the um revoking permissions because that's what i've seen a lot uh people get wrecked on with bridges is basically allowing them to drain the wallet because their permissions are open but i'm pretty sure if you have your metamask connected to a hardware wallet they can't drain your wallet because you have to physically approve of the drain so i'm pretty sure anybody uses a bridge and i'm saying pretty sure because i could use some confirmation here but um yeah i you know as long as you're not using just a hot wallet on any of these bridges you shouldn't have to revoke the permissions um but you know i guess i could be wrong i guess they could figure out somehow

but i don't think that they could so i've seen a lot of fun about that but i think it mostly affects users who just use hot wallets to be honest i can't give my answer to that and even though i'm dealing with bridges all day long uh um i haven't spent too much time in the past weeks uh i'm caring about these hacks or researchers do that right now and they they basically pass information on to our developers and we do a lot of things on our end for example kill switches so we'll allow bridge builders to pull the trigger themselves if they encounter a hack and basically one of their wallets addresses is registered with our smart contract and they can disable it on the smart

contract level but also uh we have like easy switches where we can turn off certain bridges for all our integration part of this once because we have that central that's what this where a centralized backend is nice right because we can simply it's a we disable it with one small uh signature and that's it and uh yeah same same for yeah that was going to be able on on spy contract level as well as on um back end level and uh yeah these are the things we can do as soon as we are aware of something and even one step further if we get developers to to a point where they can basically uh yeah pull the trigger themselves if they counter a hack i think that's the most important uh part here

yeah we're working on a concept which you can share with other bridge builders and aggregators as well nice nice yeah yeah i mean it's uh it's definitely something to keep in mind but um yeah like i said as long as using hardware wallet should be okay and again using these secure bridges is the answer um you know for for the most part and i i mean i think vitalik made a comment he was saying multi-chain but not cross-chain now i don't really have the context on that um but you know i i assume he means we exist in a multi-chain world um however likely not cross-chain in terms of i guess things like swaps like

that that could potentially go against uh the idea of lee finance um but i i think he more so meant like um interacting with multiple chains at once less so kind of uh you know get going from one chain to another i don't know what do you think about the idea of multi-chain but not cross-chain yeah basically the question is do will we have a multi-chain world i strongly believe so i think that we have we're going to have blockchains for different use cases we're going to have private chains we're going to have you know that's that's one thing that's for sure for me and as we are talking about the market um so there will be bridges because people

want to move assets from one chain to the other let's say we make it to replace fiat and then then then especially um so there needs to be a way then the question is um will protocols like yearn drive their strategies mulch across chain right that's the question here like will like will yarn have cross-chain vault strategies [Music] difficult to say i believe that in a very fragmented multi-chain world there will be enough financial incentive to build these protocols and that means they're going to be part of the crow infrastructure it's it's kind

of hard to predict i i can see his thoughts at the same time i would simply say in the next years it will matter and people will jump on the on the bandwagon when they see the opportunity oh there's something working across chain and we're gonna see multi-chain token governance models we gonna change all that stuff i think there is a huge episode where we will see uh multi-chain and cross-chain uh strategies behaviors and and dabs and maybe even use cases we haven't seen yet maybe there's a new complete new layer that has to be built in order to make that new financial system we are all dreaming of and we are all building

right now to make it work right um so uh i don't think that this is a black and white answer uh are we gonna see interoperability happening and there are also great protocols like ibc uh that would make that possible um in in a safe way just very complex but but yeah solid so there's a there's a lot to it [Music] so i would not ultimately agree yeah yeah potentially a layer of abstraction uh one one further from from the

aggregation layer uh where people start to kind of interact with different chains but unknowingly um so it's kind of a uh maybe it's a game layer and there's like uh you know some collaboration between uh some different nft projects and you can kind of cross-chain without actually uh digging into some of the different bridges that are required to to go between these different game universes if you will or d5 universes um i think what and that my understanding of where vitalik was coming from was the uh the security assumptions that are baked into uh these bridges and how it's it's a bit of a systemic risk to how it

assumptions um yeah because because i guess i guess the the the real risk being is um by having connectivity between these different chains in uh a system where each chain kind of relies on another if there is a bridge transaction and one chain uh you know that that transaction goes through but on the other for instance there's there's some you know blockage there's some resistance and and the the transaction doesn't fully confirm uh you know if if that transaction was happening on the same chain there would be a solution you know you

could you could roll back the chain and the transactions would would be reverted but for instance if you have it on one chain and you roll back transactions on the other chain but you don't you don't do that on both chains well now you're stuck in this this format where uh you know the transaction went through on one side but it didn't go through on the other and you're kind of you're in two like parallel different scenarios with a transaction that doesn't align between the two um and to me this was this was a kind of justification for modular blockchains because you want all these different pieces to fit together and and

uh you know work together well but this you don't want the security assumptions of one chain to affect affect the other um and you know to me that's kind of the reasoning for a modular blockchain is so that you know we these different these different modules can plug into each other but if one of them breaks there's not a systemic risk of of that breakage uh impacting the rest of the chains that's absolutely true so there are multiple stories to that let's start with the bridges one right regarding the bridges there are bridges that that basically mint and burn their own eso representations and if they they mind and burn their own official asset representations for someone else and if

they don't leave the door open for other bridges to mint the very same asset representation then we basically have a vendor log in and if that asset is then heavily used on the destination chain but the bridges collapse for whatever reason gets hacked then we are basically reducing the security of the whole system of that whole ecosystem of the few of the few billions within that protocol we reduce this to the security model of the bridge instead of having the supposed to be their security uh which is given by the blockchain itself which has been developed over five six years you know and and that's one thing with the

bridges i absolutely agree um and that's that's for example why any top or multi-chain uh now as they rebranded um they got a lot of uh critics around that um in the in the past weeks um and people have been trying up to come with with uh with uh there's a memorandum as um sealer like seabridge released one on their blog um but yeah it's it's that that is something we still have a find a solution around that um nomad is trying to create an open standard when it comes to um burning and minting asset representations on on certain chains so nomad tries to create that open standard so there are projects that are taking

care of that already but i can also see that while wider league is totally right on these things um is that there are they're going to be players to mitigate this so if there is a major re-org or whatever and transaction don't go through or if there is anything happen so that that that chain um yeah doesn't accept the transaction that has already found finality on the source chain um that there might be insurance protocols and basically technical buffers in between that are basically buffering and and taking track of all these transactions and then they resubmit them um should that rare instance happen or

should that instance happen whereby uh something was not accepted then there's this insurance protocol that resubmits these transactions i see these these things coming up that's how the market works um so i don't believe that all of that is ending up in that idealistic way we all would wish for to happen that's simply not how the market works and um i that's that's what i believe is much more likely it doesn't make sense because yeah does this tap into uh the conversation around data availability and i know we have just a few minutes left so that that's a whole

you know a topic we could have a whole another conversation on um i guess you know as you were describing the the finality of a transaction on one chain uh and the potential issue if that same transaction doesn't find finality on a different chain it kind of leads me to believe that ethereum could be this uh this complete you know comprehensive chain that tracks the finality of really the entire ecosystem um and to me that that represents almost a monolithic approach you know everything has to be uh exit has to reach um finality on ethereum to to kind of achieve consensus

does the openness of like a of a data availability layer um kind of remove the need of ethereum to be this this underlying consensus layer and allow it to allow like allow these modules to connect to one another without requiring a a consistent layer of uh execution yeah i think we are mixing two topics here a little bit because uh ethereum being the final settlement layer so to say right uh like for for for endless data persistence this is something that i can definitely see but still there might be that issue where we

have two l2s and we found finality on the source chain but we didn't get it on the destination chain and now we have the transaction and it's somehow in in in space right we have a problem uh because that person locked funds on the source chain and that needs then another data availability layer that is cheap enough that he can reach transmit these transactions and and you know um before it found finality here and there it wouldn't have found finality on on the underlying settlement layer as well right so he that settlement layer doesn't know know of that transaction so we are talking about two different problems here so there still is room for for that data layer that that watches the space

that watches what is happening what is happening between between these uh different uh bridges and so on but yeah then again these bridges are probably not open enough so we're gonna have it's a huge mess it's it's a huge problem um but it's basically market demand versus uh idealistic technical systems what we're probably gonna see is that um if d5 works out we will end up with another system that's better than the old one but it's not the final version you know we're doing a lot of things

better than in the past but we will fall back to the it's also with regarding in regard of compliance now now everything is trustless permission is all of that right it's changing things are more trusted things are more permissioned because now it's about credit so we need to credit history a credit score at some point like do we need this maybe not but maybe there are some use cases where we need this um there is a there is a reason why we have these systems in place why we have insurances where we have compliance um it's about keeping consumers safe that's what regulations are for often it's also to make the so that the state

can earn money and and get taxes but that also has a solid reason because they are building streets they're also messing up a lot of stuff but that's with any company and any person so that's totally totally human that we mess things up so i'm this is a very philosophical thing here right now but but i do believe that d5 is super great and we will we will we will change a lot in this world but then ultimately the technical setup we come we come out with in the end will not be optimal but it's going to be better than the old one that's great and then we can start from scratch another revolution maybe we'll we will see it

maybe not maybe we will not see it anymore it's like the vision of d5 the grand vision there's like there's like uh there's a lot of layers to it we're like in in the early earlier stages here where you know we're just trying to get something stable if you will you know just get get the building blocks and then 20 30 years down the line you know we're talking yeah like you're saying like a full-blown you know system but it never really ends you know there's always going to be iterations because as long as this this this game stays around it it becomes an infinite game where younger people you know even robinize

kids when we're in our 30s or whatever you know we'll be we'll be playing the the infinite game so like the amount of iterations are kind of mind mind-boggling what's possible it's it's definitely interesting man and uh we we appreciate you coming on and sharing your thoughts and vision and your work so far with lee finance and excited to get on there and use that much more often when uh conducting you know bridge transactions so looking forward to that yeah guys thanks for having me um yeah it's a fun conversation it was great man yeah real quick before you go one last question we asked uh pretty much everyone who comes on the podcast if you were to pitch

uh defy lately finance to anyone in the world uh who would you choose and why to who oh to pick one person to pitch this to one person or one company yeah defy crypto web 3 lot the multi chain i i already did that i wanted to pitch i would have chosen metamask but we already uh we already pitched it to them and um because i believe like yeah the the largest one is the largest wallets the largest um centralized exchanges all of them could make use of our infrastructure and so that's why we're basically saying hey

yeah and we're in touch with all of them so we talked to all of them and it's it's super exciting for us super exciting stage like we could potentially make the whole ecosystem so much stable yeah um so um no clear answer i would i would love to pitch it to video league just up for the challenge and and getting his feedback yeah i probably choose metallic uh i highly respect him such a bright guy and um yeah i i choose vertilik metallic awesome yeah yeah wallets are a great a great integration partner and vitalik is uh i mean he's a great spokesperson for for the multi-chain and and the whole web

through ecosystem uh yeah yeah it was awesome having you on men and uh and you know keep on building and yeah looking forward to using live finance here uh to navigate the these different chains thanks guys thanks for your time