The Next Chapter For EigenZero | Bryan Pellegrino & Sreeram Kannan

Transcript

What's up, guys? Just wanted to give a quick shout out to today's sponsor, Apptos. We'll hear more about how Bitcoin, DeFi, and Apptos is heating up later today, but for now, let's get into the episode. Nothing said on Zerox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Pokio, Ryan, and our guests may hold positions in the company's, funds, or projects discussed. Okay. Um big big day for me today and big day for you guys I guess last week um with IGEN zero. Before um before we get started with the questions, do you guys want to give a short um and I don't know who to pick here. So I I'll I'll let you guys

decide on who wants >> I was already I was already chatting some. So >> but um what is Ienzero? What should people be looking forward to and maybe like a rough overview? >> Yeah. Amazing. Hey, hi everybody. I'm super excited to be here. Thanks, Brian, for doing this together. Um, uh, what is Zero, right? So, as, uh, you know, Blair Zero leading bridge, right? So, you know, does, uh, I think more volume than Western Union. Brian recently had a beautiful comparison.

>> Oh, five times Western Union last month. So, >> oh man, they're crushes. See, amazing. So you know you want to build a crypto bridge and like one of the big the architectures underneath uh layer zero is this idea of a DVN right which is a decentralized validation network which will actually verify the messages and move the messages across different chains and a question that shows up is how do you know that a a DVN is secure is honest it's uh trustworthy and you can have different mechanisms right you can have reputation You can have many parties you know it's decentralization you know these are different mechanisms

a very cryptonative mechanism which is what secures basically all blockchains is stake right you know Ethereum secured Solana is secured all the chains are secured because somebody stakes and promises to run this network correctly and can we have a similar mechanism for a DVN which is some kind of cryptoeconomic stake that is securing it where if this stake secures this DVN and this bridge, it means that um you know that this amount of economic security is backing this bridge. If this amount of economic security is backing this bridge and the operators are malicious in moving messages around then they will lose their stake and then they'll be

slashed and that money will be redistributed to the harmed parties. Right? So this is the endto-end flow. you know over time this will become like a you know fully insured bridge right an insured bridge is uh you know when I'm transacting if my if I'm if my bridge is broken because of an operator malicious you know action so because I'm taking counterparty risk on an operator because of that if I'm losing money then I will get redistributed so that's the idea of like you know this is combining the two things that both of us are building layers taking slashing redistribution layer zero, DVN, leading bridge. So, we came together to build this product

called icon zero. Ryan, >> yeah. Yeah. Yeah, I mean the the way I view it is uh I mean I think we can get into a bunch of this stuff, but effectively, you know, I think there's been long-standing demand for how do how do you take like how do you add an economic stake into this layer and there's a bunch of different ways that people uh basically try to secure sort of different sides of this and everything from right again from from ZK proofs, economic security like all of these different stacks. How do you make a stronger and stronger sort of validation or verification layer? Uh there's two sides what we did. One is the framework which is kind of like the big thing like listen here's a framework that anybody can now apply and use uh to build this economic layer on top. So

every application who uh is rolling something out every asset issuer has the ability to do this. And you can imagine there's some pretty interesting times. uh people used to think you know you need a huge amount right you need to have you know hundreds of billions of dollars security to be able to do this but so we so there's a framework and then there's our implementation which is like the IEN zero DM DVN right um and so for us we just put up $5 million of zero in that and so you're ask well $5 million given the amount of volume over there not like not a huge amount of of economic security tied to this which you can actually do if you look at something like an intent layer so if you looked prior people talked a lot about like a cross and intense and one of the biggest

complaints they had against them was this uh 90minute window uh to get the assets back. Uh so you had a 90 minute sort of um approval period to be able to unlock your assets on the other side. Now you have the ability to basically be able to do that every call it 30 seconds, right? And so now you think about $5 million, you think about it as as the size of your pipe effectively where you could secure $5 million of throughput every 30 seconds throughout the entire day. Okay, so now you're talking about the ability to do, you know, many hundreds of millions or billions of dollars daily uh 100% completely secured with zero risk, right? Uh and you can talk about the ability of asset issuers where you see sometimes assets choose to set pretty long outbound comps um from certain

networks and you could say, hey, uh you know, we're going to allow sort of we're going to monetize. So CCTP or something takes a fee for CCB v2. Uh so it takes some amount of BIPS and you could say we're going to allow fast uh fast withdrawals or fast transfers out of this network that has a typically longer period of time. We're going to charge a you know a tiny amount of BIPS on that but it's going to be effectively instant. It's going to be backed against this and this becomes the pipe. And so there's a bunch of like cool things that you can do. Um, but I think the framework to me is the most interesting piece of it all because what we're most interested in seeing the evolution of this sort of landscape of DVNs and I think there are a bunch of really cool

things where with a relatively small amount of stake and a relatively small amount of um uh of of charge for bypassing like a for a faster window to have near instant you know zero block comp or one block comp transfers out of any network and so on and so forth, Right? You now can create a model that's actually like very very compelling to the end consumer. You have you have almost instant experience when you're talking about intent layer stuff. You have almost instant uh getting your capital back on the other side which now means you can quote like much cheaper because you you don't have duration risk. You just like have assets that are not being useful for 90 minutes. Um so there's a bunch of cool things in there that I think will be downstream unlocks.

Uh but yeah, the first step is like build it, get it out in the world and kind of encourage people to to see what they do with it. Yeah. Um I I want to take one tiny step back just so that the listeners can have a better grasp of what's happening. So when you say DVNs, um do you want to kind of um run over why they are involved in this process altogether? >> Yep. Yeah. So I will I will try to keep this you you tell me if you want me to to be more technical and we can you know go down a rabbit hole as much as you want. Effectively every chain no matter what is just like an untrusted state machine. They do not know the state of each other. They don't know anything.

And so your something has happened on chain A and something needs to is going to happen on chain B, right? So this most commonly is like burn some asset, burn a million dollars here, mint a million dollars there. Um there's a bunch of different ways that you can tell chain B what happened on chain A. And sometimes people put, you know, a middle chain in the middle and they say our special little network of validators is going to tell the truth about what happened. And like Circle, CCTB I just mentioned, right? They have their own attestation where they just say they run an attestation server and they say this happened here over here like I authorized this mint on this side because I saw this thing there. We always took the opinion that building a generic set of parameterization for all

applications is just bad. You don't want like your one- cent NFT projects to be paying the same for security as your uh and getting the same security as like application doing billion dollar transfers or multiund million dollar liquidations. Those are likely going to be willing to pay more for much higher standard of security. So needing to force everybody to like one parameterization just makes everybody out of bounds. These guys don't get enough security. These guys overpay. And so the concept of a DVN was just it's abstract. This can be anything. Fast forward to today, there's about 52 DVNs on the network and they look like all different kinds of things. These are big orgs. These are Ubisoft and Deutsche Telecom and Google and these are groups

like Nethermind and P2P uh you know kind of like known entities. And then there's also things like Polyhedra which is a full ZK proof coming out of Ethereum which is like the aggregated signatures of the whole ETH and committee. you know, there's all of these different things that people have built to provide this attestation layer. What you typically see um when you have like a USDT0 or an Athena or a Bitcoin and typically they're like, "Hey, like Circle, I want to I want to sign off on these messages as well. So me, PayPal, or me, whoever, I'm going to create an attestation, but I also probably don't want to be the only one. Uh, because you

don't want to be like a single point of failure. And so then they'll backs stop and say, I must be required, so I must have signed off on this, but I also want to include, you know, Google and never mind and polyhedra and X and Y and Z, right? So you'll typically combine uh some number of these and you create your own sort of attestation layers. A DVN is just any mechanism that produces the attestation of state and again that can be you know a single DVN could be a 10,000 nodes. It could be a full network and you know in cosmos sort of every chain could be its own DVN. It really can be anything. It's a very abstract concept. It can be a single node of some guy in his basement who wants to run a DVM. Doesn't matter. Um and then again

the applications themselves sort of choose what they want this set to be. I >> think perfect that's that was a very sure go ahead. >> Yeah I think the the simple way is who's verifying the message is correct right that's it. So there some it could be a smart contract it could be a group of people it could be like you know they are staked they are not staked all these things are possible this modularization helped like a bunch of experiments that can be done on you know like Brian said 50 plus DVNs that have been working on >> perfect and with zero uh sham you guys are incorporating your existing operators to opt into this and say I want to be part of this EVN or not >> that's right so it's the so I think

Brian said we have a framework and we have a particular implementation. So let me talk about the framework right the idea that so firstly what is the point of cryptoeconomic security and why why do we need it why you know so this has been one of the core thesis of agon layer right as you know uh layer is invented this paradigm of restaking but the core idea is how do you supply cryptoeconomic security to any kind of service and network so that's kind of like the underlying value problem layer now you can ask like why do you need a deviant so there are 50 plus deviants why do you need a cryptoeconomic deviant what is the special thing that it does so when you think about it um when you make a system trustless

then it can scale because anybody can provision resources into it so I'll explain this if you make a system trustless anybody can provision resources and the system can scale so what do I mean by that suppose I have a new chain okay and I want to connect my new chain to like I want to build a DBN that's going to bring bring messages from my new chain to other chains Now the problem is if I have to go with an existing DVN that DVN has to add support for my new chain. It's a whole thing you know I have to talk to them.

They have to accept that they have to expand this to my chain. I could do another thing which is if I can just build my own DVN to transport messages back and forth my from my chain that that's something simpler but then you'll be like who the hell is she? Why would I trust messages signed by this TVM? But if I say, "Oh, the message volume on this chain is like, you know, $10 million daily or $100 million daily, and I've put up $100 million of stake," then you don't need to know who I am, where I'm from, and like what my reputation is. So now, like, if I want to add my chain, I just add my chain, and then like I can throw in a DVN that actually validates my chain correctly, and you

know, you don't need to know who I am. So this so cryptoeconomic security makes this system trustless. Why do I say trustless? Because either my message goes through correctly or if the message didn't go through correctly, I'm going to slash the guy and get the money back. So you know netn net I'm okay. So if you have a framework like this, then the DVN system can scale infinitely, right? Anybody can keep adding new DVNs to actually secure new things. and as long as they're built within this framework and I know that I have full economic security and it's fully insured. So that's the real kind of like thing that we're going for here with this framework is to enable a whole sleuth of like slew

of permissionless you know deviants to be built all of them secured with economic security and therefore they can all be trusted with a similar grade without needing to know who they are where they're from whether I trust them or don't trust them. So that's the big big thing that we're very excited about. And >> again, the interesting point for me from earlier is is if that $100 million of daily chain volume is distributed equally over time, you would only need $35,000 in stake to actually be able to secure that entire thing, right? It's typically not going to be equal and you can set rate limiter. You can do all of these things to guarantee your your pipe is sort of not being exceeded. But you can talk about being able to secure a hund00 million daily volume with with maybe a couple hundred thousand dollars

and and comfortably never exceed uh the pipe. >> That makes sense. Um just just to like clarify one thing for me in the announcement, I saw that um there was $5 million worth of slashable zero. Where does that come in over here? How does that compare to the to the $100 million 35k thing? >> Yeah. Yeah. Yeah. So $5 million in in zero slashable uh basically is again you can think about that as the throughput or the pipe. Um and so it depends on uh sort of what that's being set for outbound comps. But if you imagine again imagine 30 second period. Well now you can do $5 million sort of of pipe every 30 seconds or times that by 2880 for the daily volume. So you know it's a it's a

it's a big number for the amount of uh you know 20 2880 five millions. uh you can do a lot of a lot of throughput on that. Um and even even for us when we're doing you know we're doing over a billion dollars a day pretty consistently now. Um you know 99% of that is coveraged within this sort of like $5 million 30 secondond pipe. >> Bitcoin defi is heating up on ApdOS with nearly 400 million BTC assets on chain. Apptos users can now earn yield on their Bitcoin via EcoABTC and OKXXBTC without the typical bridge risks and high fees.

To explore BTC yield opportunities on app dots, follow the link in today's show notes. >> As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. >> One question I have here is um what are some things that uh Brian, on your end, this seems kind of like it fits, right? Like it it works because you have an existing system and you're adding something on top of it. Um, Sham, I guess like my question for you is was there anything that you you guys were like, I don't know if this is going to work on our end or if like if this is going to interact weirdly with other parties that were involved with.

Was this ever a concern for you? >> Yeah, I mean so the thing is we built this uh you know uh earlier this year we went live with slashing and uh later with redistribution. These are the pieces that were needed. you know, Brian and I did a podcast now like more than, you know, 14 months back where we kind of like kicked off this partnership. Uh, you know, uh, one of the things I really love is building with long-term builders, people who are here and, you know, have a long-term vision and actually like, you know, working towards it. So, really enjoyed like getting to know Brian and starting to work on this.

But you know slashing and real distribution were not live and those are two key features that were needed before we could actually you know go ahead and build this product and showcase it. So in terms of like what was needed that was the first thing right. So you know slashing needs to be live on layer redistribution needs to be live and this is you know um the first lighthouse project that is actually showcasing all these features building it together. So that's as far as the core layer systems concerned. Now I know there's all kinds of details on you know how does the DVN actually work, how does slashing actually work, what who are how is you know the who's the slashing committee, how is it constituted, how is the what

is the trust model. So again there is going to be a lot of evolution on this over time but starting to build the first one how do you observe for example an L2 may uh make a claim and later say that they never made a claim like a sequencer right like think of a L2 sequencer it makes a claim and it says oh I never made this claim how do you observe this how do you attribute it do you know fault the DVN or you fault the sequencer how do you attribute these things correctly so there's a lot of like science that goes under the hood on this one of reasons and know out of abundance of caution we launched on a few handpicked chains to begin with right I think it's three chains to begin with and over time expand to like you know cover the whole gamut of chains is

because of this uh feature because of this issue of how do you observe how do you attribute things that you kind of like when you want to build a trustless system things that you kind of slip under the rug oh the sequencer said therefore it should be right but the sequencer said now the devian said like but did the sequencer to tell the deviant or the deviant told you something wrong like you need to know these things correctly and so the so part part of the work you know ongoing work actually is to actually uh identify these things and wherever there was yolo trust models again like chains that don't finalize say chains that say they may have finality but actually if you dig under the hood you actually find out they don't have finality like these kinds of things are all problematic

because we're aspiring for a high trustlessness in the in the bridging model. So lots of fun stuff for us to get into like the rabbit hole there. But that's I think slashing redistribution core on the layer part you know the first lighthouse integration with that you know what are the conditions for slashing what is the observability like so more research you know happening but I would say this is one of those places where you put we are putting not just a spotlight on what's happening in layer but what is kind of like other people are slipping under the rug in the rest of the ecosystem. So this kind of like sunlight is the best segment here.

Perfect. Go ahead. >> So, I just want to say like um we've talked a lot about what's taken to create this to create zero, but um for on the developer side of things, what is the unlock for for that for that group of people like what changes for those that can build on top of zero or that can build with IGEN zero? Yeah, I mean I think the biggest thing is as as an application your uh sort of role in this is to pick this group uh of this attestation layer for what your validation layer is. And so now you have this sort of like $5 million of slashable stake that's guaranteeing uh the transactions on on sort of this

layer that's happening there. And so what you have is again uh an option and your set of options that now is uh you know potentially more secure than what you had prior. And then on the other side which I think from the framework side is what people find more again more interesting than maybe the specific instance is you as as any application or any asset issuer now have the ability to have your own. And so we had a huge demand actually for asset issuers who said hey we want to secure our own messaging and put up our own stake to again create like this piper throughput.

So now you might have a you know you have um asset X uh and you know you're some large asset and you have you maybe you're moving a billion2 billion5 billion dollars a month across the rails. Uh you might want to put up uh you know x 5 10 50 hundred million in stake uh that one allows people in the community to like stake into this and then allows them to potentially get yield if you're if you're again allowing faster withdrawals allowing people to bypass that. Again, if you're if you go the CCB route, you charge kind of a small fee for the convenience of this fast uh sort of bypassing of finality.

So then the sort of mechanism bears the risk. Uh but then there's some reward for that in terms of the overall throughput. So it just it gives you the ability to offer like a more dynamic product. And I think both the users uh we've seen really consistently users are are willing to make large tradeoffs um for for like very fast experience. You see it with a lot of the um you know some some of the other bridging solutions right now are just like very very fast and they're being run out of EOAs but they deliver like obviously just an incredible experience just bam delivered. Um, and so people people want that and they're willing to give it. And so if you can as an asset issuer give them that in a way that uh sort of is is more economically secure, delivers the

same experience, all of this and it's both compelling for the asset issuer and compelling uh for the end user and then gives their token holders some ability to to again stake into this, participate in the overall security, etc. So I think there's a couple of vectors there. And when you say um people want speed, I you're referring to like people want the speed, but they don't really necessarily want to give like a cut every time. So if you have a DVN on the back end, um >> yeah, more more like I I think so when we um when we were building like Stargate, let's say, right? uh we were like very adamant that everything was 100% onchain and you have these pools of native

assets that exist and you were doing verification on like a per message basis and you know on and on and on and on and then came intense and people were like well rather than waiting for you know two minutes for finality I can get my asset in a couple of seconds uh and who cares that you know maybe there are is only like one solver filling this or maybe there's you know in times of volatility there's just like not going to be a market uh there's no like censorship resistant aspect to it any of those things what the end user wanted so you can basically frame it as the end user cared about the average experience and not about like the worst case experience right and I think most

mechanisms in crypto uh have to design obviously in like a hyper adversarial permissionless environment against the worst case so unis swap all these things are built to protect against the worst case and what we found out in most of the consumer applications today is is the users are actually optimizing for like the average case, not for the worst case. And so you started to see a lot of trade-offs where now there are a bunch of things that are are are literally just like straight EOA just deliver and they they give a an incredible incredible experience. You quote offchain, you give them money and they give you money on the other side and like you know they do a good job.

They're a service provider. It's great. You've been able to trust them so far. You'll probably keep being able to trust them. No problem. And like people are uh again there has been an appetite for that. And so what you have seen again is historically we're building continuously for the worst case. I think at a protocol level you always have to build for the worst case but actually I think the asset issuers and the applications are building more and more for the average case of the consumer and trying to deliver an amazing average case. And I think what you want is to be able to give them a really compelling easy way to deliver a really really good average case. uh while still um while still doing it in a way that like maybe protects the user a little bit more or gives them these sort of um more secure

environment to do this in. Um and so I think from our side that is sort of the unlock for the end developer because again the developer and the user are chasing this average case. Uh you want to give them sort of like the most secure best way to do that. >> I think that makes a lot of sense and one thing we talked about it how is how this relates to I guess asset issuers mostly. Um, when you say asset issuers, do you specifically mean real world asset providers like tokenizing assets, bring them on chain, or is this more like referring to general asset issuers um chain to chain? >> Yeah, I I I view asset issuers and applications as just as a little bit different, right? Application is going to be sushi swap built swaps embedded in the application, right? And it's like uh

originally was like swap, bridge, swap, and now they've done all these other mechanisms to to build out sort of like a fully functional application. Whereas an asset issuer might be like PayPal's Pyusd or PYUSD, right? And and there there was just an asset and that asset wants to move. It wants to have more AUM. But at the end of the day, the asset issuer is issuing a single asset and the asset is the thing. It is the product. >> Makes sense. uh just chatting a little bit there the you know uh the there is a RWA type asset issuer but also I think layer zero has a format called OFT which you know if you're issuing a native onchain asset normally you have to choose a chain in

which it's launched but the omni chain fungeible token standard actually lets you launch a token which is across many chains but then you have to decide like how the messages go across chains so that's another example of an asset issuer which is even just like natively onchain assets. It it doesn't have to be RWS. >> So, one thing I would like to ask here is like for the developers like just follow up here um how should developers compare like the I guess I can zero to other DVNs. So I know that um in the past or I guess uh in the past one criticism was that like DVNs despite having like the capability like to

choose whatever DVM people you know wanted they would just go with like Google cloud or some or some set of providers. Um from my point of view it seems like I zero provides like a pretty easy funnel uh into like a a distributed network so that you don't have that like same centralization. Is that is that correct or is there what else would how else would you you describe that? >> Yeah. So I think I think it's a little bit and sure obviously you comment as well. I think it's a little bit different where the IEN zero DVN is is not um there's like a slashing committee and there's some uh distribution around that. The actual operation of the the individual DVN isn't really significantly different than existing DVN. It just happens to have economic

stake tied to it. Right? it isn't uh it isn't this uh super wide distributed network which again is something that that people can do and likely will do. That's the point of the framework. This is more an example to show what can be done and how it can be done and tying economic state to it and sort of setting the stage for everybody else. Uh I think the big things around the DVN spread itself uh is well um well many people use uh sort of you'll have overlap on a bunch of the DVNs we have all this data that we can sort of like publish and show. So like actually layer zero labs DVN gets used a lot uh but the layers labs DVN is never used like exclusively and so if you actually look at the set uh there's actually

reasonable amount of split across applications where like almost all of the big applications I mean if you talk Athena on USDT0 PayPal's PYUSD0 USDG uh or PYUSD not PG USDG on and on and on WBTC all these things right every single one of them uses diverse uh and like not a single one of those uses the same set of DVNs as any as the others. Huge amount of overlap between them where a bunch of them may actually all share a DVN but there's a bunch of others that are sort of mixed in there and sometimes it's your own sometimes other third parties etc. So the point is like you want to build resiliency uh against and the way that we always viewed it is

again single parameterization is global exposure that is broken everything is broken and this if any of those happen to have all of their DVNs corrupted broken malicious colluding all of these things it's still isolated only to a single asset the broader network is like not affected at all and I think what you want to do is again to continue to have this like bifurcation of especially as you get larger and larger assets sets or as you get these, you want there to be as little overlap between exact identical sets as as any of them. And it gets harder and harder um to think about a scenario of like broader corruption the more that you do that.

>> Yeah, just I want to add one thing here. This is uh you know people uh conflict two different concepts. One concept is decentralization and other one is trustlessness or verifiability. And so you know the whole idea of for example the role of paradigm is that you have a single node doing the computation but the computation is verified and therefore like you don't need to worry that the node can make a mistake or in this case that's the paradigm that the first you know framework is actually showcasing is even if it's a single node doing the action it has put up a collateral which is greater than the amount you know volume flowing through for that time and

therefore for you do you're not really trusting that node. You're trusting that this the mechanism to actually enforce the slashing and redistribution as opposed to you're trusting that node. So that's you know that's a really good um um like model to understand right because you don't need so where do you need decentralization why do you need trustlessness this is more on the trustlessness rather than on the decentralization. Uh second one is this framework can be expanded to make it more permissionless for anybody to as long as you put up more you know enough stake I should be able to sign off on a message I don't need to be this one node I can be any

node so make it more permissionless to do that so that those are the kinds of directions that we headed in so the idea being even if in the normal mode only a few nodes are running it anybody can spin up a node and permissionlessly evaluate if these nodes go down so that's the two false you worry about, right? Is the message sent correct? If it's not correct, you can slash them. If if the node just goes down, it's just like robustness, you can have another node spin up and do it. So, that's that's how we think about it in terms of like the the decentralization versus trustlessness here.

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I want double click on something or just to clarify I want to ask like where does I zero fit in the grand scheme of the road map for layer zero. Um from my point of view layer zero there's been a lot of focus on asset issuers and providing like um providing like verifiability to to those asset issuers. Um and I see this across like different uh infrastructure providers as well. Like if I look at um like both the chain link team or like Pith or something like that, those teams all are like partnering with asset issuer issuers in the same way as layer zero has with um with the Fireblocks engine and they're they all have like really or they all

have um interoperability solutions that they are backing with crypto economic guarantees as well. Where do you see this like trending uh in the long run? Yeah, I view it as a as a tool in a toolbox ultimately. Like I think if you look again, we just talked about last month, right? Last month at at $ 38 billion, I think that translated to something like 90% across the market in terms of like value transferred overall, right? It's like asset issuers largely by and large, stable coins primarily and many others are are building on layer zero. And the question is why are they building on layer zero and what do they want? Right? I think there's a couple of things there. one for us the large thing had always been uh and I joke it because it's like you know just job's kind of

done because like the protocol is immutable I couldn't change it if I wanted to and that's part of the core guarantee to the asset issuers themselves is that you don't have to trust us right you don't the protocol is there it is immutable we cannot change it exists you have comfort with knowing that there's longevity there and then it is really like okay great what do they want do they want decreasing latency right how do you get DVNs and sort of the offchain workers that are creating these attestations. How do you build better clients that people can run? How do you uh incentivize other groups? So, client diversity is something we cared about a huge amount, right? I think there isn't actually another group uh in the space outside of Ethereum who has as much client diver like we have four pushing five unique clients now. A bunch

built by by teams that are, you know, not us at all. We've built two of them, but there are three other unique clients built completely from the ground up. And so when you talk about like uh downstream effects of uh ma many other solutions right now just you know just push client updates and everybody accepts it and if there's a bug in that then it doesn't matter how many validators you have because there's a bug in the client it's everything is rubbed right and so uh you know there's a bunch of these things where we just continue to try to figure out how do we provide a better stronger and stronger guarantees to the asset issuers or the people building on top of the protocol so that they can deliver sort of a world-class experience to their end user and I think this is like part of that

approach overall. And I I think again I I I continuously get these moments that are crazy for me because for me I remember I remember launching the protocol and I remember the first like dollars going through the protocol and you know everybody who's using it and like people are asking you questions to do everything and like we were sitting there the other day and the team sent me two transfers and they're like oh hey like $550 million just went through in a single transfer and then it was like $800 million just went through in a single transfer. or somebody sent $800 million almost a billion dollars in one single message and I have no clue who that person is. No idea, right? It's just like the the protocol is there. It works. It exists. It's being used like in production at scale in a permissionless way and I have absolutely

no idea the participants, right? And like that is extremely powerful and I think that's what you want is to build something that like supersedes you and people needing to trust sort of you and the solution that you're providing. What we're providing are tools for people to be able to deliver their own solution. Again, the asset issuers come in and they build with the OFT and they build with sets of DVNs that they like and they build, you know, they take this stuff that is existing, but then it's out in the world and like they're driving it and they're driving adoption and they're using it overall. And I think like that is how we view it is we're going to continuously build better and better tooling that give the asset issuers what they need to be able to have their customers not our customers

their customers come and send a billion dollars in a single transfer and like that itself is is the thing >> that makes that's um makes a lot of sense. I am uh kind of jealous that you experienced this feeling that somebody sent through $800 million and um it is very awe inspiring. I'm sure I want to ask you the same question but um with a kind of a twist I have um we we did a pod before as well. I'm not sure if you remember. It's okay if you don't, but um and back then it felt like I layer was very much like focused on building this system um and was not particularly product focused versus now it feels like

over the past six months you guys have become increasingly more product focused and I zero feels kind of like that to me. Um is this I guess like where does I zero fit into your plans and where do you guys see going forward? >> Yeah, absolutely. So we built the um the our core thesis at IGEN layer is IGEN in German for your own layer right uh you know you should be able to build what what you want at the kind of protocol level and so uh the way we uh the way we've evolved from think u from that starting point is initially we were like okay you know we have this powerful layer of trust that

anybody can tap into and build whatever you know decentralized protocol they want on top of it. And what we found is while this is great for like deep complex infrastructure builders like a layer zero or infura right these are products building on top of wagon layer it is not good for or a regular application developer like a regular app developer cannot just directly come and build an ABS on top of wagon layer it's extremely complicated and so you know this is like that metal right and so the way we've started thinking about it is like if you think of like a cloud Right?

You know in the cloud the base layer of a cloud is a data center right if you are open AI you want direct access to the data center and directly build something on top of it and so that's how I view this like I zero you know partnership between layer zero and us they're like open they have their own customers they have like huge distribution they want to build something bare bones powerful bare metal and so they they can directly use a whereas most developers if I'm just building an application and I want to use an AI agent in my application. I'm building an application. I want to use um you know off-chain compute verifiably, right? So there is like all there is a broad category of use cases that application builders want and they

don't have the tools to go and build an ABS by themselves. So we launched two new services compute and IGEN AI which is basically run offchain compute you know give me a docker container go build you know it goes and runs it offchain and then brings the result back on chain you know using it you know different trust models so that's an example of us taking the step to go closer to product closer to users closer to developers right I can AI is something similar right I want to run an AI uh inference right I and I want to bring that result onchain to make an action and um now I take this action I do this inference

offchain and bring the results back on chain but in a trustless verifable manner so that those are two products which are much more abstracted much easier right so uh one of our u friends uh who's a hardcore engineer like called and told me man it's so hard to build an AV It's so easy to build on compute, right? And it's kind of like that and this is mental model of data center and like bare metal data center and services built on top actually like is a very good model to think of like layer and then the services that we've built on top right very powerful builders can go and actually directly like configure the data center to do what they want but

most application builders want like highly abstracted like if you go to AWS you want a storage service S3 you want a compute service E2 you want a AI I service bedrock like this is what you want. What we've built is IGNA is our data service. IGEN comput is our compute service and IGEN AI is our inference service. And so I when I build an application I'm not any more restricted to the developer environment EVM or Solana or whatever can actually run something offchain and then bring those results back on chain like in a very fast loop. So you know and one of the big things we are actually envisioning here is AI agents. If I want to build AI agents, I need both, you know, uh, compute to be verified, the input data

streams to be verified, and the AI to be verified. And so by mixing and matching all these things, you can actually get really powerful, uh, powerful experiences built on top. >> Perfect. I um, yeah, I think that makes a lot of sense. Um, I guess one last question for both of you. Um again you'll have to decide between yourselves who wants to go first but um so what is the next step for IEN zero? Um when are we going to get some exciting updates on um who's on boarded and what is the let's say six months although I'm not I'm not an engineer so I don't know what timelines look like so maybe you can give me a better timeline estimate as well.

>> Yeah I think uh I'll start. I think the the again the most exciting thing in all of this to me is the framework right it is what are other people going to come and build and so I think if you want to look six months forward and say hey um you know was was this you know did it work did the market care was this successful as as a product I think what you look at is uh how many other people have come and built what other developers or assets have come and used this as a framework to actually build their own and so I think the things that are interesting is when you start to see uh these other large assets um and again you know all of the ones that I named effectively and start to say hey are they rolling out sort of their own

mechanism of slashable stake are they putting this up where are they using it is this to make sort of intense have faster rebalancing is this to make it so that you have uh again like a like an instant bridging option for is this to do X to Y to Z uh and I think there's a bunch of interesting paths that people can take it down there but It starts with somebody uh from the asset issuer side saying, "Hey, this is something I want to do." And again, we we've had inbound interest of people saying, "I I want to take my own asset and allow people to stake into this. So, turn it into like a community token style mechanism that has this uh uh reward back to those people for sort of like the risk that they're bearing on

the underlying chain side. Um or whether they just do it themselves internally and kind of what that looks like. uh and so I think from the foundation side or from whatever right so I think there's a couple of different things but like Sri Ram said the end result is that the user has a uh trustless experience because it has stake that is bound more than the value that is being transferred and so they don't need to think about what the option set is for DVNs what any of these things are it is just is there more economic stake uh than what is current throughput going through the pipe uh if yes great everything is perfect um and so I think yeah for me Again the the six months is just who adopts it, what does it look like, what like we are both people who build largely uh as as sort

of groups for the end developer. And so while us launching our own thing is cool and is interesting and seeing usage and adoption would be would be nice uh I think both of us are much more interested in seeing developer adoption and users of the underlying protocol actually like that's where real growth comes from. So that for me is like that is the measure of success. I know we I or sorry I know um box said one more question or but I do actually have one more thing I would like to ask Siri. Um, so and I could be entirely butchering this, but I recently read about like a uh kind of a cyber attack using AI agents um using or it was there

was a international like cyber attack with AI agents um for the clawed code tool and I'm curious if there is like an angle here for verifiability because it seems like this is like this is like a prime area for for something like this to to be involved. What are your thoughts? >> Yeah, great question. It's uh is an interesting angle, but I think it's not an easy problem for us to solve. So, let me just uh state like where trust lies in in you know when for example when you're using an AI system.

So, the first one is what I call runtime trust. So, maybe let's just contextualize on a simpler example. Let's say trading agents. Okay, so I want to use a good, you know, I want to use a trading AI agent, right? I'm why do I need it to be trustless, secure? I'm giving it some money to go and do my trades. So, you know what? If I give it money and then like it goes and buys, so let's say like Grock comes up with an automated trading agent and then it goes and buys a bunch of Dogecoin, okay, or GameStop or something. And then people, you know, may may lose money and then they're going to be like, "Oh my god, it's Elon. Elon like made Grock buy like Dogecoin or, you know, GameStop and then

like I lost money." So it's a huge library surface area for a Grock or ChibiBD. In fact, Chagd came up with an advisory like or update to its terms of service, you know, last week saying that no legal advice, medical advice, health advice or even, you know, human advice. I don't know, they exploited all kinds of advice and like the the reason is they're worried about liability, right? Because now like you know, as they are kind of like becoming more and more central. So when you think about the the input output interface to like uh chat GPD you don't know what's running in the back end you're just like oh that's chat GPD like that's what you know like you don't know what it is that you're talking to. So the first level of trust is I can guarantee like IEN can for

example guarantee that it's this AI agent with this specific code, this specific model with this specific weights and this specific compute which is actually doing this task. That's what we can guarantee, right? We can get just like exactly what Ethereum guarantees for smart contracts. It says this piece of code can only move your money, right? Same thing this AI agent is this piece of code, this piece of data, this piece of inference together, that is what can actually touch your money. Now if that piece of code is it good or bad, right, is outside the purview of like what we can underwrite trust for, right? Just like Ethereum like you know somebody can

write like a balancer smart contract which has a bug, right? Or somebody can write like a thing that doesn't have bug but that's not a thing that Ethereum knows whether it's a bug or not. just knows this piece of code can run this piece of money. So I think of two layers of trust in AI like one is is the code is it like you know break the black box and know this code's running your thing but is that code doing what you think it should be doing that's another layer of like you know trust and the way I think that we resolve that as a society and like what we can play a role is in insurance right so normally you know these are risk right so you don't know that a code all so imagine there's a travel agent it's booking tickets,

right? And I say, "Book a ticket from SFO to SEA." I'm thinking it's Seattle, but it's actually booked a ticket to Southeast Asia, right? And so, like, suddenly I'm like, okay, you know, now I lost my money and paid $2,000 to book that ticket. And so, you can use things like, but I know I'm talking to this model and you know, this model makes errors like 1% of the time. So somebody maybe like a niggon layer stakers can come and underwrite that risk as an insurance and say that this model makes an error 1% of the time somebody loses money because of that I'm going to pay back pay them back how by collecting money from all the people in the normal mode. This is exactly how insurance works. So that's the kind of thing that we can do for the the software you know

this code is running but this code did something mistake and so things like cyber security attack are the hardest because it is like a code I know this code's running but somebody figured out how to cheat this code and extract all the money from it. So then you are you're out of luck. Basically right now we need to know how to figure how to build systems that are actually more robust to that. That makes sense. Um okay sure. Um then um asking the same question that I asked Brian. Um what is the next six to 12 months look like for IGN zero on your end? What are you guys focused on? Um >> yeah I think Brian's totally right. like

our main goal is always developer adoption, right? So that's our kind of like we are developer platform so we want developer adoption more developers come and build on top of it. Uh we already like Brian mentioned after we posted this we got a bunch of people asking us hey how do I build a DVN using this framework so that's really what we want and other developers up taking this up and then going and building new and interesting things on top. Um so in terms of the underlying technology itself we will continue to research and evolve this you know uh both of us a portfolio of Andre and Horowitz and their research team has actually helped us a lot in thinking through like all these observability conditions I was talking about how do you attribute who's

actually at fault if a sequencer lies or if a if a DVN lies. So those kinds of things we will continue to evolve the underlying framework and make sure that you can actually like support a wide range of chains and conditions. Yeah. So that's so on our side we improve the underlying framework on the developer side adoption uptake and more asset issuers choosing these things and over time if something like this becomes the standard where I don't need to know who the developer is I don't need to know who the deployer is. I can just directly check check it's a cryptoconomic DVN it has X amount of state I don't need to worry about anything else I think that's our would be the good end state for us >> perfect that makes a lot of sense um guys uh I want to thank you both for

coming on this was really fun before you go um I assume everybody follows um both layer zero and I cloud um and is familiar with um what is happening but do you want to give I guess like what should people look into what what should people read about what should people be focusing ing on um yeah what do you want people to come with? Maybe I I can start um because we announced this new umbrella brand cloud right think of a cloud the underlying layer of the cloud is a data center the underlying layer of IG cloud is IGN layer because it's decentralized distributed cryptoeconomic data center on top of which we have these services DA compute and AI DA comput AI um so there is a huge number of new unlocks

for developers with comput and AI you can build many interesting new things very very quickly including things like AI agents, games, um you know uh agentic payments, all these things. So I would uh urge the So we just launched this developer website um let me just put the link here. I don't know if the users can see it but developers.cloud.xyz uh basically explaining some of these things. So um yeah excited for users the the viewers to check this out and build new and cool things. I think one thing I just want to stay like say abstracting out is crypto has been infra constraint

for a long time. I think with this with the set of things we are building here crypto is no longer infra. So there is for whatever you can dream up you can build today because you can use off-chain compute you can use onchain compute all the chains are connected with things like layer zero and I zero so you are you can build pretty much anything you can think of so but I think people are still stuck in the mindset of like where infra was like one year back or you know two years back I think the ability to express much much more complex computation trustlessly verifiably has grown so like the call to developers is think of new and cool things that you can build on top of it.

>> Yeah, I think for us it's it's it's similar, right? I think what we I've said it a couple times recently. I think people right now obviously a bunch of our attention has been uh that's been where we lived right now and we we've had a crazy amount of adoption. It's been amazing. I think stable coins have been a huge boon for us and we just continue to see growth in terms of numbers and metrics and how people are using it and what it's actually happening and uh you know rolled out things like we talked about at the beginning of this like direct deposit into hyperlquid and you know all of these other tools that just make it easier and easier for people to like do the things they want to do at the asset side. I think people are going to be really really shocked uh over the next

six to 12 months how deeply we've bridged the gaps into into some of the other sides of the market in the institutional side into the the sort of adoption across sort of like everybody who is now coming into the technology versus uh prior which I would say is like the more native side of things. Um, and so for us, if you are building, if you're interested in in building really any asset, any piece of technology, like we want to have the conversations, we're actively engaging with everybody across the board around this stuff, even just how you think and ideate around it, how you design mechanisms across multiple chains. Uh, but for anybody else who's who's listening, I think uh, you know, I think follow along and uh, you you should see more of uh, more of what you

have seen. I think the next couple of uh, you know, next year is going to be incredible. Very good. Very excited for both of you. Um guys, again, thank you so much for coming on. Um I really appreciate you taking the time. Thank you for having us.