Axelar's General Message Passing Launch with Sergey Gorbunov, Zaki Manian, & Steven Goldfeder

We’re entering a new multi-chain and secure cross-bridge world very soon. With Axelar's General Message Passing launch, a new era for interoperability has been unlocked. Tune in to hear from CEO/Co-Founder Sergey Gorbunov, Zaki Manian, Co-Founder of Sommelier Protocol, Co-Founder of Iqlusion, & Steven Goldfeder, Co-founder of Offchain Labs, and contributor to Arbitrum ------ 🚀 Airdrop Alpha is waiting for you on Bankless.com https://bankless.cc/Alpha ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap 🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE https://bankless.cc/MetaMask ------ TIMESTAMPS: 0:00 Intro 5:09 Axelar Explained 8:25 Cross-Chain Bridging 10:46 Axelar’s Announcement 15:10 Bridges of the Past & Future 19:00 General Message Passing 21:40 The New Way For Interoperability 28:42 Arbitrum’s Side 32:36 The Tech Metaphor 35:40 Multichain & Interoperable World 37:00 Bridge Security 39:05 GMP Applications & Services 40:57 Zaki’s Cosmos Vision 43:20 Why is this Bullish for Arbitrum? 47:27 Resources 48:00 Closing & Disclaimers ------ RESOURCES: Sergey Gorbunov https://twitter.com/sergey_nog Zaki Manian https://twitter.com/zmanian Steven Goldfeder https://twitter.com/sgoldfed ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02David Hoffman?

  Bankless Nation, we got an extra show for you today. Here, we got a panel of cross-chain experts. We got Zachy Manian from Cosmos. We got Steven Goldfeder from Arbitrum. And new to Bankless, Sergey Gorbunov from Axelar. Axelar is a newer IBC chain on the scene. It's been around for a while, but it's new to me. And it is working on interchain composability. So not only is the world of Cosmos and IPZ chains a world of interoperable mesh network of Cosmos Layer 1s, but also Axelar specifically is working on interoperability beyond the IBC realm. And so the announcement going out today is that Axelar's new technology, what they

• 0:43David Hoffman?

  are calling general message passing, is connecting the world of Arbitrum to the world of Cosmos, which is why Steven Goldfeder from Arbitrum is on this panel as well. So previously, we have been skeptical at Bankless about cross-chain bridges. Generally, the position that everyone that we've seen so far is fundamentally insecure. And I am still cautiously optimistic about Axelar, but there is a lot of new technology that they are bringing to the table. And so they are able to produce what seems to be a meaningful integration between Cosmos and Arbitrum that has both communities pretty excited. And according to Sergey from Axelar, the interconnections between different chains doesn't stop there.

• 1:25David Hoffman?

  Because if you can connect the IBC language of Cosmos to the EVM language of Ethereum, you can actually kind of connect any languages from any blockchain. Or at least, that's the idea. And so if you are into the world of the many Layer 1 landscape with bridges connecting all of these things, this episode is definitely for you. And so we are going to get right into that conversation with Zachy, Steven, and Sergey. But first, before we talk to Zachy, Steven, and Sergey on this show, we're going to talk to some of these fantastic sponsors that make this show possible, especially Kraken, our strategic sponsor for 2023, who, if no matter what chain you choose, or no matter what asset you prefer, it's all on Kraken. And so if you do not have an account with Kraken, perhaps consider going and signing up for one now. So we're going to go hear from Kraken right now. Let's go. Kraken Pro has easily become the best

• 2:10David Hoffman?

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• 2:54David Hoffman?

  to help you navigate through the crypto markets. Have you ever wished for a trusted resource that would share their thoughts, ratings, and their opinions about tokens? Boy, do we have the product for you. The Bankless Token Hub is where we provide Bankless citizens with the alpha on the hottest tokens in crypto. We do the research, so you don't have to. The Bankless Token Hub includes the Token Ratings, where our team shares their research and outlook on the hottest tokens in crypto. Also, the Token Hub includes Bankless Bags, our own internal investment club. Bankless Bags is where we put our money where our mouth is. And for the Bankless power user out there, you can access the analyst team 24/7 inside the Bankless Nation Discord. You can ask them questions and learn from a group of people deep in the weeds of crypto investing. The last feature of the Token Hub

• 3:37David Hoffman?

  is the ability to upvote or downvote token ratings. The Bankless Token Hub lets you learn from your fellow citizens to rate these tokens yourselves. The Bankless Token Hub is launching right now and has already been beta-tested by your fellow Bankless citizens. So stay tuned in the Bankless Discord for updates. And if you're not a Bankless citizen, well, you better sign up if you want access, because this corner of Bankless is available for citizens only. I'll see you in the Discord. If you haven't yet experienced the superpowers that a smart contract wallet gives you, check out Ambire. Ambire works with all the EVM chains, the Layer 2s like Arbitrum, Optimism, and Polygon, but also the non-Ethereum ecosystems like Avalanche and Phantom. Ambire lets you pay for gas and stablecoins, meaning you'll never have to spend your precious ETH again. And if you like self-custody, but you-

• 4:20David Hoffman?

  You still want training wheels, you can recover a lost Ambier wallet with an email and password, but without giving the Ambier team control over your funds. The Ambier wallet is coming soon for both iOS and Android. And if you want to be a beta tester, Ambier is airdropping their wallet token for simply just using the wallet. You can sign up at ambier.com and while you're there, sign up for the web app wallet experience as well. So thank you, Ambier, for pushing the frontier of smart contract wallets on Ethereum. Bankless Nation, we have two returning guests and one new one. Zachary Manian from Cosmos. Zachary, welcome back to the show. It's great to be here. And Steven Goldfeder from Arbitrum. What's up, Steven? How's it going?

• 4:55Speaker 01

  Great to be here. Thanks for having me.

• 4:57David Hoffman?

  And also the new entrant into the Bankless Nation, we have Sergey Gorbunov from Axelar. And this is the center of this announcement. Sergey, welcome to Bankless.

• 5:08Speaker 02

  Hey, good to be here.

• 5:10David Hoffman?

  So today, we're talking about chains and bridges and a particular new type of expressive bridge that Axelar is bringing to the table. So Sergey, since you're the new one of the bunch to the Bankless podcast, could you just explain a little bit about Axelar, what it is? And you can just tee us up for this announcement that we are going to be talking about here on this episode today.

• 5:32Speaker 02

  Yeah, for sure. I mean, high level Axelar is a network that connects other networks, right? So it's a decentralized blockchain technology that allows you to connect different layer ones and layer twos and send information across them, right? And so we build a kind of a full stack of interoperability that allows you to compose your applications across different ecosystems, right? So you can have smart contracts on one chain, talk to smart contracts on another chain, and really enable kind of very simple developer and user experience to interact with multi-chain ecosystem that we live in now, right? And so Axelar is a decentralized layer that enables a lot of this functionalities.

• 6:08David Hoffman?

  And Axelar is a Cosmos IBC chain. And so like many of the other Cosmos IBC chains, it just fits right in into that mesh network landscape of Cosmos chains, correct?

• 6:23Speaker 02

  That's right. Yeah. So Axel is powered by kind of a tenderman, right? And you know, a lot of the rules around the consensus have been customized to go beyond Cosmos, right? So be able to connect different ecosystems like Ethereum, like you know, Layer Ones, like Arbitrum, Optimism, and so on and so forth. And kind of really be the connector across different software language stacks.

• 6:43David Hoffman?

  Right. So this is, this is where the explanation for Axelar kind of gets a little funny because we have Cosmos, which is a network of chains. And then we have Axelar, which is supposed to connect the Cosmos network of chains to other chains. So can you just like open up that, that can of worms and help explain that a little bit?

• 7:04Speaker 02

  Yeah, for sure. I mean, I think Cosmos has been built right with interoperability mindset at its core, right? And so IBC protocol, you know, can be used quite well to connect a lot of the Cosmos ecosystems, right? But, but the reason IBC works and everything else is because the Cosmos stack has been designed with interoperability in mind, right? So IBC is kind of a very native to the Cosmos ecosystem. All of the chains speak the same language. And so, you know, IBC helps you put packets back and forth across them. Now, if you want to go outside of Cosmos, right, to EVM chains, you know, to Arbitrum and so on and so forth, you have to speak a different language, right? Then you have to have a different protocol in mind to connect those chains, right? And so this is where Axel comes in, right? So our protocol, you know, can be used to connect an arbitrary EVM stack,

• 7:49Speaker 02

  um, you know, and then be able to compose those ecosystems with each other, right? And with other sort of Cosmos chains, right? So, and you can think of Axel acting as a sort of a translation layer in that, in that process, right? So you have messages of transactions that can be executed on EVM chains that can be translated into the sort of the packet formats or messages that can be executed on Cosmos chains and vice versa, right? And so Axel sort of allows you to connect the software stack that speak very different languages and, you know, sort of unite them together.

• 8:23David Hoffman?

  So previously, generally on Bankless, we were critical of cross-layer-one bridges. Generally, as a form factor, we kind of think as a, as a structural pattern that they are insecure. They tend to kind of collapse down to just a multi-sig. So how, how is Axel are different in that respect?

• 8:44Speaker 02

  Yeah, so Canaxxol is one of the only, one of the very few networks that's sort of fully decentralized and then the power's interoperability, right? So it's powered by Tendermint, it's an open validator set, anybody can participate, anybody can join. And security is something we took very seriously, kind of from the ground up, right? So a decor network in layer, the network is decentralized, it has robust security policies like quadratic voting, right, for cross-chain requests, validator key rotations and so on and so forth. So that's sort of the base layer, right? It's a very secure, very decentralized network. On top of it, if you're thinking about security for cross-chain, you have to have very robust engineering practices, right? So everything from, we've done over 40 audits on the network, right?

• 9:26Speaker 02

  Multi-million dollar bug bounties, lots of rigorous like unit tests and so on and so forth. So you have to have the operational excellence, right? If you want to ship anything cross-chain. And finally, what I call is like application layer security add-ons, right? So if you are transferring value between chains, then in your code, right? Or in your functionality, you maybe want to have things like rate limits, right? That would prevent, worst case, disaster attacks, the network and layer. So that's how we think about security, kind of a from-the-ground-up, full-stack approach, making sure you have multiple robustness protocols in place throughout it.

• 10:06Speaker 02

  And the end of it can be actually a very, very secure and scalable architecture. And the final point I'll mention there, kind of a new paradigms, things like general message passing that we have a lot of applications building with, actually enable you to build different class of applications that don't rely on explicitly token bridges, right? Don't rely on token transfer in particular. And those designs can be a lot more secure and we can go into the details of it. But I'd say that's the new wave of how cross-chain applications will be built out is using kind of general message passing paradigms that enable a very new architecture and design space that's more secure by default.

• 10:46David Hoffman?

  And that's the subject matter of the announcement that's going out of Axelar today, correct? That is the big thing. So like, there's a big thing happening. There's an announcement that Axelar is making. It's called Somelier. Is that correct?

• 10:59Speaker 03

  Somelier.

• 11:00David Hoffman?

  Somelier. I'm not French. Somelier. So, so, Zach, maybe I'll turn to you. Can, since you're the one wearing the Somelier shirt, what is this announcement? And technically, what does it do?

• 11:12Speaker 03

  Yeah. So, co-founder of Somelier. Somelier is a project that I started with my, with Christie, my co-founder, back in like, sort of early 2021, right around the time when IBC was launching. But it was really, you know, it's been a passion project about the combination of Ethereum, DeFi, and EVM, DeFi, and Cosmos tech. So, the idea was to build us a decentralized active strategy manager. So like, essentially, like, think of it as Urn 2.0. It was like, you want to, because Urn strategies, anyone who's used them has seen a pattern. You know, you start out, APYs are really high, you put more, as more

• 11:57Speaker 03

  money comes into them, the returns get diluted, and you've got to pivot to the next Urn strategy, and it's just sort of this, sort of endless process. And so, wanted to build a protocol for strategies that adapt, evolve over the time, but didn't give up decentralization. And it was always sort of a core value for me that like, we wouldn't be bridging tokens. Bridging tokens, super hard to do well, and a lot of risk, right? There's all this risk associated with it. But what we wanted, what we realized is, by bridging essentially data and rebalances, like sort of trades, we could manage the trades on the Cosmos side. So...

• 12:38Speaker 03

  You could have like strategy signal providers that are, you know, DeFi experts talking to validators. Those validators agree on and process proposed trades before they happen. Like they agree and it gets bridged over. So we've been using our own bridge for over a year to run our strategies. And we have like, we have two strategies right now that collectively have about seventeen million T V L. We have the best stablecoin yield on Ethereum, real yield U S D, and the best ETH denominated yield on Ethereum, real yield ETH. These two strategies are these adaptive, market adaptive strategies. They can scale, they can do, they can allocate into multiple strategies. They don't have to compromise decentralization for this and they never bridge the tokens.

• 13:23Speaker 03

  So, you know, you, uh, you aren't taking this like security risk of the bridge when you use the system.

• 13:32Speaker 03

  But like the hottest place to be in DeFi right now, where all of our strategists are like, where, how can we get on Arbitrum? When can we get on Arbitrum? Uh, uh, you know, it's clearly the coolest, hottest place to be in DeFi, right? Uh, most protocols, most exciting stuff, lots of volume, lots of T V L. Um, and so been looking for what would be the right way of doing that. Um, and have been keeping an eye on Axel R, uh, for a long time. Um, and realized that this composability between I V C and E V M was possible. And realized, you know, we could almost, we could in a very short order, get access to the ability to run our strategies.

• 14:14Speaker 03

  You know, similar strategies on Arbitrum and, you know, many other E V M. Uh, and like, you know, it's like, I mean, people don't really know this about me that I've been, you know, building this massive, like a very large scale, very sophisticated Ethereum project. I'm like, you know, we just joined the E R C four, six, two, six alliance where like, we're, I'm like basically an E D five maxi at this point. Like, uh, and like love using it. Um, and, uh, yeah, so this was like.

• 14:43Speaker 03

  Huge enabling technology. And, you know, I think, you know, it took us basically two years to get Semele to like full maturity and a lot of money and a lot of time. But like, the next generation of builders, the builders who come after all of this can just use Axelar and immediately take, like, combine Cosmos tech and ETH tech to build something like bigger, better, amazing in like, you know, months.

• 15:11David Hoffman?

  Okay, so my understanding of this so far is that Axelar Cosmos IBC chain fits right into the Cosmos IBC ecosystem. And then we have Arbitrum with this very vibrant DeFi ecosystem on the other side. And these things are disparate. They are disconnected. While Axelar does have cross-chain, cross-chain communication capabilities, I don't think that they are meaningfully differentiated from bridging from, from the cross-chain bridges that, that Bankless has previously been concerned about. But this is when some, some, sorry.

• 15:44Speaker 03

  Semele.

• 15:45David Hoffman?

  Sorry, Zach, it was Semele. I might have to do that a third time. Psalm, Psalm. And but this is where Psalm comes in and changes the game, correct? So just at a high level brush stroke, that's, that's what we're talking about? Is that, is that a way to depict this?

• 15:58Speaker 03

  I mean, well, we're like the first of what is a category of applications, right?

• 16:01David Hoffman?

  Okay.

• 16:02Speaker 03

  I don't think the bridge applications of tomorrow and today really look like the bridge applications of the past. Like, the bridges of the past were like, okay, I need to like, I want to go like ape into this like high APY tool on like some weird chain. I'm gonna like bridge my stable coins or my other coins over. And like, that's, you know, that's, that's been the bridging experience of, you know, the last two years. What Semele is, is like, no, we're getting you the best ETH native yield. We're gonna get you the best Arbitrum native yields. We're gonna get you the best. We're not sucking your liquidity into some new

• 16:43Speaker 03

  ecosystem. We're making your liquidity more effective, more efficient, more powerful in its, in where it's natively. So, you know, for, for Arbitrum native DeFi protocols, like the GMXs, the, the options protocols, the, the Camelot decks of the world, we're building optimized experiences there using the cross-chain tech.

• 17:09David Hoffman?

  Okay, so I think I misspoke. So Sam Malyer is a DeFi app. It's in, it's an application. It's in the application layer. And so I misspoke when I said that it is the thing doing the magical bridging.

• 17:21Speaker 03

  The magical bridging is Axol. We are, we are the application layer of, and like, we are the application layer that's really highlighting what can be done now.

• 17:33David Hoffman?

  So Sergey, where is this? Go for it.

• 17:38Speaker 02

  Yeah, I mean, just to add to that, right? Like, so traditional, like, Axol has been kind of composing Cosmos and a lot of VM chains. For the, one of the, you know, exciting applications was the bridging, moving tokens around, right? And I think, like, like Zach said, I think sort of moving tokens around is skewed, but it's kind of a turn, you know, humans into manual routers, right? That they have to move their tokens back and forth just to use one application, right? And so, you know, I think what we're doing, like with the upgrade for the general message passing, what it means is that you can have applications on Cosmos, you can have applications, you know, on Arbitrum, that can talk to one another by issuing contract calls and sending messages, right? And so what that enables you is to have liquidity wherever you want it to be,

• 18:21Speaker 02

  but manage the contracts and manage and compose the applications, you know, in the same way as you could compose them if they were all like on Arbitrum, right? But certain applications, you know, could not be built on a layer one or layer two on its own, like Sam Malyer, it needs its own validator set, it has its own security model and things like that. So those need like separate stacks. But now they can have the same level of composability with all the applications and, you know, all the liquidity on these chains as if they were actually residing there. So I think that's, you know, that's the exciting part. And so that's the the general message passing sort of paradigm, right? That we kind of open it up between these two software stacks.

• 18:59David Hoffman?

  So I was talking to Zachy before the show and we were talking about just like the war against non-interoperability and I called it like a front, right? A front that we need to advance in order to create interoperability. And there's like marginal improvements you get, you get across chain bridges, you get some language efficiencies, you get, you get to improve. And so I was trying to like weight the magnitude of what is being announced today, which is just to make it really specific, Axel's general messaging, passaging is the announcement that we are talking today, the GMP. And so like the answer that he gave me was like, I was trying to measure it between like a small incremental step and like a breakthrough that we've never

• 19:42David Hoffman?

  seen before in the world of crypto economics. And so I'll throw that question to you, to Sergey. The, the general gist I'm getting is like, this is a large step forward. It's not, it's not like a zero to one breakthrough moment that we have totally upended the world of crypto economics, but this is not just an incremental improvement. Help me understand like how big of a deal this is for the world of cross-chain interoperability.

• 20:06Speaker 02

  Yeah, I mean, I think this is the first time where you can have very two different software stacks, right? Like EVM stack and a Cosmos stack being fully composable with one another, right? You know, through Axel and through the, through the general message passing. On EVM land, you know, it's much easier to compose things, you know, and Axel have been doing like general message passing there. But across different software stacks like Cosmos and EVM, it's, you know, it's much harder to do, right? You know, like, like Zachy said, they sort of spent, you know, kind of a two years building the initial version that connected to, you know, Ethereum, right? So how do you do that for all the chains, for all the Cosmos and all the, you know, EVM chains? And that, you know, that's what we've done with the very

• 20:45Speaker 02

  simple architecture. So, um, you know, what I view it is a step forward to have better developer and better user experiences where people, you know, don't have to think about bridging, don't have to think about moving their tokens that would in turn, you know, enable us to have more users in ecosystem. Because I think, you know, right now it's very painful if you have, you like to play with an application, oh, it's in a different chain, oh, let me find the bridge, let me move my token, it's a different token, you know, oh, I need a wallet, I need to pay gas across all of those things. But all that stuff we can remove away, right? And so you can have If you're a user assembler, you can just interact with Arbitrum and vice versa. If you have an application on Arbitrum, you want to submit a request and that request

• 21:28Speaker 02

  needs to be executed in an application in a Cosmos ecosystem, you'll be able to do that. So much, much simpler, you know, user experience, much better, you know, liquidity properties. I think that's what, you know, it all enables the.

• 21:40David Hoffman?

  So Sergey, when I said like Bankless had previously been critical about cross-chain bridges, I think it is that migration of tokens across chain is where we start to get scared. And I think, I think we are in agreement in that philosophy. It's like that is where the insecurity comes from. And so this is the new strategy that Axelar's pioneering is not token transfers, but data transfers. So you call it general message passing to just allow chains to talk to each other, communicate messages to each other, not share assets with each other. And so I think it's, it's, it's saying that this is the new way to do interoperability is to not, not share, share assets, but, but share data.

• 22:23David Hoffman?

  How does one actually achieve a fully expressive level of interoperability if only data can be passed? So the way that you and Zach are talking, it's, it's as if the full vision of interoperability is equivalent in this world. Are there any trade-offs in just like the message passing versus token passing world? And do we actually get the fully expressive interoperability world that we would get if we had secure token passing too?

• 22:52Speaker 02

  I mean, you can build secure, but yeah, I'll say briefly, I'm taking your head on. You can build token transfers as an application on top of general message passing, right? So if you want to transfer tokens, you know, you can build that as an application, you should have, you know, robust security there, maybe rate limits and so on and so forth. So that you can do. And so I guess what general message passing allows you is to go, you know, sort of beyond that, like was said, right? And sort of the analogy that I like using, right, is we traditionally move the liquidity to where the application logic lives, right? And that's what creates like the painful experiences fragmentation. You can still do all of that, you know, if you want to move liquidity and like build a bridge in application. But you know, with this new software sort of paradigm through general message passing,

• 23:36Speaker 02

  you can move the application logic to where the tokens are, execute that logic and then return the result back to the user's wallet. Okay, so I submit it with my wallet on like Cosmos Chain, the transaction is executed on Arbitrum and I get the result back to my wallet. Liquid it is not moved, it's the interaction that we have, you know, wh- within it. So you can build, it gives you kind of a, you know, you know, in a theorem, right? I think everybody knows that EVM is sort of Turing complete, right? Meaning that you can build anything. And so with general message passing, it's a Turing complete way to compose, you know, chains and ecosystems that you can build anything in. You know, bridging could be one of the applications if you really feel like it, but it doesn't get you the same level of experience.

• 24:20David Hoffman?

  Sure. Zach, you were gonna add something?

• 24:22Speaker 03

  Yeah, I mean, I think that right now, the user experience that is most familiar to most users, most capital, is like the EVM, like the MetaMask, Gnosis Safe type experience, right? That's primarily an experience that you want, you know, you want to be able to give. So like when you interact with some MiliA, you don't, you know, you don't know about the Cosmos side really as a user of real old E, the real. And the same thing will be true for our Arbitrum strategies, right? Like you'll interact with all of them from MetaMask. You'll, you know, it'll feel like a, it always feels like a completely native Arbitrum or experience, but you're getting all of these benefits sort of behind the scenes.

• 25:07Speaker 03

  And I think that, that kind of application paradigm, and you think about how much more accessible it makes everybody, it to, to be able to like embed, like, we need to be able to move away from this like current world where like when you want to do something, like every time you want to like access something new in blockchain, it's like, okay, I gotta like learn a new wallet, learn a new ecosystem, learn a new block explorers, learn everything, right? It's too much. The Semele version of multi-chain has been like you get you get you're getting these enormous benefits of just get expressed as better yields from the multi-chain world.

• 25:50Speaker 03

  But you're just like your user experience, what you know, you know, you can go look at a Semele strategy on D-bank, see where the assets are allocated, you can, you know, you can, your transactions are all on EtherScan. You know, this is what the world would people want.

• 26:05David Hoffman?

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• 26:49David Hoffman?

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• 27:34David Hoffman?

  With Arbitrum's recent migration to Arbitrum Nitro, it's also now 10 times faster than before. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free. You know Uniswap, it's the world's largest decentralized exchange with over 1.4 trillion dollars in trading volume. You know this because we talk about it endlessly on Bakeless. It's Uniswap, but Uniswap is becoming so much more. Uniswap Labs just released the Uniswap Mobile Wallet for iOS. The newest, easiest way to trade tokens on the go. With Uniswap Wallet, you can easily create or import a new wallet, buy crypto on any available exchange with your debit card with extremely low fiat on-ramp fees,

• 28:19David Hoffman?

  and you can seamlessly swap on mainnet, Polygon, Arbitrum, and Optimism. On the Uniswap Mobile Wallet, you can store and display your beautiful NFTs, and you can also explore Web3 with the in-app search features, market leaderboards, and price charts, or use Wallet Connect to connect to any Web3 application. So you can now go directly to DeFi with the Uniswap Mobile Wallet. Safe, simple custody from the most trusted team in DeFi. Download the Uniswap Wallet today on iOS. There is a link in the show notes. So Stephen, you've been patiently waiting for us to arrive at the Arbitrum part of this conversation. From the Arbitrum perspective, if you could, if you, if one could speak for the protocol, why would the Arbitrum protocol be interested in this? Like, what's exciting from the Arbitrum side of things?

• 29:00Speaker 01

  Yeah, I think from a, from a technology perspective, you know, I think it's all about access, which is, I don't want to repeat the, the points that have been made, but the idea is there are different ecosystems with different properties and allowing you to do different things. And the question is, are these siloed, or can you access one from another? And to, to Zaki's point, you have the Similia, I had that idea there. Just kidding. You have the Similia, Similia Cosmos chain, and that, that has some really nice capabilities. For example, I think, you know, one of the things that I, that I'm most excited about is the ability to ingest private data and use that to inform these strategies. And now the question is, so you have these strategies, you have this data, these strategies,

• 29:45Speaker 01

  what can you access there? I think that's where Axelar is helping. Oh, now you can access the Arbitrum ecosystem, you can access this as well. And, you know, fundamentally,

• 29:55Speaker 01

  You know, bridging is is is really, really important. And actually, so I'll talk about the Arbitrum Rollup Bridge for a second. Um, many people don't know this, but that's also just the bridge, the native bridge in Ethereum and Arbitrum is a general message passing, passing bridge, which most people you just use to bridge tokens. But obviously, there's a lot more uh, to explore when you, when you look at general message passing, uh, be it between Ethereum and Arbitrum, be it in other ecosystems. And um, yeah, I think some of the real, really important value here in connecting these different chains in these different technologies is um, not being siloed and having the ability to uh, via, you know, securely, that's the key word here. And that's where the, you know, um, you know, the questions you're asking, David, um, uh, of course. And I think that's, uh, you know,

• 30:40Speaker 01

  Sergey's uh, uh, focus here is to securely be able to, to bridge and access these different ecosystems because uh, you know, just two things. One is like, there are different levels of expressiveness, different ideas, what you can do, you know, what you can do with private data. You wouldn't necessarily be able to do directly in, in these ecosystems. Also, the, the idea that you just want to access multiple ecosystems from your strategy. I think these are all really important. I think from um, you know, the Arbitrum, uh, from technology perspective, it's nice to have uh, to be open and accessible from, from these different environments. And, and also I'll just say one more thing on a multi-chain. Uh, you know, uh, on a multi-chain vision that I have, which is, you know, we get very focused here, or I get very focused on like, you know, the values that I care about, which is

• 31:24Speaker 01

  you know, security and decentralization. And that's obviously what led to a lot of decisions that um, off-chain made or the on when it was, you know, um, uh, initially designing the Arbitrum technology, or I was doing back when I was with Ed and Harriet Princeton. Um, that doesn't mean though, that we have to ignore the fact that there are others that make different decisions. And I'm not talking about, um, any of us here. I'm talking about some others, say, other layer ones or other layer Qs that have different properties. Um. They can have different values and different decisions that allow them to make a different set of trade offs. It's all trade offs, so there are always pros and cons, but the idea of being able to talk to each other is still valuable, right? You don't always have to be so maxi and say it's either you believe in our set of values and and and and interact here or else, you know, get away from us.

• 32:07Speaker 01

  It's like, no, okay, you have, you know, this environment and there's this other environment. And there's a different set of properties in them, maybe expressive, expressive, maybe security. But can we bridge these? And I think Axelar via, you know, is is is a, you know, one of the great, great, a great project that's working on exactly solving this problem. And Smillier is a one of the first users or perhaps the first user of this particular integration that's showing the power that can happen when you grant this access from one ecosystem to another.

• 32:38David Hoffman?

  So the the image that I have in my mind about how this is, I I I try and turn these into like visual metaphor, just because I understand those better. And so we have the the Ethereum multi-layered landscape. I always kind of view it as a tree with a tree trunk as the base layer, and then it branches out to the layer twos. And then a layer three is on top of that. And then we have the philosophically aligned version of the Cosmos mesh network app chain system, which is like a like a like a bush or like a mycelial network. Mycelial network is a really important metaphor because what I'm seeing with Axelar here is that we are actually seeing the first cross connections, the first bridges being made between the Arbitrum layer two and the Cosmos message network.

• 33:21David Hoffman?

  I don't know if you call it a layer one, but the flat landscape of chains. And so this and Sergey, correct me if I'm wrong, but the idea here is that this starts with GMP, the general message passaging. It starts with data as perhaps just like the small thread of connection that connects these two endpoints. But I'm assuming that it grows from there and it becomes a more robust than just data. And can the the actual threads can actually combine in a more robust way? That's my intuition. Can you reflect on the accuracy of that metaphor and maybe perhaps make it a little more tangible for us?

• 33:59Speaker 02

  Yeah, no. So you're right, right? Like so kind of a the the data itself that you can pass, right, can be like I said, sort of arbitrary, right? And so when I guess like when you when you talk about reinforcing what can be done is that where, you know, this is where we rely on builders like Summaliya, right, to actually build the application logic into that data, right? So, you know, performing those types of, you know, cross-chain calls, you know, and Axel will help you facilitate all of the communication in parallel, right? I guess just just to add one more thing to, I think what Stephen said, right? Like I think why it's important, you know, to intraoperate these ecosystems is to really allow innovation to continue to happen across the software stacks, right? I think we're still in the

• 34:44Speaker 02

  early days. I think there's still a lot of decisions to be made on how to scale. There's still a lot of decisions to be made, like how EVM should evolve, a lot of decisions, how Cosmos should evolve, right? And so the interoperability between them means that, you know, you can innovate sort of any way that you want within Cosmos stack. You can innovate any way you like your application within the Arbitrum stack, right? But they can all still be kind of composable and and talk to one another. And yeah, kind of as more Cosmos chains, right, like use the sort of the axeler for the general message passing, you know, you can think of them as more connections being made, right, through the axeler and then axeler helps facilitate that with Arbitrum. So lots of data passing and Arbitrum, you have a lot of applications that can consume the data from all of the

• 35:27Speaker 02

  Cosmos ecosystem through, you know, what we call like as a gateway smart contract. So you can talk to one contract and you have access to, you know, now like the or hundreds, right, of Cosmos chains for for free, essentially, right? So that's and kind of a one connection, but many to many on both sides of the equation.

• 35:45David Hoffman?

  And Sir Gary, my, correct me if I'm wrong, but I think the way that this works is that if you can connect an EVM chain like Arbitrum to a non-EVM chain like anything in Cosmos, can't you do anything? Like you that's, those are just two language types, like you could do other language types as well, correct?

• 36:06Speaker 02

  Correct, yeah, we've already working with a lot of, you know, different layer ones, right? So Stellar, you know, we're working with kind of Sweet, right? Like Cap, those integration. So pretty much anything that, um, yeah, kind of has a smart contract capabilities can connect with Axol. And that was one of our requirements, right? As we were designing the protocols to make sure we can plug and play interoperability, right? So don't require any changes from layer one or layer two, be able to come in and just serve a plug and play. Make sure the protocol is like as light as possible, you know, requires as little effort as possible to integrate. And, uh, you know, again, like, um, that's very important, I think, in this phase of the ecosystem to allow innovation to happen across languages, across settlement layers, right?

• 36:50Speaker 02

  Across consensus protocols, um, and having this sort of plug and play approach that you can talk with, you know, any different language or a virtual machine is, um, you know, pretty important. And that's what we're following.

• 37:02David Hoffman?

  Okay, so I hate to get fixated on the bridge conversation, but just like, remind me one more time about the security model for Axol R and how it's compared to, to bridges in the past. Like we, we've seen the, the wormhole hack, we've seen the Nomad hack, we've seen the Ronin bridge hack. Uh, we have cross-chain bridge hack PTSD. And so I really want to just like drill down into this, like, what's the security model for Axol R? And what's this defense against, uh, something like this?

• 37:31Speaker 02

  Yeah, so security model is that Axel compared to a lot of the protocols that you mentioned is actually fully decentralized network, right? So it's not relying on a small like multi-sig, like three out of five, or whatever was the, the Ronin hack where the keys got compromised, right? It's a decentralized network where you have lots of validators that are collectively processing all the cross-chain messages, right? And so what that means is that, you know, from a security side, you have security that backs, you know, the same model as backs a lot of like layer ones on their own, right? So layer ones have a decentralized validator set that sort of secures and processes. And you get security through, you know, having a consensus, right? And so that's what Axel is. It's a kind of a security through a decentralized, open and, you know, permissionless validator set.

• 38:14Speaker 02

  Augmented with a lot of robust engineering and a lot of like application layer, you know, security features, right? Like rate limits if you want to do a bridge in application, right? Or things like that. But it all starts at the very core, which you know, you have to have the right sort of decentralized design to be able to diversify software deployments, to be able to, you know, encourage as many participants as possible and not have a closed, you know, multi-sig between a few people.

• 38:40David Hoffman?

  So does that, that makes it sound something similar to like REN protocol, where it was a decentralized network of nodes along with a native token that would do a lot of cross-chain infrastructure. Spiritually, are we in the correct area?

• 38:56Speaker 02

  Yeah, so I haven't looked at like the REN full design. I mean, I'm not sure if their validated participation was fully decentralized, that anybody could actually join and anybody could participate. But, but yes, like, you know, in principle, if that's what they're doing, then yes.

• 39:10David Hoffman?

  Okay, cool. Okay. And so like the, the main question is like, man, like, why didn't we get here sooner? So, I mean, the, a lot of the cross-chain layer, cross-chain bridges were just like multi-sigs, right? And so kind of egregious in hindsight. But it really just seems to be the, the main, the main big novel parts about Axelar is that it's hooked into a pre-existing ecosystem that stood the test of time being IBC and Cosmos. And it's leveraged this general messaging as like the base level of cross-chain bridging. And then it's, it's done just a lot of, I'm assuming, technical engineering lifts to get to the point where it's been able to

• 39:52David Hoffman?

  connect the EVM to IBC and then also all the other chains. So this is my mental model of so far as a result of this episode. Is that right?

• 40:02Speaker 02

  Yeah, I think that sums it up. Yeah. And I think, you know, the one thing that I just want to add, right, is that kind of even if you have general message passing or things like that, you still have to think about how do you build the types of application experiences that we talk about, right? So when, you know, when, when a user submits a transaction somewhere here, like, how do you make sure it actually gets executed on our bid term, right? Who's going to pay gas there and things like that? And so, you know, we've augmented kind of the, the, the network itself with a lot of services that allow you to do those things, right? And so I think.

• 40:33Speaker 02

  The developer experience building in a multi-chain world is very, very different. You have asynchronous message passing and you have execution on remote chains and things like that. So you actually have to build a lot of services around these core protocols to make sure the experience is as seamless as possible. Right. And that's the final piece that we're working on is actually building the types of tooling that developers needs to build these types of applications.

• 40:59David Hoffman?

  And Sunny, if we can put the Cosmos hat on, how would you resume all the way back out and view Cosmos both as an ecosystem of many, many chains and also a long-term project that started, I think sometime in like 2016 or 2017. What does this technology mean for Cosmos? How does it fit into the whole Cosmos vision?

• 41:21Speaker 03

  So, I mean, there's no one Cosmos vision, but my Cosmos vision has always been the sort of Cosmos Ethereum merger vision. Right. You know, the success of Ethereum L2s, Arbitrum, OP Stack have kind of brought the toolkit for building blockchains, innovation marketplace that Cosmos already conceived of to the Ethereum ecosystem. The, and you know, there's also, you know, with Eigenlayer, things like ideas of like sort of subsetted validator sets, you know, like sort of, you know, partial, you know, shared security, all of these things.

• 42:02Speaker 03

  So like, there's just been this general sort of convergence that I've believed in for a really long time of, you know, Cosmos ideas, Ethereum ideas into the one, like ultimately, like we're not here, I'm not, I don't care if like, Adam is like the most valuable token or like what the price of ETH is, like ultimately, we're here to build. Of like a a secure infrastructure for for the entire world, right? That's the ultimate goal. And so to me, it's always been about like, how do you blend these? Like all of these different technology ideas to get to that. And so like, to me, the vision is Cosmos, Ethereum. It's all one thing ultimately for the users.

• 42:45Speaker 03

  And the users are just getting like robust, secure financial primitives and other, you know, interactions, transactional primitives that like they couldn't get anywhere else. And so, you know, in the ordinary world, if you wanted to have something like, you know, sommelier, you'd be, you know, sending your money to a hedge fund. And instead you have like a decentralized, secure system that like protects its users from like strategists going, you know, off the rails, doing anything malicious. It's actually able to have a coherent security model, but allows for extracting alpha that you wouldn't be able to get it.

• 43:23David Hoffman?

  Stephen, part of the the recent Arbitrum announcement was not only the launch of the Arbitrum DAO that made everyone very excited, but the idea of multiple Arbitrum chains being built in a stack. And so we got layer twos and we got the layer threes and everyone loves all the chains. How, just from now that Arbitrum is on like kind of the receiving end of sommelier, sommelier? Gosh, I'm so sorry, Zachy. Sommelier and and the interoperability efforts from from Axelar. Is there like, how is all of these chains going to interoperate with the Axelar Bridge? And overall, what is the net net effect upon Arbitrum? AKA like, why is this bullish for Arbitrum?

• 44:06Speaker 01

  Yeah, so so a few things to be said. First of all, I think, you know, just getting, you know, more access to Arbitrum. I think the fact that it's starting off with Arbitrum is very, you know, it's a good sign for for Arbitrum and, you know, the strength of the ecosystem. And that's where, you know, a lot of the strong DeFi is. So, you know, it's it's exciting to see that the decision has been made to expand to Arbitrum first, but when it comes to the L2s and other L3s, so yeah, it's a great question, which is like, so how do those fit into the to the bridging environment, if I understand? And then like, how how basically, you know, will they use Axelar or something else? So. The answer is like, I think a little bit of both. Um, you know, there, there is some, particularly when it comes to layer three chains, arbitrary morbid chains.

• 44:49Speaker 01

  There is um, the ability for these things to talk to together a little more natively. Um, so to actually have some native uh, interaction. So in a roll up, for example, in Arbitrum, you know, the there, there, there is a, there's a few out there that says all rollups are is a, is a bridge. Right? So um, you know, there's just like uh, one, one of the framings of what rollups are or what chains are even more generally and um, you know, so there, there is, you know, the Arbitrum obviously has a direct bridge to, to Ethereum. Um, and, and one of the interesting things though is um, okay, but what about these other chains? What about two arbitrary chains, right? Today there's arbitrary one arbitrary no, but can they talk together? So today they don't talk together um, better than that, right? They can talk together via Ethereum, so there is room and there, there are these fast bridging solutions.

• 45:33Speaker 01

  They go ahead and talk to one another, um, you know, can, can bridge that gap. I think over time, um, there are opportunities to develop technology that can allow different layer threes to talk together um, more broadly or different layer twos to talk together um, uh, more, more, you know, more directly connected. But you will have, that will always only be like, you know, in the same family of technology. But if you want to reach past that, say to get to the Cosmos ecosystem, say to get to the um, you know, to other ecosystems, you're going to need uh, interoperability solution that don't have those same native properties and, or don't have the same native abilities. And those are, I think, are going to be very important. One other thing we know, which I will mention, which I think is very interesting.

• 46:13Speaker 01

  Um, not, not to digress too much into the uh, into the optimistic uh, or the rollup wars, but one really, one thing that comes up a lot with rollups, people like to talk about the benefits between like different types of rollups. And bridging is one of those that, that comes up right away. You know, people say, well, ZK rollups have a faster bridging, which is, which is uh, you know, it's, which is true, right? If the, if the proofs are faster, it's not instant, it's usually hours to, to days, hours to half a day or so, depending on, on the rollup. But I think what people miss and what this show actually highlights is, that's looking at a very, very narrow bridging uh, example, right? When you talk about bridging from Ethereum to a rollup, um, people like to focus very much. But in a multi-chain world or a cross-chain world, or whatever the term you want to use, um.

• 46:57Speaker 01

  Both ZK rollups and optimistic rollups or any type of rollup that want to access other ecosystems or other go across the boundary, not just to the chain that they're built on, are going to have to rely on other other bridging technologies. They can be more native, they can be third-party technologies, they can be axilar, and they're all going to be kind of important to this to this big ecosystem. So, you know, from an off-chain technology perspective, I think, you know, interoperability is the frontier right now. And this is very, very exciting to to see today's announcement.

• 47:30David Hoffman?

  Well, Zachy, Stephen, Sergey, I really appreciate you guys walking me through the the story here. And so Sergey, I'll let you end it here. If listeners are peaked and they want to learn more about this, maybe they're a developer and they want to open up the docs or they're just a user and they want to use, where ought they go?

• 47:49Speaker 02

  Yeah, I mean, I think a good starting point is just to go to axel.network website, you know, and from there you can find links to Discord. We have, you know, developer channels. And you can find links to the docs, so it's docs.axel.dev and you can take it from there.

• 48:03David Hoffman?

  Awesome, guys. Thank you so much for joining me here on the show today. Like always, Bankless Nation risks and disclaimers. Crypto is risky, ETH is risky, DeFi is risky, cross-chain bridges probably are still risky. Yeah, at least they are headed in the right direction. You can lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we are glad you are with us on the Bankless journey. Thanks a lot.