📺 The Great L2 Migration | Cross-Chain L2 Panel

hey bankless nation it is panel time today panels are some of my favorite discussions we have on bank list a great cross section on a specific topic and today we are talking about bridging bridges cross chain bridges this goes into a theme we've been talking about in 2022 which is the great layer to migration i think there are a few reasons we're doing this we'll get into them but before i do uh david we've got ben here as a co-host for this topic uh ben it's great to have

you can you explain why ben is joining us for this conversation yeah uh we did this uh expert panel for eip1559 uh and that was uh co-moderated by another technical moderator tim baiko and that was really really useful because some of the developers out there just ask questions that i think are really really smart that i wouldn't have thought to think myself so ben we're bringing you in as a member of the optimism team as somebody who can ask some more technical questions than what ryan and i would have thought about uh and so we're

gonna first off before we get into the content we're gonna have just a little bit of a discussion uh some questions that five panelists don't need to ask like what are bridges um but before we get there ryan we have some things that we need to talk about such as our friends at on juno on juno is our new checking account for the crypto natives uh and so for those that are frustrated that things like usdc or btc or eth aren't in your wells fargo account on juno might just be for you it's a checking account that loves

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you definitely want to get a crypto native bank account so you're not using a legacy wells fargo bank account that's giving you like .01 interest rate this is a way to do this they also give you a fantastic uh card as well so a debit card it's metal debit card really nice really enjoying this i set up my accounts recently excited to get started so if you're interested in doing that use the code bank list 50 on your first crypto paycheck you can do that at onjuno.com uh david you know i just want to say a few more things about why we

are doing this topic on bridges today because i think it's important and there's really three reasons we're doing this um the first reason is there's really no future world in crypto that doesn't require a massive amount of bridges okay no matter what you believe about the future whether it's going to be a multi-chain future with all sorts of different layer ones okay you need bridges whether this is going to be an ethereum dominated world with bunch of layer twos okay you also need bridges so bridges are this nascent infrastructure

and a massive opportunity i think both for users or and investors who are listening to bank lists the second reason something that we've talked about in our modular blockchain thesis is there's really no future for users on layer one on ethereum layer one i wanna say that again because i think that's a hard pill to swallow for a lot of people there is no future for users on layer one unless you're some kind of a whale okay the main chain is actually not for users anymore it's for chains okay this is a layer two roll-up centric world you

can get caught up on bankless past episodes if you want to school yourself on that including the one we released in early january with vitalik and the third reason is this we've simply never done a full episode on bridges and it's like it's about damn time okay because bridges are going to be a huge topic in 2022 and i feel like the panel structure is the perfect way to get just a variety of different opinions and ideas and projects to the table to educate us on this subject so we have a bunch of people on the panel these are some of the biggest bridging

projects they bring you know different flavors different approaches different trade-offs different design decisions but this is a fantastic cross-section a few more housekeeping items for you as usual if you have a question a burning question you want us to ask this is a live stream okay so go to youtube hit us up with those questions use the troll chat box for that we'll look at them we'll filter them we'll find the best ones we'll bring that to the panel if it makes sense uh and uh with that you know what david i think we should get to ben to give us a quick overview on bridges

so uh what do you want to lead with for like our 101 on on bridges david yeah let's just start with the most basic question ben what is a bridge because you know most people think bridges is like the thing that you drive your car over over a river but not in the world of crypto or or across chains cross l2s just at the most basic level what is a bridge and why do we need them indeed oh and thanks for having me on by the way guys these are my first words and i feel like i'd be remiss if i didn't start there so hi everyone okay what are bridges and why do we need them great question so fundamentally a

bridge and bridging refers to the at the deepest level the passaging of communications between two different chains so basically taking information from some authenticated source on one chain second sending it across to be authenticated or received on another chain so that at the you know most fundamental level is usually what it is what is being communicated now that is most commonly movement of assets right so when you're moving your uh tokens from one chain to another you've

got to bridge them somehow so that's you know technically there's actually when you're moving those tokens around a sort of more fundamental thing that you might call bridging that is like sending a message that says hey alice has just decided to bridge over x amount of funds this is the erc20 this is the amount this is where the destination is but but most importantly i think for users this is talking about moving assets between chains that's the most common form of communication and what we have a lot of great panelists trying to help facilitate so diving into that a little bit more

what is technically going on behind the scenes and i think this question actually might unpack some different kinds of bridges there are cryptographic bridges and there are multi-sig bridges can you just uh unpack what technically happens when you bridge an asset and how that is different based on what kind of bridges out there that's that's a great question so i'll ignore the details you know we could obviously get into nuance of kind of the details of those messages that i was talking about right because you have you know the messages got to express who is depositing where they're depositing to

or it could be withdrawing right where that where the assets are being bridged to what is the acid that's being bridged and so on and so forth um i think what i would say is that there is a like what is actually going on when you're bridging is really dependent honestly on what bridge you're using and what change you're bridging between and also what change the bridging between may have an impact on what bridges you can use or what fundamental things that you can do so in general i mean to speak to my expertise on on roll ups right because that's what we're building with optimism generally generally speaking there is a

sort of native bridge that is sort of treated as the canonical secure way to move assets back and forth between the chain and so when what's going on behind the scenes when you use that which is for example you know maybe the default if you go to like gateway.optimism.io right usually what's happening there is basically on l1 right on the source chain if you want to generalize right assets are being locked up and they're being locked up and they're emitting some sort of message or in the case of a roll up an event or some sort of storage that says hey

you know alice has locked up 100 eth on l1 and alice wants to use that ethon l2 please credit alice 100 eth on l2 for this money that she locked up on l1 and the only way to unlock those funds is if you bridge in the opposite direction which says hey somebody who had those funds on l2 decided that they wanted to get it back out on l1 so they're trying to withdraw these assets please unlock those assets on l1 so that's usually what you're doing at a sort of a native layer and depending on the construction of the

two different chains you're moving between those might have different properties so in the case of a roll up we would consider this very secure because you have these fault proofs right that are basically a dispute layer that are going to keep those funds secure in all cases but in general what you can do is build on top of these chains and build on top of those native bridges bridges that have different properties that might be more compelling or more economically efficient and make a different set of trade-offs in terms of things like security or user experience or what's going or what's going on so

when we talk about bridging we're talking about locking funds in one place and unlocking them in the other there's a lot of details that go on there there's native bridging that can very tightly couple this in a very secure way that forms the basis for roll-ups and then there are layers of applications that you can build on top that accomplish the same goals with some different sets of assumptions or trade-offs uh that you might want to make so that's sort of what's going on in uh in a bit of a ramble there no that makes it makes a ton of sense and just to reiterate with roll-ups and also with multi-stick bridges going from across l1 to across l2 or across from l1 to l1

there is what you call the canonical bridge as in ultimately all things that are built on top of this canonical bridge use and it's the conversation what we're going to have today is how different implementations can use that canonical bridge in different ways to make things a little bit easier for users and so there is the the slow bridge the canonical bridge and then there's like fast bridges that i think most of the users of these l2 cross chain ecosystems will ultimately use and that is who so many of our panelists today are what

they are building and so ben we have you from optimism who's building a roll-up which must include a canonical bridge or else how else would people get there and then we have many of these panelists that we're about to bring on after this who are using your canonical bridge to make different flavors of bridges that make different trade-offs and so ben my last question for you before we tune to our panelists just what are you excited to hear about from these panelists today what do you want to learn what are you uh interested in hearing about and what should listeners have in their heads is what they should be paying attention to in order to get

the most out of this panel most definitely so um i hope you all ready for some gardening because i want to get into the weeds so i definitely think we have an incredible lineup of different bridge projects here and like i said every bridge project makes different trade-offs has different designs and the implications of what the bridge gives you and what you give to use the bridge change so i think that's going to be an absolutely fascinating thing and i think for people listening that are trying to use you know these bridges that's incredibly important it's really important to understand the properties of the system that you're using because

there are bridges that may have weaker security assumptions they may have stronger security assumptions there may be ones that are more expensive there may be ones that are cheaper so i think that's one thing and then i think the other part for me at least that i'm personally excited about is hearing a little bit about the future and sort of the more uh you know next next year or two years of bridging what's that's what that's gonna look like because now that we're starting to see many of these different chains coming online we're really starting to see these bridge markets actually play out and i think it's gonna be really fascinating to hear what our panelists are cooking up in the

background for the next releases and that sort of thing well i think with no further ado we should go and get right into this panel because they have so many things to talk about we have a list of questions that we're going to get through so let's go ahead and get our panelists on the scenes right after we talk about some of these fantastic sponsors that make this show possible slingshot is a decentralized trading platform that combines the performance and ease of a centralized exchange with the openness and transparency of defy slingshot aggregates liquidity from all of d5 in order to find the best price on thousands of crypto assets every token on slingshot comes with a price chart

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portal.arbitrom.one and you can bridge your assets over to arbitram using bridge.arbitrom.io in order to experience defy and nfts the way it was always meant to be fast cheap and friction free all right guys we are back with all of our panelists we have hart from across protocol also part of uma we have vc from mover we have chris winfrey from hop protocol and we have arjun from connext and you can see that order moving from left to right but with arjun at the bottom guys thank you all for

being here on this panel and you can all answer it once uh and or i'll say hi at once because we'll also introduce you guys all individually but everyone thank you for being here cheers thanks for having us thanks a lot thanks for having us uh so we're gonna start with this very basic question and we're gonna go one by one what is your project what makes it unique and uh what's its flavor does it have a flavor and let's start with heart from across protocol totally um well thanks for having me guys um and yeah our project is unique

uh because across started as just a demonstration of what uma's been building with our optimistic oracle and so sidebar here i actually know ben from back in 2019 sitting in a conference room screaming at me about how i need to be more optimistic um and this actually never be too optimistic never be literally what he was saying and this informed the design we had this oracle we call an optimistic oracle that has a really simple concept where we can say hey anyone can say ask a question on

anything anyone can propose and answer that question and that question is taken as truth if no one disputes it um and so this is an optimistic approach to uh ask getting data and we realize we can use this optimistic oracle uh to do cross-chain messaging and cross-chain to look at what's happening on other chains um and so that's what um has been focused on with our optimistic oracle and you know about four months ago the idea came to us that like holy this

bridging thing is a big issue specifically the specific question we're looking at is fast withdrawals from optimistic roll-ups or from roll-ups to layer one and that's actually where we're focused and we realize that we can come up with a design that uses our optimistic oracle to quickly securely and in a capital efficient way actually move assets back from l2 to l1 and across itself is this side project

that the the team behind the mic was called risk labs built we built it very quickly um because it's using our oracle and we built it as a demonstration of this optimistic oracle technology with this specific focus just focused on l2 to l1 um and it turns out it works really well um which like gets me really stoked it's like it's capital efficiency we'll get in those details later um but that's that's our origin story and that's how we got here awesome thank you heart for that that was hart from across protocol again a product out of uma and

now we are going to go to vc out of mover that's mov r vc uh can you just tell us about uh mover how what's does it have a flavor what is it optimized for what makes it unique in the world of bridges yeah for sure so like more is like probably quite uh different than you know all the flavors here like uh more essentially we call it like a meta bridge our approach here is like taking the modular uh approach that that we saw with you know like uh scaling l2s you know having

like different settlements different dla so we are trying to take like a modular approach we where we have like a standard uh bridge building framework that can be plugged into any sort of bridging mechanism be it optimistic be it hdlc based be it like a oracle or something and that allows us or like you know developers to like build this this like hybrid sort of applications where you know like movement between l2s could be trustless but if that app also wants to go to some somewhere like solana they could use like a more you know trust

minimized solution so we are we are trying trying to like go in this like uh modular phase where people can build their bridge applications without you know kind of thinking of like what the exact bridging mechanism or like you know message transmission mechanism would be so yeah that's kind of like the unique uh thing in the direction that we are taking with mover and you know hope to showcase something really soon absolutely thank you thank you vc moving into chris chris from hop protocol chris tell us a little bit about hop what's its unique feature what's its flavor of

bridge what's it like sure and then thanks for having us on the show and um yeah so we're building hop protocol we're very optimized for ethereum's ecosystem and ethereum scaling solution so we actually use ethereum as as a hub to kind of bridge um between all of the different layer twos and scaling solutions and previously our team was working on a wallet called the ethereum we actually built up just out of pure necessity to get our users onto layer two have them stay on layer two and just never touch

uh layer one at all and yeah so it's very optimized for for ethereum's ecosystem awesome and then last but not least we have arjun from connext arjun all right connection's been around for a real long time uh and it started actually as payment channels before it turned into bridges arjun can you tell us about uh connext and what flavor of bridge it is what makes it unique yeah um so yeah as you mentioned connects has been for been around for a very long time uh we actually built the

first ever like non-custodial l2 system on ethereum was pretty cool in partnership with spanx chain in like 2018 um uh obviously things have changed quite a bit since then because that was a very simple like micro tipping system uh using payment channels um uh connext is a an interoperability network that lets you basically transfer funds and then also do some forms of message passing between chains so like calling contracts and things like that um we're working

towards like more general purpose interoperability that's completely chain agnostic what we focused on is two things uh trust minimization so we are extremely extremely extremely patched about making sure that like connex has the exact same trust tradeoffs as you know using ethereum itself or or at least as close as possible and like um generally speaking uh the the security model of connects is effectively the same as the security model of the role of itself um uh and then um or or potentially better in some cases um and then

uh in addition to that uh we we also have focused a lot on extensibility so like um the the idea there was that we don't quite know yet what the what the right mechanisms are going to be are going to be in the future around like how l2's will be built um and of course we also have this like uh world right now where there are ethereum compatible or even ethereum friendly uh chains that are not actually like tied to the base l1 and there may actually be a room for for those to exist as like a lower trust environment um or more trusted environment sorry uh

in the future as well um and the goal with k'nex is just to make it one simple interface that allows you to connect to all of all of these different systems um allows you to have like a true kind of internet of ethereum so arjun maybe um you sticking on this for a moment could you tell us a bit more about how we compare these various bridging solutions like sort of the the trade-offs of them and also get into if if you're thinking about um like the the perfect bridge the success criteria for a bridge what are the kpis

that you really look at is it number of users using this thing is it amount of capital flowing through it so first how do we compare these bridges and secondly what are the success criteria and sort of kpis yeah um so there's a there's a mental model that we've been using and of course all mental models are simplifications but i think this is a good simplification um and the mental model is is something that we like to call the interoperability trilemma or the bridging trilemma which is similar similar in concept to the scalability trilemma where all interop systems can only really have two

of three properties and those properties are uh extensibility so being able to like go to multiple chain multiple different you know l2s and chains very easily and work the exact same way and all of them um generalize abilities the ability to do arbitrary data passing and then trust minimization and what we've seen is that all bridges kind of like pick end up having to pick for for just because they have to end up picking like two out of those three properties um uh everybody that's on this call uh has selected

uh trust minimization and extensibility so that's why you're able to like run the system on l2 and then also on uh on ethereum and also do it without without you know introducing a lot of trust but the you know we've talked earlier on this call about multisig bridges um that you know multisig bridges pick generalizability and extensibility but they're obviously more trusted um so yeah generally we've seen that there's like three overarching flavors of bridges and then of course a lot of other subcategories within them um can you repeat the second part of your question yeah so like success criteria for a bridge what

makes um what makes a bridge successful is it amount of capital is it you know users what what's what are the kpis yeah um this one's a bit more difficult because it's like it depends on what the bridge is being used for right so like if if your system like hop connects i guess everybody that's on this call um your kpi is going to be like uh transaction volume so the amount of value that is flowing between chains because the vast majority of what you're doing right now is like helping users transfer value from one system one l2 or chain to another um whereas uh you know

if you if you once you start moving towards like more generalized data passing where you're allowing people to build like actually cross l2 apps that are fully generalized um uh then it becomes a little fuzzier because it's like now you're running this like you know system on top of on top of these l2s and like the purpose of that system may not be to move funds it may be you know just to pass arbitrary messages so in that case it would probably be something more similar to like ethereum where it's like you look at number of transactions that the chain is doing um or perhaps even like the amount of fees that are being earned by the by the actual uh service providers

so chris wondering if you could kind of build on arjun's definition here so we're talking about comparing different bridge projects and yeah i'm struck by all the time how how much surface area for education there is here because now now we uh we need to do something with with kind of the community and we need to make sure the community understands the difference between like multi-sig trusted bridges and these like more trustless bridges and it sounds like all of the panelist participants fall in the the trustless category but even within that that you know uh trustless category

what are the other trade-offs or differentiations you you would make between these bridging projects how can we how can we compare them yeah it's a great question um so so there's definitely kind of a few trade-offs within this uh trustless uh design space of uh bridges and so um i i guess kind of the main uh types of bridges would be like you know i think us and across share very similar properties where we kind of have both um passive and active liquidity providers i

know we're going to be talking about that stuff a little bit later um and basically you know have these active or yeah have the active liquidity providers fully verify different um chains and and uh facilitate the bridging and then have kind of the passive uh liquidity providers take on uh longer tail risk of stuff breaking or challenge windows not being long enough uh and stuff like that um but yeah and then the other side of things is uh kind of like atomic swap uh type of bridging and uh

you know that that can be trustless it can be extended to chains outside of the ethereum ecosystem you know which can't uh necessarily happen with hot uh and and you know this will you know ux wise you you do have to wait for kind of like two steps of finality so so if you if you're thinking about like an optimal bridge uh an optimal bridge will um be able to do a transfer within just one step of finality so so you wait for the source chain to reach finality and then you receive funds at

the destination uh and and so like an atomic swap setup you do have to kind of wait for for two steps so that that's kind of one of the trade-offs but then there are big advantages around capital efficiency and stuff like that um that that are worth uh taking a look at so if you see vcm and mover you guys touch a whole bunch of different bridging solutions and i'm trying for for a minute to to put us back in the headspace of a typical user who's like i want to get from here to there from this chain to that train

and they're looking at the landscape and they see all of these different bridge solutions you know one's a two-lane bridge one's you know a one-lane bridge one is kind of just like uh i don't know uh built out of wood the other is like a nice you know suspended bridge all of these different bridge solutions how do they evaluate the differences and make a decision on which is the best bridge to take is like safety and security the primary concern is it how much the toll is how much it costs what are the primary concerns from a user's

perspective so like from a user's perspective i would say you know like it you know kind of depends a lot on the user profile so it's like a degen you know they they could like prefer a really centralized bits that allows them to just you know kind of operate on a single database and just like move things around before the block on the sending side even receives finality because like the liquidity provider here can take the risk of the source side kind of rolling back so like it it definitely kind of depends on like

the user uh so we've like kind of built out this thing called fun more which is like a bridge aggregator that kind of like allows to just like see what all options are there right now they're you know like different security properties they're different like outputs gas fees and so on and you know kind of judge from there so like a user depending on his preference can just like see what what he prefers to you know kind of move his funds from one chain to the next so yeah you know heart i'm wondering if you could weigh in on this this you know

conversation so far so uh is it it seems like there's so many different bridge solutions is it good that the ecosystem has a plurality of different solutions or is that is that more confusing uh what types of bridge solutions do you think the ecosystem needs to develop in order to get us where we need to go in this this great migration from layer one to layer two yeah ryan i'll give a controversial answer here i think um

which i i hate i i think the number of solutions is problematic and i think the different security properties they have makes us a show and actually exposes users to a lot of risk that they don't know they're taking and so again this panel we're all aligned in that we at least are are closer to the trust minimization side of things or the trustless side of things and we value that um there's other people that are not on this panel that um like are more generalized and supportive of chains that aren't on that

and there's some really scary um going on out there the problem in my view is that users are ultimately going to pick a bridge based on price and mostly based on price alone or let's say price and speed so i think that's going to end up being what we have happen and that could be very scary um if people pick up the cheapest bridge but that has the worst security assumptions and then something goes wrong

so i think that there's this uh i think what we all got to do as like on this group of people we got to get to be the cheapest and i think price really matters here um that's kind of my view and we've got to be cheapest while being trustless um and that means iterating on a and i got a lot to say on that too but you look like you're about to say i want to get to i want i i do want to get to arjun and some of the others really quick but but like scare us straight for just one second hear heart okay so like when goes wrong how how could it go wrong if

we're depending on centralized more trusted solutions for bridging like why why is this so bad what is the iceberg that people don't see in the water in some ways i think um ben's big brain might be actually best to answer some of the really scary here but generally speaking it's just like you don't get your money or the tokens you think you have you just don't have right um and like you know a hundred percent losses um are a bad thing um and then people providing liquidity