53 - Building DeFi on Layer 2 | Synthetix, Loopring, Immutable

Guests: Justin Moses - CTO of Synthetix Robbie Ferguson - Co-Founder & President of Immutable Matt Finestone - Head of Business Development at Loopring We discuss how these three voices in the crypto space have been integral in building successful DeFi products on the Ethereum mainnet. Listen in for a deep-dive into the different methods these protocols have taken to implement their apps on an Ethereum Layer 2. ----- 🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- 💪BECOME A BANKLESS PREMIUM MEMBER: http://bankless.cc/membership ------ AFTER THE SHOW DEBRIEF: https://shows.banklesshq.com/p/exclusive-debrief-building-layer ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️ AAVE - BORROW OR LEND YOUR ASSETS https://bankless.cc/aave 🚀 GEMINI - MOST TRUSTED EXCHANGE AND ONRAMP https://bankless.cc/go-gemini 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith 📱 DHARMA - MOBILE ONRAMP DIRECTLY INTO DEFI https://bankless.cc/dharma ------ Topics Covered: 0:00 Intro 5:14 Loopring & ZK-Rollups 13:17 Immutable NFTs & ZK-Rollups 17:31 Synthetix & Optimistic Rollups 21:03 Why Ethereum? Why Rollups? 39:24 Layer 2 Efficacy/Roadmaps 1:01:25 Composability 1:18:22 L2 On-Ramps 1:27:52 Does L2 Compete w/ ETH? 1:34:47 Closing & Disclaimer ------ Relevant Links: Synthetix https://synthetix.io/ Immutable https://www.immutable.com/ Loopring https://loopring.org/#/ An Incomplete Guide to Rollups (w/ Vitalik) https://youtu.be/wcCHlqgGSH4 ------ Don't stop at the video! Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState ----- 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://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:06Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front-run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, how are you doing?

• 0:23David Hoffman?

  Absolutely fantastic and much more knowledgeable. After we just got done with this L2 Implementers panel, we brought on three different individuals who are all working on three different projects, who are all implementing their application on a specific L2. So we brought on Matt Finestone, who works for Business Development at Loopring, Justin Moses, the CTO of Synthetix, and we also brought on Robbie Ferguson, who is the co-founder behind Immutable X, which is a ZK Rollup-based NFT exchange. And so the through line behind all three of these individuals is that they are working for a protocol that is building something on an L2. They are not an L2, they are building

• 1:04David Hoffman?

  something on an L2. So there's an important differentiator there. And so we talked to them about what it's been like going through the research phase, going through the building phase, and where they are now, and then also where the roadmap is ahead of them. And I found it extremely informative, and I'm sure the listeners will as well.

• 1:21Ryan Sean Adams?

  Yeah, absolutely. So two things I want to say here. The reason that this is top of mind and relevant is because Ethereum gas fees are high, and it needs to scale outside of what we call kind of the mainnet Manhattan into into into Layer 2, which are these other chains that represent kind of like the suburbs, as we've talked about before. So this is a very topical issue right now that's that's really facing Ethereum. And what we think is DeFi is going to have to completely re-architect itself into this Layer 2 mode. The other thing I wanted to say is if you're kind of new to Layer 2, what we're talking about is Layer 2 is basically a

• 2:04Ryan Sean Adams?

  chain that is not on the Ethereum mainnet, but is secured by the Ethereum. Mainnet. This is different than a sidechain, which might integrate with Ethereum, but it's not secured by Ethereum. That is the distinction between a Layer 2 solution and something that might be a sidechain or a another non-Ethereum chain that's not as well secured by Ethereum. And the thing about this panel is, these are all application developers. And that's why David and I wanted to get folks that were in the trenches, actually building on top of these Layer 2 solutions to talk, because they can give the most credible perspectives on what's working and what's not.

• 2:48Ryan Sean Adams?

  Because they're actually like users of the product. They're consumers of the Layer 2. They made a strategic choice, an investment choice, to build on top of Layer 2. So if they're doing that, if they're investing in it, then we wanted to know why. And we figured that they would have the best perspective on what's real, what's not, and when all of this stuff is coming and happening. And I think they gave us this. So if you are looking to try to understand what Ethereum scalability trajectory looks like, what Layer 2 looks like on Ethereum, this is the perfect podcast, I think, to get up to speed.

• 3:29David Hoffman?

  There were two parts in this conversation that I really, really enjoyed. The first is where we asked about the research process. So each one of these guys works for a team, and there was a research process to go into which L2 was the best choice. But before we asked that, we asked, well, why did you even stick with Ethereum? Like, you could have gone elsewhere. Why didn't you? And I think that was one of my favorite parts in this conversation. And then the other favorite part of this conversation came at the very end, where we asked about their thesis or theories about, does the value capture that's going on on L2 actually compete with Ethereum and Ether the asset? Or are they value generative to Ethereum and Ether the asset? I thought that was a really fantastic part of this conversation.

• 4:11Ryan Sean Adams?

  You guys are really going to enjoy this conversation, but before we get into it, we want to tell you about the fantastic sponsors that made this episode possible.

• 4:20David Hoffman?

  So as you guys know, there is always a debrief at the end of every single episode that we reserve for the premium subscribers to the Bankless program. But we want to give the free listeners just a taste of what that kind of what those debriefs are like. So if you are interested in hearing the debrief, you can stay tuned to after the episode and you will be able to hear the 30, 35 minute conversation that Ryan and that Ryan and I have after the episode, where we talk about our takeaways, our lessons, our thoughts that we had during the episode, just me and Ryan. So if you are interested in that content, again, it's at the end of the episode. It's free for everyone this time. And if you are interested in the future and if you are interested in accessing the future debriefs,

• 5:04David Hoffman?

  you can subscribe to the Bankless premium RSS feed. There's a link in the show notes to get that done. I thought this debrief was pretty cool and so check it out. It's at the end. Aave is a borrowing and lending protocol on Ethereum and just recently released Aave version 2, which has a ton of cool new features that makes using Aave even more powerful. With Aave, you can leverage the full power of DeFi, MoneyLegos, Yield and Composability all in one application. On Aave, there are a ton of assets that you can deposit in order to gain yield and all of those same assets can also be borrowed from the protocol if you have deposited collateral.

• 5:42David Hoffman?

  Here you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option if I wanted to lock that interest rate in permanently. One of Aave's V2 features is the ability to swap collateral without having to withdraw your assets, trade them on Uniswap and then deposit them back into Aave. Aave does all of this for you, all in one seamless transaction. So you don't have to repay loans in order to change the collateral you have backing them. Check out the power of Aave at Aave.com. That's A-A-V-E. If you want to live a bankless life, you need to get a Monolith DeFi Visa Card.

• 6:27David Hoffman?

  Monolith is a one-two punch of both an Ethereum smart contract wallet and an accompanying Visa Card that lets you spend the money that you have in your Ethereum wallet everywhere where Visa is accepted. When you swipe your Monolith Visa Card at the grocery store or at a restaurant, it actually makes a transaction on the Ethereum blockchain that spends some of the money you hold in your Monolith wallet. It's insanely cool and it's one of the best tools out there for living a bankless but still normal life. Monolith also offers on-ramp services for getting your fiat money into the world of DeFi. So it's trivial to top up your Monolith Card if you ever need to and your deposited money goes straight into your non-custodial wallet. So your money is never

• 7:08David Hoffman?

  held by a centralized intermediary. Because Monolith is native Ethereum infrastructure, the money you hold in your Monolith wallet still has the power of DeFi behind it. Swapping assets on Uniswap or earning yield in DeFi is at your fingertips. Go to monolith.xyz and sign up to get your Monolith Visa Card today. All right, Bankless Nation, we are here with Matt Finestone of Loopring, business development at Loopring. We're also here with Justin Moses, who's the CTO of Synthetix, and then also, last but not least, Robbie Ferguson, who is the co-founder of Immutable, which is the studio behind God's Unchained. So Matt, Justin, and Robbie, welcome to Bankless and we're so excited to have you guys on the show today.

• 7:54Speaker 02

  Thanks, David.

• 7:56David Hoffman?

  So L2 Implementers, assemble. Gentlemen, you guys have all been invited here because you share something in common. You have all built and deployed functioning applications to the Ethereum mainchain and has seen success and adoption in the usage of your apps, which is already a feat. But there's something even more unique about the respective projects that all of you guys work on and that each of you guys have implemented or are in the process of implementing, which is your guys' app being deployed on an Ethereum L2. Synthetix is offloading much of its infrastructure onto Optimistic Rollups, Loopring Is building a complete payments and exchange platform on ZK rollups and immutable is building an NFT asset exchange platform also on ZK rollups.

• 8:39David Hoffman?

  So again, we brought Jesse, Robin and Matt here to tell us the story of their app, their need to scale and their process thus far. So let's start with with you, Matt and Loopring. Tell us about the nature of your app. What does it do? And at what point did you realize that Ethereum's main chain capacity just wasn't going to be enough?

• 8:59Speaker 02

  Thank you, David. Yeah, really excited to be here with fellow L2 implementers. Yeah, so Loopring is a bit different than I think my my compatriots here. And the fact that we had, we were a protocol and then we built products and then we built a new protocol ourselves. The layer two protocol to augment the products. So the application did not force us to kind of look elsewhere for a layer two. We built it ourselves. So we're kind of a layer two protocol and layer two products.

• 9:38Speaker 02

  But yeah, we realized long ago that like, you know, we had no business doing what we were trying to do on Ethereum layer one. We were building order book exchanges. The experience was really poor on Ethereum layer one. So we looked for scalability. This was early on. Rollups were just kind of being whispered around. And we built our ZK rollup specifically to scale our order book exchange. So we built an application specific ZK rollup and then, you know, we start learning and we actually have users and iterating.

• 10:15Speaker 02

  So the product changes a bit and then we we enhance the protocol to support AMMs on layer two as well and then payments as well. So what came from just like an order book decked protocol really turned into an order book and AMM exchange and payment ZK rollup protocol. Yeah, it's a bit of a going all over the place there, but as you see, we kind of did like full loop, no pun intended, honestly. And yeah, that's that's where we're at right now.

• 10:47David Hoffman?

  Maybe you can talk a little bit about how how and why building an order book exchange on the Ethereum L1 was such a such a pain. Like, why? Why did that not really work out so well?

• 10:59Speaker 02

  Right, very briefly, the biggest thing is to get liquidity on order books, you really need market makers or liquidity providers that are in control of their quotes, what they're quoting to buy and sell, and 15-second blocks and gas prices to submit, potentially cancel, does not allow them to do their thing and kind of quote, and as the market's moving, be quick and cheap, like low latency, low fee. So it's really like a non-starter. It's maybe one of the worst things you could do if you're trying to replicate that legacy-style order book on a blockchain. But Layer 2 allows us to really replicate that performance. You feel like you're on Coinbase Pro or Kraken, except you're on this layer completely

• 11:44Speaker 02

  coupled to Ethereum-based layer security.

• 11:49David Hoffman?

  Right, so market makers, even with Ethereum before, scale was really an issue in the way that gas prices were today, those like 15-second block times, and you know, even pennies' worth of a transaction, it was already like, without the congestion that we have today, it was already a poor experience. And you know, people who are managing order books need to be able to basically have instantaneous control, not 15-second delays or pennies at a transaction. So even before Ethereum was congested, the L1 was never, ever going to be able to do what you guys wanted to do.

• 12:25Speaker 02

  That's a great point, actually. I didn't think of that kind of theme here, that like, you know, Justin and Synthetics were forced after like, large success on Layer 1 already, and potentially same with Robbie. We couldn't do what we wanted to do even a few years ago. That's very true. And I guess we'll jump to this, but the Layer 1 not being suitable for this type of behavior is actually kind of what spawned AMMs, where these market makers don't need to jump in and be quick, you're just kind of dumping your money and letting a function do the thing. So it kind of, AMMs came out of the environment that optimized for it.

• 13:04Ryan Sean Adams?

  Yeah, Matt, they really came out of necessity, right? It was due to this constraint of basically, you know, low amounts of transactions per second that the automated market maker model became so successful and so popular. Maybe Robbie, for you, kind of same question. Can you tell us a bit about the nature of your application? And at what point you decided that you needed a layer two?

• 13:30Speaker 03

  Yeah, of course. The point was actually really early. When we were first launching the original sale of God's Unchained, it was at the same time Fcoin was doing their exchange listing. And I don't know if everyone watching this remembers, but the way they incentivized that was basically as poor as you get was they incentivized transactions in the ETH network with high gas fees. And so for the first time ever, we were seeing gas fees of like 150, 180. We did some innovations then, which were fine, but fundamentally we did the maths. We were like, okay, if we even get to 30% the size of Hearthstone, so a medium sized game, we are taking up some absurd amount of the Ethereum blockchain via NFT transactions,

• 14:12Speaker 03

  particularly because NFT transactions are a ton more expensive than just ERC20 transfers. Like you can transfer a million dollars worth of ERC20 value for a fixed cost. You're transferring in a million dollars worth of NFT value in God's Unchained. That looks like probably, you know, 500,000 hearts. So there's a fundamental difference between fundable tokens and non-fundable tokens.

• 14:36Speaker 03

  And so in picking a solution, really, there were, there were no available solutions, I would say, three years ago.

• 14:44Speaker 03

  There were ideas being thrown around, state channels have yet to come to life. Plasma chains also really have not been implemented in a mainstream way. And this, I think, was what drove people to things like new layer ones or side chains. And then we had this magical thing called a zero knowledge proof come out, which I remember being obsessed with when I first heard about it, especially the different parables of ways of explaining it, like the parable of the cave or, you know, the numbers and how it's all. Kind of like probabilistically determined, which gave me some rough approximation of the maths, which is probably like one percent of what it actually is. But thi- this is, as Vitalik says, like, the way it will scale. And so I think we determined that solution pretty quickly.

• 15:29Speaker 03

  That this was the most obvious way to scale, in particular NFT transfers, because they were so problematic on Ethereum.

• 15:37Speaker 03

  And then it was just a matter of choosing, well, okay, who do we think the best kind of roll-up provider is? ZK rollups are a bit of a NFTs, just because of the lack of withdrawal time. Right now, I think optimistic solutions work better if you want generalized programmability, which is, I think, why, you know, Synthetix is going with optimism, which is also an excellent solution. So, yeah, I think that was the genesis of when we knew. And also, when we knew there'd be a solution was when we first saw traction and deployment of rollups.

• 16:04Ryan Sean Adams?

  So, to be clear, Robbie, you are going with a ZK rollup type solution in the same way that Matt's team is with Loopring, is that correct?

• 16:13Speaker 03

  Yeah, that's right. I think we use slightly different providers. I think Loopring, do you guys use Meta Labs?

• 16:23Speaker 02

  We use ourselves. Loopring Protocol was the first ZK rollup, as of 14 months ago. So that's our kind of provider. That's why I was kind of saying we're a bit of a different beast. We're a bit of a different beast, like we operate across the stack. But, yeah, no hard feelings.

• 16:42Speaker 03

  No, no, no, very cool, very cool. I'm sorry, I didn't know that. I think, I mean, creating those proofs is bloody hard. That's why, that's how we partnered there. And ultimately, I see there's a few layers of the stack here. There's proof providers, there's a protocol on top of that. So I almost call that like an AWS infrastructure right down the bottom, which is clearly what you guys are providing. And then you have, okay, well, what networks or products are built on top of that? And then you have applications, then you have OpenSea, SuperRim, Marketplaces, Games, which sit on top of that protocol. So we went for this level. We said we don't need to make the magic maths. I don't think we wanted to do that. And there's a real need, exactly. Yeah, literally.

• 17:25Speaker 03

  And the implementation of it for NFTs is already tremendously difficult. So we took on that challenge instead.

• 17:32David Hoffman?

  All right, so let's turn to Justin at Synthetix. Synthetix never really was destined to be an L2 in the same way Loopring or Gaussian Change slash Immutable was, but you guys have turned into an L2 just simply out of necessity, because if your email one is congested. So let's talk about a little bit of, again, the nature of your app, the nature of the economic activity that goes on in Synthetix. And at what point did you guys realize that, you know, L2 was not just like an option for you guys, but something that you guys must do?

• 18:08Speaker 04

  So Synthetix is a decentralized exchange, a little bit like Loopring, Matt was saying. I guess the big difference for us is we're a bit more like Uniswap in that we're Peter Contract and we don't have an order book as such. What's actually happening is people stake a token, a S and X token, and from that they can issue a stablecoin and then they can basically reprice that stablecoin into any other synthetic asset. So basically what we have is this big shared debt pool that's comprised of all these different synthetic assets. The more people that go into synthetic, the more the debt pool is denominated in E, which is kind of cool, because it means that you can get this idea of like input liquidity. You can take any synth and 100% convert its value to any other synth that is supported. But the problem with that is that

• 18:53Speaker 04

  that means that it's all shared, like it's all shared state. And as those of you who've ever written any, I certainly know that that tends to mean things like, you know, looping over every synth in the system to figure out how much debt there are. There is. And this stuff is very gas intensive. So I think for us, there's sort of, it's somewhat two-pronged. I actually think you're a little off, David, on that assertion that we would never destined for L2. Like if you talk to Kane, he's always been very much that he wants the experience like Matt was saying. He wants it fast and snappy like a traditional, you know, Dex. And so, you know, we obviously couldn't do that on L1. But on top of that, we have this very onerous gas fees that are just preventing, you know, regular people, people who, you know,

• 19:37Speaker 04

  might only be staking, you know, a few hundred S and X for actually Doing anything because the code that we add is fairly complex, you know, with some people looking at a hundred, two hundred dollars worth at the time of trying to do simple things and minting. Now spending, you know, a few hundred dollars worth of ETH in order to to earn maybe a half fifty dollars worth of that's the next. So for us, there was really those two, those two factors required us to go over. And to answer your second question, it was actually in DevCon five in Osaka when we saw the Unipig demo. We saw for those of you who were there or want to see the video, basically, you know, the Plasma team who became what it became the Optimism team. They worked closely with Hayden and the Uniswap team and they put together this Unipig.

• 20:22Speaker 04

  And, you know, just seeing it, you know, just seeing the tactile response, you know, my background's like, you know, full staff web engineering and I, you know, I was shocked. And when we did our demo on L two, it was funny because our front end engineers, we were now dealing with like regular kind of, you know, concurrency problems that we just never had with Ethereum. But like, we have multiple users using the app, we need to basically use WebSockets or something to to to tell them in real time what's happening. So this the shared state, which we never had to worry about, you know, with L one. So, yeah, for us, the Unipig demo, which was about, was it October twenty nineteen, was the step from the moment we were, we started to take a lot of interest in Optimistic and we started talking to them in earnest.

• 21:04Ryan Sean Adams?

  So, guys, let's let's dive a little bit deeper into kind of the selection process of of Layer Two. And I want to start here. I know none of you are, let's call it, you know, chain maximalists of any sort. I I'm pretty certain. I think that you guys are looking out for your users' best interest. That's what application developers do. They want to provide the best user experience and the best application possible for users. And of course, when when you think about Layer Two, you could also go in another direction, which is a non-aetherian blockchain. And there are a ton of, we'll call them ETH killers, in quotes, out there that are promising.

• 21:49Ryan Sean Adams?

  You know, low gas fees, no gas fees, infinite amounts of block space, kind of the all you can eat buffet. Please come to my blockchain, Justin from C++. We want you up here. And yet, all three of you have chosen to stay within the Ethereum ecosystem. And not only that, but have chosen the the security model of Ethereum as well. So it's not only kind of a sidechain based on the Ethereum virtual machine. You're actually choosing to go down this even harder road where the security of your rollup is actually based on Ethereum. So there's some some really new technology that you're cutting your teeth on. I want to know why, and I think listeners want to know why.

• 22:33Ryan Sean Adams?

  Why did you stick with Ethereum? And what was the rationale behind the selection of the the layer two that you've chosen? Let's start with Justin on this question.

• 22:46Speaker 04

  Yeah, that's a good question. I mean, I think, you know, for us, I don't know if any of you know this, but when we were Haven, which is what Synthetix was before, before it sort of rebranded. I was actually working on writing, porting our contracts to EOS. I did it for maybe six weeks. I was brushing up on C++ and writing code and getting involved and really trying to get like write open source code, write continuous integration that that that pulled together Docker containers and spun everything up and tested everything. And whenever I tried to ping the the community on EOS, it was just crickets. Like, it was just nothing like, and I was peeing different BOP producers and trying to get them to like help.

• 23:28Speaker 04

  And it really just just reillustrated how strong the Ethereum developer community is. It's massive. You know, there's just so much infrastructure, there's so much tooling. And there's so much momentum there. And I, you know, I'm an engineer, right? So I tend to, maybe I overindex on that. But my experience very strongly is that Ethereum's developer community is so rich that it would be, you know, very hard to move away from it. And I didn't, I haven't seen any, you know, ETH killer that has showed me that there's any developer community anything quite like it. So for for us, it doesn't make any sort of sense to move over to another one.

• 24:04Ryan Sean Adams?

  Can we talk as well, we've got you on this, Justin, about why the optimistic rollup design specifically? What were the advantages of that versus the other rollups or other ETH layer two scaling solutions out there?

• 24:19Speaker 04

  Well, I mean, I think, assuming we're on, sticking on Ethereum, I mean, for us, like, obviously, you know, ZK, they're not having to worry the one week withdrawal period is obviously, it's obviously a better user experience, but there's no doubt about that. But for us, a big part of the decision is how complex our smart contracts are. Still, to this day, there's no easy way to port smart contract logic, you know, into anything, into anything ZK at all, right, onto L2. So the solution is to try to, you know, to try to take a little part of it, right? Whatever you need to sort of take onto L2 and create some sort of ZK, compatible solution and create it.

• 25:00Speaker 04

  And a big part of the decision for us, particularly for me, is maintaining these two different code bases. So I'd like to talk more about this at some point, and this is a good piece. But there's a lot of complexity in now maintaining state on both, and not just state, but also contracts, code of both L1 and L2. Like, I'd like to think of it as a new dimension. Now, we have our contracts deployed on different networks, right? Like, you know, CodeMan will have it. But now we also have this dimension of layer two. And the more, you know, the more cognitive load you put on your engineering team, the harder it is to get things done. So for me, like, a big, a really big part of the appeal of optimism was being able to port more or less exactly as is the contract code that we have on L1 and run it in L2,

• 25:42Speaker 04

  and then have two separate systems, which is one algorithm to the shards. And what I imagine is going to eventually happen is we are going to probably see different L2s. And there'll be, there'll be capital moving between these different L2s. And we need to handle how that's going to happen. I don't actually think it's necessarily going to be winner takes all. You know, so for us to be able to take our logic and move it over wholesale, it's a huge value add of optimism.

• 26:05David Hoffman?

  Robbie, let's talk about the process over at Immutable. When you guys were realizing that the Ethereum L1 wasn't going to be enough for all the data that you guys would need to be able to put on chain, did you guys ever look elsewhere other than Ethereum? And if you did, what was the rationale behind why you decided to stick with Ethereum?

• 26:26Speaker 03

  Yeah, of course, we looked elsewhere. We even had offers, massive grants from different chains. You know how like these things go. And this was actually a really simple question for me, though. And ultimately, I am an ETH maximalist, I think, contrary to the original thing. And the reason is not just inherently, hey, this is what I like. It's, I think I'm a decentralized maximalist, and Ethereum is really one of the only public blockchains which fulfills that criterion for me.

• 26:56Speaker 03

  The alternative blockchains simply, like, either their consensus mechanisms are so centralized that if I hired a crackpot team of hitmen with 2 million bucks, I could go crack it. Or if the government cracked down, they could go crack it. Or if the CEO of the company of their centralized blockchain, I don't know who I could be referencing here, was to leave, that'd be a significant impact to the blockchain. So I think, just speaking pretty candidly, there's very few decentralized alternatives. So my question is, what is the point, then? Why don't I run a marketplace on my database on my computer? Why don't I just do another steam? Like, the whole point of this is to give users self-custody, sensitive resistance,

• 27:36Speaker 03

  and it's fundamentally decentralization and sovereignty over hard-capped assets and hard-capped money. And so I don't think going halfway and just creating a nice experience for trading valuable things that is fundamentally vulnerable to the same things centralized markets are is doing anything at all. The next thing I would say is, so that's why Ethereum. But the next thing I would say is, it's not sufficient for me to have some sort of relationship with the Ethereum ecosystem. And I think there's a lot of wool being pulled over people's eyes here as well at the same time. Which is, I think, I mean, and this is where I actually take my learnings from you guys, because I think you so cleverly articulated, what are the value propositions of Ethereum?

• 28:17Speaker 03

  Which in my mind are four: ETH is a consumable, ETH is a capital asset, ETH is a store of value, and ETH is a form of economic bandwidth guaranteeing via its security the operations that exist on that protocol. To me, you have to therefore rely on Ethereum's security.

• 28:35Speaker 03

  Scalability solutions which rely on Ethereum security are rollups. And so I think that that was partially why I chose that. Like, at the end of the day, you want to have the cost to attack the stuff you're trading to be the same as the cost to attack your rollups. I think optimism has a slightly more linear cost to it to attack the proofs, but it's it's still correlated to Ethereum security. And so it's still really good. And I think, you know, Justin was on the money with the fact that it's just way better for DeFi apps right now. An optimistic solution. And so that was why, Ethan, that was why rollups. And ultimately, at the end of the day, for customers, it's way better to. Like, it is where all the network effects are. It's where all the developers are.

• 29:16Speaker 03

  That's a really hard thing, even with $250 million to buy, you know, your own ecosystem of developers. It's just, you know, that money will only go so far and that people will be motivated by cash rather than the true kind of cultural genesis of a decentralized community, which we've seen on Ethereum today.

• 29:36David Hoffman?

  And so what about the research phase for immutable and an L2? How did you guys come to a decision as to what L2 was the right L2 for you?

• 29:47Speaker 03

  Yeah, so it's really just two decisions. It's one, what kind of? So in my mind, the only L2s are rollups right now. I mean, that's because the definition of an L2 is something which inherits the security of the L1. Well, it's the only solution which do that currently. Other mechanisms like sidechains useful. And they're just, they have their own consensus mechanisms. So you're not actually getting any security. They have bridges and it's great for the ecosystem. And this is partially why Polygon said, hey, we want to be this, you know, relationship to future ZK rollups and things like that. I'll be excited when they release one and they can they can use us if they like for NFTs. So I think that the first choice was out of rollups, which one?

• 30:30Speaker 03

  Zero knowledge was very clearly the choice for us. NFTs have a reduced need for EVM compatibility over complex smart logic. And we're also getting there. So immutable X is implementation of a zero knowledge rollup with Starkware. Already has the prover on chain, which is able to basically take any EVM logic. We just don't have the language and tooling, which is going to get there this year. So that's future proofed. And the main reason for NFTs is the instant withdrawals. So the benefit with ERC20s in a, you know, a protocol like Synthetix is you can do things with liquidity bridges to kind of get around this problem with the withdrawal time. They're not perfect, but they're pretty good for fundable tokens. You can't do that for NFTs.

• 31:09Speaker 03

  If you have a, you know, one of a kind crypto key, Axie, God's Unchained card, I can't, you know, loan you or construct some liquidity bridge, which is going to give you early access to that capital. It's just impossible. So for us, those were the, you know, a zero knowledge rollup was the only solution. Out of that, it was like, okay, well, provided to be used and, and Starkware was the obvious choice for us. $30 million from Sequoia, a really world-class team and it's future-proofing that as well.

• 31:35Ryan Sean Adams?

  All right. And last but not least, of course, Matt from, from Loopring was building on something else other than Ethereum, ever even something that you guys could have considered?

• 31:46Speaker 02

  Right. So first of all, such a pleasure to hear these guys speak, Robbie and Justin, and like so like-minded or facing similar things. And I don't have much else valuable to say except for our own situation. But yeah, I really echo everything they said. Didn't we ever look somewhere? Here's another little fun tidbit, actually. Even before scalability was like the big pressure on us or the big thing we were trying to tackle, we actually did look elsewhere off Ethereum back three years ago. And I will up Justin's EOS. We actually deployed smart contracts for Loopring version one on Neo.

• 32:29Speaker 02

  On Neo.

• 32:30Ryan Sean Adams?

  Wait, Neo, the, the China's answer to Ethereum? That Neo?

• 32:35Speaker 02

  That's right.

• 32:36Ryan Sean Adams?

  Okay.

• 32:37Speaker 03

  Can you pick someone from a call?

• 32:42Ryan Sean Adams?

  No, we'll just edit that out, Robbie. We have to. No, it's okay, Matt. You know, we, we, we all have those things that have happened in our past that we're trying to get over now, but tell us more.

• 32:53Speaker 02

  No, we, I think it's a great learning moment. We, you know, Loopring is actually a primarily Shanghai-based team. Most of our engineers, and I'm not there, I'm in Canada, but a big part of our team is there. And back then, it wasn't so obvious to some, even to me, even though I'd also consider myself, you know, just a purely ETH person now, by a long shot. Back then, it wasn't clear that you didn't want to deploy your things on other chains. Not for scalability reasons, just for, oh, this is maybe the Ethereum of China, or interoperability, different chains. Like, the reasons are fuzzy now, looking way back then, but we deployed it.

• 33:35Speaker 02

  But it was really kind of like a tangential effort. And as soon as we did it, it kind of didn't work for certain technical quirky reasons, like the way their gas... It's actually kind of funny to think about it. They had like two types of gas. And like, if you did the transaction that is below some type of, like, consumed gas, it's like free, if I remember correctly, but then it like spikes up. It's like a step function. If you do anything a bit more complex, it was really... So actually, the reason why we dropped it was because it was technically not feasible. That was before Ethereum just became the clear place where we wanted to focus our time. As Justin was saying, like, the cognitive overhead and just the simplicity.

• 34:18Speaker 02

  So we actually looked elsewhere. So we have a bit of firsthand experience about dealing with crickets in a community, or just facing all those things. But it really was a different world back then in 2017.

• 34:30Ryan Sean Adams?

  What's worse, Matt, crickets or high gas fees? Is kind of the question, right?

• 34:35Speaker 02

  Yeah, right, exactly. That's the first thing I thought of when you posed the question was like, user experience is not, like, we all think like, okay, speed and cost. That's like actually way down the list on user experience. What's way higher is people, both users and devs, assets, liquidity, and like awareness, right? Like, that is, those are prerequisites before anything else in user experience, which we think of like speediness and costliness. Like, so those are indeed the things about why Ethereum. Now, to get to the next point, when we tried to tackle scalability...

• 35:19Speaker 02

  It's funny, someone mentioned DevCon 5. For us, it was DevCon 4 in Prague and just ZK rollups. I just remember it so clearly. People were talking about ZK rollups for scalability. And I remember just writing my team. I was the only one there like, hey, what is this stuff? It sounds like it's a magic bullet to all of our, all of our problems. And back then, there were no live ZK rollups. There was no, like, to my, maybe there was the beginnings of thoughts about companies forming, but there was no Starkware in its current form or Matter Labs or really any live ZK rollup. So we became overnight a ZK rollup team. And we're not a bunch of cryptographers.

• 36:02Speaker 02

  As, as Robbie was saying, these proof systems are hard. But like, our team turned into practitioners of zero knowledge cryptography. And really, we had a few great engineers leading us building the first ZK rollup from scratch, which was a huge, a huge effort. It took a year. It stopped everything we were doing. But yeah, we, we, we built it ourselves and that's that. I forget the next part of the question. Why ZK over optimism?

• 36:33David Hoffman?

  I hadn't actually asked it yet, but that's exactly right. It seems like ZK rollups was the rollup of choice for you guys. And it was seemed really, really conducive to you guys from the get go. It seemed like you guys never really had any doubts that ZK rollups was the solution for you. What strengths did ZK rollups have that really just made it crystal clear that it was the right path forward?

• 36:55Speaker 02

  Right. So I may be mistaken here. Maybe somebody could correct, but I don't think optimistic rollups were a thing back then. I think rollups, like the idea of like a rollup, like generalized was, I guess it was a thing because people thought, okay, validity proof were frog proofs. But like, you, you didn't have debates, like cool debates now, like ZK versus optimistic. It was like, okay, rollups and like, yeah, you use these validity proofs. As far as I know, we only discussed that. We never thought of, I, I could be wrong. But then as we progressed and like we were mid-build and maybe the idea Came out a bit. We were still very, very strongly in the ZK rollup camp because it does offer us what we need.

• 37:35Speaker 02

  We're not, we don't have those complex kind of arbitrary logic that Justin was describing. We were building order book exchanges, right? Which turned into order book exchanges plus payments plus AMM. So still just like specific functions we were tackling. So ZK was able to handle that. So that's kind of one, one reason. The other is indeed the fast withdrawal times. We, that's a big thing, which is live on Loopring now. It's really cool. You could exit, it used to be a big thing that people said, oh, you know, an hour wait, two hour wait is way too long. Now you could pay up to kind of eject from layer two in the next Ethereum block, 15 seconds. It might cost you like 60 bucks or 70 bucks right now, but that, then you don't wait.

• 38:21Speaker 02

  Something like that. So, so those, that was it. But really it's the, the cold hard fact is like, it was just the one that we were aware of. But when we did kind of be, become aware of optimistic rollups, we just also, we liked the, the idea of validity proofs. Maybe we had like these naive debates, which have since been answered. But I remember talking to the team and okay, what about optimistic rollups? It's going to be more generalizable. But we all said like, we like the idea of just like validity proofs, like not waiting for fraud proofs after. I think we posed the question like, what happens if there's never any fraud on an optimistic rollups? Like the watcher's never like win a bond or something like that.

• 39:05Speaker 02

  I don't know if that's even since been answered, but like that was like a thing like, okay, if everyone is too well behaved, then does everybody like let up their guard because nobody's actually like slashing people or winning like a challenged fraud proof? So like we had those early, probably now answered questions, but we just liked the idea of validity proofs.

• 39:25Ryan Sean Adams?

  So I want to frame this question to the the implementers, the Avengers of implementing on layer two right now this way. So a lot of people, when they're seeing kind of Ethereum's congestion, as David sort of phrased it, but basically it's high gas fees. They're getting flashbacks to 2017, where Ethereum had its, you know, CryptoKitties moment, when basically, you know, everyone realized that the CryptoKitties application was consuming too much of the Ethereum network. And oh, my God, Ethereum had to scale. And then we also remember that the Ethereum scaling solutions at that time were not quite ready for primetime. There was like a lot of

• 40:08Ryan Sean Adams?

  promise about state channels, for instance, you know, projects like like Raiden would come and solve things. Then there was a lot of promise about Plasma, that you know, Plasma was the next solution to to scale Ethereum. There was even promise about ETH2, hey, it's, you know, maybe it's right around the corner, kind of like, but we're not sure what the roadmap looks like. So this is a question, I think, only the implementers can answer. And this is the reason we brought people who are building apps to this conversation is because you guys can drop the truth on us, right? Like, no one else can. I mean, we bring on some of the the layer two providers, they're all going to sell us the vision, essentially, and try to sell us the platform. But you guys are actually in the trenches, building this shit. So what we want

• 40:53Ryan Sean Adams?

  to know to the panel is, is layer two really happening this time? Like, how far along are we? Is it here? I mean, because mainstream is coming, and they're coming right now, they're coming during this bull run, we got to be ready for them. How ready are we? Let's start with Matt on that question.

• 41:11Speaker 02

  Yeah, absolutely. Maybe you gave me this one because it's a it's a softball pitch for me because I could say, it's not coming, it's here, you know, exclamation point. It's it's here. Like, that's all Loopring does. Without layer two, we wouldn't exist, we wouldn't have a product, we'd have a protocol. So to the extent that like, we have stuff to do every day and our users Do stuff and there's volumes, that's all layer two live mainnet real value. So let's get that off right out of the way. It's here. Now it's time to learn and tweak and iterate and everybody else is coming. You know, we've kind of, we've been alone for the past year. Now, like, you know, mega popular apps are coming.

• 41:56Speaker 02

  Synthetics, apps and protocols. So now, you know, they're live, they have a function of their platform live on mainnet. So it's here, it's not just us. And it's really amazing, as all these builders know. When you actually have users and things are happening, you start improving, right? Like, that's like compared to RZK, RZK roll up last year. It was barely usable. Everything was like, everything was gas intensive. You couldn't do that much stuff. Now it's like, you know, it's more efficient, it's more flexible. So we're going to see that kind of inflection kick in where people are learning from their L2 experiences. And everything is just, I mean, it's here, I'm so bullish.

• 42:38Speaker 02

  If people don't know that layer two is here and it's only getting better, then I hope this episode really. Or maybe I don't want them because that's a nice fud thing against ETH. And I want it, you know, I don't want it to just be realized overnight and then priced in that, oh yeah, this could do everything that we needed to. So I don't mind actually some apprehension or some other conspiracy theories that it's not coming because that gives me more time.

• 43:04David Hoffman?

  Yeah, alpha is of course always opportunity. But Matt, at Loopring, you guys are still building stuff. You guys are still working on progressing Loopring. So if you aren't actually working on building the actual L2 platform, what are you guys working on? Like, where are you guys and your guys' roadmap to actually capture and facilitate L2 scale?

• 43:26Speaker 02

  Right, so I think we still are definitely working on all fronts. That's why I was saying we're a bit of like a different beast. So we have that whole proving team and the relayer who's, you know, generating these ZK snark proofs. They still have improvement to do. Then we have the actual protocol, what we could write in our ZK circuits. You know, now as of a few months ago, AMMs are on our layer two. So still improvements there. Maybe next will be a lending protocol or another type of functionality. So those are kind of the two pieces of the ZK roll up front, like the relayer and then the protocol written on top of it. And now we have this new layer of products, which is kind of new to us, that's super important,

• 44:06Speaker 02

  is presenting this in a package to the user on like the Loopring Exchange on web, which is an AMM and order book decks and payment application where you can do everything gas free. And so just improving the products, which is a huge, huge thing and quite different hat for us. And besides our Loopring Exchange, we have the Loopring Wallet, which is kind of another thing. I know you guys are right on top of from Vitalik's recent episode on social recovery wallets, but Loopring kind of, you know, expanded its focus again. And we have a smart, a mobile smart contract wallet, so the social recovery wallet with

• 44:49Speaker 02

  our ZK rollup baked in, which is kind of a dual, like a really two-pronged approach at like mass, you know, mass market usability. So, you know, fast and cheap, but also a product that doesn't scare you with a seed phrase and is like socially scalable and like usable there. So, so we're still busy on all those fronts, protocol, product, all that. Definitely, definitely, it's only getting busier now that we actually have real users and real volume, you know, $250 million worth of, worth of value on our ZK rollup, which is unbelievable for me to think about. I remember being discouraged, you know, mid last year saying, man, how hard is getting people on layer two gonna be?

• 45:33Speaker 02

  And by no means are we, you know, hanging up our hat like we We've achieved it all. We're just getting started, but it's just so nice to see real users, real volume. We're all grateful and really looking forward to continuing that.

• 45:46Ryan Sean Adams?

  Guys, I just want to capture that because Matt, you know, 250 million in locked value on a loop ring. Look, guys, like a year ago at this time, we barely had that much locked in DeFi in our DeFi protocols. Right? I mean, we just hit like the 1 billion mark in something like February of last year. So now that we've got like Loopring 250 million, that's huge. And, you know, congrats to the team there and congrats for pushing this vision forward. I just, you know, this space moves so fast. It's unbelievable what you can accomplish in six months, a year's time. Very cool.

• 46:22Speaker 02

  Thank you so much, by the way.

• 46:25David Hoffman?

  Let's turn to Justin with Synthetix. Justin, where are you guys in the development of your L2? Well, like, what is that roadmap like? Where are you guys in that process and where do you have left to go?

• 46:37Speaker 04

  So right now the Optimism is like has a pseudo maintenance. So it's pseudo in that we're the only ones that can actually deploy right now. But, you know, plans are underway for a full, real maintenance, right? And as Matthew said before, you know, one of the great things about Optimism is it's generalizable. And I think to answer Ryan's question before about like, how real is this? I think a generalizable way to start deploying contracts on L2 that's very, very similar to deploying on L1. You need your own compiler that's basically like a superset of the Solc compiler. And you just switch your provider to Optimism and, you know, away you go.

• 47:20Speaker 04

  You need a bit of wrapped ETH in there instead of Ether and it's pretty much, you know, bang, bang. You know, you can actually deploy an L2. And I think that knowing that that's coming, you know, around the corner this year is going to be pretty huge. It's going to pave the way for lots of developers who may not want to sort of get into the nitty gritty of actually trying to get into ZK snacks to be like, I just want to be able to write contracts the way I always have and deploy them something a lot faster and cheaper.

• 47:46Speaker 04

  In terms of our roadmap, so we're right now at a situation where not quite as much as Matt, I think I just had a quick check now, there's about 160 million right now of USD value of SNX, it's on our layer two, which is probably even more than perhaps we want, considering it's a phase zero. So right now, what we have is some stakers, you can stake your SNX on layer two, but the SSD that is what happens is when you stake in Synthetix, you basically need stablecoin. The SSD that's on layer two is basically, you know, useless, the capital company, you can't do anything with the capital right now, there's no other protocols on there, there's nothing else you can do. And yet, there's still 160 million dollars of value on there, which is, which is pretty wild.

• 48:26Speaker 04

  The Synthetix hours sending 25,000 SNX a week to distribute among people who are staking, but that's it. And yet, there's still a lot of values. So clearly, you know, people are really excited to get off, to get off paying gas on layer one. Our next phase is to basically enable basic exchanging, so probably have like having Ether and Bitcoin and actually being able to slowly, hopefully, if we get some other protocols on there, actually do something with these, with these synths as opposed to just having them static sitting on layer two. You know, but for us, you know, a big, a big part of the excitement is as other teams and protocols do develop, as Matt was saying, like as other teams do start developing different things and they're on layer two,

• 49:10Speaker 04

  well, then we can get that, those DeFi Legos, you know, plugged in. And that's something that we're, we're also pretty excited because, you know, as you can probably infer, once you sort of take away, you know, 15 second block times and a bunch of other requirements, all of a sudden, new ideas and things you can do start to pop up.

• 49:27Ryan Sean Adams?

  So Justin, I just want to be clear. Oh, sorry, just one thing. Justin, I just want to be clear on this because this, this would have felt like a miracle in 2017. What you're saying is your team and what you've done with Synthetix on optimistic rollups right now is living proof that generalized smart contracts work in a rollup now.

• 49:50David Hoffman?

  Like that works right now. That's what you're telling us.

• 49:52Speaker 04

  That works. We basically, so what we basically, like just forget a little technical, just because I find this useful. Instead of just sending, um, you know, tokens, right, from layer one to layer two, we're actually sending messages, byte thirty-two encoded messages. We take, um, users escrow entries, because when you stake with SNX every week, you claim and you earn SNX that's escrowed. We're taking this payload and actually sending it off to layer two and recreating the state that existed on L1 and now we're recreated on L2. So we can actually create this, you can, these generalizable messages, you can actually send data and you can do it both ways. But as you obviously know, that there's that one week withdrawal period, um, which is very onerous. Now, for us, as Robbie mentioned, we're, we're talking fungible tokens, so it's not a big deal. You can have a market maker come and basically solve the problem of liquidity.

• 50:38Speaker 04

  If it's SNX or it's SUSD or something else, they can basically, they can, they can basically sit there on both sides and provide liquidity. But yes, we, we do have a generalizable solution. It's just right now, oh, sorry for the noise. It's right now, um, it, not anyone can, can deploy to it yet. But there is a, there is a solution coming, um, soon where anyone can actually deploy to it and, you know, write their code in solidity. Transpile it using the OVM compiler, um, and then deploy, as I said, using a regular provider. Cause the thing that the optimism team are really big on, um, and I really commend them for is, is, is not reinventing the wheel and just leaning on as much as, as much of, uh, of standards and developer tooling that everyone's used to.

• 51:19Speaker 04

  So there's no, you know, magical this or magical that, everything tries to be as much, you know, EVM compatible as possible. Now, of course, there's more, it's more complex because of fraud proofs and things like that, um, but they really try to make it as, as compatible as possible.

• 51:33David Hoffman?

  Justin, do you happen to have any sort of like napkin math as to how much gas you've been able to save your users? Or perhaps like what percentage of synthetics economic activity you've been able to offload? Any numbers like that you could give us?

• 51:48Speaker 04

  I don't have it on my head, off the top of my head, but I think it's something on in the order of like two orders of magnitude difference. Like so a 500 K gas transaction ends up being about five K gas. If you think of it like what the roll up is really what is persisted on to layer one is is effectively the the two things for every transaction is the call data. So the things that, you know, the inputs of the with the function call and then the Merkel hash, right, of the state. And they're the only two things that are actually persisted on layer one. So every time, every time someone transacts, they basically, those two things have to be eventually get pushed onto layer one. So there's about two orders of magnitude difference in terms of in terms of gas.

• 52:29Speaker 04

  Now, it's a little hard to compare what's happening on layer two right now to one, just because right now the gas is being basically paid for. Users aren't paying for it right now, just during this pseudo magnet. So it's hard to really say what's, you know, how many people actually, you know, how much is this real activity? As we all know, people are a bit different when it comes to their own money versus when something's free.

• 52:53David Hoffman?

  Just to go a little bit deeper into that, you know, Synthetix is one, has one of the most vibrant communities in all of Ethereum. It's kind of the thing that that you guys are known for, it's the the Synthetix communities. What I would say brought Synthetix through the bear market and into the mainstream knowledge as we know today. I would imagine that the demand for scale is must be absolutely massive inside of your community. What can you, what can you tell us about community interest in accessing this L two? Like when you guys open up the door, is there just going to be a flood of people that move on to this L two? Or have you guys done any sort of like consumer research in this domain?

• 53:29Speaker 04

  Sorry, you're talking about our users or you're talking about other developers like another?

• 53:32David Hoffman?

  Your guys' users who want to move on to the Synthetix L two to?

• 53:36Speaker 04

  Yeah, I mean, a hundred percent. I mean, a lot of them really want to see, you know, a real trading app, you know, like Matt was saying before, they want to see, you know, ticking prices. They want, you know, to get their orders filled immediately. They want atomicity, they want all the things that we don't, we can't provide right now on a one. So, yeah, a hundred percent, I see people going over there now, of course. The question of how useful is the capital that you mint or the things that you have on L2 is going to be a big, it's going to be an issue. So we will have to see, um, you know, what else appears on, on optimism. Um, and then if not, like how, like what other solutions to, as I said before, to get your SNX or your sense back to layer one and play with them if you need to. Um, I think that that's still a bit of an open question right now. We need to see where the, where that sort of comes to fruition.

• 54:21Speaker 04

  But it seems like based on what I said before, the amount of rewards that are being sent on to layer two are pretty minuscule. And yet we still have, you know, something in the order of, as I said, like 160 million, like 6.6 million SNX, right? Which is, what is that? Uh, I don't know.

• 54:38Ryan Sean Adams?

  6.6 times roughly $25. Yeah.

• 54:42Speaker 04

  Yeah, no, I meant the, the total supply. Like I don't have the total supply off the top of my head. Um, what number that is, but you know, like 3% or something, yeah, which is pretty significant considering.

• 54:52Ryan Sean Adams?

  Yeah, that's fantastic. Fantastic work, uh, and really exciting because you just released, um, kind of the layer two optimism, like what, two weeks ago, three weeks ago, something like that. I don't know. Time, time moves in a different way.

• 55:04Speaker 04

  It feels like about three months.

• 55:06Ryan Sean Adams?

  It's all good.

• 55:08Speaker 04

  I, I think it might have been a month ago, actually.

• 55:10Ryan Sean Adams?

  Month ago, okay. Month ago now. Thanks for the time adjustment. Time is weird for me right now, these days in crypto. Okay. Uh, Robbie, same question to you, right? So you represent the, the NFT, uh, side of, of these applications. And NFTs are having an absolutely massive moment so far in 2021. This is going to be an absolute breakout year, like, um, it, it, it seems so obvious. But, but same questions to you. How real is layer two for NFTs right now? Like hit us with the truth.

• 55:43Speaker 03

  Yeah, uh, building a layer two for NFTs is really hard, uh, especially compared to ERC 20s.

• 55:51Speaker 03

  NFTs are fundamentally antithetical to liquidity. If you have eight and a half million God's Unchained NFTs, you have eight and a half million order books. Each of those could have their own uni swap market. It's nuts, like they literally have their own bids, asks and spreads.

• 56:07Ryan Sean Adams?

  And Rob, Robby, just so, just so people can understand this, this is almost like, you know, like, uh, obviously fungible tokens are things we see in the real world, like, like, uh, coins and dollars and these things are fungible.

• 56:18Speaker 03

  Yeah.

• 56:18Ryan Sean Adams?

  NFTs, they're more like collectibles. They're, they're individual items, like things you might find in a, in a pawn shop in the real world, right? So of course each

• 56:26Speaker 03

  Yeah.

• 56:26Ryan Sean Adams?

  NFT is completely unique. You can't trade one FT with another. And that's why you're saying, uh, they each represent a separate order book almost.

• 56:36David Hoffman?

  And each NFT needs to find the right buyer, right? Like there's not a global buyer for NFTs in the same way that there's a global buyer for dollars or gold or coins.

• 56:45Speaker 03

  Because they're fungible. Each of these, you know, goods is unique. What I think, and I, I, I steal this from Jesse Walden, who's a great thinker on the NFT space, uh, is DeFi is as to financial services as NFTs are to literal assets in the, in the real world, like, um, cards, options, contracts, um, physical goods, term deposits. Keeps the stuff of the real world are unique and that's what financial services exist to serve. So I think fundamentally, we're seeing the innovation of tokenization of everything, the final stage. And that's why this space has gone nuts. We have Mark Cuban making NFTs of him tweeting cameos.

• 57:26Speaker 03

  We have, um, you know, major IP pouring into, um, different partnerships. The amount of people who have reached out to our company over the last, you know, three months is 20 fold over the previous year. So the space has been insane. It's really difficult to provide scalability, which is why Flow went off and said, hey, we can do a good competing business to Ethereum by carving a niche out of NFTs. And this is why I'm quite excited to say that within six weeks from now, the first ZK L2 transfer of an NFT will occur, um, on immutable X. Um, and, and people will be able to do that. So it's definitely here. Uh, I've, I've done demos, we're, we're doing test net integrations with, uh, basically partner applications. Cause the goal of immutable X is

• 58:10Speaker 03

  Like honestly, it's it's two things. One, I want to make NFTs huge and I want the future home of those NFTs to be on a blockchain, which is good. Infrastructure, which is open. Frankly, that's Ethereum right now. You need to use its security fundamentally. And so the the way I want to do that, people should just trade where they want to trade. They want to trade on OpenSea. I want to make OpenSea the most amazing place to trade ever and have those guys be hugely successful. People want to trade in in Fortnite and have an API and just trade in that marketplace. They should be able to do that and have all the benefit of Ethereum level security. Uh, so yeah, we've been, we've been working on this for um nearly a year and a half now. Uh, we're, we're, we're stoked to be able to release it at, at this time.

• 58:51Ryan Sean Adams?

  So Robbie, because we've heard a little bit of this from the other two panelists about sort of the before and after, right? They they described like kind of the, you know, a current state on the main net if they had their app, you know, and their, their app exists on the main net versus versus now. And it's world of faster UI, better experience. Can you kind of describe the before and after for somebody who is, you know, using NFTs today or trading NFTs today on main net versus when Immutable X goes live? What's, what's the difference? How's a user going to feel this?

• 59:23Speaker 03

  Yeah, it's a great question. I mean, the main difference is they pay zero gas ever. If you're a game developer, you pay zero gas to create an NFT to mint one. If you're a user, you pay zero gas to trade an NFT. It's on a validity proof, so you have the same level of security as Ethereum always. Uh, which is fundamentally the point. It's the reason why we're good for Ethereum down the track. If if NFTs become huge, if L3s become huge, we're not taking value away from the fundamental chain. Um, that's really important to me. Otherwise, you can't get Ethereum supporters on site. Otherwise, you're essentially just competing at the end of the day. Um, so that's the user experience. Uh, the other thing is we're working with Starkware to make it so if you have Layer 1E, you don't even have to deposit that.

• 1:00:04Speaker 03

  Um, so really, I want the worst, the minimum experience to be identical to current thing. You pay your ordinary gas fee, you use your Layer 1E. The best experience to be, hey, I've literally just signed a transaction. I see this NFT in my account instantly. It it feels like magic. Like it legitimately feels like magic after three years of spending, oh, will this come in two minutes? Will it come in 10 minutes? Am I paying $45 to trade a $1 God's Unchained card? Which is just crazy. So I think the demand is, you know, it's gone from being a vitamin to a painkiller for NFTs is the way I describe it. And right now, it's it's going to being general anesthetic, the state of NFTs.

• 1:00:46David Hoffman?

  So Robbie, I want to, I want to pin you down here because I have a God's Unchained deck that I enjoy playing with. But I'm far from a professional and so I would like to use the marketplace to bolster my deck. But I remember that it would cost, like you said, it would cost me $5 or $10 to get this card that was worth $3. So when do I get to use the NFTX marketplace to purchase all the God's Unchained cards that I want?

• 1:01:12Speaker 03

  Yeah, our goal would be for God's Unchained, we'll roll it out first in quarter one. So within six weeks, you can create a prediction market on that. I'll, I'll bet for it.

• 1:01:24David Hoffman?

  Awesome. Fantastic. All right. So I think that unless Ryan, you have any other questions you want to follow up here with this section? I want to turn to the conversation of composability because this is a frequent topic of concern that many people have when it comes to L2, which is, well, if Loopring gets all the liquidity on the Loopring L2 and Synthetix has the liquidity on the Synthetix L2, well, then A, we're fragmenting liquidity and now that we're all on separate L2s, we're all multiple hops further away from each other than we once were, right? So let's start with Matt. Like, how are, how are you guys addressing this concern of fragmented liquidity and broken composability? What are you guys doing to help mitigate this issue and or do you even consider this an issue?

• 1:02:11Speaker 02

  Right. For sure. This is a

• 1:02:15Speaker 02

  It's a, it's a huge thing. We haven't had to deal with it practically because we're the only ones. So we've, you know, people kind of jab at this, this potential weakness in, in layer two. And, oh, you're all going to be in silos. And again, especially Loopring, because Loopring's ZK rollup is quite application specific. We have the DEX, we have the AMM, we have the payments. But like, we're not trying to get like, like, we wouldn't have been a solution for God's Unchained. Like, we couldn't have told Robbie, hey, build on Loopring. Because we're not trying to, uh, you know, like Starkware's power their other applications. So there might, we're not, you know, inviting other teams necessarily to come build.

• 1:02:59Speaker 02

  And we're gonna, hey, like, you know, tweak our, our backend to optimize for you and, and stuff like this. So we're kind of doing our thing. Um, you know, which, which is kind of a, it's an interesting statement to say. Because, you know, everything as a Thirians, all of us, we do is so open. Um, but yeah, the Loopring, and this kind of goes back to your other question. Did you ever look at alternative L1s? To some extent, layer twos do become a bit of a silo. Uh, you're there and you have to kind of make a transaction to go into there, make a transaction out. And it could be as instant or not instant, depending on ZK rollups or optimistic rollups. But, I mean,

• 1:03:41Speaker 02

  at, at the, at the best case scenario, then you're in a rollup with other people. So Synthetix, you're, you're, you're in a rollup where there's other stuff going on. And then it becomes kind of similar to layer one. Synthetix might have plenty of company, probably will have plenty of company on optimism. I'll let Justin speak to that. And then you kind of have those same composability, um, you know, those great properties. To go cross-rollup, there's a new, now this is the next frontier, cross-rollups, right? We all know rollups are here, so how will we go across? Could we, will it be easier for maybe validity proof to validity proof rollup? So like, will I be able to speak more easily to, to Robbie or to another Starkware application?

• 1:04:24Speaker 02

  It's Loopring, ZK roll up to another ZK roll up. Can we also go equally as easy to optimistic rollups? So this is the next frontier. There's a few projects working on that. There's connects, there's a hop, which, or which came out recently. So to be honest, we largely leave that to these new solutions to come. We speak with them, we ask them questions, they ask us questions. But we, we're not trying to solve composability ourselves. We are trying to build the best kind of environment and products that we can on Loopring ZK roll up.

• 1:05:05Speaker 02

  And we kind of take it for granted that really smart people, our peers, are going to figure out to build bridges. You know, and everything again rooted, the most crucial thing rooted in Ethereum security. So if like, if liquidity providers have to bridge an exit from Loopring and entrance onto Synthetix or onto Optimism, then that liquidity provider at least has the assurance that like this is all Ethereum level security guarantees. They don't have to have a mental space for the sidechain that has seven validators. Right? So like all these rollups, at least they're speaking the same language and they know like the fallback is Ethereum layer security. And then it's just like talking about what is the market rate on their liquidity?

• 1:05:50Speaker 02

  To front you a thousand die exiting Loopring and then putting and crediting you that on Optimism. What do I need for that? Do I need 50 basis points for the hour? Like it becomes a financial consideration, which clearly Ethereum has excelled at figuring out these, these, these amazing new models and things like that. So it's going to be solved, I guess, with a mix of technology and financial innovation. And just like the market rate for liquidity, which sounds maybe like not such a huge thing, but that's how composability is going to work. Maybe like the equivalent of flash loans, right? From one to the other and.

• 1:06:32Speaker 02

  I guess we still are thinking about it in the sense that like we have in our, we have conditional transfers. So I could make a message on that that is contingent on a layer two and a layer one act action, right? So like, again, fronting this liquidity and being in two places at once. So if I do something on layer two, then I take that message and then it allows me to do something on layer one. We do support these conditional transfers. Those are a big thing that that's what fast, our fast withdrawals are based on. But yeah, at the end of the day, it's, I think a lot is to be seen. Like, I really have a big chunk of this. I just don't know how it's going to play out. There's still technical pieces to fit in place. There's behavioral pieces to fit in place.

• 1:07:16Speaker 02

  Like, how often will people be leaving their rollups? Right? And then again, it's the ZK versus optimistic exit timing. It's just, there's a lot of unknowns here, but it's clear that the work is, is, is being done. And it's a mix of technical and financial and composability will remain. But it's, it's, if I have to say kind of one thing, like, you know, that's okay, let's, let's assess a risk here. Composability is not as beautiful as everything being on layer one. That's for sure, but we're, we're gonna get over that.

• 1:07:53David Hoffman?

  Justin, I'd like to pull you into this, into this conversation. One of my long-term optimistic cases for, for Loopring is that Loopring is a place that will be able to take fiat, take, take a fiat on-ramp, right? And so let's say I transfer my hundred thousand whatever dollars into Loopring and then I start trading SNX, right? Buy, sell SNX to use the Loopring L2. And then say I've got my SNX bag filled and now I want to take that SNX bag. And, or, and maybe I also have SUSD on, on Loopring as well. Maybe there's both SSNX and SUSD on Loopring. But now I want to go into the synthetics ecosystem. I want to reprice my SUSD debt.

• 1:08:33David Hoffman?

  And if, if, if, in the current form of things, without the theoretical financialization market makers that Matt was just talking about. Talking about, I would have to exit out of Loop Ring, which would be one transaction. It would take some time. It would be a little bit more gas intensive than a basic L1 transaction. Then I would have to go into the Synthetix Optimism L2 in order to do some of the activity going on there. And that would also take another transaction and it also takes some time. How do you see some of these frictions being smoothed out and down the road?

• 1:09:06Speaker 04

  Look, I think Matt's right. It's like the next frontier. I mean, just to take a slight step back, like sharding, you know, horizontal scaling is where we're going. Like this is Ethereum. Like it doesn't matter what we want to say and label this L2. Like this is inevitable. Like we have to do something and I don't think there's gonna be one solution. As I said before, when this is, we're all coming to a lather heads of trying to figure out how the hell are we gonna do this stuff? You know, I mean, you're, I mean, you mentioned there, David, the cost of gas and stuff. And you know, of course that will be, that's gonna be unpleasant. I'm not, maybe as Matt said, there'll be a way to connect the dots between, you know, one roll up to another roll up. And I don't, I can see that being possible. I just, I don't see how that's gonna come out generalizably, but maybe.

• 1:09:52Speaker 04

  I don't, I don't really have a great answer for you, but I mean, I guess, I guess for us, like our attitude and our kind of ethos has always been, let's just iterate. Let's throw things out. Let's see what sticks. Let's get MVPs out there. Let's see what people want and use and go with it. So I wish I had a better answer, but we're, we're looking towards, as I said before, market makers who could help get the, the assets back out quickly. But to talk to another L2, it feels too early to really have a good answer to that right now. You know, maybe anyone else has thoughts.

• 1:10:21David Hoffman?

  I want to ask you kind of two follow up questions, but, but the first is this, you know, in putting kind of the, the tactical hat on that, that you wear all the time. I've, I've heard some critics say, well, if you break composability.

• 1:10:34Ryan Sean Adams?

  You're not really solving Ethereum's scalability problem, right? And, and what they mean is that layer two is not actually solving scalability, because the beautiful thing about Ethereum layer one is that all of the applications are composable. So now you're just like, like fragmenting it. So I've, I've heard critics say that. What, what's your response to that? Do you think that this is true scalability? Or do you think because it doesn't preserve some of the nice atomic transactions between all of the, the DeFi money Legos on Ethereum? That we're, we're, we're losing something and we're not truly scaling Ethereum? What's your response to that?

• 1:11:13Speaker 04

  I mean, I think you're, I think we are losing something. And I mean, Matt said the same thing, like we would, it would be great to stay at one, but I think we've just hit the limits of what, of what we can really do. Potentially there's some innovation in the future that can, that can fix this, but we've had a lot of smart minds on this problem. And it seems like we're back to this idea again, as far as until scaling. So I think the best thing we can do as protocols is to create such a system where potentially, if need be, we might even need to be able to deploy ourselves on different, different layer twos and find ways that we can bridge. So maybe the solution to that problem before that, that David mentioned is we find a way to deploy synthetics, versions of that, it's on Loopring that can interact very nicely with Loopring.

• 1:11:55Speaker 04

  And then we have a way to, to bridge that gap from their layer two to our layer two. But at the end of the day, like if we can't find a nice way to do it, like to go from, from one layer to another, then yeah, we do break to some degree, we do break the possibility. And you know, I know, you know, I, I guess I don't really have much else to say on that one.

• 1:12:12Ryan Sean Adams?

  Well, so here's my, my other follow-up to this justice, because you know, synthetics interacts with a ton of the other DeFi protocols in Ethereum today. So I remember when Dave and I were talking to, to Kane about this on a community, asked me anything. And he said, hey, you know what synthetics is doing? We're moving out of Manhattan and we're going to Brooklyn. And we asked the question, okay, Kane, like, you know, how are you going to get the other DeFi product, protocols to come to Brooklyn with you, right? And he was like, well, we're going to. Make Brooklyn freaking awesome and everyone's going to want to be there. So my question to you, Justin, is like, as part of solving this composability, you've got with optimistic rollups, you've got this, this essentially almost like a DeFi chain, right?

• 1:12:57Ryan Sean Adams?

  It can, it can host the other DeFi money protocols. My question is one of coordination. How do you get everyone else to come to Brooklyn with you? What are you seeing along those lines?

• 1:13:11Speaker 04

  I mean, I think one way, what else is really offering optimism is really offering is, is the ability to, to tinker, to play, you know, it's, L1 has become prohibitive. Now, yes, of course you could tinker on Corvan or Gurley or any other testnet, but L2 provides the ability to tinker. And I think that's exceptionally powerful. I think perhaps people who don't, who aren't engineers, don't underestimate the importance of that. Having a playground where you can actually start putting things out there and actually working. So, you know, I think that I expect to see lots of interesting innovation happen on my two. Now, the, the big protocols, some of them are probably sitting there thinking, you know, what do I do? Do I wait for, do I wait for a better generalizable ZK? Do I join optimism?

• 1:13:56Speaker 04

  You know, and my response to them is like, you should be thinking about this regardless. And, and I don't see why it's, why you shouldn't be considering ways to potentially fragment, right? Potentially fragment. I don't, I don't see why they, you know, I don't see why they wouldn't try and do this. Like now, yes, there's cognitive overhead, but again, I think that the writing's on the wall that we need to do something. Now, Kane's probably more, well, I wouldn't say fashionable. I'm the one who used to live in Brooklyn.

• 1:14:21Speaker 04

  It was in Sydney, hardly, hardly the most fashionable city in the world. Sorry, Robbie. The Robbie is in the best part of Sydney, I think. Sorry, but, but yeah, I mean, we definitely have been talking to lots of other protocols and been, you know, been, I've been asking us and talking to us and like, we want to get on there. I mean, but they all have their own concerns, like, you know, you know, let's say a money market goes over there like, you know, you know, Compound or Ave, then they're going to be like, okay, well, we're splitting up. Maybe they were splitting up, you know, liquidity. We have liquidity over here and liquidity over there and how do we do it? You know, these are particular problems that these guys have got to do, but I, we've seen lots of demand. Lots of people have been asking us and, and reaching it through us and trying to get out and, you know, and get on there. And right now, as I said, unfortunately, only Synthetix are able to deploy, so.

• 1:15:05Speaker 04

  I see it coming. I mean, I see, I see it being a pretty cool place, but I again don't think it's to be able to handle, you know, Manhattan still exists and you know what, I'm not in New York anymore, but, but you know, I hear Manhattan is starting to come back, you know, it's becoming the new place because everyone's moved out. So the artists are coming back here. So, you know.

• 1:15:22Ryan Sean Adams?

  There you go. Robbie, do you have anything to add to the composability discussion before we move to the next topic for the panel?

• 1:15:29Speaker 03

  Yeah, just quickly, I think I have two things. The first one is that I think that, you know, Justin is totally right. It's about making Brooklyn a playground and a really exciting playground. You know, we're going to ask Cairo, you can build recreations of this functionality in immutable X. The second thing to say is I think this is why NFT is an interesting use case for L2. It's less about building that interoperability and more about how can you trade real assets on, on a blockchain with high security. And so I think that there's less of a critical need there. The third one, though, is I guess like, what does a scaling Ethereum mean?

• 1:16:10Speaker 03

  Is it you are allowing the network effects of the community to be preserved interoperably? That's one definition. Is it you are allowing people to use the layer one settlement based security as the security under which their, their logic is, is transacted? I think that's a really compelling definition is I think that's fundamentally what differentiates Ethereum from every other chain out there. Because either way, they, they achieve either their security through a, a less secure main via consensus mechanism that's completely centralized, or their chain is just less stable and therefore easy to attack. And so I think that's my kind of, my real question is what does scaling Ethereum mean?

• 1:16:49Speaker 03

  And I think that it has to be on real layer twos. I don't mind if there's a bunch of fragmented layer twos. I think that's a great future for Ethereum because at the end of the day, value is being consumed in the form of ETH proofs being paid on chain and two, economic bandwidth is being increased because these assets are being transferred with the same level of security as Ethereum. So I would say it absolutely is more so than any other solution. There's a reason that Vitalik said ETH is on rollups is the future. You know, centralized sidechains are a betrayal of ETH's values, literally quote from him. So I mean, if I'm, if I'm taking any cue, I'm, I'm taking a cue from the, the guy who made it.

• 1:17:25Ryan Sean Adams?

  Yeah, and you know, you said the magic words, at least for me, economic bandwidth. I have been, David and I have both been such a proponent of this term because I do think that scalability is so narrowly defined if you just think about it in terms of transactions per second on the main chain, right? Ignore so many aspects of it. Igorer's the scalability of the community, ignores the scalability of user experience, ignores the scalability of economic security, and it ignores the scalability of trustless economic bandwidth. And when you have an asset like ETH, of course, that acts as a store of value, doesn't have any other centralized intermediary, and you're able to preserve that on a layer two, well, aren't you scaling? You are scaling trustless economic bandwidth, are you not?

• 1:18:10Ryan Sean Adams?

  So I totally agree with that last point, Robbie, that we have to also broaden and expand the definition of scalability for these money systems. I think David is going to take the next question for the panel.

• 1:18:22David Hoffman?

  Yeah, speaking of money systems, the current form of getting value into Ethereum is you sign up with Coinbase, you sign up with Gemini, you buy your Ether, and then you get it deposited to your own Ethereum address, whether it's your MetaMask, your Ledger. But that's like you getting injected with like your, you know, your first little amount of Ether, you're getting injected into the heart of Manhattan, where you don't really, like, things are scary. The L2 world is what really gets me bullish about the possibility of L2s is that each individual L2 offers a unique on-ramp possibility into Ethereum, where if people are playing

• 1:19:02David Hoffman?

  with like games on the Immutable X platform, what about the possibility of purchasing your NFTs with your credit card on the Immutable X? And all of a sudden, there's some value flow from, you know, the legacy world, that, you know, the banked world into the Immutable XL2, which is, you know, the next step into a bankless life. So Robbie, let's start with you. What kind of things could happen, or do you have in the works with, you know, value flows directly onto the L2 that's not actually coming straight from Ethereum?

• 1:19:34Speaker 03

  Yeah, that's the whole point. And I think that's why I we almost have a separate idea to to find more financial or DeFi altos. Is that what what I specialize in is NFTs. That's obviously what we're trying to scale. And I think NFTs have the potential to capture an enormous amount of value in the real world. That's video game assets for one. There was 90 billion US dollars worth of in-game items, not box copies, literally the items sold last year to gamers. And they received zero dollars of real value. They could sell none of that. So I think that's a ripe market. Gamers are already digital natives and we're already seeing, you know, major companies starting to dip their toes to space, whether it's the initiatives from Ubisoft.

• 1:20:19Speaker 03

  By the way, the main thing they care about, because the Ubisoft, you know, blockchain team, ultimately the thing that scares them is what if they put the Ubisoft brand name on something that that ends up breaking, that asset is taken. And so they fundamentally care about security. That's why Ethereum is going to be the winner, because if you put World of Warcraft on a blockchain, you can't put it on a flow. You can't put it on a, you know, a centralized sidechain which can't support that level of value. The 200 billion plus worth of economic bandwidth of Ethereum can. That's why I'm bullish and 100%. The future is, it's not people interacting with with apps and things. Maybe that's kind of a developer mindset. And that's what where a lot of this value originates. It's, hey, this is a new asset for digital. This is a new standard for digital assets.

• 1:21:02Speaker 03

  If you interact with a game, what you expect from your ownership quality is that you can sell it. And you don't even know, you don't even need to know how the the security works under the hood. You just know that, hey, these are the rights I get as a user. I pay with a credit card. I get these tradable properties. And yes, it's being minted into an L2 on Ethereum for free via an API called by that game's publisher. And then I see it going way beyond gaming items as well. I mean, NFTs have the potential to encapsulate the entire world's financial system outside of fungible tokens. Options contracts are unique financial contracts. Insurance contracts are based on the unique underlying circumstances at the home.

• 1:21:42Speaker 03

  We've seen digital art sell 100 billion dollars worth this year. We've seen sports moments being tokenized. It's this like fundamentally brand new world. And I think that that world belongs in the infrastructure of Ethereum.

• 1:21:56Ryan Sean Adams?

  You'll love to hear it. Matt, when can I get my bank account injected into the fiat or into the Loopring L2?

• 1:22:05Speaker 02

  Yeah, I'm glad to know this is part of your bull case for Loopring now, as you said before. So I'll have to work harder on it. But yeah, I mean, this is, I guess, like a pretty boring topic. It's like, how much effort and how hard could we work on like regulatory things, right? Like, we've been squarely in Ethereum land for three and a half years. It's it's nice that like we don't worry too much about regulation.

• 1:22:32Speaker 02

  It's, you know, it's I kind of hate having to muddy up the waters with thinking about fiat and different jurisdictions. And everything was just so much more simple on Ethereum, the global jurisdiction and stuff like that.

• 1:22:46Ryan Sean Adams?

  But so Matt, can I can I ask you a question that gets at the heart of this? Like, so haven't the the crypto banks like Coinbase and Gemini and, you know, even Binance to some extent already figured that out? Like, so why couldn't they just, rather than withdraw to Ethereum mainnet for my ETH, have a button that says withdraw to Loopring? Right? And after I I make my purchases, they're they're kind of the fiat bridge, the fiat on-ramp. Anyway, I just want an on-ramp directly from these crypto banks directly to Loopring. And they could solve the regulatory stuff for you. They already have that out of the box. How close are we to something like that? Or is there some challenge with that that we're not seeing?

• 1:23:26Speaker 02

  Right. Great point. And this is, I guess, a business. So first of all, that can be done right now. They could have done that six months ago, although now, I guess, gas fees sustainably high would be like a greater impetus on them. Because either they're swallowing the the high gas cost to give their user assets in a reasonable time, or they're passing it on to users for, you know, a $10, $15 withdrawal. So this, we have those conversations, I guess, a kind of maybe unexpected business answer for.

• 1:23:57Speaker 02

  For Loopring specifically is so they could just use our API and forget Loopring, the exchange, the AMM, it's just this layer two where somebody could, you know, they could just throw some dye across and it goes to an Ethereum address, right? There's no special, you use your own Ethereum address on Loopring. There's no, nothing funky that needs to happen, just an API call and it ends up in this addresses, kind of Loopring layer two shelf, which all they need is their Ethereum address to access. But what I was gonna say is it's a bit of a business case. Maybe they, maybe some exchanges are reluctant to have some, some, some assets kind of pipe

• 1:24:39Speaker 02

  in to the Loopring system because then we might eat their cake or eat their lunch a bit like, right? It's like, why am I just zapping it into you where you are a Binance that cannot act evil? Like, why would Binance like pipe a billion dollars of fiat through Loopring in a day when those users kind of could like, oh, maybe I want to get off here and, you know, and continue using Loopring? So I'm kind of, if this wasn't already in people's head, I kind of don't like saying it because maybe now I've given them a reason to, to push back against us. But yeah, the truth is like, yeah, sorry.

• 1:25:19Ryan Sean Adams?

  I, I, I see your point, Matt. And like, so, so maybe a Binance because they have their, their ETH killer, you know, the Binance chain, maybe they, they might be more reluctant to, to do something with Loopring. But it's like, let me bring Justin to this conversation here too and get his thoughts on this. Uh, you know, the, the Winklevoss twins are regular bankless listeners and they, they are very involved in, in Gemini, the exchange, of course. Like Justin, how do you get Gemini to do a direct fiat on-ramp into the synthetics optimistic rollup that you're building? Do you think that is the way forward to get fiat into the space or do you have an alternative idea on that? What would you say to the, to the Winklevoss twins if they're listening now?

• 1:26:04Speaker 04

  Yeah, I mean, basically, we just need a, we just need a way for, for these like centralizing exchanges, for example, to, to get access to the tokens, right? Like, it's no reason why they couldn't. Once they know the addresses, the contracts, and they've got, you know, they've got balances set up on layer two for their, you know, various, you know, wallets, that's easy enough for them just to send off. They could go, okay, there's access to SNX. They can, right now, we have SNX living on L2. Right now, transfers are disabled because we're in the studio of mainnet thing, but once the real mainnet comes along, there's no reason why they couldn't acquire SNX, have it set up on a certain wallet on L2, and then plug in a Fiat Omram, and off they go. They could be like, here's Fiat, and then SNX.

• 1:26:45Ryan Sean Adams?

  So there's no technical reason that they couldn't just do that? And I'm just, just curious, Justin, your thoughts on, on, maybe all there has to be is kind of an economic reason to do this, right? So in the very early stages of Ethereum, no exchange-supported Ethereum, but as it grew, it became impossible to ignore. And is that sort of what happens with Layer 2? I mean, Matt's here on Loopring with 250 million in total locked value. You guys have 160 million. If this is a billion or more, does this just not become impossible for exchanges to ignore? And they build those, those ramps naturally, because that's where the economic value is. Justin, do you see it playing out like that?

• 1:27:25Speaker 04

  Yeah, I mean, it's the same way, like, why are they listing all the, why is Binance listing every token under the sun?

• 1:27:29Ryan Sean Adams?

  Yeah, exactly.

• 1:27:31Speaker 04

  Because people are trading it, like, you just gotta do it, because that's what you do. The market decides to dictate it, you know?

• 1:27:37Ryan Sean Adams?

  Yeah.

• 1:27:37Speaker 04

  You know, it's really, we're just talking about developer cycles, right? So they've got to decide whether or not they want to invest the time, and, you know, what it's like to, to try to invest developer cycles, if there's enough, enough, you know, suits saying, we need to do this for money, then the developers usually have to, if they're total long, okay, we do it.

• 1:27:52Ryan Sean Adams?

  So guys, we have a lot of folks that are into crypto investing, obviously, they're, they're bullish on various DeFi tokens, they're, they're bullish on ETH, but there, there's a question, I think, of how Layer 2 constructs might impact the underlying ETH value capture thesis. And I'm wondering, Robbie, if you have any, any thoughts on this? Are these Layer 2 solutions value-accretive to something like ETH? Or are they value-competitive? Do they take away from ETH's value proposition as a whole? Maybe we'll start with you, Robbie.

• 1:28:28Speaker 03

  Short answer, L2 is the other savior of Ethereum's price. They're the only thing holding back other scalability solutions who can offer UX that gives people the critical revenue they need right now, but fundamentally don't use Ethereum as a security or settlement layer from destroying us. And I mean, you know, Flow raised a quarter billion dollars the other day. Rome was on Twitter saying, you know, Ethereum is all great in that, but Flow is ready for mainstream NFTs. I don't think he's just trying to say that to mainstream NFTs. I think he's trying to say that he wants Ethereum to be zero and he wants Flow to be the dominant chain for all transactions. And he thinks NFTs are a good entry point to that. No, that's fine. If you want to use Flow, go ahead. You can also use my old laptop with a database and I'll run it for you for $2 million a year.

• 1:29:13Speaker 03

  But fundamentally, if you use the definition that, you know, you guys popularize, which is capital asset, which is a form of economic bandwidth, store of value. The only thing, that means two things. One, you need to at some point consume it. If you're not consuming it, you are not providing consumable demand for Ethereum. Two, you need to rely on Ethereum as your layer one form of security. That is the definition of a layer two. By doing that, you increase Ethereum's value proposition via economic bandwidth. So quite frankly, I think any solution that is not a roll up on Ethereum right now is an ETH killer, is an ETH competitor. You know, even Polkadot, the way. And the reason that everyone's positioning themselves as not ETH killers

• 1:29:56Speaker 03

  is because it's a dumb thing to do. Like, I swear, it's like you're going to be hated by $200 billion worth of capital. It's not a smart move. So that positioning is, hey, we're synergistic. Hey, we're Polkadot, we're a power chain, we're doing this, this and this, we're synergizing. It's crap. Just look at the fundamentals. Either you use Ethereum for your security and you consume it, you're good for its value, or you don't and you're not.

• 1:30:20Ryan Sean Adams?

  Oh my God, I really want to see the podcast where it's immutable X versus Flow. I want to see kind of that debate sound off now that I've heard Robbie.

• 1:30:29Speaker 03

  I'll have to be more polite.

• 1:30:32Ryan Sean Adams?

  Guys, Matt, Justin, any other thoughts on that? Value accretive. Matt, any comments?

• 1:30:40Speaker 02

  Robbie is a great spokesperson for that. No, he's 100% right. Like, we kind of lose sight about what the label "Layer 2" means. Like, people say, like, anything scaling is Layer 2. But yeah, it has to be strict. You have to inherit Ethereum security guarantees, which means you're paying gas. I like how he says that, you know, it still remains a consumable. You're broadening the economic bandwidth because your little vertical... Or once, David, I was on here and he described Ethereum as like a pier. And then you go on to like your loop ring ride at the end. You know, like, so these things, like, the end of that pier is like its own middle economy, where, you know, toes are going in, you know, there's sort of the bandwidth.

• 1:31:24Speaker 02

  It's 100% creative. And I do think it is just massively bullish. Rollups, uh, yeah, like, you know, we're talking ETH maximalism before. I'm a rollup maximalist. And I'd even go so far, you know, maybe just to chat, to more friendly chat here. But like, I'm a ZK rollup person. Like, I think those, I think ZK rollups are kind of like here now for the application-specific stuff. Optimistic rollups are like right here and they're going to do a lot of the generalizable stuff. And then, you know, ZK rollups kind of re-leapfrog when you have like this, the ZK snark and the advance and then you do everything back in a validity-proof way.

• 1:32:07Speaker 02

  But yeah, all is, it's just massively creative. And I do, you know, it's funny what Robbie say about like the way they're positioning themselves. I like to think that maybe I tried to coin something, I'm not sure. But like, Ethereum killers are rebranding themselves as ETH enhancers. Well, they don't use that word, but I use that word. Everything must be an ETH enhancer now. Otherwise, it's just really, really stupid on you. I mean, we saw maybe a soundbite these past few days talking, like, putting that in jeopardy. But from different chains, saying that there are no network effects that somebody may laugh when he hears about Ethereum network effects. But you have to respect the network. Work effect, you have to respect the network.

• 1:32:52Speaker 02

  It's it's just it's massively accretive. I don't know if there's a if there's even a bearish interpretation. I haven't heard one of of layer two for Ethereum. Besides the potential, the composability breaking, I don't see any kind of value. There's no leaky bucket where this kind of bypasses Ethereum accruing the value, in my opinion.

• 1:33:16David Hoffman?

  Justin, do you want to add anything to this conversation? Any thoughts here?

• 1:33:20Speaker 04

  Yeah, I mean, I totally agree with both Matt and Robbie, and Robbie quite very eloquently. I put forth his thesis that, you know, the layer two needs to be something that relies on EFT security, which I think is a really nice thought, a nice way of putting it. I find on it. I guess my main thought, and it's a bit more meta, is that

• 1:33:42Speaker 04

  one thing I really like about Ethereum is I feel like it, you know, it's decentralized, of course, as Robbie said, but the way that it like it put its money where its mouth is in terms of the way the EF supports, you know, various implementations of the, you know, the protocol, like, you know, EVM, like, here's here's a spec, go go at it, right? There's JavaScript, Rust, yeah, go. And then the same thing with Ethereum, right? Let's go with Lighthouse, Prismatic, you know, and I feel like this is where the same thing with with Rollups, right? Like, here are different implementations of Rollups and have at it. Like, there is no one solution. There are just the specifications based on, you know, security and usability and, you know, people, we are all sort of expected to to try to put things out to iterate,

• 1:34:26Speaker 04

  and things will bubble up, the right things will bubble up. And I love that about Ethereum. Like, I feel like there isn't this, there isn't this, this, you know, dictator down on high saying this is the way it needs to be. And, you know, credit to Vitalik, because he does a pretty good job of of trying to stand back and let things let things evolve around him, rather than, you know, trying to trying to maneuver and steer the ship.

• 1:34:45David Hoffman?

  You guys, this has been such a fantastic conversation. So thank you guys all for so much of your time and your insights. It's really valuable to me and of course also to the listeners. And I want to finish up with this last final lightning question. So in just two, three, four, just a few sentences, can you guys give us the maximally successful scenario of the long-term version of your app? So like when L2 is completely rolled out and also under the conditions of maximal global adoption, what does your app do? When you have as much scale as you want and all of the things that you guys are trying to get done, you do get done. Justin, let's start with you.

• 1:35:25Speaker 04

  Users can basically get a synthetic version of any kind of asset they want. Anyone around the world can take it and no one can stop them, right? They get access to whatever they need, whenever they need it, as quickly as they can, and it doesn't cost them a lot.

• 1:35:40David Hoffman?

  Matt, what's the maximally successful version of Loopring?

• 1:35:46Speaker 02

  Loopring, outcompeting legacy fintech applications. You know, we don't compete with each other on this call. I mean, some of us are not on the same verticals, but just any user can trade any Ethereum-based asset. So not synthetics, not a synthetic asset, but just if it's on Ethereum, or actually, we can trade synthetics, but you know, just trade anything, instant finality,

• 1:36:17Speaker 02

  super cheap, and payments as well, just complete freedom. You know, we've started using the little slogan for our app, "Freedom at your fingertips." That is what Ethereum allows us. We can never misbehave. Nobody could take it from you. Nobody could stop you. That's what we hope Loopring becomes.

• 1:36:35David Hoffman?

  Matt, you must be bearish because I was hoping in your answer, you would have said the words Venmo, Robinhood, and central bank digital currencies. But I guess you're just focused on a little bit more meta level right there.

• 1:36:49Speaker 02

  True, I wanted to keep it, you know, somebody actually brought it to my attention that on our site, it says feeling, you probably read it like Venmo and Robinhood and user experience. But then I said, do you still want to say Robinhood on there? Should you remove that? So, but we haven't removed it. Give it all, all this stuff, but yeah, I'll, I'll leave it there.

• 1:37:13David Hoffman?

  Robbie, what's the maximally successful version of Immutable and Immutable X?

• 1:37:19Speaker 03

  Yeah, I think it's the marketplace for all unique assets worldwide, the, the exchange protocol.

• 1:37:28David Hoffman?

  That's it, full stop. All right, you guys, this has been such a fantastic episode. Again, this, we have Robbie Ferguson, who is at the Immutable Project, building out the marketplace for L2s for NFTs. We have Matt Finestone, Business Development at Loopring, the ZK Rollups Exchange and Payments Protocol. And of course, we have Justin Moses, CTO of Synthetix, leading the charge to deploy Synthetix on Optimistic Rollups. You guys, I think the listeners are really going to enjoy this one. So thank you so much for giving us your time and being here.

• 1:38:00Speaker 02

  Thanks so much.

• 1:38:03Ryan Sean Adams?

  All right, Bankless listeners, action items. If you want a primer on rollups, we just had Vitalik on the show, who gives a great overview of rollups in sort of layman's language. We will include a link to that in the show notes. We will also include links to Loopring Immutable X and Synthetix New Optimism L2. Because here's the great thing, you can start using Layer 2 now, today. It's here, as our panel said. So start using it. You don't have to, to keep with, on the main net, the gas fee transactions, we could start using Loopring Immutable and Synthetix now on Layer 2.

• 1:38:45Ryan Sean Adams?

  Also, David, last and final request, we want those bull market stars on iTunes. How are we doing on our five star ratings on iTunes, my friend?

• 1:38:53David Hoffman?

  We are always trying to do better than where we currently are at. As you guys listen to during this podcast, L2 is here, but yet people somehow don't realize it yet. And you know why? It's because we don't have enough five star reviews on iTunes.

• 1:39:06Ryan Sean Adams?

  That's why. That's exactly why.

• 1:39:08David Hoffman?

  If you could, please go to wherever you listen to your podcasts and give us those five star reviews. We're trying to get Bankless to the top of the iTunes business and investing charts so that everyone can hear the great gospel of Ethereum. So if you could, please go ahead and do that. We would really appreciate it.

• 1:39:22Ryan Sean Adams?

  All right. If you, if you care about L2, give us those five star reviews. That's what David said. All right. Risk and disclaimers, everyone. ETH is risky. So is crypto, of course, as is DeFi. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.