Polygon’s AggLayer and Type 1 Prover upgrade Web3 infrastructure

0:01I'm Ashen Addison from the cryptocoin show and today on blockchain interviews with Brendan farmer co-founder of polygon Brendan welcome to the show and thank you for taking the time today yeah thanks ashon uh thanks for having me you're very welcome excited to dive into the latest updates uh with polygon and what polygon is doing for the blockchain industry overall I feel like 2024 so far

0:22has kicked off to an amazing start uh with the further increased adoption uh with the Bitcoin ETF the having potentially more incredible updates for all the layer twos that are coming out and I know that there are some issues that need to be solved to really unify blockchain as one holistic ecosystem and I think polygon has a part to play with that um so let's dive into the latest

0:45updates that polygon and the team I've been working on I'm really excited to hear uh the details maybe you can talk a little bit about first I've seen this EG layer update and you know these are some big Pro this is a big project so uh we might spend some time on this but I would love to just kick it off to you know hear what you and your team have been working on this whole time and then

1:07we can dive into all the details yeah sure so so the aggregation layer the egg layer is a big big one for us um we've really been thinking about these sort of the underlying problems for a long time um and and just to take a step back if you think about um how we think about blockchain scaling right now the the debate is sort of stuck between the monolithics side and the modular

1:31side and so the monolithic side says look when we talk about scaling in crypto we're really talking about scaling access to liquidity access to Shared State maintaining composability if we create a bunch of chains that can't access liquidity uh where it's where it's sort of available and useful then we we haven't really scaled uh in a meaningful sense and so the modular side

1:56on the other on the other hand says um actually uh the way to scale is like like we'll never be able to bring uh internet scale crypto with a single chain like We'll always run into bottlenecks there'll always be contention for shared resources and so fundamentally we need to look at a multi-chain approach to scaling um but and and and so I think that uh both

2:22sides get something right and something wrong I I think the monolithic side is correct that really what we're trying to do is scale access to liquidity like uh if if liquidity is fragmented that creates um you know a bad user experience it creates complexity but it also creates cost for users because they encounter slippage their execution is worse um and then on the other side on

2:43the modular side um I think that they're correct that we need horizontal scaling we need to be able to add block space so that we don't run into this uh situation where we we have like these intractable limits to scaling um but at the same time like we need some way of of taking fragmented block space and unifying it so that users can access shared liquidity and shared State and so

3:07fundamentally that's what we've been thinking about with the aggregation layer is um how do we take a a modular multi-train ecosystem and unify liquidity and state across those trains yeah I appreciate that explanation and I feel like the sweet spot is somewhere in between uh right because we're seeing chains get really big and running into issues but we're

3:29also so many different blockchains coming out uh that could probably be working Better Together to unify the liquidity I feel like that's very important if we're going to be getting to the next stage of adoption where big wants to come in yeah so so so for us I I don't know if you've ever seen the meme uh like thesis antithesis synthesis and so so for us like one way to look at

3:52it is the original thesis from Bitcoin and ethereum and then for blockchains like salana is like the thesis is monol thic and then the modular thesis arose in response to the limitations of the monolithic thesis and so for us like the synthesis The Way Forward is this aggregated thesis where where we have a multichain ecosystem but we have the mechanism to unify State and liquidity

4:16across those trains so maybe you can talk about the vision how how did you guys plan all this out because this is a a huge initiative to try and unify blockchain together what was the vision and how did you start building this aggregated layer and solving all of the different problems without making it too complex yeah sure so so our uh I guess the main

4:40design principle with the agir is uh is Simplicity and minimalism like we we we want to build a protocol that can support internet scale crypto adoption and I I think in order to do that we need to build something that's minimal and that's not opinionated and can accommodate like a range of chains with running on different execution environments using different tokens

5:02using different mechanisms for for sequencing um and so for us like the I guess the foundation of this vision is ZK Tech and so the question was like okay we we know that uh right now for Two Chains to interoperate they need to uh like like two l2s you need to go from your initial L2 to ethereum and then to your destination train so if I want to move tokens from chain a to B I need to

5:31uh withdraw from chain a I need to wait until the proof of my withdrawal hits ethereum and that block on ethereum is finalized so that's like 25 minutes and then I need to deposit uh into chain B so that's another you know however 12 minutes of latency um and so the the the concept was like how do we create low latency interactions between chains in a

5:56way that's safe and trustless and it turn turns out that we can do that by using ZK Tech so we we we can let chain a and chain B interoperate however they want to they they can you know run full nodes for each other they can use a shared sequencer they can rely on Builders or relays like the coordination mechanism is sort of out of scope for us but what we do guarantee with the AG

6:19layer is that if chain B receives a message from chain a at lower latency than ethereum let's say like chain B receives a message from chain a uh and and and two seconds later wants to start building blocks on that message that they received from train a then chain B can commit to this the sort of state of chain a that uh produced that message and we can use ZK Tech to ensure that

6:45chainb will never be finalized and accepted by ethereum um unless that block that chain B is relying on from chain a uh is valid and is also finalized to ethereum and so the the this approach like generalizes to a bunch of different cases but fundamentally it's about like enabling chains to interoperate at really low latency while still maintaining safety

7:10like like you know that that the destination chain for chain B will will never be rugged uh by anything that CH a does and that opens up the design space and enables them to coordinate in ways they they currently can't okay it's uh it's a lot to digest but I I know that your team's focusing on on the minimalism and simplicity which is good and I think people when

7:35they see how it works from you know a defi perspective if you're just somebody who's going to make a swap or make a move of some crypto coins to another blockchain they won't have to understand all of this they'll just be able to have a seamless experience I would hope definitely not you you will not have to know anything about ZK Tech or what chains are doing on the back end um but

7:55the uh the sort of interface that that we enable is uh what's what we're calling like bridge and call so so you can uh if you have funds on one chain you can Bridge them and call some other contract um in like one interaction and so we we we think that you know if you have uh like you said if you have usdc on on one chain and you want to buy eth on the chain that has the deepest

8:18liquidity then you'll be able to do that in a really really simple and userfriendly way that's very cool and now in terms of unifying the liquidity on on these different chains how exactly will that work will it be say there's there's 20 evm chains that all have a million of liquidity that's not communicating each with each other and that sort of moves into a single

8:41pool that's worth 20 million that lowers the cost and the slippage and Etc yeah so I think this is a really good question um so so I I think that there are two uh ingredients for for unifying liquidity the first is fundability so right now if you think about how third party Bridges work like if I want to bridge um from polygon to arbitrum Via Wormhole then what I'm

9:07doing is I'm locking uh my eth and then I'm minting wormhole eth on on arbitrum and the problem is is that Wormhole eth is not fungible with regular eth I need somewhere I need some liquidity provider to get me from my wrapped synthetic version of an asset to the native version of NASA and so providing fungibility in the polygon ecosystem is something that's really important and

9:31the unified bridge and the AG layer allows us to uh ensure that L1 native assets and L2 native assets are fungible across chains so so I won't have to think okay um I have uh eth on the ZK VM chain and I want to move eth on the POS chain I'm not minting ZK evm eth I'm just getting eth on the destination chain and so this is a really really powerful thing for unifying liquidity to

9:57your uh question specifically What will what will the world look like will it be a single super deep pool of liquidity or will it be a bunch of pools that uh that sort of automatically rebalance and and uh and you know have Arbitrage uh opportunities between them so so they effectively have the same uh execution um I think that that is an open question

10:24you you can imagine a world in which there's a single pool that has all the liquidity and uh the the problem is is that um you know it e like getting best execution on that pool and getting priority becomes really expensive and so normal users might be priced out of using that pool but one one thing you can imagine is um those users would sort of batch their transactions and on

10:50lowcost chains and then that batched transaction would be executed on on the pool with deepest liquidity and so it you know the the transaction cost would be mortiz across all the users that are batching um I think that there there are like similarities between that model and the model that you describ where you just have uh a bunch of different pools

11:09that are all automatically rebalancing and where orders are sort of being routed between them um I think that both are uniquely enabled by the agay and by sort of the vision that we're building and and I think it'll just be interesting to see what what dominates yeah it's very interesting and I like that example that you gave with bridging through the worm ho I feel like that is

11:32a setback right now where I I don't think you can't you can't really tell from the front-facing perspective but you may not necessarily have the exact same ether on on polygon that you would on a different blockchain and same goes for stable coins as well you know a stable coin usdt or C that's on a certain blockchain it's not the exact same coin on a different blockchain and

11:54that's why the liquidity can't be combined because it's it's not the same asset yeah yeah and I'm curious also on the ZK perspective uh you know a lot of people just know zero knowledge proofs as something that adds speed privacy U being able to confirm things with zero knowledge uh are there extra benefits to introducing this ZK Tech into the EG

12:22layer or maybe you can touch on that a little bit more yeah sure so so ZK Tech is sort of the it's like the fundament Al ingredient of the AG because we need a guarantee that like like we need to be able to prove to ethereum that we have this giant multi-chain ecosystem with thousands or tens tens of thousands of chains and we need to be able to prove

12:42to ethereum that um actually all of these chains are sort of like operating on consistent views of the same state so so you don't have like chain a telling chain B one thing and sort of double spending on chain c um and so being able to do what we call called proof aggregation is a really really important thing um and it has like a sort of a few different purposes in the agare it

13:08provides uh you know a guarantee that everything that happens across all chains is valid it provides a guarantee that chains are relying on uh consistent views of other chain States and it also provides the safety guarantee where um we know that uh if if a single chain is compromised that attackers cannot drain um the entire ecosystem of funds because

13:32we're able to enforce that uh no chain can sort of um withdraw more than the uh tokens that are deposited in that in that chain even if that chains prover uh is unsound and so it's it's a really important uh um ingredient in in this overall Vision definitely and with some of the evm chains right now you know there there's so many that are coming

13:58out but from what I understand some of them have some kind of ZK technology that they're looking to integrate some of them not as much when these new evm chains move into the EG layer does that make them all sort of have a unified equal level of of ZK technology implemented into the chain or how does that work yeah sure so that's a good question and it's a timely question

14:22because we just announced uh our type one prover which sort of uh you know achieves what what you're describing and so the way that I would put it is um in order to participate in this ZK powered ecosystem that runs on the AG uh chains must include um ZK proofs like we need a guarantee from each chain that everything that happens on that chain is valid um and

14:47so the if we think about like what the current state of the world is um we have all of these evm chains like um optimistic rollups like polygon POS um like Ulta ones that use the evm and there's a ton of liquidity and state and huge user bases that uh are locked in these evm chains um and they can't interoperate in the way that we're describing with the Ager because they

15:14don't support ZK Tech and so what we released um last week was uh the type one zkm improver and this is a really really cool piece of technology because it allows us to take any existing evm chain whether it's an optimistic rollup whether it's a side chain like the polygon POS or whether it's an al1 and we can instantly start generating proofs for that chain and so that will allow

15:39those chains to onboard into the agare um and so this is like a really really important component of the overall Vision which is to to take uh all of this fragmented liquidity in state and uh and these user bases uh that are currently uh dispersed among a bunch of BBM chains and unify them together so that we can deliver better experience for users H okay that's great to hear

16:03and with those chains implementing the ZK technology how easy is it for all of this to be done do they just have to flip a switch do they have to rebuild the spaceship no no so uh so so there are no client changes that are required like nothing changes for for the users or validators or full nodes uh we just turn on approver and we just start generating proofs for that chain

16:27obviously if they want to if if they're like in L2 and they want to migrate their L1 native assets to be able to have fungibility with uh L1 native aets on the agay they would have to do a bridge migration but if they don't want to do that they can just uh immediately start generating BRS amazing and um so does this this sort of came about from the

16:55polygon's growth from the POS chain moving into the ZK evm chain and you guys are going to be running both of those chains but this this technology does it affect primarily the ZKA the ZK evm chain so it actually affects POS because the POS chain is not using ZK technology and there's a ton of liquidity there are a ton of users I think it's one of the most actively used

17:18chains in the ecosystem and so taking everything that exists on POS and onboarding it into the EG layer so that um all of that uh all the assets that are on POS all the users can seamlessly uh move between POS and zkm that was sort of the Genesis of of the type one pro and and the reason why we started working on it so that's awesome and now in terms of the transaction costs ZK is

17:46supposed to help you know lower the cost too as well some the cost varies from what I've personally experienced in different layer twos on ethereum you know going from a dollar to 10 cents to a few cents um how will this affect the costs of the different chains will that be improved even further yeah sure so so I I think it's really important to note that um the

18:12cost for l2s is generally dominant by the cost to post data to ethereum so if you're a rollup every transaction you have to post some amount of data to ethereum and and this has a cost and so generally all the transaction costs um that you see for l2s are based on uh this L1 data availability cost and so I I I think that the way that I would look at it is um there are other costs that

18:40exist on l2s and so one really obvious one is that optimistic rollups have this downside where uh if you want to withdraw from an optimistic rollup via the native Bridge you need to lock your funds for seven days uh would to sort of wait for uh the duration of the what they call the ch challenge period so it allows anyone to submit a fraud proof if if the operator of the optimistic rollup

19:03is misbehaving and and you know you can ensure safety um but the problem is is that this 7-Day withdrawal window imposes a real cost on users uh no one wants to lock up their highly volatile crypto assets for seven days uh and and take on duration risk and so what they do is they rely on thirdparty bridges that uh impose fees on users um and so these fees in aggregate are

19:29like it's a lot of money so it's millions of dollars and so uh the nice thing about the type one prb is that we can convert all of these optimistic rollups into ZK rollups and The Proven cost so so we're effectively taking this duration risk and these fees that are paid to third party Bridges and we're replacing it with approving cost so instead of forcing users to pay uh for

19:53Bridges we just force them to pay or to to cover the cost of generating Zer knowledge proofs for the train and so they can have instant withdrawals um and it turns out that the proving cost is actually really really low so right now we're seeing uh proving cost on for generating uh proofs for main net ethereum blocks as like two to 3/10 of a scent um and in the next few weeks we're

20:14going to release an upgrade so this will go down to like between one and two10 of a scent and then in the sort of more medium term uh we expect a 30 to 50x uh reduction further and so yeah it'll go to like I guess like 4 th000 of a cent um and so this like like like in terms of cost um this is like you know orders of magnitude less than uh the capital

20:42and efficiency costs that are imposed by optimistic Roll-Ups and so um so it doesn't solve the data availability cost but it does solve uh these other sort of rollup costs that are still born by users yeah wow that's incredible to hear um I I can't imagine not having to pay a dollar or two um it just gets me so excited uh and and that that's crazy so

21:06your your team you have this is a huge update obviously but then you're going to be working to towards even further uh upgrades that you're talking about that will make it 50 times cheaper and faster in the near future yeah yeah and and I I will say like from the the transaction cost perspective um this model allows us to and this like sort of the Ager and

21:31the multi-train model allows us to launch uh what are called validium so they're l2s but they don't require you to post uh data to ethereum and so for these like the transaction costs can be super super low um and so yeah I I I I think in the next like year or two we'll see a pretty huge reduction in in transaction piece very cool so looking towards the very near future here uh is

22:00there going to be you know what what are your team sort of focused on in the next month or two and ensuring that you know this all rolls smoothly and everyone's getting on board and and really getting the realization of these benefits for everyone that's using Defi and on all apps in evm Chains yeah sure so so so the AG is going to be released in a few

22:20different stages so happening this month will be V1 which is effectively a unified bridge and so this will provide that fundability property that I was talking about earlier where you can move assets across chains um but it won't have the low latency uh property yet so low latency will will happen in in a few months but um yeah so so in the near term it's about providing fungibility

22:48about getting chains uh using a unified bridge and then in sort of the medium term uh we'll be releasing further upgrades which will enable the uh the low low latency mode for cross chain composability and interaction that I was describing ear awesome I'm looking forward to that I would love to have the team back on you know as the phases develop and we can see H uh just the

23:10benefits people reaping the benefits uh in these applications yeah for sure and what is the best way for people to follow along well first of all to learn more about egg and the type one and for these updates as they're rolling out to sort of understand better and capitalize on these improvements that your team's making into blockchain yeah sure so um

23:34you can follow zerox polygon uh on Twitter um you can uh we we have discords for uh polygon developers and then an overall polygon Discord and so we run amas and and we're pretty responsive to to uh questions and and and feedback um and uh and yeah I I I think that's that pretty much covers it Twitter and Discord sounds great and I can leave those Social Links in the show notes below as

24:02well appreciate your insights into this congratulations on making such an amazing Improvement to blockchain I'm excited to reap the benefits myself uh and looking forward to the coming months as this develops further on uh thank you so much Brendan for your time today and all the best with everything polygon moving forward and let's follow up in the near future yeah thanks ashon really

24:23appreciate it and thanks for having me