Mainnet 2021: "Liquidity and Beyond: Cross-Chain Interoperability"

Notes from the Liquidity and Beyond panel, hosted by Ryan Watkins and featuring Carson Cook of Tokemak, Chad Barraford of THORChain, and Sunny Aggarwal of Cosmos.

• Why Interoptibility Now? - Ryan
  • Scalability demand due to high gas - Sunny
  • Self-soverign chains with lots of value -Chad
    • wasn’t possible (for thorchain) until now due to previous lack of TSS and other Cosmos work
  • Carson: Technologists pushing for cross-chain. Now, degens need it.
    • Degens want higher yield, may be on other chains.
  • Sunny: Cosmos approach is IBC (Inter-Blockchain Communication)
    • Trustless & Permissionless
    • Currently solutions only usable for “Famous” chains.
      • Validator sets are picky
    • IBC is on-chain, allows any 2 Cosmos chain to ‘bridge’
    • One con is the higher-lift for IBC support is the requirement to build light validators on the chain.
    • Thorchain is the best example of protocol to do cross chain
  • Chad: Thorchain has very little requirements to work with a chain — can connect to any L1/L2 due to neutrality.
    • IBC didn’t exist at time
      • Not quite a perfect fit
  • Carson: Liquidity is fragged across L1/L2s. Need any-to-any protocol. Accept tokens wherever they are, allow TOKE holders to direct liquidity in frictionless manner.
  • Sunny: “You have many chains that are trying to talk to each other”
    • 4 Approcaches:
      • Centralized Operator (WBTC)
      • Decentralized Operator (Wormhole [REN?])
      • Trustless Decentralized Operator, i.e. THORChain
      • IBC: No central operator, just let all chains talk to each other.
    • All have tradeoffs, all have strengths and weaknesses.
      • All will be important in the future
• Ryan: How do you see ways you can work together to solve this problem?
  • Sunny: Unification of semantics
    • Formatting of data, standardize on app-layer semantics. Allows integrators to abstract away which xchain solution is used
  • Carson: Seed & Cost vs. Security & Finality
    • User shouldn’t even know about the weeds, should be abstracted away like TCP/IP
  • Chad: That is very difficult. Like US/EU plugs, still not abstracted away.
    • Doubtful that it will ever be simple.
    • Blockchains are all so different, ship has sailed on standardizing.
    • Thorchain is good at being able to adapt.
• Ryan: what are some use cases unlocked by cross-chain interior.
  • Chad: All chains have unique value. BTC == SOV. Monero == security.
    • Being able to transact and move between allows users to have the best of all worlds. Very powerful.
    • "The fact that we rely on Binance or Kraken to get us across chain is fucking ludicrous!".
    • DeFi Cross-chain is critical.
• Ryan: Centralized solutions in between Decentralized solutions is bad.
  • How does cross-chain inform strategies for deploying apps?
  • Sunny: multi chain vs. interchain.
    • Multi == L1 -> L1.
    • Inter vision: provide 1 app specific chain that connects to other app specific chains. e.g. Compound building CompoundChain, becomes defcto. “Thorchain Gets It”
    • Bets that Maker will be its own chain.
  • Chad: Only picking EVM leaves out 60% of crypto.
    • Thorchain hopes to support everything
    • Serious DeFi projects must target 99% of blockchains/liquidity
  • Carson: In todays world, with blockchains of various things
    • Whale chain (ETH) prices normies out.
    • Decision point for apps: What type of tx throughput do I need to target, pick chain that fits best.
  • What role do general purpose SC platforms target?
    • Chad: SC in general doesn’t make a lot of sense
      • If you are building a serious app, you don’t build on a platform you don’t control.
      • e.g. Heroku, great for hobby, not for production.
      • Devs want control.
      • Cosmos is super powerful because it gives devs full control vs. Ethereum.
      • Building a chain is more difficult that simply launching a SC.
      • Future isn’t smart contracting, devs will want isolated env. Will use something e.g. Cosmos to own the chain.
    • Sunny: “Totally Agree”
      • Smart Contract chains are good for testing/finding product market fit
      • SC is useful as an add-on to app-specific chains.
      • Core functionally not in smart contract system.
• Ryan: Composability will be on separate chains, asynchronously. How does this affect UX?
  • Carson: Writing on the wall. Tokemak is going beyond ETH L1
    • Liquidity is bandwidth.
    • Fragmentation is a problem.
    • Tunneling is a challenge, how to move the liquidity.
    • Tokemak can help solve this
  • Sunny: Web dev is all async.
    • If we want blockchain to become big, much adopt this async model.
    • It will take time for tooling to get better.
    • How do we get XC UX as good as single chain UX.