Secure Crosschain Apps: the next wave of innovation - Max Lomuscio | Connext

hello everyone lunch time so I appreciate you guys being here my name is Max I work at connect we Define ourselves as the HTTP or web3 which means we are trying to build we are building we build a secure communication protocol between cross chains it is able to perform cross genetic execution and I'm going to Deep dive into that and explain what are cross-chain applications and why we believe they're really the next wave of innovation for the space so first of all we need to talk about what are cluster applications we call them zaps and they're big they're a big difference between the current state of doubts that are basically multi-chain so a multi-chain that is is an is adapt that is deploying a multiple chains with separate isolated instances so the same code is replicated across the different chains and and they work in a very isolated and isolated manner a typical example is our friends at Abe they have deployed multiple chains and each chain as a different Landing Market is a different money market that is isolated from the other ones which means that as a user I need to look at the different opportunities on the different chains and then if I want to use one of them I need to bridge my fans there I need to take care about the gas and that obviously introduces a lot of friction for Less technical users a question app on the contrary is an application that is able to interact with different chains at the same time and this these chains are interconnected with each other in a very very secure way an example is is fujidal fujifinance which built a cross chain lending aggregator protocol which means they are able to tell the users hey you want to deposit a collateral which which is for example you want to borrow some tokens like usdc they will find the best opportunity for you across the different protocols whether it's compound it's other or another one but they will also find the best opportunities across the different chains so your users don't have to do not have to think about what happens in the background you can just select what are your priorities and then the the protocol Fuji in this case will take care of you I will take care for you of spotting the best opportunities and moving across the different genes so why are that necessary um as you as you as you know already you know we are living in a multi-chained world meaning there are already plenty of little ones and we are coming to a new area where spinning a new layer 2 is getting very easy and so we're going to see hundreds and thousands gradually of new layer twos and layer of trees they will gradually create a very very fragmented user experience so the liquidity is going to be fragmented across the different chains and layers the user is going to have to be able to manage all the different on the different chains and this is of course like creating more friction and actually um reducing the possibility for new users to get on boarded in an easy way so why do we need discussion applications well the idea for Builders is that with the cross chain up with a zap you can actually access the users the liquidity the data that are present on every type of ecosystem on every type of chain in a secure way so if you want to integrate a protocol that is deployed on a different ecosystem to where you're deployed you can now interact with it if you want to access it to liquidity is data you can do it if you want to onboard users from from a chain that were their funds so if a user has funds on a different chain to where you are deployed you can now do that and this kind of produces a new level of experience for for our retail users for you know the ultimate consumers of these applications where they don't have to think about it you don't need to think about on which chain adapt is deployed on uh compared to the change where they have deployed where they have funds where they hold funds because the whole uh experience the whole question experience can be abstracted for them the whole chains the whole technological stack can actually be abstracted for them and that like simplifies extremely the the overall experience if you think about it that that makes sort of sense like if you if you are if you're going on YouTube all you want is to watch your favorite cat video you don't care about which cloud provider the the website is using you don't care about on which storage the the video is actually hosted all you want is to have an experience with your application so why is web3 not doing not providing the same experience we need to get there and that's how cross-chem protocols empowers you to to create this type of experiences so we really want to go to a situation where a user need to open metamask opens his favorite wallet and select the network where it needs to when it needs to go to think about the gas think about how how do I get there I think using a bridge UI to actually creating applications that tells you hey you have some tokens whatever they are with one click you can deposit into a board and this is the case for mean Finance which is another project this is integrating with us that allows you to do DCA dollar cost averaging operations in a very simplified way so now the question is okay I I like this this idea I like this approach I like the the idea of obstructing the chains and creating these custom applications I can see the utility but is cross chain like our course cross chain introduces new type of risks so can question really be secure because of course we are now we have this you know almost secure like let's say a relatively secure ecosystem the different blockchains that exist but they are disconnected from each other so is it possible to connect them in a secure way otherwise all of this doesn't make sense and for for costume all you have to think about it really is who has the power to rug me who has the power to steal my funds and how much does it cost to corrupt you and so over the course of the last years several Solutions have been created and each of them has their own trade-offs um so I've kind of like categorized them into um you know broad categories this simplification but it kind of like helps you to understand what are the different trade-offs in the space and how we're trying to overcome them so the first category we call them not native Bridges and it happens where all the validators on one chain are validating the transactions on the other chains and these are the examples of Cosmos and the IBC protocol it's very trustless and very trust minimized an example of these are all abridges where all the validator all the um ethereum validators are validating the smart contracts for the roller Bridges so this is a very secure way to perform question transactions to move between ecosystems but they have an issue the limitation is that this type of communication is not generalizable meaning it's very specific on a certain path for example if you want to go from arbit room to ethereum or to ethereum from arbitrum the the connector role the bridge the role at the native roller bridge between ethereum and arbitrum is trustless is very it's very secure but it's only it only works for the for the past between arbitrary material right so you need something that is more generalizable so other projects I started saying okay let's create a an external entity uh that basically is in charge of validating what happens on one chain and then can let something happen on chain B um this is the case for multi-stix bridges for example this is the case for a set of external validators this is the case of bridges that are powered by oracles what's the issue is that in this case you're creating a third party that actually becomes in charge of validating these cross chain transactions and the third party is not as secure as ethereum of course like it's not as decentralized it's not as trust minimized as the big blockchains so it becomes a point of attack and if you think about it like if a bridge has locked at one billion in value and only cost is to buy this token for 50 million 100 Millions it just becomes an economic calculation to say okay that's that's how much that's how much I can access by hacking this bridge and if 100 million sounds a lot to you think about the power that is more government or a big Corporation can have and they have this economic possibility to actually attack this type of this type of infrastructure so the issue with this type of bridges is that they are not trust minimized present a centralized a single point of failure and therefore they're not the right solution to go for a third type of bridge is the what we call optimistic Bridges so these uh they are based on the principle that it's impossible to verify that something that has happened on one chain is valid from the other chain but you can what you can cryptographically verify is that from what from chain B I can actually demonstrate that something didn't happen on chain a so the idea of domestic Bridges is that I can bring a transaction from chain a to chain B and this transaction is quarantined for a certain amount of certain amount of time let's say 30 minutes one hour and during this 30 minutes any Watcher anybody who is watching the chain can come and say hey this transaction is not valid and slash it so there's a very secure architectures because all you need is one good actor monitoring the space watching the chains that is able to say hey I am not you know this is not this is not true this is not correct and so the transactions get flashed those the what's the trade-off of course with double bridge is that they have latency so you need to wait this 30 minutes you have to you need to give some certain amount of time for the Watchers to come improve and prove that it's not a valid transaction so how we're trying to solve this we built what we call a modular system that basically breaks uh breaks the bridge into different layers the first layer is the what we call the transportation and verification so we we looked at the space and said okay what's the most secure path that exists today between I don't know to a rollout for example well it's actually the same roller Bridge so we plug into the same roller Bridge and we use that to communicate between the different chains using ethereum as a hub and when that is not available we have an optimistic system on top of it that connects I don't know two different layer ones where there is no native bridge that is there will be trustless otherwise and so this creates a another issue which is the latency as we said before so we created a third layer on top of it which we call a liquidity and execution layer that were basically there are liquidity providers on the receiving chain they said hey you users should be waiting for 30 minutes before having your your cash or your tokens on the receiving chain we will give you the cash for you in exchange for a macro commission for a macro fee and then you can go and do what you want and then really liquidity providers who will wait for this low refund coming from the optimistic path and the good thing about this layer is that it can also be an execution layer layer so this is what we're focusing on it's it's a layer that allows you to execute transactions on the destination chain all with one click all with a smooth experience for the for the user so for example you can do a bridge and deposit on the destination chain a bridge and a swap on the destination chain all in a very seamless way um this is how it works for as an example as I said we use ethereum as a central Hub so if you want to go for a binance chain or a chain that is not directly connected to ethereum we apply an optimistic mechanism so there is a that's a more secure way to currently conduct these two chains and then if you want to go from ultimately to optimism we plug into the native bridge and in order to speed up the whole process we have this fast network of fast liquidity providers they give you the caching needed so the beauty of it as we you know wrapping up all the whole topical of this of this of this chat is that with this with this type of Technology you can really build custom applications so it becomes a platform for developers to build cross-chem applications uh the the you know user interface is very simple it basically tells you okay I want to interact with this smart contract on the destination chain with this token and I want to do this and so this unlocks is really like a universal possibilities we're really starting to scratch the the surface of what can be built but I'm going to present to Showcase you some examples of things that are being built and hopefully Inspire more Innovation and most more things that you guys will will actually develop uh the first use case as I mentioned is what we call chain abstraction so the idea that my dap can only only needs to be deployed on one chain and then the users can be on board that the users can be can interact with them adapt from any other chain so let's say that I have evolved and I want it to be any users to be able to deposit from whatever change they are so you know from the thousands of layer tools that will come up I don't I will not need to deploy on every single layer too I will just allow this onboarding Universal onboarding into my chain and so I'm on another chain I will only pay gas in my in the native token of the origin chain but I'm able to interact with the with the DAP on the receiving chain which kind of like simplifies and abstracts all the technological stack as we mentioned before but this is just one example you can do really a lot of things one thing is cross chain lending for example Imaging a lending Market that allows you to deposit collateral on one chain Ease on ethereum and then allows you to borrow um you know a stable coin on another chain polygon or whatever because that's what the user wants in the moment that's where the best rates are Imaging a dial that sets up is headquartered on a specific chain but then as the necessity to manage funds on on on different chains now they can do it with this question Communication in a very secure way they can distribute the treasury if they want to pay their members on different chain they can change the smart parameter on a smart contract on another chain they can actually deploy full smart contracts on the different chains imagine a project that is on on an expensive chain like ethereum Minette that wants to go to another another layer another ecosystem to be able to fractionalize the it's in its nft now they can do it and it's very simple and it's very secure so the idea is this is a generalized protocol that allows you to build a lot of good things and we hope to spin this this new wave of innovation for for developers and builders okay um so that was the end of my talk I just wanted to um you know leave this this this room with basically three takeaways uh the first one is every time you think about cross chain you have to think you have to ask okay who has the power to rug me how can you know who can potentially corrupt this system to steal my funds the second takeaway is I can I want to build a question application because I want to be able to be composable with the whole ecosystem with a whole series of universes that are coming out the layer of tools the layer of trees I want to be able to access the liquidity I want to be able to access the data that exists anywhere everywhere and more importantly I want to really simplify the experience for users we are coming up to this fragmented Universe where you know we're leading into this fragmented fragmented Universe of what tree we want to be able to abstract completely the technological stack for people we want to be able to interact just with adapts without having to think about chain we call it chain abstraction there is a toolkit that is already able to as a builder you just need to import it you don't need to do any additional audits because it's built on top it's a layer built on top of your smart contracts and it really changes the the level of experience that you can provide to um to your dap applications thank you so much my name is Max I hope you guys will get in touch and if there are any questions I'm happy to take them right here