DeFiDay panel - Crossing chains and Layers - Balancer, Figment & Aave

foreign [Music] so both for James are we good um so both for James and Jeremy could you start by just giving a very quick introduction of yourselves sure hey I'm James Perillo I work at figment I'm on the new opportu it's a proof of stake infrastructure provider amongst other things we provide staking infrastructure for over 51 networks right now across multiple ecosystems and uh I'm on the new opportunities team for the protocol team and we also do investing and I lead the VC arm of figment hi I'm uh Jeremy head of growth at balance for labs uh balance for labs is a core developer of the balancer protocol which is a amm automated Market maker that is designed to be um highly highly flexible customizable and dynamic so I think amm's um the way we understand them in general today is that they provide token liquidity for Traders I think that balancer goes beyond this concept by really acting as a primitive for developers that want to build a liquidity layer into any kind of D5 application or protocol cool thanks a lot yes Danny we know hello [Music] um so I'm just going to jump into it and lead with the first question um so layer twos Bridges and interchange communication has been a huge topic during devconnect I'm sure we've all heard a lot about it over the last seven days or so what is your team built or is building that could make your product more ready for this type of world and could you share your thoughts on these topics as they're so vital during this devconnect the merge Etc any of you can lead and we'll go from there okay so uh figma is a proof of stake infrastructure provider so as far as building uh we haven't built anything um when it comes to Bridges or l2s however uh we do provide uh infrastructure support and validate on we're waiting for l2s we're really excited for the opportunity to and we're waiting to see what decentralization and ltus looks like right now it's a question mark um but then on the bridge side we provide Bridge support for a number of different Bridges so right now we're supporting the test net for axillar we're supporting gravity Bridge chain uh which is both cosmos-based chains we are supporting Wormhole so we're one of the Guard one of the 19 Guardians on Wormhole um as well as like sommelier and Umi Umi have uh their own like iterations of gravity bridge and so while we haven't built anything we spend a lot of time and I've spent a lot of time over the last like six to eight months just thinking about bridges we've invested in a few Bridges and uh a lot of the trade-offs and we think about the trade-offs uh there's also like a super important osmosis vote right now for a canonical Bridge because they want to choose a single bridge for the UI and so we haven't built anything yet but we are always thinking about it and I'm really excited to talk about some of the some of the issues and you're definitely enabling it at the end of the day so uh the balancer Dao and Community has built a Innovative approach and sort of a scalable program uh called uh the balancer friendly Fork model and um this is a mechanism that I think community members um we're sort of trying to trying to solve for a while um how does balancer expand itself into other ecosystems in a sustainable scalable way without spreading thin the resources that are required to build the core protocol beautiful and so what we uh what we came up with was what you can think of as a franchise model where um we invite and welcome developer teams who wish to deploy the balancer protocol into other environments where it doesn't currently exist to develop a relationship with the balancer Dao there are some requirements in terms of how that relationship works um you know one of the one of the important ones is that um is aligning Financial interests so allocating a meaningful stake in a new newly deployed balancer Fork to the balancer Dow involvement in the balance for Community engagement and governance so essentially this means like we have come up with a mechanism that allows us to grow and to give other developers and Builders the incentive to to do that work and really benefit from it the first approved balancer Fork is called Beethoven X it's on the Phantom layer one chain it's been very successful and I've gotten a lot of traction amazing team and they're super engaged in the balancer Community they've made multiple pull requests for the balance area through mainnet code they make contributions to our project they vote in governance they speak they share their perspective on important issues so you know just to wrap this concept up balancer is growing on multiple chains and ecosystems and this is something we're going to see more of I anticipate and on the topic of bridging between these different environments um we don't we're not Bridge experts so I don't I don't think we see ourselves like building a bridge solution but we are excited by all of the developments in the space today it's probably the hottest area of of defy right now and uh yeah we're definitely see some solutions that look interesting to sort of bridge liquidity from one one chain one layer to another balancer itself is officially deployed to ethereum mainnet arbitrum and polygon we have a friendly Fork on Phantom we have another friendly Fork approved for Avalanche and we have other proposals that we'll probably be coming through to our community soon for other chains things who here has heard of a friendly Fork before because it was the first time I heard it this week and I was like nice [Laughter] stunning um yeah I mean I I think for for the other community the um bridging and and new networks has been always a way to kind of like um uh bring a lot of like inclusivity into the community and also kind of like reach out to new new communities and and expand like our ecosystem and uh I think we started kind of like very early and and pioneered it a bit in the sense that we we were one of the first protocols that deployed to to polygon um and I remember because like going back to those days you know there was still kind of like very um kind of like this ethereum like core maximalism culture and and I I personally I've been kind of like born and raised in ethereum community and it's my my kind of like a um on-chain headquarters and for the other proto-class wall um and I think we always being kind of like in in the in the position that we um we have always taken this kind of risks where we try to kind of like um um expand the culture a bit and and polygon was an interesting um um uh Network because there was a lot of gaming activity so gaming was one of the first things that that took off on polygon because there was avogochi and bunch of other things and um in nft ecosystem because it's very low cost to to mean that nft there so it already had a nice vibrant ecosystem but it didn't have much of the E5 so that was kind of like one of the first things we we did and and I think also um with polygon we somehow managed to come up with the idea that what if a like a layer one or a network itself creates incentives and kind of like tries with the incentives to invite the liquidity especially during the times when transactioning ethereum was was was quite high and still is and then quite similarly we we started to expand to other networks because with the concept of evm it makes very easy to to to scale to other networks and that happened essentially with with Avalanche and and a bunch of other of these networks with the bridging I I'm I love the concept of that you can Bridge from one network to another and you know you can choose where you want to um hang or transact and the the issue is that where I'm becoming more skeptical is is like how we can make these Bridges secure because we've seen different kinds of exploits some of them has been code exploits but some are just social engineering grabbing the keys of the multi-secant and then walking away with hundreds of millions of value so this is where the the kind of like the biggest issues are coming in terms of bridges and I know like in in version three we uh as you also the presentation um we we try to emphasize that we're now in a kind of like a multi chain universe and we have to find a way where we can bring Capital efficiency and that's how we along with the ports to to bridge liquidity seamlessly and fast between the networks but I I kind of think that where we might go in in further it's more of evolving the the layer 2 infrastructure because layer twos can scale quite um sufficiently and you can actually grab you can inherit the security of ethereum or or whatever the underlying network is so I think that will be the where the main liquidity will be Crossing and and we will see more evolvements you still like the the the the complex complexity comes where you have the way you have uh Roll-Ups now in ethereum is amazing because it's permissionless so anyone can create a roll-up um uh and and in some networks you kind of have have to have uh White listing or or become a um for a chain and whatnot so like the challenge comes when let's say Avalanche has subnets ethereum has rollups and polkadot you have para chains like then you you kind of like the ecosystem just expands within um like um like I um vertically like that but you still have a lot of capital going from one place to another so that's where like you still need bridging and and the challenges will be but we want to be a part there uh and we want to empower uh the bridges with the portals um but I I'm I'm just thinking that there's there's where the kind of like Oculus heel is at the moment yeah and that was actually my next question if if um Jeremy or James wants to add on is like where do you see the problems in having that you know either vertical sailing with layer twos or the the horizontal scaling in terms of cross bridging and things like this because it's not all roses [Music] yeah I think that there are definitely security issues as Stanley pointed out that's the biggest thing that stands out they're also like just kind of like practicality and ux issues um if you're for example using like like a bridge aggregator I feel like that's a thing that's like big right now like these um aggregators of different Bridges um to essentially transact cross-chain um you know front like coming from a DEX amm's perspective you're making a trade on a decks on on one chain um between you know between two dexes on two different chains by the time you bridge over from chain a to chain B um kind of in the conventional way of doing that the the price of of the asset that you're trading for has likely moved possibly significantly um so then you know you might need to have like a very high slippage tolerance it might be costly and what you might end up failing in if in like often um not that like no one is working on solving these but there are just some practical issues that can make it suck basically um yeah so like I think it's interesting so stani I think you mentioned uh you know l2's uh subnets pair chains all shared security models um that are leveraging the security of like some sort of main chain in order to secure the assets on these um Roll-Ups for lack of a better word or roll downs I guess for subnets I don't know but um so so shared security is like one of the the key components that seems like is potentially a solution for bridging I mean IBC is a is like I think personally the end game for interoperability but we'll see um in addition to that the bridge aggregators like scare the crap out of me um like what's what's worse like putting all your trust into one Bridge or uh just saying you know what let's throw them all in one together and hopefully none of them get hacked uh well that's like really scary um so but there may be value to that as well right because you don't it's like not All or Nothing um so uh yeah so I think essentially like where the trade-offs are and I assume most people already know this is that there's like a future trade-offs that people are making right the first like they think about it as like cost speed security um and maybe trust is security or maybe it's not security and so everybody has their own like preferences uh where they find where they want to put risk on where they want to take risk off and so like if you're looking for something really fast um you may you may have to like uh give up the trade-off is like secure and cheap right then like well you're not gonna get fast and cheap and super secure um using like a third-party Bridge it's like not a shared security model and so I think like different teams and or different individuals and and token holders will have like a different like Risk profile um and so like an aggregation of all of those where you're like well look I just want secure it's like okay well now you're combining secure with fast and other things so it's a really interesting space um there are new Solutions coming out consistently uh arbitrary messaging seems to be like the new um hot thing with like layer zero and I think Nomad is also doing it but in an optimistic way so there's like a little bit of a time and a Time trade-off for more security arguably um yeah so I guess I'll I'll stop I'll end with I actually have a question it sounded like they were like bridged like there's like a there's like a white list uh what are the qualifications for the white list is it a governance proposal are you guys going to kind of handle that at least initially internally first before you like open up the governance how are you thinking about that Yeah so basically there is kind of it's all up to the governance so they they can there's a framework in terms of um different kinds of um um like qualifications depending on on the reputation and and also the like essentially how the framework works is that a potential Port comes uh today of a community and there's a template uh framework and then describe their uh their project because it might might also apply to non-bridge that just wants to become important and has some sort of uh um use case and um the idea is that the governance will assist uh per board the the depth Gap and and reviews it periodically so it's very kind of like a um governance process I I personally want to see more um like governance minimization so maybe like there could be some sort of idea of involving maybe the uh some sort of a staking that could help to actually increase and and decrease the the depth gaps of of how how much you can get as a as a port liquidity um but at the current moment it's it's pretty much up to the governance uh to decide which which bridge to trust which leads me perfectly into my next question um ultimately with Bridges lots of there's lots of places where you can put liquidity but it's not also about liquidity it's also about the governance it's also about the staking and it's kind of causing arguably maybe a big diversification in the space of both attention and all of those things like you know how right now there's a lot of innovation happening in these space which has the consequence of this splitting like how do you see that evolving types of tools like what you just mentioned or ideas on where you see that going in the future um I would just comment like I think one of the challenges that um I think there's you know several teams working on solving is when you when you shift from a uh you know transacting within one chain or within one layer one environment to a cross chain cross cross layer transaction you lose the ability to perform like Atomic transactions where there's one transaction in which one transaction which contains multiple transactions I guess and I think that's a it's a huge benefit of you know in today's landscape transacting um in one environment but replicating that experience as much as possible um I think would be really key to the space um what's the question like diversification so I'll read it directly how do you envision governance taking liquidity on multiple chains at the same time it's a great question um I have a feeling it's going to be that arbitrary like cross-chain messaging is going to be like the solution it sounds like um at least so far uh for I just keep I guess Shilling I uh like IBC but um there's uh there's they're coming up with like interchange accounts and so interchange accounts will allow you to like control um assets that are held on multiple chains through a single account and will allow you to like be able to vote on like depending on whether you're holding tokens on like this L1 or that L1 you'll be able to vote from a single account so that's kind of um interesting um but I just yeah there's the slido asked in a minute we're going to get around to the questions and so yeah like that's the place to start to contribute to those unless you're eager or ready to ask you're really eager yeah go for it aggregated IBC Bridges do you like them uh well so here's okay so one thing we haven't talked about yet when it comes to Bridges which is probably like a like the the red herring is like composability um and so composability meaning that you know the let's say you take Ethan you move it over to polygon and you use two different Bridges right so you have like this bridged version of eth uh those two eth are not the same eth you can't like you have to trade those for each other right so both are ious uh or like some sort of like code check and so you can always go back to the old chain assuming and try to get your coat when you give back the like the the code slip hopefully you coach there and the coat wasn't and the and the the dressing room wasn't robbed um IBC actually sees the same issue if you go from uh let's say We'll name three like Cosmos chains right so like or four so let's say you go from uh Cosmos Hub to stargaze to osmosis uh with your with your atom and then you go from Cosmos Hub to Yumi to osmosis uh and that's just the path that those transactions that that IBC router took those assets are also not um composable like you you they are not one in the same they can't go into the same LP the same pool and so ultimately where like the exciting part of uh like pair chains are is that and what maybe the cosmos Hub was supposed to be was that it was supposed to be like sort of like this this router like the Hub right and so all transactions would like bridge to and from the single point making composability like a better like an easier solution right where you won't have like multiple iterations of the same asset um just floating around all over the same I guess a single sort of like ecosystem um which I think is super compelling and super interesting um so from an aggregator perspective uh I haven't heard of an IBC aggregator yet but um yeah yeah I I I'm also like very um excited about IBC I think it was more like first love in terms of like bridging messaging between different protocols and I think also like maybe uh what could be interesting is that if there's more kind of like a frameworking between networks and because usually all the developments in different networks it's it's quite siled in the sense that you know the ethereum community looks into you have the Improvement proposals um application or the infrastructure um and and different networks they and communities they look what other folks are doing uh would be cool to see some some sort of a framework where everyone comes together and thinks how to kind of like improve the the whole underlying infrastructure that is more um could talk more to to different networks and more more compatibility that will be that will be like a good for for everyone and um I guess because the the bridging is just one issue but I'm pretty sure that there's going to be other technical challenges over the line that you know you have to as you you have the same users just using multiple networks so you kind of like have to figure out uh like more Universal Solutions as well cool thanks for sharing um just for the audience and also if anyone on the live stream are going to ask questions in probably like five minutes or so and I'm just going to work my way through the last question maybe two that I have is once Layer Two start introducing their incentive programs how are layer ones going to still compete for the whales that are looking for the returns the yields and also other users I don't think they're mutually exclusive I think they can live like together um friends so that's my short answer friendly incentives oh yeah I agree as well because um I I think people should transact pretty much where they feel they're part of the community um because it is what what the incentives are doing is that they're you know it's not the incentivizing you only to to kind of like bring your asset and and into your network but it's also like uh giving ownership of that community and I think polygon innovated it quite quite interesting way because they they started to give those incentives to to users and to to to different protocol users and based on the liquidity and and you you suddenly have a stake uh in that ecosystem more and more so um that's that's one thing and I I think everyone wants to have like more than one um kind of like a favorite protocol and and network but eventually I uh you know with the layer twos what's fascinating is that um not just that they have separate communities but they might have separate use cases so you might see a layer Layer Two that just focuses on um specifically on payments and has interesting uh economics in in the in their underlying Network or focuses on let's say gaming and you know you have different kind of audience there so um I I think and for the underlying like the layer ones um it's all good um business because they're settling their transactions and and the future ethereum could look like you know just a place to store hashes and do very minimal competition and then you have this um like a bunch of uh layer twos then then um where where you have the most transactioning um adding to a point that was just made um these incentive programs they bootstrap liquidity they also boost that bootstrap community and they also bootstrap ecosystem liquidity is the most fleeting of those right it just kind of flows very freely from from one place to another depending on where it gets most most Roi um Community is more solid when you build engagement and you and you create a community that doesn't necessarily get up and leave so easily when um when incentives um are more attractive somewhere else and the most solid is an ecosystem of Builders right and I think that's what these incentive programs Target the most is um it's it's like attracting settlers to come and and build and plant roots here and when you when you build um like a protocol you are making a significant investment that is not easy to divest and and move um just kind of get up and leave necessarily um also composability plays into that very much so if you if you do this well then you build an ecosystem of builders that compose and integrate with each other which makes it even more sticky for them to stay and even it makes it even more of a long-term commitment so um I think yeah layer twos have been lacking in competitiveness because they have not had the ability to deliver these incentives um I very much look forward to them having that that Firepower and and seeing what they can build and who they can attract and I think that the l1s that have successfully attracted you know strong ecosystem growth um cannot lose it overnight yeah it'll be interesting to see what those incentives look like right if you look at like the pair chains for polka dot for example um the collators are like you're not there's no security there's no the security is like secured by the relay chain right the security of uh these l2s on ethereum are secured by ethereum and so like what is the need to stake is there a need to stake how distributed or decentralized and how many sequencers does a roll-up need well arguably one because there's l2s right now that are operating with one sequencer so um a that's sort of a single point of failure although there are Escape hatches but like what will the incentives look like um is a super interesting question and like you know there's there are a pair of chains that are offering you can stake your assets it's really just like sort of like an incentive it's like an inflation for inflation's sake um to get so it would be interesting to see what happens we'll see all right I'm going to jump into the audience questions which is the first one is what percentage of your community is today actually using blockchain for real life transactions as opposed to investment speculational solution building you know I think like there's sort of transactions that um especially within the webpray community where uh there are a lot of people who take payments uh in uh in stable coins might be salaries or or um contract work so like within the ecosystem uh quite a lot but of course outside it it's it's it's a different story but really um if you go to certain countries for example like um uh Argentina um I mean every you know almost second person holds holds their crypto uh but also they transact quite a lot uh by uh using crypto but uh what they're actually using is uh does anyone know what what people use in Argentina for uh transacting with crypto which network lightning Yeah well yeah basically binance database so they in binance you basically can transfer funds to another account to your friend and and Throne is the second second uh most popular so um you know transaction costs matter but also it shows that there's actually real demand there um for crypto payments and it's convenient and I I personally think the the um the Roll-Ups are the way to go uh especially with stable coins I think stable coins should be they could be minted in a secure network with with collateralization let's say for example ethereum but then the actual distribution um uh and and and and the the use can happen on on these Roll-Ups because you can minimize the the cost or or even bear the cost for the uh for the network and I I think actually we have now first time ever for um uh uh this kind of like a situation where we could actually see a stable coin on a roll-up that's going to get adoption like organic real adoption uh either on internet payments or replacing binance uh uh in in our Argentina so I this is something I'm expecting quite a lot because um this this was very difficult to achieve before I mean when you pay five dollar coffee with with uh ten dollar transaction fee that's very hard to argue but now with Roll-Ups you can actually uh achieve um a state where you know stable coins are used in in real economy that's fascinating yeah and to build upon that one of the other questions here is nobody wants I quote okay no one wants l2s everyone what just wants cheap fees what still needs to happen before users will not know slash care where their money is at anymore because I think that builds apart from what you're saying I think that we should also include in this equation the developers that were like aware do they want to build solutions for users to use and they have different considerations such as security so um I I I agree with the sentiment of this of this question which is that the end user is um you know doesn't it doesn't care as much of what the underlying infrastructure is that's normal that's how it is that's how it is in any like technology that we use in our in our daily lives um like I don't know what satellite systems use when I call people on my cell phone and I don't care I just care that it works so same principle applies here but um yeah I guess the point that I wanted to make is that the users ultimately will use the best products and and we'll go flock to the best experiences and those will be built by the developers that kind of choose the best infrastructural layer to achieve those goals yeah so like another just to build on top of that it's uh it's gonna like the question essentially is like also asking like when do we get to extract away what chain we're on and we're just transacting um which is ultimately going to require like a lot better like tools and like middleware so like for example Dora like search it search on doors trying to do like a uh um Buck multi-block chain multi-bridge Explorer right and so what that should hopefully do is like it shows you kind of like where your assets have come from where they went and where they are now like that's the type of thing that's going to need to be like it's going to be like required in order for people to know where their assets are and then ultimately like wallets that can be like a multi-chain wallet where you know it just shows all my assets it doesn't quite actually tell me which or maybe tells does tell me where they are but it doesn't really matter I can just send eth whether it's on the L2 whether it's on the L1 like that's the one I want to send and I want to send it there and I don't care about anything else just do it dreamy dreamy all right um we got time for two more questions we're already over a little bit but I want to give you guys the opportunity so place your votes now for the next two questions I'm going to ask the one that's the top um actually no you just answered that and so the second question is an IBC question Fanboy um IBC is the core interchange security layer why shouldn't the lowest layer be protected by the largest Capital brackets eth uh no um so the way that IB like IBC is like built into the protocol so um it's it's a function of just being able to enable the connection um and then it's there uh you know the one thing that if I was to like change one thing about IBC it would be that relayers currently are not like being incentivized to run relayers it's essentially like a public good and people are just doing it out of the kindness of their hearts um which is weird for crypto usually there's some sort of incentive and so an incentivized version of IBC is probably like I would assume the way to go maybe um if anyone's building one let me know uh but I think there's like different models um you know a security model I mean the other thing about that is that what that does if every cosm if that Cosmos ecosystem all has IBC then arguably like that's like 140 billion dollars that's securing um IBC it's not just one chain it's all of them um and so that is a I think that's a compelling use case for it and the more change that can enable it like so Solana should be able to enable it ethereum arguably could enable it without changing too much other things and all of a sudden you know we're all connected cool um but there's a joint first place so I'm not going to ask the the questions that are here but I will ask as a closing comment is there anything that you would like to share with the ecosystem words of wisdom an opportunity that you think someone needs to build and fix that problem we can go one by one okay I think one important aspect is the governance um and and endows so I I think like uh there is a lot lot that we can improve in the the the governance tooling that's that's one thing uh but also making voting um less painful uh less costly um Ave has a cross-chain governance module so we we tried to innovate a bit uh further um as a cross-chain protocol where um you know you can vote on a a proposal that has been polygon and vote on on layer one um other stuff we are looking into is how um you could actually use starkware as well to to vote on um on proposals and and then um submitting them on chain but I think this area is like heavily um under explored in my opinion and we just need more more tooling and and and more flexibility and also uh different kinds of governance models so we have like the most common is the the like uh one vote one coin um idea um but they could be arguably other governance uh models based on some other merits or some some new systems so I think this is like very heavily under explore area if someone is looking to build something this could be very interesting cool thanks Jeremy yeah um I'll just share something that's on my mind but um you know thanks to partially thanks to study throwing such good parties you know my I'm running at low capacity but um something that's on my mind like when you try to scale a project or a team in this space I think you quickly realize that there's not enough uh talent and like resources within this space for us to actually grow the way that we need to um and so what I mean by that is it's like it's very important for us to continue to kind of onboard people from other Industries and other you know disciplines into web3 that is the fuel that we really need in order to grow this space in order for the projects in this space to really really scale and really you know be have the resources that they need to to make the kind of impact that we can make and I'm I love seeing that I think these conferences are always a great opportunity to see that there are really bright um passionate people who are sort of being attracted but I think as a community as a whole we need to continue to remember to like open the doors and and really you know reach out and and bring more people here um and educate don't chill yeah and um I guess so I'd be like incentivize IBC I think I said I would I'd like to say um but other than that uh I guess both great great things both you guys have great things like I think vote I think like just actually using those governance tokens and actually learning about like the network and the or the project or the protocol that you're that you're like holding tokens on and then actually participating in governance uh is a super important and like often uh delegated away to other folks um and so I just think if there's one thing I could say about that it would be like just like try it see how it works see why it doesn't work or why it does work and and what would you like to do differently about it and what would you like to see differently about it um there's a lot there's a lot of interesting governance for us out there there's a lot of like mob mentality votes out there sometimes um and so it's just the more you engage in the space uh the more the space engages back with you and like ultimately we all learn valuable lessons either the easy way or the hard way but we learn them together so thanks for the time also Jonathan thank you guys please give it up for these amazing panelists thank you [Music]