Episode 301 - EigenLayer @ Devconnect

Transcript

[Music] welcome to zero knowledge I'm your host Anna Rose in this podcast we will be exploring the latest in zero knowledge research and the decentralized web as well as new paradigms that promise to change the way we interact and transact online this week we bring you an interview with tun shiram and I this was a spontaneous one recorded during the dev connect event in Istanbul in fact we were sitting just outside the aloh hackathon for the recording like we were just in the hall so you as a listener

May notice some background noise people walking by you know what I mean General hackathon sounds to kick off the episode we did a quick survey of the ideas that we had discussed at Dev connect including ZK toolkits intense and da and then we spend some time really digging into igen layer something I had yet to properly do now both tun and I are investors in igen layer him through robot Ventures and me through ZK validator and while tun clearly deeply understands the system as you will hear leading up to this interview I did not so you will hear me stumbling around a little bit and trying to fill in the gaps in my understanding and unlike other podcasts this one was very spontaneous so we didn't have very much time to prep we are also recording this

at the end of the dev connect week we are also a little bit tired so yeah here is a more unfiltered version of the show for you but before we kick this one off I do want to say a big thank you to all of the folks who came out for the ZK hack Istanbul event this was our second IRL hackathon and it ran from November 10th through 12th we had over 170 hackers and 59 teams and 48 of these completed and submitted their project at the end of the weekend once again we were blown away with the creativity technical skills and speed of development of of these hackers I will link to a tweet which highlights all of the winners and Runner ups and bounties but a big shout out to everyone who came

through especially the winning teams cats damn Fair Anon abuse ZK VM and nil Chronicle we also had this time around a chewing glass prize and the winners were 0js shot 256 and hello hypercube the hackers got to vote on their favorite project and so Hacker's Choice went to kzg CeX solvency and in the 3 days following the event Dev folio the hackathon platform we' used for the event ran a quadratic voting competition where everyone who had participated could vote on all of the teams and for that circom monolith came in first so congrats to all of the winners but yeah thank you all for coming out I know the

team was so excited about it we already started planning our next IRL hackathon we're aiming kind of for May June probably somewhere in Europe but even before that we're going to be hosting our next online ZK hack So This Is Us returning to the puzzle hacking competition and multi-week workshops and we're planning this for mid January so keep an eye on the zck Discord zck Twitter for more info now Tanya will share a little bit about this week's sponsor Alo is a new layer one blockchain that achieves the programmability of ethereum the privacy of zcash and the scalability of a rollup driven by a mission of a truly secure internet Alo has interwoven ZK proofs into every facet of their stack

resulting in a vertically integrated layer one blockchain that's unparalleled in its approach Alo is ZK by Design dive into their programming language Leo and see what permissionless development looks like offering boundless opportunities for developers and innovators to build ZK apps as Alo is gearing up for their mainnet launch in Q4 this is an invitation to be part of a transformational ZK Journey dive deeper and discover more about Alo at al.org so thanks again Alo and now here's our [Music] episode I think we ask this every time we do these kind of live event ones but what were the themes that you've been hearing and it doesn't have to be talks

this is maybe what people are talking about what I mean you just mentioned da data availability maybe in different forms or yeah do we need it in the way it's been proposed or not like maybe let's start with da expand a little on like what's been discussed and then we'll talk topics I think most of the stuff about da is has just been focused on lowering fees for use cases that are not purely Financial or like defi types of use cases and I think because Celestia is live it's now like it doesn't feel like there the only da is e L1 you know it feels like there's like choice in the marketplace and I think Shri Ram's probably the best to talk through the pros and cons of each of the different models um but I think a lot of

it is just focused on reducing cost but I do feel like there's still the reason I I would say we aren't fully out of the disillusionment side of the distribution is there just hasn't like every it feels like everyone I talk to is basically saying when application when new application right like like there's tons of new infrastructure but there haven't been too many newc like there's no the unisoft moment of this cycle hasn't happened yet mhm let's talk to Y for a second though you just said sham is like a good person to break this down can you yeah sure I I do think you know maybe it's the the sample of people that I interact with but it seemed like a lot of people excited about da this time you know it's it's really credit to the

Celestia people for actually like making this happen because it's such a boring concept maybe Define it okay so to to Define it the idea is when you have the one of the ways to scale a blockchain and this is particularly the road map that ethereum committed to is to use rollups and what rollups rollups basically offload computation and then create proves that the computations were done correctly when you do this one of the important things you have to do is to publish either the inputs or the outputs to the computation this data has to be published somewhere why do why does this need to be published because if this data is withheld and not made available by the rollup operator What

might happen is funds get could get stolen because if you don't know the data then you don't you can't compute what the you know rollup did or if in in case of a ZK rollup what might happen is you know even though you don't need to double check the computation somebody needs to know the state in order to continue the computation thereafter so a role of a data availability layer I think you know some people are saying maybe it should be called a data publishing layer a layer which ensures that when uh data is published everybody has access to this uh data so that's that's what a data availability layer is even though it's a kind of a critical piece in the blockchain uh stack the

identification that this could be kind of decoupled and scaled separately uh is one of the key insights in the ethereum road map as well as what Celestia took and built around so one thing I think um to a person who's never heard of Da before that often times gets use as analogy very imperfect one but one that's worth maybe going through is a compar of like dialup or T1 to broadband right in in terms of like single chain dialup versus broadband like many asynchronous kind of connections capturing data how do you think about that analogy especially when it comes to this idea that you know in blockchains it's not just about how much data you get it's also execution environment there's all

these other overheads um yeah how how how do you kind of think about that yeah so one of the things that the modular landscape does is to decouple things like computation throughput from data throughput so you can say you can execute the you can separate the quality of data availability and a consensus protocol by just looking purely at how many bytes per second can it transport and then on top of which you're slapping a VM on top of it and then the VM translates that you know oh I I I can take like 200 bytes per transaction and each transaction on an average takes this much you know computation and you can translate that into a throughput or like a trans transactions per second for a certain kind of

transactions so the fundamental performance metric of a DA layer is that four bytes per second so the comparison with something like a dialup versus like a Broadband is quite appropriate but what's actually happening under the hood is the following thing which is that in most of the blockchains today you have highly redundant uh transmission of the data every node downloads and stores exactly the same data therefore the entire system system's performance is bottlenecked by any one nodes U bandwidth availability whereas scaling data availability fundamentally pertains to the idea that everybody doesn't have to download all the data everybody downloads only a portion of

the data using things like era codes and kzg polinomial commitments even though some fraction of nodes go offline or like you know or malicious you can still reconstruct every bit of the data from a small fraction of the nodes okay let's do explain it like to a 15-year-old or high schooler for data availability sampling and also the commitments because I think understanding the trade-offs and just the process in which this is done is important before we talk about the security guarantees Y imagine you have a bunch of nodes and you want to store some data on on this nodes uh what and you don't want everybody to store all the data one way you do it is you take the data and then like split it

up into uh chunks and then say that data item one I only store on a few nodes and data item two I only store on a few nodes and so on if you did this what would happen is if the nodes that just stored the data item one if they go offline then you lose you lose that portion of the data completely yeah yeah so this in simple schemes like this where you are redundantly storing data but only on a small subset of nodes you have this problem that uh scalability and security are at odds if you want more scalability you will say that only a few nodes store the data each data item but that means that if those nodes go offline you lose that data item so

what eraser codes do is instead they allow you to mix the data item in complex configurations imagine X1 X2 X3 or different data items you send X1 plus X2 plus X3 to one guy X1 - X2 + X3 to one guy X1 + X2 - 3 X3 to another guy and so so on so that any three nodes you get three linear combinations and you can actually find out what is X1 X2 and X3 so that's the basic idea of erasa coding and data availability scaling I'm going to separate data availability scaling from data availability sampling the data availability scaling basically means everybody doesn't download all the data but to GA the system is still

secure and has all the data even if some of the nodes are a good fraction of the go offline what is data availability sampling is imagine you have a network that is running and I run from I'm I'm sitting outside the network and I want to know whether this network is doing its job of actually storing and downloading the data so how can I verify that a normal method to verify that would be to say go and download all the data and then you will know whether the data items available data availability sampling is this very nice idea that instead of actually like downloading all the data you decide which random samples to query for and then you say oh give me sample 30 give give me sample 35 give me sample 50 and if you get all of them

you're like okay you know it seems like it's highly likely that all the samples must be available because you know the guy is giving me whatever I asked for so that's data availability sampling it's data availability sampling is a mechanism to scale verifiability it is not a mechanism to scale the consensus bandwidth in the network so you can think of you know these two things data availability scaling which is how do I make sure that no node in the network actually downloads all the data versus data availability sampling which is a verifiability scaling method when you say both of these and I it might be very off but it sort of reminds me a little bit about like mp3s and like this sort of Curves is there any connection

between rasor coding or the sampling and that kind of Technology yeah I mean definitely and it so MP 3 is compression technology but if you look at most of the say things like CD ROMs or you know where there is a chance that for example you may scratch your CD so data has to be stored in such a way that it's resilient to certain number of erasers like you know and that's exactly the same technology that is you know used in uh you know data availability sampling nice sort of bringing it back to the event and the week are there any other topics other than da that you thought were discussed a lot where you were reaking which is you know what we're

going to talk about more in a bit I may or may not have been also one of the proponents mentioning it a lot so so it's funny someone said to me everyone is talking about intense but I personally have not actually heard much about it I heard one project that was doing some like ZK intense project that that talked to me but otherwise I hadn't heard very much yeah there were about three events uh for events I intense I only went to one um and I feel like so I I I sort of presented this view of ethereum at a couple panels today but you know if we look at ethereum's transaction supply chain from 2016 to now 2016 you had sort of these

probalistic gas auctions you only had the public menol people spammed the menol to try to get their transaction in so you kind of have this like completely disaggregated transaction accumulation process once flash Bots launch you now had this combinatorial auction where people sent in bundles so I sent in a group of three transactions and I say I these need to be executed automically or not uh like I really want all of them executed or none at all uh and that sort of led to some Co cohesiveness like there was less of a reason to spam the network and now you have had sort of more ordered blocks on the other hand this thing was a combinatorial auction too hard to do not centralized and uh effectively you know

we what what you see is you see a bit of uh an aggregation event there so we went from totally disaggregated to somewhat aggregated then we went in you know last year at the merge to propose or Builder separation where instead of bidding on sequences of transactions you bid on the entire block this kind of uh moving from very disaggregated to aggregated is realistically a way for making ethereum sustainable it it increased the net revenue to proposers as you did this aggregation process and it took more of that revenue from me Searchers and and people of that form and gave it to proposers on the other hand now the users want to rebel against that sort of Monopoly power which came from that and

you can argue that we're now about to enter the disaggregation era of ethereum and intense and RFQ systems are a way of disaggregating the value extracted by the proposer and returning it partially to the user and so this sort of aggregation disaggregation process you know when I was five my mom once told me this very wise conen which is capitalism is just bundling and unbundling repeated at infinum and uh at some level I think this this entire what we're seeing in the transaction coalescence world is that and the intense model is unbundling the me in a sort of more peer-to-peer fashion versus kind of giving it alter proposer so I think that's the reason people like it it feels like it's the thing that has the highest growth rate

or highest sort of derivative like people think it's making the most progress if you look at unop X it's been taking in a lot of unops volume on the other hand it's sort of this thing where it's like a nebulous concept and of course disclaimer I'm spending a lot of time trying to write some research on this because it feels like this type of thing where everyone you know it's like there's the porn you know it when you see it uh you know Supreme Court aspect to it like everyone is like this thing isn't intent this thing is non- inent yet there's no definitions and so I think trying to make sense of that is like what I would say is one thing people are doing people but people are making all these software Frameworks for for writing these types of things that effectively in my mind are ways of

avoiding paying the proposers wow sorry for the rant no no I'm going to mention a few things that definitely hit my radar I had been at VM day so VMS but also because a lot of ZK days or events would also have mentioned sort of VMS these these new VMS in within rollups um I feel like we are currently also in this moment where there's been a big shift to l2s especially since Amsterdam if we think you know on that time scale ZK sync I I mean I actually did an interview with Alex a while ago but they launched in February 2023 this is pretty recent still it's like 10 months ago and so many have launched around that I

don't know if there were any before before but like just seeing Oh I guess yeah there was like optimism in Arbitron before but like there's just this all that shifting value into this L2 space it's kind of amazing that like we're now living in that time you waited almost into one of the controversies on my zkm panel which was who which was the first question asked which is who's the first ckvm and of course one of the answers uh was oh we're all in it together we're all first and then immediately after that someone was like no no no we were first nice um I do want to mention one more which is on the ZK front which was this idea of on the ZK front if we look at like the difference between last year

and this it's the fact that there are now maybe still in test net but like there are now environments sandboxes um yeah test Nets Frameworks where people can start to like build and deploy ZK stuff a lot faster I think that's also why in April of this year when we did ZK hack Lisbon people were able to build anything I mean otherwise they're just doing cryptography implementation which is very very challenging only a limited number of people can do it but I think it's been opening like the space has been opening up to more you know noobs kind of like f not first time hackers maybe like experienced developers but first time building in ZK and then this time around we saw even more of it and there is even more Tools around ZK and

how to deploy them faster and like I don't know if we're at the point where there's like a lot of debuggers built into systems I know these languages and these Frameworks are still super super like young but yeah that's something that I noticed especially I mean especially at the hackathon but also kind of all week oh I think last time at in Paris I also asked what's what was the best swag that you saw this week speaking of intense uh there is a team called essential and they give out essential oils and me as someone who has a house filled with 500 candles and incense burning all the time I appreciate a scent based swag much more than a black T-shirt with the logo very

nice all right I think we could shift the conversation now a little bit over to Igan lay we I feel we've set the scene in describing da I think like it's funny because I would often kind of put Igan layer in the da Camp I like that that somehow it it competed with celest as it was being proposed as just like a DA layer but is that wrong to put it's not wrong that's correct but and yet it's that's a problem not the minute I look at the system I'm like is it da it's because we building two things we're building igon layer which is a general purpose mechanism for sharing decentralized trust so you can take the staking and the node operators and the

economics underneath the ethereum network and Ian lets you share that with anybody who wants to consume imagine share it to share it imagine you want to build an oracle or a data storage Network or a um or a new uh AI inference Network or a decentralized prer network for a ZK any of these things you need many nodes and they need to put in some stake and then they need to participate in active validation of a certain service so I layer is a generalized mechanism for anybody to build arbitrary distributed systems on top of the ethereum trust Network okay that's that is not at all da one of the

modules so we call these AVS as actively validated services and anybody can build an AVS to demonstrate the power of the platform we built the first actively validated service ourselves and that is called Igan da which is a data availability service I see but it's still kind of in the ethereum camp right it's not it's it does it model itself as like a celestial like Hub that rollups are supposed to link into or is it doing diff a different kind of Da yeah that that's a great question uh the way we modeled our data availability system is as an adjunct to the ethereum blockchain so you have an e on the ethereum blockchain let's say you're running your

own ZK rollup and you want to post your data somewhere and ethereum doesn't have enough bandwidth or it's too expensive whatever and you can post it on Aon da andda is not a standalone blockchain unlike Celestia or ail or other things and it was designed from first principles to be purely an adjacent to ethereum what this does we surprisingly found is it liberates a lot of the tradeoffs that exist in building a data availability because usually when you're you know the other blockchains that serving to be data availability systems also build an ordering service and basically it's a blockchain because

there is an inherent ordering of the data blobs that have been posted into that system what we realized is already rollups have an ordering service they're relying on ethereum in the world that we are living in so what we do is just provide a data attestation service where you write the data to the system this system gives you a thumbs up saying that the data has been stored and you know custodi and then that uh aggregate signature of the commitment is then posted onto ethereum and ethereum itself has an ordering layer so you have an implicit ordering of all the data blobs through ethereum by

decoupling consensus and data availability so we are even more modular than these other other Solutions and these this come with you know benefits and tradeoffs and the benefits are very clear when you when you are roll up which is natively on ethereum but these other systems offer you mechanisms where you don't have to be on ethereum for anything and then you can be natively on Celestia or ail so in celest in the Celestia model though so like they do have consensus and data availability but they don't have a settlement layer right in your case it's just the data availability purely just data

availability and just just one thing because they also they had this other project I think it's blob stream am I saying BL yes is that similar that's not similar so what that does is that Bridges this information from the Celestia blockchain so let's say you are an ethereum rollup and you still want to consume the Celestia like blob space so you your rollup you go and write your blob into the Celestia blockchain but your rollup contract is sitting on ethereum so now you know you need some kind of a bridge which tells you that that what has happened in the celestial universe and then that information is bridged into ethereum that's what blob stream is got it so the one of the key things that these other data availability systems

like Avil and Celestia were built on is data availability sampling and like I was saying data availability sampling is a mechanism to verify from a third party point of view that the data is available and this is really useful and gives you very high trust guarantees on the system when natively on Celestia because even if all the Celestia validators collude and try to make you know sign on a data item for which they did not publish the data if you run a light node you will try to sample the data chunks and you find out hey the data Chun this blocks data chunks are not available even though the

validators a majority of the validators signed off on the Block you will not accept it and you'll say reject this block because you know I'm unable to access the data items in interet and if everybody does the same thing then the blockchain will stall and you can Fork the chain and then retrieve it to a correct state so this is a superpower that is uh possible on blockchains that Implement data availability sampling but when this state is bridged into ethereum because you know if I'm if I'm a rollup on ethereum a rollup on or an ethereum smart contract does not have the ability to do data availability sampling so what that what that means is essentially you have to trust this majority of

validators from the other in network from the Celestia Network or aale network and the rollup contract if the majority of these nodes are malicious rollup contract still makes progress and your money is stuck in the rollup so this can definitely happen so the benefit of sampling is not prominent or I would say non-existent when you are an ethereum adjacent layer and so we built our system around data availability scaling instead of data availability sampling and what these other systems did is they also made trade-offs where even though the system has data availability sampling there is no scaling of data availability what it

means is every consensus node in Celestia downloads the entire block and there are lots of technical reasons for this but that's the architecture and whereas it is is highly scalable for verification it is not scalable to be a consensus note so I think um one thing you know that's probably worth talking about if we zoom out a little bit is you know why can you build such a thing on top of ethereum and what does it mean to be sort of reusing ethereum's trust um you know there's two main benefits that I've sort of always thought of since I guess whenever you told me about this 2021

November or something which is first you don't have to bootstrap your own network so if you think about something like Celestia the market cap of the token is really important to be large so that this consensus is hard to hey number going up great for for sure but but I mean you have to be able to bootstrap such a network right like you couldn't just start testia tomorrow as a fork and yeah hope that it's secure enough right like it's actually quite hard to to do that and it's an accomplishment have gotten to that market cap right so first off but I think the interesting thing about igen layer and reaking in general is you don't have to bootstrap a token you get to use ethereum's market cap and

the way you do you're doing it is you're opting into extra slashing rules and getting potential fees but also potential extra slashing but that allows you to to to piggy back off of ethereum so maybe walk walk us through the process and why you're able to build da a in this way that doesn't rely on new consensus the process for how a Staker or operator opts into a layer there are two mechanisms one is called native reaking you stake in ethereum uh natively and when you st in ethereum natively you have to set who's the withdrawal address usually you'll set it to your own Hardware wallet or wherever is the safest place you have because when you withdraw that's where

the funds go to instead when you opt into layer what you do is to add a step in the withdrawal flow you say set the withdrawal address to a contract that you create in the igen layer system called an igen pod which is your own l zone in the igen layer universe and in the igen Pod contract you then set your withdrawal address to your Hardware wallet so when you trigger withdrawal from ethereum the funds go into the igen layer contract and if you didn't do any kind of malicious activity and were subject to igen layer slashing you will be able to then like withdraw the funds into your wallet plus other fees you may have earned for yes so the you will be able to download your fees in the normal

mode you know every few weeks or whatever from the igen layer uh protocol that's why you're doing all these things you know why take the trouble of you know opting into other things and risks is because you are actually earning something for you know delivering these services so this is the flow for a native reaking once you re you know now that you do this you become a native reaker on igen layer and you can go into the igen layer contracts and you have because you have the igen Pod you can specify what services you want to opt in and operate yourself maybe these services are like I want to run Igan da I want to run an oracle service I want to run a bridging service I want to run an intent based architecture whatever is

the set of services that you are opting into run you can decide you know it's an purely optin system for all the sites so you opt in and say hey I'm I'm doing this and then you have to be an OP you have to say who's the operator who's going to run the service you could say yourself and say that yeah I download and run these softwares and each of these softwares now are arbitrary software like they are not confined to the evm or anything like that it's just a binary or a Docker container that you can download and run on any computer so you can start building general purpose Services which have nothing to do with the evm so the let me explain so now I mentioned the Staker and the operator

side then there is a service somebody who's building these new Services they build two different two distinct things one is they build a service contract which sits on ethereum and then talks to the igen layer contracts the service contract does minimal overheads and coordination what are the coordination things number one who can register into your system do they need 32 e maybe they only need three e because you're a different system whatever so that's number one registration conditions number two what is the payment conditions oh if you opt into my data storage service you store 1 gab of data you will get one eat whatever some kind of a payment condition number three

slashing condition if you say that you're storing data and then I randomly recall you to produce the data and then you don't do it you will lose your e something like that is the slashing condition so this specifies a service from the service side so igen layer is the coordination mechanism which helps stakers find operators find services and then these three together then create a service economy where these services are then offered to Consumers maybe it's a DI app which is using an oracle service or an intent service or a bridge or a DA so that's the overall architecture I mention mention there are two ways of staking one is native reaking which you had to do this withdrawal credential

thing there's also liquid reaking you can take an LST like the coinbase lstd or the Lio LST or the rocket pool lstd and then put it into the igon ler contract it's just like any token that you deposit now you have a status inside the igon layer contracts that lets you participate in this economy H did you I mean you sort of mention it as this like underlying General like it's not framework but it's like a a space where you can deploy things you mentioned the da level the da layer as like one of those applications is the reaking an application on top of it as well reaking is what poers is what powers the I layer okay is IG layer da

just kind of like you want it to show what is possible or is that meant to be like an actual product that's being used Igan da is a product okay it was designed not only to be a proof of concept but also to be a proof of value which means it's something that is valuable and useful and delivers fees because you know when you have this complex multi-sided Marketplace your stakers operators Services service consumers like there are four sides at the minimum in this Marketplace you want to you know it's very difficult to bootstrap it one way to do it is to actually build a powerful service which is fee earning so that sters actually have some something to something to get

so it's not meant purely as a proof of concept it is a proof of value will you be doing other things like that will we be building other services we are not intending to be building the other services we are intending for other people to be building all these Services you briefly asked what types of other services maybe I can go into that littleit that's kind of what I wanted to find out yeah first I wanted to understand sort of what is I da because maybe I mean my initial thought is oh maybe you will be building three of these and they're all sort of feeding into the system but what I hear is you're building one to create value so that it's actually like paying kind of through the system to show its proof but the other two would you just like put out proposals would you be like or would

you be like oh this is this is what you could build so anyone can build this and I think um an interesting kind of overheard which may or may not have had some input from me into it is uh you know uh all l1s either die a hero or live to turn into an L2 using reaking or their own da [Laughter] layer that is an interesting take but the reason I mentioned that is as sham can tell you about there is an L1 who's moving to to being an L2 using reaking oh yeah yeah and that's the the cell thing right cell is actually um working with us and using Igan da to become a

roll up on ethereum the total data throughput that cell was operating at was I think even greater than the total throughput of ethereum so there was no chance for them to be a native rollup posting data to ethereum not only for the low fees you know cell has lots of users in Latin America and so on and like very low fees so there's no chance for them to actually be a native uh rollup whereas I DA has extremely good cost economics and that Ena them to to come become part of the ethereum ecosystem we are also seeing another trend for example near uh which is an L1 is working with us to build lots of services for the rollup ecosystem so for

example rups need sequencers and near protocol already has like you know this consensus protocol and everything already running so you could actually have the near blockchain work with ethereum to to provide some of these other services as an adjacent to the ethereum blockchain can you describe let's kind of going back to that initial question that what are the services what are the categories so we seeing actually like you know it has been amazing to see from our our our own Vision has been open Innovation so we want to maximize the surface area of permissionless innovation that's really what motivates Us in this project but when we started we had like a couple of examples of what might be possible as igon layer services

and today you know in the reaking summit I just gave a talk where I showed like 25 new services in five categories oo neat and I I'll maybe give a sense of these categories and what some of the most exciting are you publishing that somewhere because maybe we can add that to the what the you do you record it all thep we will have a video but so I can give a link to that or just send the picture for example one one category which is very obvious and where we see immediate traction is rollup services so rollups need lots of adjacent services in order to make the rollup economy work one example I I was just mentioning is sequencing how do you you know a single sequencer is like a um a censorship uh

bottleneck in the rollup system do you want to have a small group of decentralized sequencers or a large group of nodes which participate in ordering transactions so is that decentralized sequencers or shared sequencers is could be could it could be a Shad sequencer or like a non- Shad sequencer yeah but both of them need decentralization and so you know all of them can use IG layer to actually build these kinds of we seeing many different models of decent sequencing being built but espresso which is a you know a leading Shad sequencer is also working with us in in Sharing security from ethereum in addition to their own uh Native token so as as a disclosure igen L investor as

also Anna is I think I think the the zeroth order model I had in my head for like how this network ACR value despite not having its own token and layer one is effectively this idea that you know if you think about all the rollups in the world they're eventually going to have to have decentralized sequencers those fees have to go back to ethereum somehow right ethereum is going to be losing a ton of fee Revenue as more and more value migrates away and the main way of unfortunately this word is overused aligning the the rollup fees with the the proposer incentives and the L1 is to actually have a way for the L1 proposer to also earn the rollup fees and the natural way to do it is via

something like Igan lay because you know if I use reaking I'm reusing eth I'm earning fees in eth I'm sort of you know in some ways giving the roll up some of my eth in exchange for some of their fees one interesting thing that i' I've been thinking about a lot uh is if you if you look at this model of like igen lir for reaking the different rollups plus d and eth just being the place where data is posted some data is posted or maybe proofs of validity are posted you really do start looking like polka dot without the auctions yeah actually turn you kind of Drew this out you said there's like these three pieces that basically make you it really looks like polka dot except for the auctions I think the auctions were just very

expensive for the par chains here this is much more yeah so the the the comparison to padar is actually you know accurate in one sense which is that basically you know parach chains gave a certain level of programmability while also maintaining Shad security but there was a certain amount of homogeneity which which was needed for example they all had to be in wasam and you know you have to write your virtual machine on top of that and not only that you only share Security in the poka do model uh for the execution for example let's say you want to uh build a secret sharing service where you take a secret and then encode it into chunks and then send each

node a portion of the secret you cannot really do this in the Shad security model of padot so the way we think about it is you know in in the in the history of blockchain like ethereum was created as this toing complete general purpose programming language but it gave you only a programming interface at the level of the virtual machine and then all the coordination about how the distributed system is managed how the consensus is managed and all of it was internalized into the protocol and what we started as we were thinking about new ideas for consensus and scaling and so on what we found is this limited the level of permissionless innovation that could penetrate into

these areas and so if I had a new idea you know as an academic we had tens of papers on consensus protocols and and we talked about many of them in the last ZK podcast yeah yeah and if I were to go build a new blockchain for each new consensus protocol that would just be like a completely unnown viable way to do things whereas um what Igan L does is give you the first general purpose programmable distributed trust system so you can say what each of the nodes in this system have to run you have complete programmability at the level of the distributed system so you can start building basically anything that requires decentral trust yeah I I I I for the record I wasn't saying it's like

exactly polka dot it was just more it's funny cuz I feel like ethereum was always like we're never going to like have fishermen and do all like and it's sort of like indirectly all of these things are happening actually right like you know layer by lay converges converges to polka do like everyone I feel like theorum is very good at taking the good ideas from different places and then like smooshing them together uh you know I I think there's also something similar to be said for Cosmos and how like a lot of the ideas from Cosmos also percolated back to ethereum and there's the idea of interchange security and how I is related to that um yeah so for sure going back to this the the services I want to hear more going back to the set

of applications rollup Services some of the examples are I mentioned decentralized sequencers um bridges for example you want to build a super fast bridge between two ZK rollups each of the ZK rollups only settling on it every few hours because of the batching efficiencies but I still want to interoperate between them at a much faster Pace can I build some kind of a restake service which knows the state from the other thing and then puts an economic collateral at risk and then starts helping you bridge between rollups that's an example you can start thinking about can well could you do something like co-processors that sort of co-processor model that's the next category you you're right on target no way okay so Ian Lay's taking over

everything though so you know to finish the rollup thing one more category that we see is like fisherman that you know tun just alluded to in padot the idea of who's watching in an if there are a lot of optimistic rollups somebody needs to be watching these optimistic Roll-Ups to trigger fault alerts and today there are like a handful of major optimistic rollups and there's lots of extraneous parties whose job you know involves also watching the network because you're an RPC you are an exchange you're a block Explorer whatever your job is you you have happen to be watching the network but in the era of thousands of application specific rollups and some of

the rollups are actually building to be uh highly transient like they just open up you know be a rollup for a few hours and then vanish you know do your nft distribution and then vanish or whatever so these kinds of rollups who will be watching and nobody knows who might whether they'll be enough people watching so a Watch Tower Service is being built where a random group of nodes are selected to watch each each rollup and you know you can spin up tusks and so on and that's the fisherman that's a fisherman like service on I co-processor is the next category like rollups the way I Define co-processor is like a serverless Lambda it's a stateless service I'm sitting in ethereum and then I want to run an AI

inference and then I want to consume the output of the AI inference why maybe because I want to do intelligent def like I I put my money into a Unis swap pool and I don't want to get you know raided by Unis swap X basically only sending toxic flow into my uh liquidity provision so what I say is I put my money into a pool and say that the price of this pool is modulated by an AI protocol and the AI protocol looks at all the history of the trades and then tries to adjust the spread so that the toxicity is maintained but I need this AI inference to be highly trusted because if somebody says oh one each should be set as $20 and then like somebody can come and raid the pool you

don't want that so you want this AI inference to be highly trusted so what you could do is run an igen layer service but there is enough Economic Security let's say you want to get at least $100 million Economic Security because in a given day your trade volume is less than 100 million then that makes the system like fully secure so this is an example of a co-processor another example of a co-processor might be I want to run a Linux box and like this particular program on this Linux box and get the output and then promise it on ethereum or I want to run a database I want to run a SQL query and then get it back so all of these things could be either done using ZK Technologies or they could be done using cryptoeconomic

security and the trade-off here is like what is the excess cost of proving that goes into crypto graphic you know like a ZK ml or a ZK SQL or whatever set of solutions or can I uh instead of paying for the cost of proving I can pay for the cost of capital and then borrow the security from I but like in moving into the co-processor space or like having that be an option is there still a reason to create like a very from the ground up co-processor like do do they still get some advantage in being able to build it from scratch versus building it on Igan layer is there an advantage of building

a co-processor from scratch I mean the way I think about it is in it's not a binary question of if you are building on ION layer versus building on o on your own because igen layer is fully programmable so whatever you can build on your own you can also build on IG layer does it lose anything by building on I layer the the constraint that you're suffering you lose the ability to make a token no no no no okay that's a misconception I want toct s sorry you lose the need to do it at Inception okay that may be so you what it does is you know this is one of the things that everybody asks me is hey you know if you're saying that you don't need a token for your own like you know middleware or service or whatever you're

building then what would people do like where are they going to go but you know first thing to observe is that's already true for being an application on ethereum every dap on ethereum also as a token the tokens used for governance or other purposes in IG layer we also provide a native support for something called dual staking so let's say you have a co-processor and you have a co-processor token you can have both the co-processor token be staked and the ethereum token be staked so you're borrowing a sense of Economic Security and how much of each you can decide by controlling how much fee you're willing to share between the two layers and over time maybe for bootstrapping you need a lot of eat and over time you decide like

it's not that beneficial to your system so you can tune it out to using more of your own token later on so this is the kind of co-processor category but in general this question shows up a lot hey you know what happens to my token and the answer is nothing actually like fundamentally if you look at the economic value of your token it's coming from the future expected rewards and if in the future expected rewards are maximized by not using each security and only using your own token security you can tune the Dual staking all the way to send all my fees to my own token oh wow so you really don't have any laws it's just optionality and you can use the

optionality in ways that most benefit your own Community I feel like you already kind of at the beginning or like a few minutes ago you defined reaking really well um but I I still like I feel like I still need to like go the but maybe this will help I think reaking became a meme and a word so we stuck with it but really what we're building is permissionless programmable staking so when you're staking in any given blockchain protocol what is happening is you are making a promise to run that blockchain protocol according to the rules otherwise you're liable to lose your eat and each blockchain when

the blockchain is created specifies these rules and they're programmed into the rules of the blockchain but what we figured is it's just stake and if ethereum is curing complete programming language I can subject your stake to arbitrary slashing conditions so that you you now create this general purpose layer for programmable staking where anybody so it's permissionless programmable staking because anybody can come and create you know new staking conditions bying new programs and then you can bind yourself to them I thought though when I first heard reaking that it was somehow in the category of like liquid staking but it isn't it's a lot of people say think that they thought

that yeah so but like as as a Staker can you just walk through what's happening if they stake like like normally a Staker will be like running their validator and staking their eth to the validator or they'll be like staking through a pool in this case they're staking with a new piece of software it's not is it a validator as they know it this is the part I wanted to understand so we have two roles a Staker and an operator the operator is the one who's actually running the service it's the validator kind of is is the validator right so what the ster does is the Staker puts up the money into the contract and then they specify who their operator is okay it could be themselves or it could be like delegated and why

they trust the delegate and so on it's up to them MH and and uh and then because the delegate is now the the operator downloads and runs all these containers that the Staker is opting into let's say the Staker opts into run this Oracle and data storage and so on then the operator has to actually go and download and run all those services and by them downloading and running these Services they earn a certain fee and the Staker keeps a certain fraction of the fee and the operator gets a certain cut of the fee so it's very much like staking any other thing except it's like a infinitely expansive staking protocol you stake ones and then you can restake into all these services do you end up like do you have

to sort of stake more and then a portion of it is going towards regular staking no actually is a portion of it going towards regular staking on ethereum that is correct yes so you're subjecting your 32 e to multiple conditions how how do you actually do that like under the hood though because you still like the operator still needs to have a validator with rules of eum that's right so so this was one of the early things we had to kind of like figure out this hack which is the the thing I was explaining about the withdrawal credentials you stake in ethereum whenever you stake you have the ability to set the withdrawal credential to your your own like wallet but instead you can set it to a Smart contract on ethereum and in that smart contract you

set your withdrawal power to yourself so that smart contract is Theon layer smart contract so you in you stake in and then set the you know withdrawal address to an IG layer smart contract in the igen layer smart contract you set you say that hey I am the one who will Who has the ability to withdraw this money at the end of the day and what this does is enables the aan layer contract to take away your e if you misbehaved ah so that's that's what it but still I guess the thing that isn't solved here is the 32 yeah like does that mean that anyone used see the restak and have to put up more than 32 e if if you're reaking natively so this is

what we call native reaking okay but you could take like you know Ste and put up 3.17 Ste into the IG lay contracts and then specify who the operator is okay so I have to say I remember the first time shiran mentioned this idea to me I forgot what name you had for it uh this must have been like August 2021 or like July or something and he had the most confusing name for this routing contract that sits in front of like the sing which was middleware which is like a very like 2000's tech company term because it is like middle like that is what middleware is like software sitting in the middle to like add extra rules but I did not understand it until I until I asked a bunch of

questions so I I feel your pain but I just going so I see this so the St using Stak eth you're already like let's go through that example so you're saying either you're going to put up 32 plus something that could be used for the restak there's no plus something it's just 32 just 32 but then doesn't if you just put up 32 doesn't all go through to the validator all goes to the validator you have to set the withdrawal address the withdrawal it's the slashing that you lose on okay and and the and the gain when you withdraw you will not be able to withdraw your entire money and the yield comes because of those services that are paying down through the system I get it okay so it's like taking a parlay B like you know you lose your bet if any of those okay okay now that's the native

now walk me through liquid staking the liquid staking Tok is one of the easiest ways to participate in I you just take your Ste token or CB token put it into the ion layer contracts and then specify some operator like coinbase or whatever and then like let them do their thing and again you have like a withdraw act like access so that if you do something bad you get slashed yeah it's not only a withdraw access your steth is sitting in the contract and yet it's you basically you allow this to still participate in the system because it's stake e like it's it's already has the it's already connected to ethereum and in some sense you know igen L contracts are designed to be highly general purpose I could put

in usdc for all I care okay so you can stake anything you want it's general purpose taking yeah so there's nothing specific about you know St or LS is just that these the state St these are already reward earning right because you know I'm already earning the base layer rewards and in addition I'm getting these rewards making it very easy for people to to not worry about the opportunity cost of capital whereas if I ask them to put in unencumbered eat or USD or anything then we have to worry about like are they making like that 5% 6% this is like I already got my four 4 and a half% 5% so this is something on

on top of it so that's the economics that makes it more favorable for us to ask for it's it's just in the staker's favor to actually stake uh one of these other assets rather than native e another category that we are super excited about is cryptography which you know many of your listeners may be super interested in so all kinds of interesting new cryptographic systems can be built on Igan ler for example uh if you want to build a system using SEC multiparty computation right there's no way for you to build that either as a rollup or as a native smart contract on ethereum because you are specifying what

kinds of computation each node should do and what specific information each of those nodes hold for example imagine a system like penumbra which has state which is dispersed across these different nodes and you want to build applications on top of this you can build this on ION layer because you have a decentralized you know Network that you can borrow so you can build something like panra as an AVS on top of ion layer you can build uh threshold encryption right so let's say you want to build an encrypted mempool where you send transactions and the transactions are all encrypted to a threshold key which is you know in the threshold group yeah which would prevent like sandwich

attack which would prevent sandwich attack so these can be built on aen layer you can build threshold uh fully homomorphic encryption systems you can start building basically anything that requires decentralized trust can be built on igon layer and the proximity to the ethereum ecosystem you know what it reminds me of you know if this analogy is useful is if you look at how web application development worked you know back in 1995 uh if you wanted to write an application you have to put up your own server stack and then on top of it you write your own identity stack your payment stack your database stack and then the specific application if you're selling a books you have to then do

whatever that particular thing is but you're building all of this all by yourself to me blockchain development that was just proof that you're from Seattle also showing my age here but uh you know I remember GE cities for example used to be there where you know if you just wanted to put up a dumb web page you can go to geoc cities and host it but if you want to do anything more powerful you have to do all these things that I'm talking about that's exactly the situation that I see in blockchain today if you just want to write a simple smart contract you you can just throw it on D of ethereum but you want to do anything more powerful you have to build everything you have to build your own token of value you have

to build your own validator network you have to build your own like consensus scaling all of these things inside your own like blockchain instead what's happening in 20 23 web application development is you say go to the cloud use AWS and on top of the cloud there are thousands of successful software as a service solutions right and each of them hypers specialized in some particular domain saying hey I am an authorization service for social networks like oo right I am a no SQL database for like Enterprise applications very very very speci specific in the type of use cases that

that are being dealt but these are still you know more foundational pieces and what happens is consumer applications integrate a bunch of these SAS services in the back end and then create an end user application a typical end user application in in the web uses 15 SAS services in the back end wow so when people come and tell us oh you know if you have a lot of modular blockchain you have to pay a fee on each of these layers that's exactly how the internet works if you haven't noticed wow so so you're bringing SAS to blockchain yes unleashing the SAS era of blockchain you know because SAS is actually open Innovation so you know our core uh thesis is open Innovation which is you

know somebody who's super specialized in building you know let's say fhe for some particular application should just build that and an end user application should should consume these Services as they need and and they all interoperate through a Shad security layer which is Aon layer so that's our vision and so what we envision is people building on top of us build these more protocol you know you can think of it instead of SAS it's protocol as a service right anybody can build an arbitrary protocol and launch it as a service and now you can concatenate these protocols as a service and then build end us applications so that's the vision that we building one very big different financial piece of this versus SAS though is that you have

Dynamic pricing at all times versus like SAS is often times mainly s like obviously there's preemptable nodes in Cloud but like you need to get to a certain scale for dynamic pricing to work whereas here you have Dynamic pricing from the beginning and that's like a totally different economic World completely agree and I don't like that we're trying to change it so for example in Igan da you have static reserved pricing so when you think about something like AWS right you know people say oh how much block space do you have and nobody asks AWS how much Cloud space do they have the cloud space expands to fill the requisite demand and the reason it does it and does it in a very smooth manner is 70% of the uh instances

running on on AWS are actually reserved instances and there's also the spot instances where you can go and like ask right away give me something which is dynamic pricing but there's also the reserved instances which give you like a long-term cerence which gives you price certainty absolutely completely different economics Igan da is built on this dual model where you can you have a spot Market where you can go and buy bandwidth in the moment but as a rollup I know I need 100 kilobytes per second over the next one year so I prepay that fee with a very good discount and then I I I have access to it this this reminds me of a very old project I don't know if this ever turned into the gas to do you

remember this it kind of died because of EIP 1559 yeah I think the difference between things like gas token and this thing is the gas token is like spot Futures where you're actually trading like you know what is the spot future instead reservation bandwidth is like contract pricing like you know you you have like a contract with your oil supplier for the next one year to supply a barrel of oil at this price so I think contract pricing is directly happening between the seller and the buyer so it's actually much more rigid in the types of guarantees that you can provide yeah although I think I I would guarantee that if you went and interviewed a bunch of web 2 companies and you were like hey would you be willing to pay Cloud flare

on Dynamic pricing where like most of the time you're actually going to pay 10 times less than what you're paying now but sometimes you're going to pay 10 times more I bet you most people would find that appealing but if you think about how SAS Payment Processing works and how uh there's not really stream Notions of streaming payments you effectively have this huge overhead for startups like stripe doesn't offer you Dynamic pricing right you have to get to the scale of Uber or AWS for you to have Dynamic so there's also this thing though that I think to me has always been the beauty of cryptos that you can be arbitrarily small in size but have Dynamic pricing if you need it yeah so I I you know that's a really really good

point if we only have reserved instances then small rollups will not be able to use uh you know I layer so the availability of these multiple pricing models is useful but also the cost certainty that a reserved bandwidth gives you is you know because the cost imagine you're a rollup and you have uncertain data availability costs over the next one year but you have to go tell your users at coinbase like how much it's going to cost on a daily basis how do you go do this so it becomes impossible you know for example you know we know for example R Alo help or McDonald's hedge you know soy Futures and so on so that like their burgers can actually have like a constant price over longer time scales

and so these are mechanisms that are needed to actually build pretty rigid markets yeah I just think the difference is most non fly native payment mechanisms which is like almost everything right like only at really high scale can you do these kind of streaming crazy things it's always been quite hard to get to to that access to that and I think to me crypto the beauty of it is that you can have that if you want it uh because like obviously people love static pricing right it's like nice but if I can really offer you way more efficiency on average like there's a lot of people who would like love to reduce their Cloud flare bill for instance right if it was Dynamic but it's just a

pain in the ass for them to do it because they they are not even their own payment provider they need their payment provider to like offer you know and I think that somehow this notion of services is that start from being programmable on how they take payment is like there's a fundamental difference between this type of stuff in SAS so hopefully we don't have to use the word middleware again all right well I think we've reached the end of the episode I know I've reached now the end of my time here it's late night here does connect it is late here thank you so much for coming back on tram thank you so much Anna thank you ton this is super fun chatting about all these things with you and looking forward to hang out with you all

at other events thanks sham I want to say thank you to the podcast team Henrik Rachel and Tanya and to our listeners thanks for [Music] listening