Hop Protocol AIRDROP and DAO Launch! 🟣_🟣

welcome bankless nation to a very special episode a live stream that we got to do just because this is what happens when the news breaks we have the hop drop on our hands the hop protocol uh the bridging protocol between ethereum layer 1 ethereum layer twos and other chains did a token and and of course they're launching a dow so we were talking all about these things today on the bankless live stream because apparently that's what you do when you launch a dow you come to bankless and we live stream about it it's a ton of fun the community shows up they're all in the youtube comments right now i'm really going to enjoy this

one for those that don't know we've also had chris winfrey on before chris winfrey of course has been with hop protocol for a very long time he will be joining me and unpacking the hop drop and the launch of hop protocol dao uh some uh some of the typical questions that you would expect as well as the unique things about hot protocol because a hop as a system as an org as a dao got spun up with a unique genesis story that lends itself to the to the long arc of what hop is and what our a lot what hop will become as well so of course what is

the token responsible for how much responsibility did we just receive uh the air drop details and the distribution of course there is a new hop foundation there's hop labs there's the dao how do these things all interface uh and uh where is the hop protocol going and then of course like chris has been in this space for a while so i just want to pick his brain about uh the coming layer two two two this is the second layer two related token to come out in the last two weeks uh and there are definitely more on the horizon so what happens next when more of these tokens come out and about and

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twitter at maker dow and learn from the oldest and most resilient down existence all right bankless nation let's go ahead and get right into the show i'm joined with chris winfrey of hop protocol uh and chris uh exciting news man welcome to the show thanks david it's great to be back on the show it's definitely been a crazy week but yeah super excited to be here yeah uh all of a sudden oh there you go camera just became uh in focus again wonderful okay cool let's get into it man but like there's so many things to discover and so many things to talk

about like of course all the airdrop details the distribution all the all the things that people would expect but of course we need to actually talk about what we are talking about so what is hop protocol and what does it do and why do people use it yeah so so hop protocol is a cross-chain bridge we're very much focused on the ethereum ecosystem so we we have a hub and spoke model where ethereum is the hub and then we support uh layer two networks like arbitrary optimism we support other l1s

that that you know are close to the ethereum ecosystem like uh polygon and gnosis chain um and ultimately we can support any chain that has a message bridge with ethereum so you know we will be expanding um and connecting ethereum with kind of the broader uh crypto ecosystem um but we you know keep ethereum at the center of it and and this allows us to have this really secure bridge model where we can put these stop gaps between each network so if any one network were to fail the

users on uh the other networks are safe so that way users on arbitrom and optimism can enjoy you know trustless uh you know enjoy the full uh security of ethereum uh but then you can still jump you know straight over to to another chain like polygon and and um you know enjoy the the low fees and and so on right okay and of course just asking the very basic questions why do we need bridges why are bridges necessary yeah so you know within the ethereum

ecosystem you know we're seeing this movement from layer one ethereum to layer two um and with the kind of rollup centric ethereum roadmap uh scaling roadmap um you know usage is moving to to this you know very diverse layer two ecosystem so right now you know we have arbitrage we have optimism um you know we have we have some uh starkware rollups that are application specific but you know they're going to be launching their own role up uh zk sync uh is live their v2 is coming very soon

um and and so we just have like all these different solutions they all have different use cases different trade-offs but ultimately for regular users layer 1 is super super expensive so if you want to be using ethereum you actually want to just be this layer 2 native citizen where you jump from one layer two to the next and never have to touch the uh base uh layer of ethereum um and then also you know if you want to jump to outside the ethereum ecosystem you also need a bridge to kind of get your assets over there okay of

course of course right we are going into a multi-chain world whether you think it's a multi-layer two world a multi-layer one world but we're going to need bridges around these things but each each different layer two has its own canonical bridge right can you help uh help the listeners unpack the difference between the layer two bridges that are built by the layer twos themselves like the layer two optimism bridge and the layer two arbitrary bridge and things like hop and connects can you differentiate between these things yeah absolutely so um you know like you said each each of the layer twos as well

as kind of these like um ethereum side chains like uh polygon and gnosis chain have um a asset and a message bridge with ethereum so uh this lets you you know like one contract can talk to each other and then also if you just want to move your assets over you can um with specifically with optimism or optimistic roll-ups uh this message bridge takes a full week to get back to ethereum and this is enough time for any kind of uh fraud detection to play out on chain uh

make sure that all the assets on the you know those networks are secure um and then also all of these bridges are just between the networks and ethereum um and so what hop does is we basically leverage these bridges uh specifically the message bridges um to create this the broader kind of cross chain bridge so that you cannot just go from like polygon to ethereum or optimism to ethereum or arbitrary to ethereum but you can actually go directly between each of these um and the way that we do this is we uh

bundle messages on one chain so we get you know thousands of messages that are sending from say you know polygon to arbitrarily uh we we pack those up and then we send them through uh layer one ethereum to to the destination but that's you know very small package and then we can unpack them over there and this creates this you know very uh scalable way to get a message from uh one you know non-ethereum chain to the next by using ethereum as hub certainly and without these cross layer two

bridges if you were on polygon and wanted to get to arbitram you would have to go down to the ethereum layer one and then send your money over to the arbitrom bridge and then up to arbitrum and then if you wanted to go to optimism you would go back down that would take seven days uh and then you could go over to arbitrarily or optimism then up to optimism and then getting off of optimism would take another seven days but with these cross layer two bridges uh we can just go and hop from layer two to layer two to layer two without any of that time delay one of the cool things about this whole thing is that we knew

that this was a problem for layer twos like from a long way off this whole seven day like withdrawal thing it's just not going to be tenable for users and so like products like hop and connect started getting built even before the layer twos had launched and so it's one of the cool instances of problems being solved before they were even coming into existence and that brings me to my my next question about the genesis of hop how did hop come to beat uh where did it come from because of course now that it is turning into a dao i think it's

important to understand the genesis of this whole thing so where did how did uh hop come to be in the first place who created it yeah so you know our team has been around the space for uh a long time now and so previously we're working on a contract-based account uh wallet called authorium and so this was you know targeted towards regular users that just wanted to kind of log in with the username and password but we you know stuck to kind of the core ethereum ethos where it was like non-custodial uh you know you could access it on your own and

but it still made it like very easy to onboard um but you know defy summer hit we saw started to see a lot of these users just get completely priced out of mainnet ethereum because unless you're dealing with you know tens of thousands of dollars if you're paying hundreds of dollars of transaction fees like you're just getting your yield cut it you know it stops making sense very very fast and so what we did with ethereum is we started integrating with different layer twos um at the time it was like diversify uh and uh loop ring uh and you

know so primarily application specific layer twos to focus on exchanges or being exchanges and we saw our users they would kind of move to these layer twos they'd make a few transactions and then they moved back and by the time they they paid the bridging costs you know they deployed their layer one account uh they might as well have just used uniswap on layer one like they weren't really saving uh money and so and and meanwhile we are you know seeing like our onboarding flow just get destroyed

by fees because now all these new users that have this smooth onboarding flow now have to pay you know 100 200 just to deploy their account and get started which was just like a deal breaker for for most regular people so we were we knew that okay we need to onboard users directly to layer two and then just let them hop around from one layer two to the next never touch layer one never have to deploy that contract based account and yeah started to think about um different ways we could do this and yeah so we came up with uh hop protocol it's a you know very unique um design uh

we put the white paper out uh towards the beginning of 2021 uh just to the research community um and then yeah not too long after vitalik released his paper on the roll-up centric uh scaling roadmap and that post actually called for exactly what we were building like we need to do um you know we need to be better about uh transferring assets from one roll to the next so we got super super excited uh just kind of went heads down built the thing as fast as we possibly could uh you know went through a bunch of

audits made sure everything was secure released it uh last july um and then yeah then growing it since oh man that is a cool story so how many people who are working on the original ethereum project uh were rotated into the hop project yeah so so it's uh the three founders um yeah that's three so three guys okay uh great and then and then how has the hop community grown since then um i mean in terms of the the team uh we

we have uh lido on our team as well um so it's you know shane miguel myself uh and lito and you know we're going to be growing the team uh pretty aggressively coming up so you know if you're interested in in uh you know building a bridge and you know helping us scale ethereum uh definitely reach out um and then as far as the community goes like that that's been one of the coolest things to see is you know we've really seen a lot of people step up um you know take charge whether it's like mods in the discord or people building uh dune

dashboards or uh twitter bots and and all kinds of stuff just like making small contributions um yeah and i think this makes for a really unique story out of hop protocol where uh you you guys saw a need ahead of time based off of what you were building it's like well this is a problem for our current product uh and then you had like this a nice immaculate just like vitalik paper saying hey this is gonna be a problem coming forward and you guys were like oh we already knew that let's keep on building it was like the vitalik

validation uh but then like you wrote uh rotated ethereum into hop protocol a way ahead of the curve before the role us the the like roll up centric mode roadmap was even well understood by the broader ethereum community but you guys never actually took any additional vc funding from uh from anyone before after the rotation from ethereum into hot protocol is that correct so so we we did do the round with ethereum like you said um and then uh we did actually do a very small round just to get um a few uh d5 founders and so

you know we brought on uh kane and stani uh from uh synthetics and ave and then as well as stefan um from gnosis and then a key a few key individuals but this was just you know a very very very small allocation just to kind of keep us going and get these folks involved so yeah we've really kept um funding to a minimum and you know i've been like super lean with with you know how we built out um but that's allowed us to give you know just a ton uh to the community and

make sure that that the the dow has like a bunch of firepower in the treasury and and uh yeah really happy with the way everything turned out yeah and where the the current state of crypto right now is that uh seed funding and seed rounds are just like going bonkers and valuations in the private markets and hop never really engaged with that so you guys had the the one round with ethereum years ago uh and then i think and then what you just said just with a few key more people just to keep keep a gas in the gas tank but it never really

seemed to be about like how much can we raise from from vcs can you talk about just the ethos and the vibes that that you guys have tried to uh make in into the whole hop entire in into the hop ecosystem yeah i mean that that's exactly right like we we truly believe in in decentralization and um you know ultimately if the the company behind uh or that like initially develops the product has like you know all the funding then then you know the community only has so much uh

control and so what we want is really for hop to be community truly community-led um and so the you know the community will own the treasury uh and you know there might be opportunities for investors to to get a piece of that treasury if they decide um but we as as kind of the initial development team uh are now kind of transitioning to being a service provider for the dow and so in terms of like our budget and and you know that's all gonna have to be requested uh from us to the community

saying you know here's what we're providing what we're bringing to the table and what we're asking to kind of like keep ourselves going okay so and one final question before we get into the fun stuff the token stuff how many full-time hoppers are there how many full-time people like work work for the hop protocol so there's four of us four of us okay cool yeah that's not that many not that many but you know like i said we're gonna be growing the team uh pretty aggressively so uh hopefully we'll we'll have a bunch more hoppers here um pretty soon how much like

bottom-up community involvement has there been um there's been a lot you know we've seen um you know definitely people have picked up you know like i said uh dune dashboards uh twitter bots um you know someone did a gnosis safe integration uh we've seen tons of like integrations across different um products in in the crypto space um like david mihal with crypto fees has been uh pretty cool and and yeah you know definitely seeing the community start to pick up anything they

can amazing i'm just reminded of how uh lean and simple not not necessarily simple but just like it doesn't take a whole lot to make a whole lot of value out of this base like uniswap doing as much volume as coinbase only had like 20 to 30 employees and now we're seeing entire cross across layer two bridges come out with just four people and a community uh i would imagine that community is about to get a lot bigger coming up soon here yeah and you know the three of us founders are all super technical we all still are writing code you know are in

the weeds and then you know lito is just incredible on the marketing side and growth side so um yeah feel good you know even though we're smart small team we can um you know definitely pack a punch and and get stuff out there amazing okay let's go into the details of the hop drop itself what were the criteria for for getting the the air drop and how was that criteria decided yeah so so with our airdrop um the the goal was to one you know reward early uh participants of the network so you know if you provided liquidity um then we

wanted to basically like reward uh for that contribution um and then beyond that we we targeted uh achieving as broad of the distribution as possible so you know like i've been talking about we really want hop to be truly community-led uh and you know truly decentralized and and so in order to do that you know we need to have like a very healthy distribution of tokens across you know a broad set this has become an incredibly hard problem to do and uh just like i don't think people really

realize the scale of um people uh farming air drops like it is truly an industry uh i you know i would guess that over the past year you know billions of dollars of tokens have been given away and these farms are making you know probably hundreds of millions of dollars and so you can imagine like if they're scaling things up they they're hiring people they are you know it really is a massive scale it's not just like uh joe schmo over there kind

of spinning up 20 accounts and and claiming 20 airdrops and you know so these folks have uh discord accounts they have twitter accounts they have ems names they're spending millions of dollars in transaction fees like the the going into this we were like mind blown uh once we started digging into uh the different transactions and so with hops specifically uh we saw that you know a lot of these um air drop farmers were kind of like on on the low end where they would send you know 50

cents back and forth back and forth a bunch of times with a bunch of accounts um and then we we saw everything from that to like you know much more sophisticated uh where you know uh farmers where they they actually have uh you know millions of dollars like you know they're making hundreds of thousands of dollars of volume um you know really solid the full spectrum and and so what this creates is like really hard problems it's like we want to give hop to the community that's the goal but

how do we sort out our actual community from uh you know one these large-scale bot farmers two people who see kind of the air drop as the product themselves they don't care about the bridge they just really want to get the airdrop and then bounce on to the next thing uh and then there's like our actual community um and so we tried a bunch of techniques uh what we landed on was like creating these like initial criteria where it's like hey you know we can't uh sort out the box if we

just look at everybody but if we create this like initial criteria most of the bots will fall under it and then we'll be able to actually manually go through and uh you know both programmatically and manually go through and find our actual users and get them hop token um so what we did is we we set the initial criteria uh this moved around a little bit and we set it as low as we possibly could at two transfers in a thousand dollars of volume um so you know an average of five hundred dollars if you're just doing two transfers if you're only working with a

hundred dollars you could still make ten transfers and you'll still uh be included um and so this kind of gave us our initial set of addresses and then what we did is we we ran this you know algorithm that that actually tracked every single transfer that that these addresses have made every single uh bridge transaction that these these addresses have made and then we uh filtered out all the exchanges all the contracts all anything that that might have interacted with multiple

individuals and uh split up the interactions and and so this kind of like allowed us to isolate these groups of addresses that that we could identify as being individuals all that it's done programmatically spits out a list of groups and then we actually manually went through every single group and said hey you know this group they all are doing this exact same transaction at this exact same time looks like a bot farm eliminated or this group you know looks like a bunch of nft uh users that are all friends with each

other sending each other money but you know they're still included they're getting hot token uh and that kind of led to uh where we landed so we you know out of 40 000 addresses that met the criteria we eliminated 10 000 of them uh and now the community is is kind of helping um to eliminate a bunch more i don't know if you want to get into that already yeah no we we certainly will i think this is really cool and just it kind of illustrates the changing meta of airdrop dynamics uniswap had this just

immaculate blessing of not having to worry about this because they invented the whole concept of a retroactive airdrop and so no one was farming the uniswap airdrop because that wasn't a thing to do but they were the only people that were able to do that whoever was going to do the retroactive airdrop first had the blessing of like cool you get to do it first and it's pure that way following that every single app was like ooh retractive airdrop retroactive airdrop and it's starting to become gamed and now it seems to be like there's this arms race of air droppers

versus airdrop farmers like who can get more creative in trying to figure out the mechanisms to farm the airdrop versus which teams can figure out how to uh mitigate against uh these these retroactive airdrop farmers how would you if you had to like rate your efforts your guys's efforts as in like give your guys a scorecard of like how well you did in achieving your goals of mitigating the farmers how well would you how strongly would you rate yourself i i think we did really well you know there was we spent three months uh

trying to figure this problem out and you know the whole time we're so jealous of unit swap just kind of being able to put it out there and there's no expectations and um but yeah we we knew people you know had expectations and we we really wanted to get get not just do like a plutocratic airdrop where we give to just the liquidity providers or just based on volume like stuff that can't be gained but it was such a hard problem to to figure out but yeah i think we did really well i think you know there's

there are um more bots that that you know may still be there but i think that you know we've already seen some really promising submissions from the community and so what we've done is uh said that hey if you submit a group of uh addresses with very solid proof we don't ever want to accidentally eliminate a legitimate user um so it has to be like you know super tight and but if you do you get 25 percent of the tokens that that would have gone to this civil

attacker and then also if you are a civil attacker you can report yourself so if you are scared that you are going to get caught by the community which you know they likely will there's a huge incentive to do it you can just report yourself and and you will get 25 of the tokens that you otherwise uh would have gotten or you can wait and get nothing and so i'm super excited that's amazing that's that's such a chad move because like it's game theoretical

rational to just turn yourself in because like you still get the you still are farming the air drop but you're mitigated by by 75 percent so you like you still like congrats like you you got something but like you're you're still getting knee capped in the total supply of what you're getting that is genius it's a little little tip from the irs [Laughter] oh my god that's too funny and so also what you're doing with allowing people to report this uh report the the farmers that the airdrop farmers is like you're

allowing other people to farm the farmers uh and so like it's it's you're putting this out into the market and you're allowing just raw financial incentives to uh reduce the distribution of tokens into the hands of people that shouldn't have gotten it in the first place this is really cool that's exactly it yeah and so is this is this like you do you think going to be like the standard mechanism going forward i i feel like all future airdrops would probably use some sort of like mechanism like this i do i do um

and i but like you said like i think it is an arms race and ultimately it comes down to solving civil resistance and you know you've seen people work on it for years like like notably bitcoin has been working on it for a long time it's a really hard problem i i don't know if it's solvable so i you know i do think people will use this if they try to do civil resistant air drops but uh we might see this be one of the last civil resistant air drops because the incentives are just too big for the farmers and it's too easy for them to

hide well this is going to be an involving story as we go forward of course okay i actually want to go into the actual distribution uh and so uh chris you're not seeing it because i'm i'm uh live streaming my screen but i'm i'm showing the hop distribution pie chart we got the treasury we got the airdrop we got the investors we got the team we also have the future team uh and so i kind of want to just go through these one by one starting with the actual treasury uh so typically i think you see i've seen the treasury uh for like typical dallas gets spun up at just 50 percent seems to be like the shelling point uh but you guys have chosen point

five percent uh is there any just like grammar reason into how that number got decided yeah i mean it's a symptom of like how lean we've been able to stay and get the protocol out there so you know we we think of like insiders as both team and investors and um the typical slice uh for insiders in a uh dow is is like 40 to 50 percent uh and for us it's you know right around uh 30 percent and so that that's what has allowed us to give an extra 10 of firepower to the doubt

fantastic fantastic okay and then also i should also start with there's a one billion hop supply correct so that makes it uh what is that 650 605 million tokens of hop tokens are in the treasury and there's no other there's no plans for those right they're just in the treasury right yeah it's going to be up to the community okay so i i i'm not sure if there's consensus on this but i want you to check this take of mine if it's in the treasury it's basically tokens that aren't in circulation but are minted but like

when it comes to like the trading like volume and also the market cap of this thing they basically count as like unminted tokens and so i actually consider the 605 million hop tokens to not actually exist because they're in the treasury right and also does the treasury have a lock up i think that's a fair take and the treasury doesn't have a lock up um so the community can kind of uh spend them as as they see fit okay so if you if you take my take uh there's actually really just about 400

million hop tokens out there the the 605 million from the treasury will slowly make themselves relevant over time so this is why we call fully diluted valuation um but if we're talking about like today the air drop and what people are going to be clamoring about as soon as this token starts trading for those purposes like these tokens just don't exist um but also there there are some other categories where that falls into the same uh same category as well so we'll talk about that airdrop at eight percent uh eight percent of the total supply so what is that 80 million uh hop tokens how did you guys decide on eight

percent um so so we really wanted to um get a lot of hand or tokens into the hands of the community but you know like giving too much to bots was a concern and then also uh the bridging space is incredibly competitive right now and um liquidity mining plays a huge role uh in in this so what we imagine the community will do uh you know soon after the dow uh launches is set up like a liquidity binding to get um you know