Anna (00:00:05): Welcome to Zero Knowledge. I'm your host, Anna Rose. In this podcast, we will be exploring the latest in zero knowledge research and the decentralized web, as well as new paradigms that promise to change the way we interact and transact online. This week, I chat with Fabi from Parity, Derek from Moonbeam, Ruitao from Acala and Lucas from Centrifuge. This is a multi-interview episode, all about the Polkadot ecosystem. I felt it made sense to get a number of perspectives, to really paint the picture of what this ecosystem looks like. Especially now, given that the much anticipated pairachain component is about to come online. A quick primer for folks new to the Polkadot project, Polkadot consists of a relay chain, which acts kind of like a hub with a number of other blockchains that are connected up to it. The relay chain is where the blockchain consensus happens. The connected blockchains are called parachains and this connection between the relay chain and the parachain is the component that is about to be enabled. In this episode, we talked to the teams, who'll be working within this new architecture. But before I kick off, I want to tell you a little bit about the ZK Validator. It's a project that I co-founded over a year ago, and I've mentioned it a couple of times on the show. The ZKV is currently active on Cosmos, NEAR, Polkadot and Kusama. We will soon also be active on Mina. And as a validator, the ZKV is quite unique. We have a very clear mandate and a singular focus — that is the advocacy and promotion of privacy and zero knowledge topics on the networks that we validate on. We do this through connecting the ZK community with the folks working on the network. We also run workshops. We put together blog posts and reports, and we're also starting to do a little bit of funding into early stage projects that line up with the ZKV mandate. What also might be interesting for you is we're launching a series of dedicated events focused on privacy on these different networks. For example, we just recently held a NEAR privacy round table. There's an upcoming Cosmos privacy and ZKP showcase happening on March 26th. And we're in the early planning phase for a Polkadot event. The details are still in the works, but we're aiming for late April or early May. We hope to bring together the ZK community as well as new privacy projects that are emerging on the network. If you think your project falls into that category and you want to participate, please email us at events@zkvalidator.com. You'll also be hearing more about this through the Polkadot channels, but do follow @ZKValidator on Twitter to stay in the loop about all of our events. Anna (00:02:45): Now, if you want to support the Zero Knowledge Validator's initiative, there's a very easy way to do so. As mentioned, the Zero Knowledge Validator is running on a number of POS networks. If you happen to be a token holder on any of those networks, you can always stake to us. And since we're talking about Polkadot in this episode, I do want to highlight that we have five validator nodes there. Find us in the Polkadot.js UI, and do add all five nodes. This is a pretty cool passive way to support the Zero Knowledge Validator initiative,, and by extension, the development of zero knowledge proof and privacy tech on Polkadot. Now that we got this covered, here is my deep dive into the Polkadot ecosystem. Anna (00:03:27): In this week's episode, I speak with four members of the Polkadot ecosystem: Fabi from Parity, Derek from Moonbeam, Ruitao from Acala and Lucas from Centrifuge. My goal is to understand what projects are doing in the ecosystem and kind of what it means to be part of it, especially now on the eve of parachains being deployed. Now, I've done a few episodes in the past on Polkadot: what it is, how it's built. We talked about the Kusama network as well, in an earlier episode. So I'm going to add all of those in the show notes, but today I want to figure out a little bit more what's actually going on in Polkadot. So first off, I want to welcome Fabi back to the show. Hey, Fabi. So Fabi and I used to work together many years ago when I was still at Parity and actually, Fabi, you were on one of the very early episodes of the podcast. I think this was like end of 2017. I believe it's episode five, something like catching up with a few peeps from Parity. It was recorded like on a retreat, in this cabin in Brandenburg. And it was a very, very long time ago. So I think it's worth it to share with the audience what you do at Parity. Obviously, that's evolved since that episode five, but yeah, what do you do at Parity today? Fabian (00:04:43): Yeah, for sure. I mean the Polkadot and Parity, as well as this podcast, I think has come a long way in the meantime. So I'm so glad to have another opportunity here. Yeah. So I joined Parity four or five years ago. When I joined, it was really just a handful of sweaty developers in the Berlin living room and primarily focused on Ethereum back then. So we built core infrastructure and tools for the Ethereum ecosystem, primarily the Parity Ethereum, now Open Ethereum client. So that was the beginning of my journey with Parity, it was primarily focused on that, starting mid 2017 or so. And I think this is also where we met. Things became a little bit clearer on Polkadot. So the Polkadot paper was already there from the end of 2016 onwards, but the full force Polkadot work really started mid 2017. Anna (00:05:41): That's when I was there. And that was during the time of the fundraise, basically. That early, early Polkadot period. Fabian (00:05:48): Yeah. That's right. So that was the time when suddenly the word Polkadot was slowly being used more often than the word Ethereum, within Parity. And since then has been a pretty wild journey, ups and downsides. A few hacks. Bear markets, bull markets, NFTs and ICO's and DeFi and all of that. But yeah, pretty focused on just building what was written in the white paper, plus a lot of extras on the way. So things like Kusama, which you said you had a whole episode with Nicole on, but also things like Substrate, they're not mentioned in the Polkadot paper. Those are all things we discovered on the way that will be neat to have. So while the white paper is the guiding document, in terms of what we're set out to do, there's actually a lot of more stuff that we've built on the way. Anna (00:06:45): When you first joined Parity, how many people were there? Fabian (00:06:48): Just over 10. Anna (00:06:51): Wow. You're like employee number 11 or 12 or something? Fabian (00:06:54): Something like that. I mean, there's a few people that have left since then. So if you look at the most long standing employees, it's probably actually higher up the list, but yeah. There weren't all that many people, but we went through incredible growth since then, we are around 150 now. Anna (00:07:12): Wow. This is a completely different entity then. Fabian (00:07:14): Yeah. It's not much to do with high-level organizational point of view with what it was back then. But I think actually in terms of what we're doing, it's the same thing, just a larger machinery and more smart people behind it. But it's still at its core, we're still doing the same thing. Anna (00:07:33): So what do you do exactly at Parity? What's your role today? Fabian (00:07:36): So I look after, what we call, ecosystem development. It's a little bit of an umbrella term where maybe we have to rename that at some point in the future, but what we do is traditionally associated with ecosystem development, like growing the ecosystem, supporting the ecosystem, thinking about what kind of stakeholders do you need on Polkadot, but it's also things like developer relations, it's our enterprise business, it's our localization strategy. So there's a bunch more things that we bundle into into that, that I'm ultimately looking after. Anna (00:08:10): And how would you describe this ecosystem and the community that you interact with a lot, maybe say a little bit about what it used to be like and what it looks like today. Fabian (00:08:24): Yeah, it's actually interesting because the Polkadot ecosystem is, given that Parity already had a name when we really started talking about Polkadot, there was always a bit of a Polkadot. I wouldn't call it an ecosystem, but a community, there were already people who thought it was cool what we were doing. There were already people who would come to meetups and at least hear out what the vision is. But an ecosystem that started to emerge was really only possible when there was something tangible, some codes to build some stuff with. And that's a beginning of 2019, roughly, with the first releases of Substrate and us actually going out in the world and doing workshops with people and starting to do hackathons and getting learning materials out there, doing live demos on stages and so on. Like that was really a time where, developers started to get interested and started to use it, we got the first feedback and from there on an ecosystem emerged. Anna (00:09:21): I think people who listened to this podcast for a long time are familiar with Substrate, but maybe you should define it for listeners just catching this episode for the first time. What is that? What does that have to do with Polkadot? Fabian (00:09:32): Yeah. So Polkadot, there's many ways to describe it, I think, but I would classify it as a meta infrastructure layer for layer ones. So for layer one blockchains, they can plug into this meta infrastructure and get finality as a service, security and interoperability through that. Now the question you quickly ask yourself is: okay, now I have this great meta infrastructure that these blockchains can plug into, where are the blockchains? Like you'd better make it really easy to build blockchains that can actually plug into this. Anna (00:10:10): By the way, by meta infrastructure here, you're talking about the existing Polkadot and the relay chain, I guess? Fabian (00:10:15): Exactly. I've talked specifically about the relay chain and its functionality. It's like this, if you think about Ethereum one being infrastructure for dApps, then the relay chain is a meta infrastructure for something like Ethereum one. Anna (00:10:29): Oh, I see. Okay. Interesting. But Substrate is not that, Substrate, as I've always understood and how we've talked about it on the show, it's the builder or it's the thing that you can use to build any blockchain. Fabian (00:10:43): Yeah. It's essentially a set of tools and libraries that you can use to build blockchains. And if you connect these blockchains to Polkadot, we call them parachains. Anna (00:10:53): And pair chains is what everybody's waiting for, right? This is the update, or an upgrade. What is it? Fabian (00:10:59): It's the last stage of a phased rollout, that's what we call it. So this is the hot topic, it's what everyone's waiting on. We started the Polkadot rollout in the spring last year and we went through different phases and we're really not in the very last stage, where everyone is just waiting for this parachain functionality, which is really crucial because so far Polkadot is primarily a skeleton chain that just validates and governs itself, but you cannot actually deploy any additional logic on top of it. Parachains will enable that. Parachains are like flipping the switch from this skeleton thing to an actual open developer platform. And deploy parachains on top of, and then potentially applications on top of these parachains, and then we can actually use all of the tools that we've been building over the last year or two to deploy stuff. So it's the last milestone, but it's also the most important one in many ways. Anna (00:12:00): Cool. Maybe for the listeners who aren't familiar with parachains and how they actually relate to the relay chain, what is that connection point? Fabian (00:12:09): For people who are familiar with Ethereum and Ethereum 2, I think a good way to understand it, although there are many, many nuances to that, but on a high level is, ultimately Polkadot is also a sharded blockchain protocol. But with the key difference compared to Ethereum 2 that, instead of each shard being an issue of execution environment and each shard looking exactly the same, these shards can look vastly different. It could be like a Bitcoin, like a UTXO chain, it could be an Ethereum-like smart contract platform, it could be a completely application specific chain, like one chain — one application kind of thing. So you have significantly more technical freedom in actually going into this chain and changing it to whatever you need. And then there's an economic mechanism on how these spots are allocated. Eth2 just launched us with like those are the shards, that's the capabilities, please deploy on top of them. Polkadot is a little bit more:, here's this meta infrastructure, you can actually now start deploying these shards and there's an economic gain on how they're allocated. Anna (00:13:16): And so in this case though, each shard is a unique blockchain, actually, it's not an identical data structure. Fabian (00:13:24): That's right. That being said, they could also be identical. If you want to deploy twice the same thing, Polkadot doesn't care about that. Let's say you want to horizontally scale your chain, you could deploy the same thing again. But obviously the idea always behind parachains is optimization and you can optimize for a lot of different things. Maybe you optimize for a specific application or for a specific industry, or for specific problem domain, let's say privacy or scalability, whatever it is, but it's the power of Polkadot and power of Substrate really comes through. When you think about what am I optimizing for and how can I customize my infrastructure to accomodate for that use case? Anna (00:14:07): On launch, as mentioned, there's going to the last building block, parachains are going to be enabled. But there already exist some fully formed projects, we actually are going to be interviewing three after this, but some are fully formed and are actually live, and some are waiting for parachains. Do you expect that, when you turn this on, and on day one, you have a hundred new parachains? How is that going to actually work? Fabian (00:14:39): Yeah. So there's going to be some allocation mechanism that I alluded to, but essentially it's a gradual scale-up. First of all, we want to have some confidence in that the thing that we built actually works. So we don't just want to let everyone jump in and then hope it doesn't break, but rather gradually roll it out. But there's also economic reasons and stuff like that, why you gradually want to allocate this stuff also, as the ecosystem grows. So you can imagine, it will look like one slot that becomes available per week, so over the course of two years you could roll out a hundred parachains, but at any given time there's going to be some slot allocation mechanism going on. So if people are interested in getting a slot, they can start playing these games. Anna (00:15:28): Do you know, how many are going to be offered right off the bat though? I don't imagine it's going to be one at a time right off the bat. Is there going to be like 10 slots? And then you add one every week or..? Fabian (00:15:37): Yes. Well, I think those are still decisions that need to be made. It's essentially parametrization within the protocol, but as I said, it's going to be gradual, and it's likely, it's first going to be on some testnets. That's already the case, we have parachains on non-value bearing testnets, and people are using cross-chain messages. All that stuff already exists, but the next step would be to bring it on Kusama and maybe already through the auctioning process, but maybe also through a governance or different mechanisms on how you can actually bring chains on. So we will do that gradually, and as we feel comfortable, as things are tested and audited and optimized and all of that. But on Polkadot, once you "pull the trigger" and say: okay, now, programmatically, the slots are being allocate, then, I don't want to say there's no way back, there's always a way back, you could hold it or whatever if the community decides, but ultimately once you do that, you want to have confidence in, you know, this thing is going now. So there's going to be a lot of steps before that, where we try things out and have dry runs and do things in either environments where there's no economic value, or at least significantly less economic value then on Polkadot mainnet. Anna (00:16:50): I mean, it's extremely exciting, but I'm curious, how many groups are there in the ecosystem? How many teams would even be able to take one of these parachain slots? Fabian (00:17:01): Yeah. So right now we do track it internally, like Parity internally, quite diligently to know who's there, what are people building and stuff like that, but it's ever changing and we're increasingly fast paced. So it's sometimes a little bit hard to fully stay on top of it, but roughly 300 teams. And we start counting as a team, if we say: at least two people, a product idea and some funding behind it, so those aren't Parity internal projects or tinkerers or weekend projects, hackathon. I mean, if it's just two guys having tried something for two weeks, then it doesn't count to that number. But those 300 projects they aren't all building parachains. So a good way to categorize things, and the one we often use is like three bigger buckets, one being parachain, so teams actually using Substrate to build chains that then will be deployed as parachains on Polkadot. The second category is high level applications. So those are teams that build, for example, smart contract applications that are deployed on top of these parachains, so you can imagine a lot of these parachains are platform themselves. So maybe there are EVM platforms or Rast-based smart contract platforms, and so there's obviously a lot of teams that aren't actually building parachains, they're building applications in the Polkadot ecosystem. That's like one layer on top of that in the tech stack. And the third one is what I would call components/toolings/infrastructure builders. So those are all the people that aren't actually deploying any business logic on top of Polkadot at all, but they're contributing code in a sense of that they're making it easier or more powerful, or faster, or whatever to do stuff in a Polkadot ecosystem. So developer tooling, like node infrastructure, that kind of stuff would form the third category. Anna (00:19:03): Would something like a wallet or a block explorer fall into that category? Fabian (00:19:07): Yeah, both of those would be classical examples of component builders. Anna (00:19:13): Cool. How are you finding these teams? Where do they come from? Do you source them? 300 seems like a lot to source. How do these teams emerge? Fabian (00:19:23): Yeah. I mean, right now they just emerge. Right now, you don't have to do much right now. There's a lot of influx and for us, it's just even being able to handle that in terms of who wants stuff from us, what kind of feedback we're getting and so on. At the very beginning, it was quite helpful to have a name in the Ethereum space. And Ethereum space still is the place, where most of the decentralized application builders are. So us having had a brand in that and the network in that was really helpful. So we could just go out and be like: Hey, we've build all this cool stuff for Ethereum, we've built a new thing, it's called Substrate, maybe you want to try it out. So we naturally had quite a few people that were following what we're doing, who were willing to jump into that, because we knew what kind of limitations Ethereum brought, because we were the guys that were building infrastructure there. We also knew what were the pain points of these people, so there was a lot of empathy in our development process, from what kind of pain points they have. So at the beginning it was a lot from there and working very dedicatedly with these early pioneers that were willing to go onto our platform. But ever since, like beginning of last year, it's really a flying wheel. Anna (00:20:42): So that was actually a question, cause if you say 300, that's pretty wild, cause I feel the last time I checked in on this, it was like 100. So it must be a lot of new projects that have just emerged in the last few months. Fabian (00:20:55): Yeah, for sure. We are all profiting, I think, as the whole space. From an upward cycle, narrative around Bitcoin, that's trickling down into the rest of the industry, but also narratives around DeFi and now NFTs, and so on. You have representations of all of that in the Polkadot ecosystem. So one is like we're all coming out of the gate with this new tech, and it's exciting and resolves people's problems. And then lay on top of that, there's also just more people coming in the space. And also more people coming into space that have less of a mental lock-in on like there's Bitcoin and Ethereum smart contracts, but there's maybe also other ways to do things. And so for us it's a function of us doing good job, I think, but it's also a function of there just being a lot of excitement and a lot of new people coming into space, Anna (00:21:47): And actually speaking of new projects, I mean, as part of the Zero Knowledge Validator, we actually did a workshop with the Parity folks back in the summer, this past summer of 2020. And we were looking for privacy projects on Polkadot, and there was a handful of privacy projects, but there was very few zero knowledge proof-related projects. There was more of a focus on trusted execution environments, when we were looking at it back then. But since then, I mean, we've been tracking it as well and we've seen an explosion of new zero knowledge or privacy related projects. Given that this is the zero knowledge podcast and a lot of our listeners are concerned with this or interested in this topic, what would you say if somebody has a zero knowledge focus, how do they even start to interact in the ecosystem? Obviously, it's awesome to see that there are projects that are doing that, but are there still building blocks missing? How would we, maybe even as the Zero Knowledge Validator, help focus that energy? Fabian (00:22:48): Yeah. There's lots of ways to get involved and, because it is so fast moving and ever expanding kind of dynamics, it's sometimes also a bit overwhelming. Like you go and there's all these teams, and there's all this tech and like, where should I start? A good way is starting to talk to people that are in the ecosystem. Talk to Parity, talk to the Web3 Foundation, maybe talk to folks who are already doing zero knowledge stuff in the ecosystem. They usually have a pretty good understanding of what's going on and what's missing. At Parity specifically, we're in this constant mode of for looking what's missing in the ecosystem and what of that should be built by us versus what should be built by others. And we were never in the business of competing with our own ecosystem. We always just look at like: Hey, is no one picking this us up? Okay. Then let's do it ourselves. But there's pretty great support infrastructure that you can plug into, that you really get for free. So the grants program, that the Web3 Foundation is running, is a great source of just non-dilutive funding, if you want to get started. There's also always a list of general areas of interest. I would say, sometimes there are even precise RFPs or things that we would like to see, that you can pick up. So that's one way. The other one is the Polkadot Treasury. It's essentially just on-chain DAO that sits on top of Polkadot, and it's a pretty powerful capital deployment mechanism for ecosystem participants. And again, a great way to get just non-dilutive DOTs into your hands to get started. That's governed by the community. And the third one is stuff that we are running at Parity. So we specifically want to point out the builders program, but there's actually more ways that kinda go beyond that, but they're all centered around technical support, support around architecture, helping people to actually find the right thing to build and then find the right way to actually go about it. Anna (00:24:47): So you mentioned this earlier in the interview, but in Substrate, is there already zero knowledge proof functionality built into that, or is that something that Parity could build, or is that something that external people should be building? Fabian (00:25:00): Yeah, so, the interesting part with Substrate is it depends a little bit on, what you call, being built in. So Substrate ships in multiple layers and multiple levels of abstraction. And the thing that Parity ships, that's in the Parity Github report, there isn't anything native in their DADs does zero knowledge stuff, in that sense. That being said, because it's an extensible framework, there's a lot of reposts from ecosystem people out there that do zero knowledge stuff that you can just use. All these things are composable and sensible and technical freedom, it's a major design principle in Substrate. Although the thing might not directly ship with zero knowledge enabled, whatever that means, it's not like you're starting from scratch. All of this stuff is open source. All of this stuff is ultimately with some limitations compatible with each other, depending on what you're doing. So you're by no means starting at zero. And all the stuff that we're supporting heavily, as in Parity, but the same is true for the Web3 Foundation, are the things that are generalizable. Those are the things we're really interested in. It was also cool if people built specific applications that really solve this problem. The greatest, someone builds something on the way that then enables five, six, seven, eight other applications to be built on top of it. Anna (00:26:27): Fabi, thank you so much for giving us this look at the ecosystem from the perspective of Parity, maybe a little bit of the history and setting the stage for the following interviews. Thanks for coming on. Fabian (00:26:39): Thanks for having me, Anna. Anna (00:26:40): Next up I'm going to be interviewing folks from three different parachain projects. We're going to be looking at Moonbeam, Acala and Centrifuge. To start, here's my interview with Derek from Moonbeam. So hey, Derek. Welcome to the show. I want to hear a little bit more about Moonbeam and yourself. Maybe you can give our audience a short introduction. Derek (00:27:05): Yeah. Happy to do that. So why don't I start with myself? I've been basically building software and technology companies, my whole career. So that's quite some time at this point, that's about 20 years now I've been doing that. And, I guess, the most formative part of my career, the formative experience was this company I started back in 2006 called Fuze. And I was there for a long time building that company up. That was a cloud technology company, not a crypto company, actually just cloud technology company. And I was there for, I think, 13 years building that company up over time, learned quite a lot in that process, met a lot of great people along the way. And a lot of those people actually are with me today at the present venture Purestake. We started Purestake in the beginning of 2019. And the way I got into crypto was that my co-founder from this company Fuze left to start a crypto project. So that got me quite interested, he's now the founder CEO of a project called Algorithm, which is based in Boston here. Derek (00:28:09): So that got me quite interested. When you work with someone for a long time. And I was quite interested in what he was up to, and as I started learning more, I said, I have to get into the space and do something here as well. So that led to starting Purestake. And our vision really, even coming into it, was that we're heading into a permanently multi chain kind of environment, in the blockchain space. And in that environment problems related to cross-chain interoperability are the key ones, the key challenges to overcome. So that's kind of the mindset we had, and I think that led us pretty quickly to Polkadot. I think that they share that vision, I think they're kind of making it happen even with their Substrate technology, and it was just a natural fit for us to start working in the Polkadot ecosystem. So we've been building our project Moonbeam in the Polkadot ecosystem now for about a year and a half or so. It's definitely come a long way in that time, I guess. Anna (00:29:08): And so the, the company is actually called Purestake. What was Purestake originally planning on doing, because I guess Moonbeam is sort of the end result of this journey, but where were you starting? Derek (00:29:19): Yeah, I mean, when you come into crypto and don't have this long history, like most people. So there was a lot of learning that we did, particularly when we started in 2019. We started out doing a lot of infrastructure work. That's the way that we initially started engaging with networks. So running validators, or running actually validators on both Kusama and on Polkadot right now. So that's how we just started learning, just how this technology works. That's definitely gave us something tangible to engage with and getting involved in the community. And so what I guess became clear to us over time was that, while that's interesting to do this work at the infrastructure layer, we saw definitely a much bigger opportunity and moving up the stack a bit to build our own blockchain. And the need that we saw was that, it became pretty clear to us in Polkadot, that there's a lot of people that want to build on Polkadot, but for some people it makes sense to do what we've done and use Substrate to build your own blockchain, to become a parachain. But I would say also, it is a fairly serious undertaking to do that. it requires time, the right expertise, a lot of capital even to win one of these parachain slots. So we saw that there was definitely going to be a good spot to occupy, to provide a developer-oriented platform, like a parachain that would be a platform that people could deploy dApps to, in this more traditional, smart contract model that people are used to. And so we were definitely gunning for that. We thought that we wanted to be one of the teams filling that need. Anna (00:30:56): Cool. And so what is Moonbeam then? Maybe we should give the audience a sense for what that is. It's a parachain, but what does it actually do? Derek (00:31:05): Yeah. So what Moonbeam is, it's pretty straight forward, the core concept. So basically what we've done is we've done an Ethereum implementation, using Substrate. So Substrate is the technology framework that one uses to build parachains on Polkadot. And in close partnership with Parity, we've basically created a working Ethereum implementation. So if you're coming from Ethereum, we're trying to create this environment that looks and feels, and just behaves in a very familiar way. And where you can use a lot of the existing tools that people are used to using from Ethereum, but you're on Polkadot. So you get benefits of being on Polkadot, we're adding other features on top of these core Ethereum feature sets. So things like on-chain governance and staking, a lot of features that a lot of other Polkadot-based projects are using. So we see it as, there's this familiar part, there's this part that allows you to use the things, all these tools that you're used to, but then you can have the opportunity to extend from that core to take advantage of a lot of the features and things that are possible in Polkadot. Anna (00:32:11): In building this out, did you interface with the Ethereum developers, like the Go team or the Open Ethereum folks, or were you, would you say, just taking the spec and then re-implementing it? Derek (00:32:25): Well, I'd say that, and this is credit where credit is due, is that Parity themselves obviously have a lot of expertise in building these clients. And a lot of these components were already, they're already part of Substrate. In particular, the EVM implementation was largely there. I mean, that's definitely evolved and improved and got more performant, but there was already an existing core EVM implementation, --- that existed --- when we started. And so that was a great basis to build on, because really, with that as the core, these other components needed to be layered on top. So things like these Web3 RPC endpoints, or things that would allow the tools to communicate with the node, we were creating a lot of these pieces this EVM core that already existed. And I that obviously helped us quite a bit. And I would say in general, that's the story of us standing on the shoulders of a giant kind of situation. So that's not only Substrate, there's all these components that are already created. And so that was was very fortuitous. Anna (00:33:33): I follow you here, where building a parachain out itself could be quite an endeavor, but building a dApp, or maybe even redeploying a dApp would allow for faster deployment and also potentially like more experimentation. How are you thinking about the way you position yourself and your community? Do you want to be a sandbox? Do you want existing Ethereum projects to come over? What's your strategy there? Derek (00:34:00): Yeah. So I would say that, we're definitely seeing different kinds of folks take advantage of Moonbeam and engage with us. What I would say is that, for where we're directing a lot of our own energy and our own go-to market, is definitely focused on engaging with existing teams that have Ethereum code bases. So if you're an existing team, you have an Ethereum code base, you're a potential natural partner for us, because you can take that code base and just deploy it to Moonbeam, with little to no changes, and then you'll have Polkadot-based deployment. So that's definitely something that we've been talking to a lot of teams, at this point, about. And I think that we're at a moment now where people are interested in this idea of what does a multi chain deployment look like. Maybe it is the case that, now I can't serve all of the usual use cases I want to serve from Eth mainnet. And there's going to be a multi chain deployment of some kind, whether that even be to a layer two or to other chains. And we're at a moment in time now where people are pretty open to that conversation, due to gas prices among other things that we were talking about earlier. Anna (00:35:14): Actually, let's talk about that. ---I mean, Ethereum,--- I was just saying this before, the way that I had played with some DeFi in the summer, using very small sums, I was able to do it. Then at this point, I'm actually not able to do it at all. It just doesn't make any sense. I would lose any of the funds that I have in there on gas fees. I mean, this seems like a pretty massive opportunity for Moonbeam to emerge now. But would you say that's one of the primary things that are driving people to reach out to you, or maybe making so that the reception you're getting is quite open? Is this the main reason? Derek (00:35:50): Yeah. So it's a good question. I would say that yes, it is. But what we found is that framing the challenge that someone is facing it's just one of scalability, is generally not enough on its own. There was a lot of different options available if you're just seeking to solve the scalability problem. Anna (00:36:10): I guess. I think of those as separate. Scaling, I always think of it's like speed. Derek (00:36:15): I think they're connected in a way, because if you had more throughput, then the fees would be lower basically. So the fees are definitely dependent, at least in the Ethereum model, on the load that's on the system. So we see it this way that, it's kind of a push and a pull. I describe it that sometimes. So the push is what I was describing. So we're in this environment, we are unable to service certain users and use cases well. So we're just losing part of our target market basically, that we can't service. So that's the push. I think the pull that we're seeing though is just interest in Polkadot. So I think of the other layer one networks that are out there, Polkadot has definitely established itself. And almost maybe separated a little bit from some of the other folks out there, and there's quite a lot of activity going on now. And a lot of activity is new asset creation, like these new projects that are developing. So I think for a lot of the teams we're working with, particularly ones in the DeFi sector, they want to be a first mover in this new ecosystem so that they can get these new assets into their protocols. Whether that be a DEX or lending-borrowing protocol, these kinds of things. So that's the pull. So I think that makes for a good prospect, if you wanna call it that like that, for us. They're recognizing that they need to do something to address these kind of users and use cases thay can address. But they're also interested in Polkadot, interested in expanding at Polkadot. And I would mention that, almost all of the people we work with are not moving. So this is a big misconception. This is the old Eth killer narrative, which makes no sense from my perspective. It's much more that they'll maintain their Ethereum deployment, and service the users and use cases that make sense to service there, but then they're expanding and getting at these other users and use cases and assets on Polkadot. So it's additive, and they plan on having multiple deployments at the same time. So that's almost universally the case for the projects we're working with. Anna (00:38:09): Are you worried though, given that it is an EVM implementation and, I realize, it's going to be a very new network, there won't be too much activity on it right off the bat, or I'm sure you want to see it scale up, but it will have less activity than Ethereum has, but would you not run into the same kind of problems that Ethereum has today? Derek (00:38:30): So I would say that we have intentionally copied as much as we can from the Ethereum model for compatibility. So whenever we've come to forks in the road, we've said, okay, we could do A) which might be faster, we could do B) which will maximize compatibility. So we are definitely always choosing the compatibility path, cause we want to really be the lowest friction way for people to deploy on Polkadot and to redeploy from Ethereum. So that does mean that ultimately we have the same gas model and that with enough load, you would see increases in gas prices. Now that being said, there'll be quite a bit of a new block space that's available. And that it is going to take some amount of time basically. You know, we have two deployments too. We have a deployment on Kusama, as well as a deployment on Moonbeam. And we can already see that potentially there might be some use cases that might be served just fine from Kusama. That's already happening on Kusama now, when you see things like NFT activity and other things happening there. Anna (00:39:30): I want to dig on that. So you have an implementation. Is it Moonbeam on Kusama and Moonbeam on Polkadot, or is it a different term on Kusama? Derek (00:39:40): Yeah, we're calling that network, the Kusama network, Moonriver. So there's Moonriver, is the name of our Kusama deployment. And Moonbeam is the name of our Polkadot deployment. And the way Polkadot works and how Parity works is, they do things first on Kusama. So our Moonriver network will be launching first, as the parachain auction start on Kusama. Anna (00:40:00): Do you plan on building bridges between Moonriver and Moonbeam or Moonbeam and Eth mainnet? Derek (00:40:07): Yeah. So we do have a number of different bridging options that we're making available. One of them is just a point to point bridge connecting, for example, Moonbeam back to Eth mainnet. Currently, that's connecting our testnet. We have bridge instances connecting back to both Kovan and Rinkeby. And that's the one that we're maintaining and we're going to be behind, but there are a number of other ones too, because that's the beauty of Polkadot, where we can leverage cross chain integrations that are part of Polkadot, take advantage of other bridging efforts. So, for example, there's the Snowfork team that's building Snow bridge. That's the one that will provide another route to moving assets to and from Moonbeam from Ethereum. And then we have other integrations underway, such as with Ren, with a newer project called XLR that will provide other ways that we can move assets between Ethereum and Moonbeam. Anna (00:41:02): Cool. --- I'm curious, what do you think about, cause I, --- You know, there's this concept of public utility parachains, it's kind of common good parachains. Moonbeam is not that, Moonbeam is a standalone, it is a project in itself and it will be using funds in order to secure a parachain slot. But do you think that these public utility parachains will be useful to Moonbeam? Or do you think that there could even be like a competitor public utility parachain? Derek (00:41:28): For some of the ideas I've heard of for these public utility parachains, they certainly will be useful. So for example, I know that there's one plan that would help support stable coins, making sure that there's stable coins that are available on Polkadot, that any parachain can use. So that's obviously something that's a benefit to all of the teams that are building on Polkadot. So same thing with the bridges. So the Snowfork bridge I mentioned also falls into that category. It's just something that I think all the teams need. I think, the things that are being remarked for that public good use or something like those examples, they will be generally useful for anyone that's building. Anna (00:42:06): I know that there's Canvas and Ink. That's also kind of a smart contract platform, but it's not EVM, it's not Solidity. But do you see that as a competitor? I mean, I realize everyone's in the same ecosystem and it's quite small, so everyone's mostly friends, but would people have to make a choice when they start to think about building a dApp there? Derek (00:42:28): Yeah. I think the decision tree goes like this. So if you're going to build on Polkadot, I think the first decision you have to make is: do I use Substrate to build a parachain, or am I going to work with an existing parachain team? Am I going to build on top of the parachain? So that is definitely the most important first decision. And basically depending on which path you go down, it actually will color a lot of what the rest of the execution looks like. So if you're gonna build a parachain, then that's Substrate and Rast and bidding on a parachain slot and all of this. If you're going to go down the path of working with the parachain then there's us, there's other teams that are also building smart contract parachains. And one of the key choices there would be working with someone like us, the Ethereum-style implementation using the Ethereum dev tool chain, or using ink!, which is the other main option, that's the Parity created more Rast-based smart contracting language. What I'd say there is that there's obviously quite a bit of thought experience has gone into ink! and it definitely serves its purpose. If you're starting from scratch, that's probably one set of conditions that may weigh into that decision versus if you already have an existing code base. So what I described before is if your project already has a code base, working with an EVM-compatible chain is going to make a lot of sense. Because you can leverage the one code base multiple times versus having to recreate something. Anna (00:43:59): What about the tooling and all of the things that exist on Ethereum mainnet today? Does that come along with it or do you need to redeploy it? Who would redeploy it? And actually even a more basic level one is like, will there be like a Metamask for Moonbeam? Would it be Metamask or would it be your own version of it? Derek (00:44:17): Yeah. So definitely it is the case, given this always choosing for compatibility, as I mentioned before, that allows --- us to basically--- the existing tools to be usable with Moonbeam, just by changing where they're connecting to. So that is just Metamask. And some users will be familiar with this from working with, for example, something like xDai, where you basically add a new network. And if you add Moonbeam as a network, then it's the same Metamask experience. You can still use Metamask to send funds or to add ERC20 and this kind of thing. All that is a similar experience. What I'd say is that tools like Remix, Metamask, things like Truffle, Hardhat, all these tools fall into that same bucket, they work out of the box as it is. You just have to reappoint them basically at Moonbeam. I would say if there's another class of services, which are things like Infura, The Graph, where that's more of a service versus just software. Those are compatible with Moonbeam, but you don't get them for free in a way. Because Infura currently is a product service for accessing Ethereum. But ---there is where--- we're seeing there's other projects that are starting up that are providing these kinds of services. And in fact, even some of the folks that are established on Ethereum, I think a lot of them are also pursuing multi chain strategies at this point. So they again are natural partners for us. Anna (00:45:35): Cool. Let's talk a little bit about the parachain slots. Now we've kind of mentioned it a couple of times through our interview already. This idea that you have a relay chain, which is the consensus of Polkadot, and there's these parachains that connect to it. Each parachain takes a parachain slot, and there is some sort of fee or loan. Maybe you can describe this better, but there's some amount of money that needs to be put up in order to secure one of those parachain slots. Can you tell me a little bit about that process from the perspective of a parachain? Derek (00:46:09): Sure. So the main auction process, which is the main mechanism by which these parachain slots are going to be allocated, has not launched yet. But I can give you our view on it, from where we are now. So I guess the most important point is that there is this auction-based mechanism that's going to be used. So what that means is that slots will become available. You know, Polkadot has a finite capacity. So there's a finite set of slots that are possible or that are supported. And thus those slots will be made available one at a time. And as those slots become available, there'll be an auction where different teams, ourselves and other teams, can basically put bids up to occupy those slots. And basically the team that has the winning bid is the team that would then occupy the slot. And it is for a finite period. So I think you can choose 6, 12, 18, or 24 months on Polkadot. That's the plan. It may be shorter Kusama. And the idea is that whatever the amount is that you bid and you bid that in the relay chain net of assets, so that would be DOT in the case of Polkadot, that lets you occupy the slot if you have the winning bid, but those DOTs become locked for the duration of your occupancy. So if you are bidding for two years, you put up a bunch of DOTs, you win the auction, then those DOTs become locked underneath your parachain in a way. Anna (00:47:32): Yeah. And so you still have them, but I guess you lose the opportunity cost of them. You can't use them for anything else, you're going to see prices potentially fluctuate and you'll just have to sit by and be like, huh, Derek (00:47:45): That's right. But you're obviously getting this valuable service, you get access to the relay chain and you can access part of the capacity of the validators on the relay chain to provide security for your parachain. Anna (00:47:56): Cool. How did you go about, I mean, I know that it's not done yet, but I assume the plan is to put DOTs forward for this slot. Where do they come from in your case? Derek (00:48:08): Yeah. I mean obviously one place they can come from is that you just have them and you put them up and we don't know exactly what the clearing price for these options are going to be, but it's going to be high. So almost all the teams that I know of, including ourselves, that are bootstrapping themselves into these slots for the first time are using this mechanism called a crowd loan. So what a crowd loan is, it's a way that you can obtain the DOT that's needed to put a bit up from other people. And the idea is that, as a team, you put an offer together. You say, okay, for this amount of our platform tokens, we request to borrow your DOT, and those people that contribute towards the crowd loan will get their DOT back. But then it's up to the team and the most common model would be that there's some portion of the platform tokens of the parachain that would then be distributed to those folks that were contributors over the course of the slot occupancy. So I think that almost all the teams I've talked to are pursuing that model, cause there's a way that you can bootstrap yourself without a need to have some huge number of DOT already. Anna (00:49:17): Would any team do like half/half, would you put some up or are you planning on actually doing full crowd loan? Derek (00:49:24): We plan on doing a full, but I think ---there probably is --- some people may just have something. --- I mean, and I think it's a,--- if you have the American ---, I mean, you know, the, you know,--- it might not make sense to do the crowd loan at all. --- But, um, but yeah, I think that, you know, obviously the thought itself has gone up in price a lot. --- So I think these things are not going to necessarily be that cheap. Anna (00:49:44): And so if a participant wanted to actually access this or support Moonbeam getting that slot, they themselves, if they are a DOT holder, they could loan through this crowd loan mechanism, they could actually loan their DOTs, they would be locked in return, they would get some sort of distribution on your network. Have you already fielded the question to your community? Do you know what the interest is there? Do you have some expectation on even how big that is? Derek (00:50:13): Yeah. And our plans are evolving as well. We're mostly focused on our Moonriver, this first deployment that's coming up, we'll be pursuing this strategy. And there seems to be quite a bit of interest. So we're definitely seeing interest from the community. And we are pretty focused right now on just this Moonriver launch where we do have, that's a little bit of our community led experiment where we're actually going to be distributing a large portion of the platform tokens, I should say that the Moonbeam Foundation is going to be distributing a large portion of the tokens on the Moonriver network via this Crowdloan mechanism. So kind of using it as a token distribution mechanism. Anna (00:50:47): Neat. And this is all on Kusama, so you'd have to have Kusama tokens to participate. I have one last question about how you interact with the relay chain as a parachain. You are relying on the validators in the relay chain for your consensus, but do you have validators as well on these networks? Derek (00:51:05): Yeah, the key role that we have is this role of collider. So in Polkadot's design, there's this split responsibility. So as a parachain, you have these collider nodes that are supporting the parachain that are responsible for block production. So those colliders are producing blocks and then they offer them up to the relay chain validators and the relay chain validators are then verifying the contents of those blocks and finalizing them. So there's this very tightly coordinated effort, but it is a split responsibility. And that's just part of the Polkadot design, to have this shared responsibility, if you will. Anna (00:51:46): I guess it almost sounds like a mini-validator set, but validator set light, because they're not doing the full validation, I guess they're not staking actually, they're just acting as this collider role. Derek (00:51:57): That's true. ---Although we are, and this is up to the different parachain teams.--- So we will have staking on our chain that will be used to select who it is that's producing, that's performing this collision role. So it will resemble the regular staking mechanics that you find on the relay chain. Anna (00:52:13): Cool. Well, Derek want to say a big thank you for coming on the show and helping us to understand Moonbeam and also what it looks like from your perspective, becoming a parachain on Polkadot. Derek (00:52:24): Thanks for having me. It was great to be here. Anna (00:52:26): And good luck with the next few months, as these things really start to come online. I think a lot of people will be watching closely. Derek (00:52:31): Thank you. Anna (00:52:36): So welcome to Su Ruitao. Ruitao (00:52:38): Well, thank you for having me. I'm super excited to be here, Anna. Anna (00:52:42): Ruitao, you are the co-founder of the Acala project. I want to hear a little bit about maybe when you started in the Polkadot ecosystem and when Acala was born. Ruitao (00:52:53): Well, actually we started to look at Substrate or have interest in the Substrate project --- almost like --- more than two years ago, when Substrate was still in its early form. So one of our co-founders, Brian, was actually one of the prominent contributor outside Parityy to the Substrate cause. So we were already familiar with Substrate before, almost two years ago. And one and a half years ago we decided that, hey, we think this is super promising, we should start a venture and be a specialized parachain using Substrate. And that's how we get started. Anna (00:53:28): Cool. And your company though, it was named something else before, right? What was that original name? Ruitao (00:53:33): Well, the initial name, we called it Laminar, and still have this name. It's actually our entity we are operating from. ---So we can think of a, yeah.--- Think about an offline organization that will be working with a number of projects, and Acala is one of our projects. We named it Laminar because we are nuts and all the co-founders are pretty much nuts. We are into physics and stuff. And this one term called Laminar flow, like water was flowing in a particular end goal. You can see it's like almost frictionless. And we envision that a capital or information of value should be flowing in a fictionless way on blockchain as well. And hence the name Laminar. Anna (00:54:09): So frictionless flow is what you meant with that. But like the project that we're going to basically be talking about is a color. When was Acala first thought of? Ruitao (00:54:20): When we started our venture, we thought, no matter what we do, we got to work on something that's finance related, because back then DeFi was still not that hot, but we already see the promising future of decentralized finance ---able to be able to bring---. And we attended the very, very first hackathon in China. We were actually living in New Zealand, but back then, there was the very first hackathon in China. A gathering was there as well. And we happened to meet the other co-founder of Acala, Jiang Fuyao. And we've been through a number of what we call dating or like the value alignment stuff. And ultimately we think, oh, we are super quick, we are the same sort of nerds, we are here for the longterm and we should start to work on this project together. And that's when our Acala was conceived, actually --- what I think --- conceived back in a very first public hackathon on Polkadot. Anna (00:55:11): Wow. That's such a great origin story. So Acala is DeFi, but I don't exactly understand what that means. So you will be a parachain on the Polkadot network, but what is a DeFi parachain, exactly? Ruitao (00:55:25): Let me start from the bigger picture. What new possibility Polkadot enables for developers? So when we are building stuff on decentralized parachain network, we are looking what possibility, what capability the base layers are able to provide. If you look at Bitcoin, there's almost nothing you can program. You can program the Bitcoin network to transfer assets and that's pretty much it. And then if you look at Ethereum, it is great. At least, at this stage, it provides new capability for developers, such as you can deploy application now. You can pretty much decide what's going to happen within your application and deploy it on Ethereum. So there's like new capability, new possibility enabled by Ethereum, compared to Bitcoin. And if we look at Polkadot, you actually enable new possibility for developer to design the blockchain in a fully customized way. And that's where we call it the DeFi chain. This way our concept is conceived. We have the ability to take the Substrate, fully customize, fine tune it for one particular use case. And in other cases, we fine tune it for financial applications. So we have a stable coin built-in, we have a decentralized exchange built-in, we have a staking derivative product built in, and we're able to customize like oracle transaction on the web with the customized, like gas fee payments, essentially have the ability to take my DOTs to the core level and to provide a much friendlier user experience for the, for the participant, for the, for the user, for the traders. So I think that's what our culture is in industrial. Anna (00:56:54): I mean, when you talk about this customization, that makes sense that you were able to create these building blocks, but do you also, like, are you able to optimize for DeFi or is it more just like you can create the Lego within one parachain? Ruitao (00:57:08): Well, I think it's more of like, we are actually able to optimize stuff for DeFi. So, I mean, I'm gonna take a number of example, like maybe two examples. One, if we look at a generic computation platform, for example, all Ethereum transactions being treated equally, right? So Oracle transaction are liable for gas fee payment. And when the net was congested there, Oracle transaction was actually competing for all the other transactions out there. So what we do is Acala the, we think Oracle transaction is like very important. It should be part of prioritized and it shouldn't be liable for the typical gas costs because like the Oracle providers actually contributing to the network, we should be incentivizing or should be rewarding them instead of like charging them gas fee. So that's why we took this like customizability. And we'll say that Oracle transactions on Acala, it's going to be free once you get listed and you are Oracle contributor, you can submit price feed on the blockchain for free. Ruitao (00:58:03): The second special capability of Acala is the traders or the user of the network is able to pay gas fee in any form of tokens. One of the concept I think is quite fascinating is that if you have Dai on Ethereum and then if you want to exchange for Dai, you've got to pay ETH as gas fee. Well, that's okay for, for, for everyone that's already on DeFi. We're getting used to this concept, but for some others outside of the blockchain space, they find it very, very hard to understand. So Acala will look at that problem. And then we said, how can we make it better? So we make it that if you transfer aUSD, which is stable coin on Acala, um, you can, pay aUSD as gas fee. And we think the fee itself is just like the bare minimum to prevent the network being attack, being congested. And that's like should be as easy as possible for users to transact, not like a barrier to prevent a user from transacting. So those, that's like the new stuff we enabled in the DeFi space. Anna (00:58:57): Would you have a project, like, I don't know, Balancer or Synthetix, something that's currently built on top of Ethereum, would you build them on top of Acala or would you build them into Acala? Ruitao (00:59:12): Well, I, I think there's a number of way to integrate within Acala. Okay. Um, and you actually mentioned like two possibilities. So one is that if a project is like deep into the core of a network, for example, a bridge like with Ren Bitcoin. So they would like to be a bridge from Acala to their virtual machine. So we, they actually got to deploy a module within Acala. And that's one way to integrate with Acala. It's actually harder that way, because your code need to be reviewed, there should be an audit every time we deploy. But on top of that, a developer can also deploy Solidity smart contract and reprogram what we created. So I already mentioned that we have a stable coin. We have a decentralized exchange. We have staking derivative protocol. All those primitive that we built is exposed to the EVM machine as well. So think about a Solidity developer. When they deploy on Acala, they have access to those primitive, they're already built there, it's there for them to use. So I think there's a number of ways. It depends on what, what project, what kind of nature of the project is a number of way for, for deployment? Anna (01:00:17): Does the parachain Acala also have its own EVM or are you talking about the EVM of another parachain or another chain in general? Ruitao (01:00:26): No, we actually have the EVM Pallet built in. So upon launch Acala, we have smart contract capability. It is more of like an way that we see how a network, how a network could be specialized. So in our cases, Acala, was specialized to have these financial primitive that we coded. And we think it's so important so we built it into the core, but we also seeing all these financial primitive can be also very useful if they could be reprogrammed. And this is why we have this smart contract capability support. The other special thing about Acala. If we look at EVM, actually, if we look at the whole Solidity space as like — there's like two components to it: There's the EVM, , the virtual machine as like the backend. And there's also Metamask, the way that you interact with the chain and the RPC call as the front end. One unique aspect of Acala is that we actually optimized the EVM as the backend. On the front end, we still rely on the Polkadot signing mechanism. We still rely on the Polkadot.js extension. We think it's like a unique customized solution to provide seamless experience for existing Polkadot.js Users. So they are interacting with the EVM, but they didn't realize. They are using the Polkadot.js signer, they are navigating using the same wallet. Anna (01:01:38): Crazy. So like your Polkadot.js, this sort of extension that would be living in your browser would also allow you to interact with not only maybe the Acala parachain, but things that are built on top of it. Ruitao (01:01:50): Exactly. We developed a translation service, a translation layer on the fly. So from the front-end user's point of view, they are interacting with Polkadot. But from the Solidity developer point of view, they are coding as if they were coding on Ethereum. Anna (01:02:04): What kind of projects do you already have built on or building on Acala or maybe planned to build on Acala? Cause I realize like, you know, you will be a parachain, once parachains are enabled, which is very, very soon. But like, what kind of projects have already moved that we might know? Ruitao (01:02:20): Well, there's a number project we already announced. So RenVM, which is essentially a bridge that connects it to the RenVM, it's already been building with us for a long time. Ampleforth, which is an Ethereum project, they will implement, they will open a branch of their implementation on Acala. There's actually quite a number of projects, I think we have a full pipeline that was a lot of interest from either like new projects or existing Ethereum projects, looking to open branch on Polkadot. There's quite a number of them. So I think not only that. I would like also to look at that once the parachain goes live, once the Polkadot space goes live, what sort of new applications that can be created on top of Acala or on top of other platform, on Polkadot for example, Moonbeam. That is like only possible to do on Polkadot, but not on Ethereum. And those are the most exciting thing. We have a number of projects that might fit into that category, but we're going to announce it when we're ready. Anna (01:03:17): Got it. And I don't know if people already know what they are yet, they might still need to kind of emerge and be seen. And then people will understand that. I think that idea of finding like the unique quality of the L1 is super neat. Like this is what I like to learn about as well. Maybe you can give some hint at that though. Like what kind of new paradigms do you think are enabled by the Polkadot set up? Ruitao (01:03:41): I just think of our, like, we don't actually consider Polkadot a layer one anymore. We consider it layer zero, it enabled projects like us able to build like a fully-fledged blockchain with Serenity, with the ability to customize its core. So I think if you look at that product and then if you look at "Hey, Polkadot is actually like a United Nation, and we are like sovereign countries living on top of Polkadot." There's a number of interesting stuff that might happen. For example, a country might have diplomatic relationship with another country expressed in the smart contract point of view. So let's say the connection between this country and the other country might be subsidized, might be, or might even like a mutually beneficial, free transaction between these countries. And there might be hot country. There might be like specialized country. Well, I mean, those is going to be super, super fun. One once the Polkadot ecosystem is developed to its like mature status, and that's something I can't stop dreaming about. I mean, every day I was just like, "when we can get projects that go live and then we can, we can start this like diplomatic relationship with, um, with other projects." Anna (01:04:49): Do you think there could also be war between them? Ruitao (01:04:52): Well, I think we will see a period of prosperity before we see war. I would like to hint one use case that I think is super, super attractive and it's somehow related to the podcast name as well, so Zk. Think about Acala, right? So we able to create a set of financial primitives, such as stablecoins. And the stable coin itself, we think Acala enable to circulate to other parachains. That's the nature of how Polkadot works, like composability between different projects. Think about if there's a project that's working as a privacy shard, focus on privacy, and then they cooperate with Acala or they integrate with Acala in a trustless way, that the stable coin teleported into their shard, would become like a Zcash version of the stablecoin. That's almost impossible to do with other layer one, but it's become a reality. We can grasp in our hand, once Polkadot goes live. And that's the beauty of like having your ability to customize a network to its core. Right? So those things like when you asked me, like what sort of new application we'll be looking at, I will be super excited to look at like, uh, this specialized network plus their specialized network is equal to something even more special. Anna (01:06:04): Neat. And you just mentioned zk privacy. I am curious, like there's currently a lot of work going on, it's Tarun, Guillermo and Alex who recently published this paper on private AMMs — what you'd actually need — like why that's a lot harder than it seems and what you'd actually need to make that happen. Are you as Acala also looking to implement any of this privacy on the base chain itself, or are you only looking to like, do kind of bridging to privacy projects? Ruitao (01:06:33): I think in the short term, our focus to remain very focused is that we want to make sure that what we built the core primitive is being utilized to its full potential. So let's say that in the short term, we will be unlikely to seek for like adding a privacy layer into Acala because we know there's like an expertise area that other teams are working on. So there's a number already, a number of projects working on that sector, they are creating a privacy shard. So the more we look at it, is that how the ecosystem as a collective moving along together by expressing where your most expertise area is. And in that way, you can see that why we think Polkadot is a United Nation and we're better off if we move along and do what we are doing best. Right? So if we look at the privacy sector, there's already a number of projects that's working on that. And if we're were able to transfer aUSD into that privacy shard, I don't know about the super fancy math, but they do, right? But they might not be as experienced at what we do about like getting the, the stablecoin to a stable peg or something like that. So we all contribute our special ability and then ultimately it's better off for the whole ecosystem. Anna (01:07:42): Cool. What's the Sovereign Wealth fund. This is something that is kind of championed by Acala. Is this something that you're providing? What is that exactly? Ruitao (01:07:51): Well, I think this is something that we... It's echoing what I mentioned earlier about how we see parachain and parachain are interacting. It's more like diplomatic relationships. So we all know that for a parachain to have a slot, there's got to be some DOTs staked in order to secure that slot. Right? So we come up with this economic models to say that we have six years of subsidies to make sure there's incentive for DOT holder to stake their DOT and support Acala to secure a slot. But we don't want to — like forever — doing that because like that create ssome sort of uncertainty, how can we make sure that this is so important in Polkadot? How can we make sure our project will always have a slot? And we've started looking at how protocols accumalate fees and buy back to, to give, essentially give dividends to tokenholders. Ruitao (01:08:38): And we think about why can't we combine those, combine those two together and then say that instead of like the protocol to buyback token and spend a fee, why don't we just like accrue the protocol fee in a fund and use that fund to continue to secure the parachain slot for the project. So I think in a nutshell, it tends to be like that you are renting the house and then you are like working really hard. And at some stage you have enough capital to buy the house so it can be operating from the house forever. So I think that's the first phase. We think we need to have this Sovereign Wealth fund to represent that this collective of DOTs is actually on by the protocol itself and it's owned ultimately by the tokenholders and it's at the command of the token holders. It's similar to a physical, a sovereign wealth fund, and it's for the common good of this project. Anna (01:09:33): Interesting, you've already described a lot of upcoming features and exciting potential diplomatic things. But if you were to give like a really long-shot view on Polkadot and Acala, where would you — maybe this is hard to do — but where would you like to see yourself in four or five years? Ruitao (01:09:51): Let me expand on the Sovereign Wealth Fund idea and see. So let's say that Acala will accrue a set of DOTs, so he can have his slot, but Acala will be still operating, there's still like operation surplus from the protocol. And once you have enough DOT what comes after, right? So all those surplus income can be redeployed. How do you redeploy those? And we will start to imagine that at that point, maybe there's some other projects, that are also going through this parachain auction. And then by then Acala could as a nation support that project, because there's this mutually beneficial relationship between two parachains. I'm just trying to see like some wild imagination here: Let's say there's going to be an oracle chain and nothing — it does nothing but oracle. And you need a parachain slot. Ruitao (01:10:39): As Acala we also would like to depend on a reputable oracle source, and maybe we are able to negotiate say, "Hey, if we help you and borrow your parachain, maybe you give us free oracle access, as long as our fund is supporting you. That's very, very seamless stuff happening in reality, how can we move that to the blockchain? So there's something I can already imagine. Like, it becomes like a diplomatic relationship with economic benefit for both of the parachains. So the decentralized Sovereign Wealth fund not only can hold DOTs. It might hold maybe some oracle token to make sure he enable access to the other parachain. And further down into the path of like the final evolution of Polkadot. We might be able to see the ultimate vision of like Polkadot within Polkadot. So maybe there's like a tiny nation that's opened up like we think Acala and like, there's a relay chain of Polkadot. And then the Acala itself might become a relay chain yet still connected to Polkadot. And they might even have its own parachains, who knows? If you ask me five year, maybe. And then like infinite scalable, right? Anna (01:11:42): Yeah. I remember I have actually had — I think a while back, I had Rob on the show and we talked about this like relay chains of relay chains, I think it was with him. Where it was like these layers of sub relay chains that would act — it would change a bit, the security model as you went down, but it would potentially open up even more parachain slots or sub-parachain slots. But it does seem like one step at a time at this point — first, the parachains need to be deployed. Just before I sign off, are you going to be a parachain on both Kusama and Polkadot as Acala? Or do you have two different projects? Ruitao (01:12:21): We actually have like two different names, right? So we call it, we're definitely going live on Kusama first because that's where the canary network and play comes in. So we're going to call our deployment on Kusama — Karura. And it has a logo, it looks like a bird as well, so bird and bird — best friend. And then we are going to — once it's stabilized on Kusama — then we're going to deploy the Acala network on Polkadot. They actually have two distinctive brand names. They might have different community further down to the road. And we are trying to follow the similar approach of like Kusama and Polkadot as well. So the Karura network, what might have wider, like more aggressive governance. So things that's crazy, might not get passed on Acala governance, might get passed on Karura. So those is like how we foresee the future. It's very valuable for an important project to have a canary network with value so they can test stuff out. Anna (01:13:17): Totally. Cool, well, good luck with everything Ruitao and thanks so much for this interview. Ruitao (01:13:22): Thank you. Thanks for having me. Anna (01:13:28): Hey Lucas, welcome back to the show. Lucas (01:13:32): Hello Anna, thanks for having me. Anna (01:13:33): So Lucas, you've already been on the show. I think it was last year. We did a full episode on Centrifuge and the way that that project came about how it's constructed, what it's for. I'll definitely add a link in the show notes, if anyone wants to kind of go deep on the project. But with today's episode, I wanted to bring you back on, have maybe a little bit of an update on what you're doing and talk more in the context of the Polkadot ecosystem and like being a Parachain, all of this — this is what I want to touch on. But for our audience who didn't hear your episode yet, let's do a quick intro to what Centrifuge is and to you. Lucas (01:14:11): Is focused on bringing real-world assets to DeFi. So what that means is a business and individual that has like some sort of asset out there that exists in the real world, such as a house or some revenue or a license, for example, or some commodities, can use that as collateral, use that within DeFi, right? Because so what you see today is we have these crypto native assets, and there's this explosion of financial products that are being built, right? You can leverage your ETH, you can short sell it. You can build these complicated products, but this is only really accessible to users who already have these crypto assets, but that's not the majority of people. Most people they actually don't have crypto assets yet. They have a house or a business or US dollars, something like that. And they want to use the same financial ecosystem, right? Lucas (01:15:05): Like this system that we're building, we're building this, not just to sort of help our own bubble. Ideally we can expand that. And this real world is more than a thousand times bigger than what we have in crypto today. If you think about the total value locked in DeFi, JP Morgan — this large US bank — they have about 3000 times more in assets, right? And so Centrifuge is all about how do we bridge this? And what we do specifically in the product side is we allow these users to create pools of these different real-world assets that can then be used as a collateral base, as an investment for other DeFi protocols. So for example, you can use your music streaming, royalty revenue streams as collateral in Maker, or you can use, by sort of investing in these pools, you can invest in real estate and get exposure through that, but completely settled on-chain, all of it done today on Ethereum. Lucas (01:15:56): And so there's sort of two — maybe touching a bit on Polkadot and why I'm talking about this now. We have with all of these different real world assets, we have a huge amount of data that we need to deal with, and we need more scalability than what Ethereum can give us today. And so actually a long time ago, we started building on Substrate, the framework that Polkadot is built on and went live with our own Proof of Stake chain in March last year. And so sort of been using both the combination of Ethereum DeFi and Ethereum where we do some of our stuff and then Substrate-based proof of stake chain that, uh, we are looking at connecting to Polkadot as parachains go live. Anna (01:16:51): I remember when we spoke last year, you were very much kind of centered around these kinds of invoices, the IOU invoice set up. Is that still the core of it? Or would you say it's expanded? Lucas (01:17:02): So I mean, already at the time we were thinking of, well, like what is an asset? And of course invoices are one of the assets, the ones that we started with. But we have been expanding it to sort of any kind of non fungible real-world assets, right? So for us, like any asset that exists out there that can have an owner we allow you to represent as an NFT on chain, sort of start interacting with on chain, through transferring this NFT. And so I've made a few examples — music streaming invoices, for example, or freight shipping invoices are some of the assets we work with, but also real estate, farmland, a few other asset classes. Anna (01:17:42): All right. So the next question is actually about that Polkadot question and being a parachain. You were one of the earlier projects building on Substrate, building in the ecosystem. And I guess the plan was always to connect in, are you going to be one of these first projects that are like on testnet, on Kusama already securing a parachain slot? Or is this something you're still sort of evaluating? Lucas (01:18:05): So we have a proof of stake chain that's fundamentally the same as Polkadot. Substrate gives you the option to launch a network with the same consensus mechanism. And so that's what we started with and so in a way, we've been not just testing, we've been actually running this network in production. And so we started this decision to built on Substrate was made over, like almost two years ago. And so at the time that there's no, not a very clear timeline on when parachains would actually go live on Polkadot. Polkadot wasn't live yet, Kusama wasn't live yet. So we said, "okay, we need to have a strategy so we're actually not going to just be stuck, waiting for parachains to go live." And we've always treated our network as like, "okay, this is an independent network." But of course the promise of parachains is extremely interesting because we pay several percent inflation per year to our token holders to secure the network. Lucas (01:19:03): And if we are able to secure a parachain slot at a cost that is less than that, with a comparable — it would probably maybe even by numbers, actually a much bigger network security, like validator pool, value at stake. This is very interesting. And I actually think this is often forgotten, not really talked about by people, but the amount of coordination and the amount of work it takes to run a proof of stake network is quite significant. And I'm super happy with the validators that we have. We have I think, 32 active validators at the moment with like several waiting to join the set. So we're like running this quite well, but like even that is a community, an effort that you need to run and so as a project, to like divide our attention and think about running this network, that's a very big cost. Lucas (01:19:51): And so, that's sort of how we think about justifying the cost for a parachain. Of course, whether we're going to be one of the first ones or not, I think unlike other Polkadot-based projects, for us it's not delaying our launch. So maybe we can, maybe we're not going to be as desperate to bid on one of the first slots, because I expect — looking at how overhyped this market is right now — meaning the DOT market and all this parachain loan offerings and projects going on. We're going to make sure we're not going to overpay for that. Because I think these first few slots they'll look at it more as a marketing expense than actually like paying for your security. And that's what you want to avoid. Anna (01:20:32): Yeah. That actually does put you in a very different category because you're live and you're not necessarily dependent on this consensus mechanism. You can just kind of wait and see and hold off and let it sit, let the network launch — settle, almost — figure out itself and then see where the opportunity to link in is. Would you have the plan to exist on Kusama and Polkadot or would you just probably lock into one of these? Like as a parachain, I guess, can you choose? You're standalone, so I'm actually trying to figure that out. Like, do you have to lock into Polkadot or can you actually just have like one Parachain that just decides at some point, which relay chain is theirs? Lucas (01:21:15): So one of the parachains or that Substrate gives you is the idea that you can hot-swap your consensus mechanisms. So as a running chain, you can decide to go from proof of stake, to proof of authority, to being a parachain. It doesn't look like this is going to be ready when the first parachains launch. And so likely we won't be able to make use of that. And so the thing we can do instead is actually to just do a hard fork basically. And that's what it would look like, if we were to launch before the hot swap consensus and the hot swapping of consensus is fully implemented, production-ready and sort of compatible with Polkadot. Anna (01:22:01): That would be something like — is that a Substrate module that would need to be completed? Lucas (01:22:05): Yeah. There's work on the consensus layer and sort of how this is abstracted that needs to happen. Anna (01:22:12): Got it. And so you could do it, but you might also be waiting for that Substrate module, I guess, to be completed because it might be even smoother or what? Lucas (01:22:22): Maybe. I think, unlikely though. I think we're going to be going for one of the very early slots and not wait with that. The downside is you have a hard fork — meaning it's not as smooth of a transition and a bit of extra coordination, but who knows how long this is going to take, so... Rather not bet on that. Anna (01:22:40): But going back to that earlier question of like Kusama or Polkadot relay chain, I guess when you say it's a swappable consensus, you can swap it in for one or the other. Lucas (01:22:48): Right. You could go from one to the other, that in theory should be possible. Anna (01:22:53): Okay. What is the current thinking on your part? Like, would you want to be a Kusama parachain or would you rather be a Polkadot parachain? I guess the consensus — the value in Polkadot is higher, so that sort of suggests that the security is higher. Lucas (01:23:08): I think we will want to have sort of this gold standard or extremely high reliability, high quality network security that Polkadot will have. Where I expect Kusama to be slightly less stable, slightly cheaper and faster. We haven't really made a final decision on whether we're going to go for Kusama and Polkadot or just Polkadot. The main reason is that you are splitting up liquidity. You're sort of setting up like twice the governance overhead, because you now have two systems to run, two parachains to run, two slots to pay for. And, and all of that is — again thinking about that distraction — it is a bit of a distraction. So what we might do is we might try out on Kusama, create like a testnet on Kusama, but with the price of Kusama today, it's almost not feasible to use it for testing anymore. So yeah, we'll have to see how it works out. Anna (01:24:09): I wonder if Kusama needs to create like another canary for itself. Lucas (01:24:16): Yeah. At some point though, you have to stop creating new tokens. Anna (01:24:22): Are you working with some existing DeFi projects that we might already know from the Ethereum ecosystem? Like, are there any sort of collaborations that, that you can maybe share? Lucas (01:24:32): So what our goal is right to, to bring these, create liquidity for these real world assets and integrate them into any protocol that has need for liquidity. And there've been two partnerships, that we've been focused on. Actually we started very early with MakerDAO. And MakerDAO is sort of in the final phases of doing the technical integration where — what we call asset originators that bring these assets on chain — can use MakerDAO as a source to borrow. The second DeFi protocol we're working with is Aave, who were looking to basically create a market where if you deposit Dai into this market, you can get exposure to all sorts of different real world assets. And on the flip side, all of our different pools can be used as collateral to borrow Dai. And so our goal is now to bring real estate or invoices into a protocol like Aave or Maker, to allow them to diversify their collateral base and for the asset originators to actually have a competitive source of liquidity and be able to arbitrage Maker for Aave and move money around, bring external investors and create some liquidity in this market. Lucas (01:25:45): And so, yeah, that's, we've been working on. Anna (01:25:47): Are you creating a unique bridge to do that? Since you're a Substrate chain, you're not an ERC-20, so you have to somehow connect to it. Lucas (01:25:59): Yeah. So we launched a trusted bridge. That we developed together with ChainSafe in May last year. So there's a bridge from Centrifuge to Ethereum that allows you to bridge these assets and sort of interact with the DeFi ecosystem on Ethereum. And that bridge actually was jointly developed with Celo and Aragon for bridging other chains to Ethereum. Likely, and that is actually one of the big benefits that Polkadot has, is that with the trustless light client that they're building, the bridge model that they'll be able to offer us, well the security of it is extremely attractive, right? And so that will make it much more interesting — it will make it very attractive for us to be able to sort of retire this bridge that today relies on a set of our validators to basically sign messages and verify it. And replace it with this fully trustless bridge. Anna (01:26:53): Would you use one of the existing parachain bridge projects like the Snowfork, I mean, this has come up in the previous ones. Lucas (01:27:00): Yeah. The one I'm talking about is Snowfork. We've been working very closely with them. We share some people on the team as well. Anna (01:27:06): Last question I have for you has to do with zero knowledge proofs on Polkadot. Centrifuge is known as being sort of a zk-focused project. We didn't talk about it at all so far, but like, are you still using zero-knowledge proofs? Is this still — is it already implemented or is this sort of to do, or have you given up? Lucas (01:27:26): I definitely haven't given up. Maybe I can say like why privacy and why zero knowledge matters to us. Obviously DeFi today is fully transparent and somehow people don't seem to care too much about make all of their financial transactions being in the public. And I mean, if you start looking on Etherscan at your friend's addresses and you start following the money around, it's actually quite interesting that you can find out. And that's fine for most people, it isn't fine for a business, right? Like if I'm starting to put all of my invoices into the clear, well then I'm going to tell my competition, like where I buy stuff, what I buy, how much, how often and all of that information, obviously is like my competitive advantage. And so I don't want to want to do that. Lucas (01:28:12): So that's why we've been from a very early point in time have been focusing on privacy. We ultimately decided to abandon what we've been doing on Ethereum, just because there's plenty of activity with zk-rollup and a few others that are actually leveraging the built-in curves, in Ethereum. But I don't think long-term, that's a good investment for us to sort of focus on this — in my opinion —outdated technology. There's way more interesting privacy focused stuff happening outside of Ethereum. And that is actually one thing that we really like with Substrate and Polkadot is that it gives you an insane amount of flexibility about what you can put into your runtime. And so one of the things we wanted to put into our runtime that runs our chain is cryptographic primitives that are much better, much more recent than what you have on Ethereum. And so to enable our asset originators to have more privacy as they're borrowing money, they're sort of originating these assets. So yeah, that's something that we're still working on. So we've been working prototyping some stuff on the Substrate side, but it's going to take a while. Anna (01:29:20): But I mean, there are now also a few other projects that are actually working, bringing zero-knowledge proof stuff into Substrate and Polkadot. We've just seen this boom of like zk-rollups, privacy tech, attempts at private AMMs. What do you make of that? Do you feel like that community, like, is it becoming more vibrant from where you're sitting since you were one of the first? Anna (01:29:42): Yeah, I mean, definitely like the amount of people that understand the topic and have been building and it has been growing quite steadily. And a lot of people are excited about zero knowledge for not just privacy, but also scalability reasons. And I think that's, yeah, there's a lot happening. I think my challenge with Polkadot is that the parachains are still not live yet. And so a lot of this innovations, really just in theory or on paper — yeah you see some testnets and stuff, but I'm really hoping to see what will actually work and what will pick up seeing as parachains go live. Anna (01:30:18): Cool. Well, Lucas, thank you so much for coming back on the show. Anna (01:30:22): Yeah, it's good to be back. Anna (01:30:23): And catching us up. I hope we get to have another interview in, I don't now, a few months or a year, and find out more about what's going on in the Centrifuge world. Anna (01:30:32): You think when parachains will be live? Anna (01:30:32): Well I hope it happens before that! Lucas (01:30:32): All right. See you, have a good one. Anna (01:30:46): I want to say thank you to all of the interviewees for taking the time to share their insights here. I'd also love to hear from you. What are your thoughts about this episode? What topics should I potentially cover next? Be sure to subscribe to the show, maybe share our podcast, leave some comments or ratings, catch us on Twitter or join the conversation over on telegram. I've added links to all of these in the show notes. So thanks again to the interviewees and to our listeners. Thanks for listening.