The Future of Verifiability: Exploring ZK Coprocessors

Transcript

gmgm welcome to what's going to be another great episode of devel so if you didn't know Devon tell is a 30-minute podcast held every week uh allowing Founders hackers and anyone in between to come on the show and uh give an explanation of the product so today I'm ecstatic to welcome Arian shaelan who's head of research at CMT digital uh if you didn't know CMT digital is a leading Global Venture Capital firm focused on early stage Investments That accelerate the adop option of blockchain technology so if you stick around for today's episode you'll see Arion give us an engaging talk exploring uh zero knowledge co-processors zero knowledge in general and their role in the future of verifiability all right let's get [Music]

going GM GM welcome to the show Arian a pleasure to have you on thank you for having me yeah my my pleasure my pleasure uh yeah uh so we're going to have a really great engaging talk today all about uh zero knowledge and zero knowledge co-processors um this is a big uh big Topic in the web 3 space as we know but um I'm pretty sure there is uh quite a bit of applications Beyond just web 3 and really Keen to to hear the insights that you have here for us today um but before we get into that uh let's let's dive in a little bit uh and learn more about yourself um so would you like to give a brief intro uh just for folks who aren't familiar yeah for sure um my name's Arian I I've uh been with CMT for

about four years I uh work as the head of research here and as an investor um I was born in Iran moved to the UK when I was around four grew up in the UK and I came to uh the United States for University back in 2016 um studied mathematics and economics at Colombia and uh yeah joined CMT when I graduated uh just got my Visa so looks like I'll be in the United States for at least the immediate future and uh yeah I'm excited for the opportunities that this country provides awesome man uh congratulations uh I'm sure uh the Visa process um I've heard is never an easy

one um so you get through that um that's amazing uh I guess uh before we get into the nitty greedy of zero knowledge uh you were telling me a a great um your your background story basically of how you got into Tech and how you found yourself at CMT um would you like to showare that uh I I I thought it was a really weird story yeah for sure I mean I was always very interested in technology I think it started when I was a kid um in the UK we've got these things called car boot sales uh it's kind of like a yard sale where a bunch of cars will drive into a field and Pop the trunk and sell very ious household items from their bag um I was really into computers and so I would go to

these car boot sales and find old computers that could be pieced together and uh sold and that's how I first got into technology uh was really just understanding how computers worked um obviously computers have come a long way since then uh back then I was actually purchasing like individual networking cards audio cards um all that is now kind of integrated in the motherboard so I uh when I finished high school I started working at Accentra excentra runs a program called The Horizon scheme where they let a few Gap year students work as normal business analysts so I was drawn to exenta because of its focus

on technology and the actual implementation side of the solution um that's where I first got exposed to blockchain technology and uh yeah found it really interesting started diving in and uh went from there awesome and I guess um is there a particular uh thing with blockchain te technology that kind of hooked you uh I know for a lot of folks um their first dive into it is reading the Bitcoin white paper and kind of getting hooked from that uh was there a particular thing that you researched or learned about that really hooked you into the tech I of course the Bitcoin white paper was hugely uh influential for kind of my interest in in the space um I read the

big Bitcoin white paper before I joined Accenture what about my Accenture experience really interested me in the technology was I was exposed to a lot of inefficiencies that exist within the modern world especially the Consulting World especially technology that exists within Enterprises and the automation uh abilities of blockchain technology in handling some of those processes was really interesting to me so that's kind of the angle from which I approached it how can we use blockchain technology to automate a lot of these inefficiencies away and uh create a better system that exists today oh yeah yeah yeah definitely uh

that is uh that is a great way to get hooked uh and uh you mentioned your head of research at CMT digital uh could you perhaps just give us a highlevel overview of um the types of different things that CMP digital invest in and um like more more about your role yeah for sure so I'll tell you a little bit about CMT digital as a organization uh as well so CMT digital really exists as the blockchain investment subsidiary of the CMT group and the CMT group is a propriety trading firm based here in Chicago that's been around since 1997 um we the The Firm was actually established around the Genesis of

electronic trading and uh founders Scott and Yan came out of Chicago research and trading uh they saw the opportunities in the electronic market and kind of set up the fund set set up the firm to engage in those markets um CMT digital was established in 2013 to start engaging in the blockchain and digital asset space uh primarily at the beginning it was from a regulatory and policy perspective you know we observed the Silk Road auction uh and we're wondering about the ramifications of the US Marshall service selling something like Bitcoin an asset that I don't think many people understood at that time and so we joined the blockchain association uh made initial investments in 2015 the crypto trading desk was spun up

full-time in 2017 and uh the first Venture fund was launched in 2018 uh I joined around the second Fund in 2021 and um yeah we're we're on our fourth fund right now um for my role you know a head of research role is really a bit of a hybrid of an investor and a researcher role especially at a venture capital firm you're looking at the research side to really inform the investing strategies to a degree so being able to dive into the research and develop thesis about what verticals in the market uh we expect disruption in um or how that disruption is going to

look I think informs our investing strategy and I think that's something that we experience with ZK as well as well um for example we had a thesis about limited use of ZK for computation and that's how we ultimately arrived at investing in lrange um at the precede level so yeah it's definitely something where the research informs the investing and and vice versa interesting interesting and I guess um could you take us through a day in the life of of uh Your Role like you wake up in the morning like what what's the first thing you do you just like uh scour the web for the latest research

papers or well I think it's a a mixture so we're obviously seeing deal flow but the deal flow also informs I guess where people are spending time um and through that we can see if there are areas that we think are underdeveloped and that is probably where the research will uh be focused this is also especially prevail in times of quiet Market activity if there's low deal flow volumes for example it gives me an opportunity to really dive into the research aspect um and build out the thesis further to to anticipate uh Builders returning and so a typical day in the life is I I tend to

get to the office around 7:30 8: am. uh log on we go through the the deals that we're seeing and uh if there are any research projects s going on at the time will uh be able to explore them as well um one that I'm currently working on is around the tragedy of the commons and how crypto networks and blockchain incentives specifically can uh alleviate some of the misalignments of incentives that occur as a result of the tragedy of the commons so depending on the amount of deal flow we're getting we can allocate more or less time to the research activities interesting interesting interesting yeah uh I've always been curious to to learn what a typical day

in the the VC world is um so thank you for enlightening us on that um and obviously uh zero knowledge is something um you're passionate about it's the topic of our talk today um so let's get into that um so for people that um have never heard of zero knowledge before um could you just give us a brief uh rundown of what it is and why we should care about it yeah zero knowledge is really a mathematical concept um and it's prevalent in cryptography uh which is a branch of mathematics uh it's a technique where one party can prove to another some statement is true um or or

false without revealing any information about that statement beyond the validity of the statement itself so in blockchain it's often used to prove computations happen correctly um or by a specific spec without actually exposing the underlying data and uh this is a recent um a recent discovery right um that this this type of thing is possible um and I believe the the biggest application at least that I've seen um has been in the in the web 3 space but is there any other field that's um adopting zero knowledge I mean zero knowledge I think has been

prevalent in computer systems for a long time it's actually not necessarily unique to crypto at all um it's just within crypto there are applications of it that I think become very useful because of the nature of crypto systems and the uh transparent nature of crypto systems specifically um but but zero knowledge has been a technique used in uh cryptography for for a long time um especially when it comes to secret sharing and uh establishing the grounds for a communication for example gotcha gotcha and obviously um privacy and verification are also important aspects that zero knowledge

provides like what do you think um they're so important for um the different types of tech that we're seeing today and perhaps the tech that we'll see in the future um how do you see all the kind of like coming along yeah I think ZK is really important because it allows you to decouple trust from transparency so instead of having to reveal all of your data um to prove something like your credit score or your age your identity even um you can just prove the result and so as we move towards a world with increasing surveillance and and data exploitation

um for verification ZK brings that math-based trust that allows you to scale as those systems scale and evolve and change uh and verify the correctness associated with your data without actually re-executing computations um or or revealing privacy uh private data um and so there's kind of two aspects it's it's huge for scaling blockchains uh improving offchain comput ations and it's also great for preserving privacy of data that's sensitive especially in a environment where everything is transparent and uh verifiable yeah indeed indeed and uh

just to shift gears just a little bit um from blockchain like what about artificial intelligence um we see a lot of data um pumping these models and training them and sometimes well most most of the time um it's just like open data that's on the web that scrapes that they scrape and they train on um have you seen any developments in um basically verifying um uh the output uh an AI model might produce um or or any interesting developments in the AI space related to ZK yeah I think I think AI is definitely a branch of ZK um we've got

ZK ml so zero knowledge machine learning and uh portfolio company lrange is actually working on uh a zkl library as well so there's there's the ZK evm side so projects like scroll polygon ZK evm ZK sync they're bringing ZK to ethereum compatible smart contracts that's one kind of Branch we've got ZK ml so zero knowledge machine learning where we're seeing early early examples of proving model inference in zero knowledge um this verifies that the AI model made a decision fairly without revealing kind of the model or the data inputs um and I would say there's also another Branch that's like recursive proofs and

proof aggregation um and this is also where L granch kind of operates Innovations here talk about drastically reducing cost and allowing computation uh proofs being composable and kind of aggregating these proofs to save on computation costs and this is key for scaling um so ZK ml I think is exciting for for just showcasing the ability for ZK to quickly be able to solve problems across Industries as a result of its inherent properties uh regardless of its use case interesting interesting and uh I guess um the topic of today's show is um

exploring CK code processors um could you explain uh what that is and um why you think that's important yeah so ZK co-processors are like outsourced verifiable compute so instead of having all of the computation on chain which is very expensive sometimes not even feasible given the computation size um you send it offchain to a ZK Cod processor this is some computation that can occur offchain uh but a succinct proof is then provided that the result is valid that the computation occurred in some fashion um

and why do I think this is important well one of the things that's really exciting about ZK is it's becoming programmable it's it's moving from this research phase into this real developer tooling phase and so using ZK Co processes in your stack I think allows you to unlock things like scalability for sure but then private and verifiable computes to unlock private voting verifiable offchain inference cross-chain asset Bridges with no trust assumptions all all of them everything that could be thought of as like a verifiable Oracle uh but for processes like compute um can then exist in a scalable and economically viable way today uh as

kind of like verifiable oracles oh interesting uh so ZK as as Oracle essentially uh yeah never uh never would have thought uh I'd connect those two but that's an interesting way to to look at it and I I guess um are would you say that cool processors are um in themselves like a specialized um set of Hardware uh to be able to run that level of computation so we know like um when we run AI models um you need a pretty beefy um ify computer with lots of RAM and uh GPU um is there specialized Hardware

that's necessary to run um the zero knowledge Co processors as well um I don't know if it's necessarily needs to be specialized Hardware of course people are working on uh Hardware acceleration for for kind of making compute more efficient on the on the hardware cpress is not Hardware per se but more like verifiable compute modules um typically they're software systems that could be accelerated by that Hardware acceleration uh but it's about the circuit that's created that verifies the computation that's actually occurring so the the co-processor piece is really software um but the they can be accelerated by specialized hardware

and and we are seeing um companies you know building in the specialized Hardware space yeah I'm sure I'm sure they are and um like in your mind do you see like how do you see um these co-processors playing into the future of verifiability I know there's lots of applications but is there something in particular that you're um quite keen on seeing being developed I think it's about the notion of changing how we think about trust in computation um you no longer then need to to rerun or trust the machine there's no trust between the machine and the protocol it's

really that trust is obtained by verifying the proof and the proof's validity and so it can help supercharge modular blockchains um things like settlement and execution layers make them more compatible with a wider array of use cases as a result um it can enable regulated privacy so you know we love privacy in this space um but we also have to be compliant in this space and so that has been a historically difficult bridge to cross um how do you merge those two it's kind of like an oxymoron but with this technology does really enable regula privacy you can

just follow the rules without showing the data and um yeah I think the AI specifically ZK ml does make Ai and blockchains interoperable in that trustless scales way and scalable way and if you think about the role of blockchain within AI um the incentive alignment abilities of blockchains can be quite useful for AI and it really requires that link of being able to not only verify the processes of AI but then trust it to ensure that you can actually align the incentives and and create an incentive model that that is not broken as a result of Bren inputs right yeah I I personally think

that's also going to be quite important um going forward um especially like this this year in particular and the around the end of last year you really saw um this merging of crypto and or blockchains and um AI really starting to take off um with like the Eliza agent stuff of course like um not everything is going to be AO made mcoin reply guy bots of course but um I think like going forward um there's going to be lots of interesting um applications that kind of come out come out of this um this merge and um obviously you being a uh inventure capital and CMT having quite

the big portfolio uh I'm sure there's quite a bit of companies um that you've had your eye on or do have inside your portfolio lrange being one that you mentioned um are there any other ones that are doing interesting work in the ZK uh space or maybe the blockchain and AI space yeah I mean I think there's a lot of companies in the in the space that are interesting and and increasingly so more and more companies are finding a need for ZK in their stack um I am quite excited about ZK TLS so companies like reclaim and opacity are working on uh using the the transport layer in Internet protocols today like TLS uh transport layer security to prove data that exists in this backlog backlog

of web two uh data lakes and so all of your information related to you know your University where you went to school your employment your credit all of that is obtainable via internet protocols you can log into your bank account for example but using ZK TLS to actually prove the inputs to the page that you're seeing you can then verify some information is true without actually revealing that information and I think that's powerful for similar to AI onboarding data and making that composable with blockchains therefore allowing blockchains to shine where they're really best which is that incentive alignment piece um using data

that is then verifiable and known to be accurate yeah yeah definitely and I think another interesting um um like on on that topic and application of of this would be um have you heard of the have you heard of a clear before the the airport terminals that like scan yeah oh you remember yeah yeah oh there you go you know you know the you know the whole deal uh I feel that like something like that would benefit a lot from uh ZK just because of um like the the amount of information that you have to give and then um there would be also interesting applications of that where you could also technically use that for

um like uh sign or um checking into your hotel as well or uh checking into a cruise um just because like all of that is kind of hous in one uh Central uh identity proving platform and yeah you don't technically have to prove you don't have to provide them all your information if you're using ZK something like ZK TLS or some other zero knowledge application but yeah one example um that I think is relevant today is um the 23 andme database uh so the database is going up for sale um a judge ruled that it can be sold as part of the bankruptcy proceedings um I don't know if you saw

but say the blockchain SEI is submitting a bid now what's interesting is a blockchain company is uniquely positioned to buy the database uh make it all zero knowledge give people who are within that database access to their credentials and then build a system for identity as a result of having access to that data without ever compromising the security or privacy of that database itself and so it alleviates the privacy concerns of the users whilst also giving them access to an identity proof that they can then use uh in in chain systems um just a question of whether or not

they can win the bid yeah that would be that would be an interesting um interesting development if if they do end up winning that bid and uh yeah I mean 23 has quite the large database and it's like going to the right hands I think is very important for all the people that gave up their data basically get their DNA test um but yeah I guess um on that front uh as we're nearing time um just wanted to pick your brain a little bit um as you're right on the bleeding edge researching all the different types of

Innovations and web3 and AI zero knowledge um are there any Trends um that you can speak on that you've you've seen are are developing or um you're you're interest you're quite interested in yourself um starting to come up well you know I think a lot of the past few years have been spent especially in the blockchain space developing infrastructure and um you know I don't think we'll ever be fully finished developing infrastructure but at least the rate at which infrastructure is being made and applications are being made I think should be changing soon um I think we've hit an inflection point where the infrastructure is quite robust

Broad um and tools like ZK TLS especially and and recursive proofs especially can um enable some types of consumer applications that we couldn't before and so I am quite excited about seeing consumer applications using blockchain technology and the the suite of tools like ZK TLS that accompany it um and so I think it's a it's a matter of seeing where blockchain can actually disrupt uh where does that self- ownership and um incentive alignment piece within a broader Network actually disrupt incumbents and I think

applications of that are pretty interesting obviously identity data are pretty loow hanging fruit um but as as we see the trafi and defi World merge I'm excited to see what sort of consumer applications come out of that as a result yeah yeah likewise uh the biggest thing at least from the uh blockchain standpoint um as as we've it's been uh quite quite the theme ever since I I've come into the web 3 space is just like making something that's usable or not making it obvious that what you're using is like blockchain enabled or ZK enabled basically abstracting that all that

fancy stuff to the back and just making use apps for for people to use and I I I think that's where blockchain's promise really lies like yeah we we can't beat web to ux by just copying it um because the blockchain stack looks fundamentally different but there are applications or or places where the blockchain stack is going to be better than the web two stack and I think things like privacy without compromise on using ZK is a great example of that you know being able to prove that you're over 18 with without revealing your actual birthday you know Healthcare um share that you've taken a covid test for example without sharing that personal medical data there's a lot of things that are very

much harder to do in the web 2 world than the web 3 world assuming the web 3 world is able [Music] to battle test and adopt the technology to to the point where it's accepted by users as being um trustable and and I think there is a little bit of uh not education but but kind of getting used to using mathematical proofs you know we we use a lot of cryptographic elements in our everyday lives when we're logging into web portals or whatever and I think it's going to be a similar sort of adoption curve where we just need to get used to the verifiability and uh trust that comes from ZK systems broadly well said well said and uh yeah

that uh brings us to time uh yeah this was a wonderful uh wonderful talk Arian thank you so much uh for taking the time out of your day to come on the show today thank you so much for having me great to be yeah likewise uh and for folks that have been watching us live um I'm going to drop the link um for you to be able to claim your attendance badge uh for uh watching us uh live today so if you're into Collectibles uh definitely check out bit badges uh you can clean your collectible for uh watching us live today and with that I just wanted to wish everybody a very happy Friday happy weekend wherever you may be and we will catch you here next week for another great episode of devel right all cheers thank you