Building an Interoperable Future with Cole Enright, Ryan McNutt and Dustin Byington at AGMI 2022 (Episode 331)
Building an Interoperable Future with Cole Enright, Ryan McNutt and Dustin Byington at AGMI 2022.
This panel includes:
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The following transcript was created using artificial intelligence. There will be some grammatical errors below.
00:00:00:01 – 00:00:32:04
Dustin Byington: Beginners intermediate. Advance. Okay. A good mix of all three. Make it balance. So we’ll just, like, jump in. We’ll get to our intros and stuff. But you’ll hear mostly, you know, kind of hear about what’s going on and the interoperability where all that, you know, lots of names. First of all, your cross-chain blockchain or operability protocols, internets of blockchains can be a little bit confusing. So why don’t you kick us off by, you know, defining what interoperability is?
00:00:32:27 – 00:01:11:23
Ryan McNutt: Yeah. So essentially, when you look at all these different blockchains that are out there today, you have Ethereum, Solana, all these different kind of things out there. It’s kind of like if you look at different financial systems today. So you have like the United States and you have like maybe like Argentina, they have like maybe Great Britain. And each of these things kind of like have their own separate like banks that they like. All those citizens can go to. What really needs to happen is like we have this swift system where we can move money amongst all of them, right? And we have other systems where we can effectively like send money through like banks that it can like kind of bounce around.
00:01:12:05 – 00:01:21:12
Ryan McNutt: We need something like that in the crypto space. So essentially, we need to make everything in or work together in a similar fashion. So that way
00:01:23:17 – 00:01:26:03
Ryan McNutt: these blockchain can interconnect and talk to each other.
00:01:26:29 – 00:01:29:26
Dustin Byington: Nice and cool. Why? Why is this important?
00:01:30:06 – 00:02:05:03
Cole Enright: Sure. So really, I kind of think of it as any computer that’s able to talk to another computer are the system’s able to pass information back and forth in a meaningful way where both systems understand the data. So this is important for, you know, any business, any organization, all of us at an individual level. A simple example that a lot of us see, just having your bank accounts, your credit cards, debit cards, integrate with your Apple wallet, with Apple Pay. Perfect example of different systems being able to talk to each other and then create value for a business or a customer.
00:02:05:14 – 00:02:26:20
Cole Enright: So in today and where we’re going today, we’re seeing that those needs explode and the types of use cases grow and grow and grow and the amount of data that’s needed to pass back and forth between these different systems to enable those features to happen, it’s exploding as well. So lots of new challenges in this space.
00:02:27:13 – 00:02:35:29
Dustin Byington: Cool. Could you tell us a little about your background and some of the pain points that you’ve experienced and you bump into with the lack of interoperability?
00:02:36:10 – 00:03:09:28
Cole Enright: Sure. So a little bit about me. I work for the Bar Foundation. I’m the director of analytics there. And my primary job there is to answer the question, what are our grantees doing on chain? So we give out grants to organizations building on our blockchain to increase the value of the network. And that’s only going to be successful if the grants we give out actually translate to network activity. So a big piece of what I do is I measure the network and associate that with our, you know, traditional web to database to answer that question.
00:03:10:00 – 00:03:41:00
Cole Enright: How many transactions are they doing? What’s the value locked on a grant level? How many accounts are being created? How many active users do we have? And to do that, I have to I had to build an integration between our blockchain and our traditional our Salesforce database. So that is one example of, you know, how we need to bridge, you know, an example of interoperability adding value there. Before I worked for the H Bar Foundation, I was working for Twitter, helping them bridge their databases together.
00:03:41:23 – 00:04:03:27
Cole Enright: And before that, I spent time working in the managed service integration industry, where companies will pay tens of millions of dollars to other companies just to simply build point to point integrations to make their features work, to make their products work. It is it’s not easy to do, and it takes a lot of a lot of work and a lot of people to create those bridges.
00:04:05:01 – 00:04:16:02
Dustin Byington: Thanks, Paul Ryan. We tell us a little bit about what you’re seeing is the kind of state of the art in bridging or cross-chain communication. And also give us a little bit about your background here.
00:04:16:04 – 00:04:48:19
Ryan McNutt: Yeah, so bridging out there is pretty broad, but it’s kind of falling into a couple different categories. So you have like what’s called a burn meant bridge, which is like what circle uses. So each of these tokens that you have out there have like essentially an issuer. So someone who created this and can issue out the tokens, create them and destroy them, those are like seen as like the most secure. I’m a big fan of those because effectively they can you can give them like say, like usdc or like their token they can take that, destroy it and then reproduce it on a separate chain.
00:04:49:24 – 00:05:24:09
Ryan McNutt: There’s no real way to or at least from what we have seen so far, there’s no really hacks or anything like that on that side. Then you have like the more like wrapped token base, which there’s a decentralized and there’s a centralized version of this. The Bitcoin is more like a centralized version. So essentially it’s one body that’s like wrapping this thing and then like handing it off. And they have a decentralized, which that’s kind of where you’ve seen all the hacks and all these different problems. But essentially it’s all at a protocol level. So everything is handled by smart contracts. The two blockchains they built out of communication protocol between the two blockchains, they talk to each other.
00:05:24:27 – 00:05:36:05
Ryan McNutt: One essentially says, hey, I have the funds. The other one says, okay, let’s put that in a contract to hold it and then reproduce a grab token or like a derivative token on this destination chain.
00:05:38:11 – 00:05:44:25
Ryan McNutt: As far as like bleeding edge, each of those are kind of having their own different faults. But I do like the Bernie Mint Bridge.
00:05:46:13 – 00:06:06:25
Ryan McNutt: As far as my background, though, I’m the founder of a company called Sphere One. We’re building an abstracted Cross-chain payments platform. Essentially, our idea is to abstract the overall experience for the user, which is like a huge hindrance for adoption, and allow people who have tokens across multiple chains to seamlessly purchase and buy things with that.
00:06:08:12 – 00:06:23:29
Ryan McNutt: Before I was doing this, I was I essentially have founded a couple other different companies in the past. Both my parents were entrepreneurs, so I’ve been in the space for a while and I’ve seen it growing up, which is pretty cool, and I’ve been coding for pretty much since I was ten. So it’s been been fun.
00:06:24:24 – 00:07:03:12
Dustin Byington: That’s where I think of the bridging. I break it down a little differently and in my mind it’s because it’s like a lot of like tactics are ways that you can like move information from one blockchain to another. But the the standard that I’m seeing emerging is IBC. And within that Cosmos ecosystem and, you know, full disclosure, I’m a huge shill for them. So I’m wearing the shirt just to make it real obvious. I was a co-founder of Tendermint, so I’m speaking in my book. But the thing is that I think the market is responding really well to with IBC is the fact that the validator set is the same as the protocol validators.
00:07:03:24 – 00:07:37:06
Dustin Byington: So you get all the security from the protocol validators without needing to like stand up this like separate group of validators that, you know, often times when you do these kinds of like Burning Man or these other things, there’s like a group of people that are controlling that validator set. And so then and that, you know, with a relatively minimal amount of liquidity compared to the whole Protocol’s liquidity and all the decentralization, that’s at the protocol level. What do you think about IBC and their approach? Do you think that that’s.
00:07:37:20 – 00:08:00:09
Ryan McNutt: Yeah, Yeah. I mean, I’m up here, totally forgot about IBC. I feel kind of bad, but no, I’m, I’m a big, big fan of IBC. There’s actually I met some founders of a company called Palmer Labs. They’re essentially bringing IBC to other blockchains, so they’re trying to bring it over to Ethereum and pretty much anything else they can get their hands on. They’re doing some amazing things if you haven’t seen their project.
00:08:00:25 – 00:08:31:00
Dustin Byington: Yeah. Layer Zero is also doing some things to extend IBC compatibility effectively. IBC natively, you need to have maybe a little too technical, but full white client support on each blockchain and only works with proof of stake blockchain. So it’s sort of like just imagine like natively IBC only work with a subset of blockchains that are proof of stake and like opted in to work with it. And now some new technologies like the one you mentioned in Layer Zero, kind of like expand the reach of IBC.
00:08:31:17 – 00:09:04:18
Ryan McNutt: And so this is like a big theme when it comes to standards and who’s going to win and how are we going to kind of have this true interoperable world, you know, in this room and around the world? It’s like in my mind it’s there’s like one major player and then there’s like a bunch of technologies that facilitate them in or operating with all the other kind of like smaller players. But what do you think? What do you guys think? Do you think it’s a winner take all when it comes to bridges and interoperability? Or is it just and this is a massive, massive mesh and bridges and yeah.
00:09:04:29 – 00:09:37:16
Cole Enright: So I think there’s definitely going to be some some standards that emerge that most people adopt. You know, going back in history we’ve seen rest API is really take off is how people move data back and forth between systems at high volume. And I’m glad you brought up burning bridges because I really like those specifically the circle one that you brought up. Very simple to make that API called to the central server that circles running. And you know, let’s say you have usdc minted on Ethereum and you want to move it to the avalanche chain or the bar chain.
00:09:38:20 – 00:10:00:00
Cole Enright: It’s just one API call away. So that’s really powerful. Developers can just hop into that and start making that. And I think that’s kind of what’s going to determine how much of this gets adopted and how quickly it gets adopted. And we’re starting to see those. I think we’re starting to see those players emerge with the IBC and the chain link stuff as well. So I’m very.
00:10:00:02 – 00:10:16:13
Dustin Byington: Excited. Yeah. How are you seeing it since you’re in the we. You know, building and tooling that’s connecting all sorts of different chains. How are you seeing the like the development toolkits emerging and the documentation support I. How hard is it to use these new bridges and this new interoperability technology?
00:10:17:27 – 00:10:54:14
Ryan McNutt: It’s been pretty fun. It’s depending on which projects you’re looking at. They have varying ranges, the amount of documentation or support. Sometimes you can actually just talk to like the developers themselves that are working on the projects, which that’s been extremely helpful because that kind of gives you a little bit more of a not just a way to like kind of understand what’s going on behind the scenes, but like also like kind of a support system. So like if you’re having an issue integrating something or using something, they can kind of help walk you through it. But yeah, it’s, it’s, it’s kind of varying, depending on like, I guess like project maturity.
00:10:55:15 – 00:11:05:08
Dustin Byington: Do either of you have any thoughts about like killer apps that could emerge that aren’t feasible now because we don’t have proper interoperability?
00:11:06:11 – 00:11:39:07
Cole Enright: Yes, I can think of a several that are simply limited by the data volume, specifically with blockchain data. Pretty much all of these projects are generating tons of data. Any project that’s, you know, has a lot of transactions is generating more data than, you know, you could load up onto a spreadsheet very easily. It would crash your computer. So I think there’s a lot of hardware limitations for just simple code running loops on this data to try to run simple analysis, just running basic scale queries that are it’s challenging to get the data.
00:11:39:19 – 00:12:13:08
Cole Enright: So right now there’s I mean, yeah, any sort of ML application, any sort of machine learning or AI application really needs all that data crunched quickly. So I think there’s a hardware limitation right now and I look forward to seeing the hardware side get smaller and faster and consuming less energy. I think that’s going to unlock a lot more applications, specifically in the data science side, which is where I get really excited about about the future having where interoperability is more, you know, it’s more widespread throughout more applications.
00:12:13:18 – 00:12:28:15
Cole Enright: Those, you know, the machine learning algorithms and AI applications, we’ll be able to acquire more data, bring it together and come up with new insights that help all of our applications. That’s where I get really, really excited about the next like ten or 15 years.
00:12:29:03 – 00:13:03:05
Dustin Byington: Yeah, I’ve seen some data aggregation plays because it’s important to get those on chain because what’s effectively happening is a lot of that’s happening off chain currently because of the problem I mentioned just there’s just bandwidth issues. And so like as soon as you pull that information off chain and you try to like synthesize it or clean it or whatever, then you can’t, you know, you kind of lose all the trust and everything on chain. Like, how do you know once they cleaned it, they didn’t tamper with it. So I think that’s spot on. And then I don’t think enough people talk about how much interoperability impacts a lot of these like data plays.
00:13:03:13 – 00:13:04:07
Dustin Byington: How would you run it?
00:13:04:21 – 00:13:36:18
Cole Enright: Yeah, I mean, I’m I’m obsessed with token movement. So, like, my main thing is I think like if there was a really good, like energy communication layer and people stuck on like one standard and the hope is that we could actually kind of get rid of the existing bridging system and more or less like perform like what’s called like atomic swaps. So you could essentially just exchange across chains. And instead of doing these whole wrapping tokens, you could just say, Hey, I want to take Etherium and exchange it for Avalanche, and then you could do it in one step instead of like multiple.
00:13:37:14 – 00:13:38:10
Dustin Byington: How do you think that would work?
00:13:39:21 – 00:13:56:07
Ryan McNutt: Well, I think there’s other two ways. Either one, you could do like a centralized source with that or yeah, it would be like a communication layer. So like if you were able to actually, like, facilitate communication amongst all, all participants, you have this like kind of cross-chain aim or some kind of sort.
00:13:58:00 – 00:14:41:03
Ryan McNutt: But yeah, I think, I think probably will end up happening first is, will end up having a centralized entity perform this first because they can kind of forcefully manage the liquidity across all the chains and coordinate the efforts easier than like a decentralized one. Interesting to just to add a couple pieces there, I think that’s really interesting. So you can have your your centralized service like the burn bridges with with circle where you send your request to circle. They take care of it on their end or I’ve seen I’ve seen where Monero the Monero community is trying to put together, you know, their unstoppable swap, their atomic swap that I guess it’s an automated market maker behind the scenes that’s taking Bitcoin orders and then matching them with Monero orders in a trustless way.
00:14:41:18 – 00:15:04:27
Cole Enright: So I think you’re going to see two different communities of people that want to use one for, you know, more business applications, more stablecoin stuff, and then the Monero Bitcoin side of people that are doing the full Trustless atomic swap piece. So really interested, interested to see how many other atomic swap type programs come. Online over the next 12 months. That’s very interesting piece.
00:15:05:19 – 00:15:23:06
Dustin Byington: I’ll tell you the tokens. What are you all seeing for bridges that are either transporting information like CC IP or that are doing more like, you know, cross-chain smart contract calls and things like that that are more data oriented than just token oriented.
00:15:27:01 – 00:15:31:20
Dustin Byington: Are there any? What do you think about Skype? Our Cross-chain Information protocol from Chainlink.
00:15:31:24 – 00:16:04:00
Ryan McNutt: I’m excited for Skype for sure. I mean, I think Chainlink has done amazing things so far and define what it is. Essentially, from what I understand. It’s chainlink’s new standards essentially create an enter communication protocol. So essentially, like they are trying to build out their own standard versus like anything else that’s out there. But like I think chainlink, essentially everything I’ve seen from them so far has been phenomenal. So I’m pretty excited for it. But based off of what I’ve seen, it’s pretty guarded information thus far.
00:16:04:19 – 00:16:39:16
Dustin Byington: The the way I describe it is it’s like if you need information, say you’re running. Jonathan Libby might be here somewhere and he’s running and he’s working on a smart insurance plan. And so if this insurance play on Polymath or Matic and that and that contract needs data from Solana, then traditionally you would need to put execution code on each blockchain. And now you could just take information from Solana like maybe a a stablecoin Deepak on Solana.
00:16:39:24 – 00:17:14:11
Dustin Byington: And so you send that chain link would send that information about a price or an activity or on one chain, send that to wherever you want it. And so then you could sort of like have all the execution like in whatever when I want to have a blockchain as most convenient advances and cheapest for you and then then you can sort of like bomb it. Information and chainlink already has all these trusted nodes and so they’re already kind of sending information. We trust them to give us, you know, all sorts of data. So then the jump in logic is, well, maybe we can trust them to give other kinds of data and use it to, you know, power smart contracts.
00:17:14:13 – 00:17:48:12
Dustin Byington: And so again, there is and then another flavor is I think it’s called Nomad that does the most bridge, and that’s there’s more general purpose, there’s less now within the cosmos, like one bridge is Gravity bridge. It’s really just focused on tokens coming back and forth from Ethereum. But then others are more general purpose that can really can actually start calling contracts on a theory and executing code. So the nice thing is we’re really brute forcing all the bridges in interoperability and like we tend to do in crypto is just like throw all the world’s smartest people and minds at it.
00:17:49:11 – 00:17:56:27
Dustin Byington: What are there any particular bridges that you want to talk about or anything that’s pretty exciting to you in the space?
00:17:58:08 – 00:18:29:17
Ryan McNutt: I mean, Layer Zero is like one that I think I liked quite a bit. There’s been a lot of bridges that have had their own issues, like Nomad was one, and so like we focused a lot on the security piece, you know, here. But my co founders has a cybersecurity background, so we are hyper focused on security and what we use in our stack. But there’s been a lot of different issues. A lot of them haven’t really been all that like complex either, which has been kind of interesting to see.
00:18:30:23 – 00:18:44:20
Ryan McNutt: But yeah, I mean, I like Layer zero quite a bit. I think what they’re doing, the team is probably pretty good. There’s a lot of communication protocols that are coming out there, like polymer that I mentioned that I really like. And then there’s Axilla, which is also a really good one.
00:18:45:24 – 00:18:48:12
Dustin Byington: What is what’s Axel’s nature? I never quite learned.
00:18:48:14 – 00:19:04:26
Ryan McNutt: That one is essentially it’s just they’re trying to create their own standard. So, so same kind of thing but they want to have their own standard and just enter, communicate and they want to do it at a very fast rate. I mean, I feel like that’s what most of these like products are doing. But I just know some people that are part of that program.
00:19:05:18 – 00:19:14:15
Dustin Byington: Go, what about we haven’t touched on Ethereum yet. That’s the mother of all mother, all bridges and interoperability. What do you think about what’s going on with the Ethereum community right now?
00:19:14:17 – 00:19:45:12
Cole Enright: Yeah, so I think I think the Ethereum community is I mean, they’re doing their thing, but I think everyone kind of adjacent to the Ethereum community is thinking, how do we position ourselves with Ethereum for the long haul? What’s that going to look like for us and or what’s our role going to be going forward? So, you know, at the H PA ecosystem, we have, you know, spun up our Ethereum Bridge, we’ve made sure that’s, you know, a big focus of ours. And we’re able to wrap here, you know, hedera tokens on the Ethereum network and vice versa.
00:19:46:20 – 00:20:07:09
Cole Enright: So I think I think that’s where everything’s going for people that want to make sure that they’re going to be around in a few years and make sure that their unique features of their chain are going to, you know, you can at least still get that done with the solidity contract on a theorem. So I think that’s kind of where things are going for everyone that’s sort of around a theory.
00:20:09:02 – 00:20:37:27
Cole Enright: But again, those data volume problems are going to persist. A lot of these, you know, issues that, you know, we’re kind of more top of mind in the i t community in the, you know, ten years ago like big data information or Internet of Things, those two things. Specifically. I think our major challenges for pretty much all chains to really grow and get to that next level where we’re unlocking all of these new features quickly with very short development cycles.
00:20:39:18 – 00:20:42:08
Cole Enright: Yeah, so those are the things I’ll be looking for over the next few years.
00:20:42:24 – 00:21:24:23
Dustin Byington: Yeah, it does seem like all chains are bumping into this problem now. For a while there were, you know, like chains, like Solana, which are position themselves as more of these, like, really large mainframes. Think about like Salon as a mainframe and then like Cosmos or even Ethereum now is more like a choose your own device. And with a mainframe, you don’t need to worry about interoperability. You just have huge amounts of throughput, huge amounts of speed and performance in like one location. But now I think at what we’re seeing is even those folks that will kind of use that as an initial design principle, I’m saying like, hey, actually it’s not that useful to, you know, be on an island and be Galapagos, Long Island over here.
00:21:24:25 – 00:21:56:09
Dustin Byington: Like we need to figure out a way to to work with the rest of the ecosystem. And we also have to like at some point, if we’re successful, this chain too will fill up. And so even even as long as the world now I’m seeing putting more and more emphasis on on bridging. And my my, my bet is that the people that take bridging at the foundation and really think thoroughly about that at conception and so that they become an afterthought are the ones that will succeed the most and are most likely to be the standard.
00:21:57:05 – 00:22:05:19
Dustin Byington: Yeah, I’ll 5 minutes. Well, but yeah, we guys, we have a 5 minutes left. Any questions from the audience? Anything any of you all want to touch on?
00:22:08:24 – 00:22:10:00
Dustin Byington: Someone’s got something there. Yeah.
00:22:12:21 – 00:22:28:17
Dustin Byington: And so one thing I’ve heard about late clients is that the more complicated the contract call gets, the more expensive they can get on gas. Are there any solutions for making light clients cheaper to deploy across multiple different channels? Or is Adams still kind of leading that?
00:22:29:03 – 00:22:59:15
Dustin Byington: Yeah, that’s actually what Layer Zero does. And so when you have that persistent light client, it’s like you’re using this like constant communication. And that’s what creates all the gas. And so you’re constantly pinging the other blockchain. And so that’s where it gets expensive. And Layer Zero’s innovation was to effectively batch those communications. And so it’s just sort of on demand. And they use the Oracles from Chainlink to do it. And so they say whenever they need information from their chain, they say, okay.
00:22:59:23 – 00:23:12:19
Dustin Byington: So there’s and then. So that’s a good example of, you know, we are pretty good with a standard. But, you know, we realize there are some faults and the community’s coming. And, you know, you work with zero. Did I categorize that quickly?
00:23:12:21 – 00:23:14:11
Cole Enright: Yeah. Yeah, That was perfect. Mm hmm.
00:23:15:03 – 00:23:22:23
Dustin Byington: Yeah. And anything else? Somebody got something. We get. We got time for one more. Can I can repeat the question to you if it’s.
00:23:27:24 – 00:23:46:18
Dustin Byington: So a lot of the talk about interoperability is moving things across one chain to another. But what about interoperability in terms of having data stored on each chain in a format that’s universally understood? So you wouldn’t necessarily have to move things across chains. Do you guys think there’s a future for that type of technology?
00:23:49:04 – 00:24:22:18
Cole Enright: Yeah, absolutely. I think, you know, if I mean, that’s a big problem we face in our ecosystem is that the API is not familiar to a lot of people. It’s not you don’t process it in the same way that you would on the theory retrieving data from the Ethereum ecosystem. So yeah, absolutely. I think a lot of developers know how to get data in a certain way. Right now, for example, people know how to do well very, very well and a lot of ecosystems are not able to, you know, they don’t have an ask you old terminal where you can just go get data straight from the ecosystem.
00:24:23:19 – 00:24:31:21
Cole Enright: So yeah, I think making databases, data structures that people already know how to get data from, absolutely. There’s a massive opportunity there.
00:24:33:07 – 00:24:33:22
Dustin Byington: Nice.
00:24:35:03 – 00:24:37:07
Dustin Byington: All right. Well, thanks, everybody. Appreciate that.
00:24:39:29 – 00:24:40:19
Dustin Byington: That’s it for me.
00:24:42:07 – 00:25:05:29
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