Jack O’Holleran on Skale Labs’ modular blockchain for Web3 gaming

0:00I'm Ashton Addison from Block West capital for investment pitch media and today on the crypto coin show we have Jack o'halleran co-founder and CEO of scale Labs Jack welcome to the show and thank you for taking the time today pleasure to be here thanks for having me likewise excited to dive into the world of blockchains and the intricacies of what makes a great blockchain I know you

0:22and your team have been working on this for quite a while before we dive into scale I would love to start with a little bit on yourself your background in blockchain and how that led to founding scale yeah so I started my career in Enterprise software um started in Mobile mobile security specifically um and there's a lot of deep cryptography integrated uh to the first

0:44product I was working on called good technology and actually coincidentally my co-founder Stan of scale did our cryptography certification we had the US government and CIA and U.S Senate and I think 90 of the Fortune 100 using this product so I learned a bit about cryptography and security um but this was you know before even Bitcoin launched and then I did um I

1:06started a machine Learning Company AI company that was a leaded Global leading platform in the life science Industry uh on Commercial execution side of the life science AI world and that was I like to say that was AI when AI was not intelligent yet because dumb Ai and now we have Smart AI um and you know that that got me on a path to understand you know about

1:29building businesses building communities uh Building Technology and I was looking to start my next company in 2017 and it was a no-brainer to do it around ethereum um and that's really that was my path people thought I was a bit crazy they're like you're leaving enterprise software to go work in crypto you're nuts and um I think we all we all well not all I

1:49think uh you know these things go in waves but I think the people listening here today understand that there's real meat on the bone here um we're creating real applications we're going to change the world and with programmable money and um you know business structures so yeah that was my path amazing that's a great a breadth of experience being in cryptography before

2:11crypto and being an AI before most people um and and now you're working on scale which I know is very Innovative as well and I would love to dive into the scale Network what makes it different what you and your team have built there in sort of a high level overview yeah well let me I'll take a step back before I get into the the nuts and bolts of scale and and just say I was actually

2:33trying to build decentralized applications in 2017 and so was Stan clad Co my co-founder um one of the things we realized is that the infrastructure was not there at all and this was before people use the word Layer Two before they used you know other you know modular scaling and ZK proofs and layer three all these terms didn't exist and so we just thought of

2:53scale as middleware it was another blockchain that you build on ethereum you can connect to scale for fast execution um and in and you know for us we were building always from this lens that we had to support you know millions or hundreds of millions of users and just if you're building an Enterprise software product or uh because you know consumer grade web 2 product you need to

3:15think about scaling user experience and performance with users and back then there were only around 10 000 daily active users using ethereum or and D5 and all the applications that were there um it was a very small small quantity of people um and then and then I say I give that background because there's just a tremendous amount of group think and how

3:36we scale ethereum and unfortunately it keeps there's this dogmatic almost religious perspective that guides uh guides us down a path that still does not cater well to to normal end users you still have to know how to use you know be pretty technical use metamask and your average D5 user yeah no problem but your average web three user your average gamer it's just not accessible

4:00and so we built scale and we started this at the end of 2017 it took a long time to build the mainnet launched October 2020 and we built it to make ethereum faster um we now have uh just crossed a hundred million uh transactions on chain in the network in the last year and we've saved over about 1.5 billion dollars in gas fees in the last year and um and that's

4:24really because the V2 upgrade last June of 2022 um enabled scale to support normal user workflows and um and and really bring this gas-free fee-free experience to end users and um you know so we haven't always followed the idea the same path that is everybody else building in ethereum and but it's interesting now the roads are coalescing and a lot of our competitors strategies

4:50are folding into the scale strategy uh-huh that's really interesting uh background there especially understanding you know the scalability issues of ethereum I think scale perfect name for a solution for that but as you mentioned there about so the adopting of decentralized applications it's easy for people that are deep in it and they understand all the technical part but I

5:15feel like you know to actually scale not just in transactions but scale the amount of users to hundreds of thousands to Millions it's going to require lowering the technical barriers to entry to make it easier for people to start getting into web3 and what do you think about that yeah and you know I'll first I'll say the challenge the challenge with that is the easier web 3 is to use

5:39the harder it is to be you know secure at the same time so security decentralization and kind of ease of use are all you know just opposed they're you know each one is diametrically opposed to the other and so that's what makes it hard and so um so for us uh we were able to build a dynamic that shifts a lot of the you know more power and more fees to developers who are running

6:08applications um now they still you know can't impact somebody's money uh and base level security is there but they can create a dynamic with this gas free experience to let people trigger on-chain transactions in a seamless behind the scenes way and we call it in an invisible web 3 experience so that is the key but you can't do that unless you have a way to

6:32in a cost-effective manner obfuscate gas fees away from the end user abstract them from the end user great point and now talking about the scalability you you mentioned that balance of having the security and but also having functionality how exactly does scale without getting too technical you know how exactly can you scale without sacrificing those other parts of the

7:00trilemma yeah well so it all comes down to capacity and economics okay so most blockchains are one finite database if you add more servers if you add more nodes it doesn't add more capacity you're just adding more security okay blockchains are really you know it's one database that can you know satisfy a certain amount of transactions now each of these actors has to play a role in

7:26saying yes this you know this block is accurate let's move to the next one but adding more doesn't add more capacity and so that's the problem with all blockchains now this new layer 3 model or modular multi-chain model or multi-chain network model which I say new because it's getting so much you know attention and also you hear the word shared security and pooled security

7:48these are all things scale's been doing for a very long time so instead of having one blockchain with finite capacity there are many blockchains and actually there could be an infinite number of blockchains the amount of chains can scale linearly in accordance to how many nodes are in the network okay now um there's two other core pieces that are important to make that work one you

8:12don't want to fragment your security if you just have a bunch of completely separate blockchains well you've you're not carrying and sharing any security across these different chains okay so scale has a way to have one unified validator set operating underneath all of these different chains so that they can also pull security with each other they get

8:33this heard Dynamic um you know herd protection Dynamic by all being there together um number two the economics are important because you have to have an economic structure that will incentivize validators or set up more nodes and therefore create more chains and that's why you know basically why I'm saying uh you know the uh economics are so critical to having actually Limitless

8:57capacity otherwise you're going to run into bottlenecks with chains and the same problem you experience with one chain you can experience with 10 um when you get to that point okay so does that make sense uh yeah a little bit for sure and one thing that I got out of that which I think is important more people begin to understand is the layer three aspect of

9:17it and talking about modularity and I I've seen across the the Twitter sphere and across the crypto chasm in the past months starting to talk about modular modular blockchains versus monolithic blockchains I feel like people overall understand Layer Two now as these scaling networks layer three not so many people are starting to understand we're starting to add up the

9:40layers is that layer three this modularity of blockchains specifically or is it more more than that yeah it is and it isn't um I'll try to I'm going to try to take another step back and make this accessible to everybody so the goal with Layer Three is to have an un you know Limitless amount of blockchains to just increase Supply will not fragmenting security you still

10:06want to tie back your security Now there's different ways of doing that scale also is built on ethereum so a lot of the network security is hooked into a theory um layer 3 models are uh you know without getting too technical one they incorporate lots of app chains or individual or specific multi-chains like scale has scale already has 20 chains in the network

10:32um but what layer threes can do they also can plug in zero knowledge proofs or roll-up techniques to connect the security of these smaller chains back to a bigger set and that could be back to ethereum it could be back to a more centralized roll-up that then rolls back to ethereum and so what happens is people are getting experimental with layer three and layer four just because

10:53they're saying well if we can get more chains without splitting up our security that's good and that's the general premise of how scale functions scale by the way is launching a zero knowledge proof so it can have a what I would say a ethereum pure layer 3 method um because a lot of ethereum maximalists don't want any consensus being finalized on another blockchain whereas I feel

11:19like from a ux perspective and for lots of use cases for example within gaming there's just tremendous opportunities uh for you know to have fast finality and gas-free transactions in app chain models so again I'm getting in the weeds but the point is everyone's trying to figure out how to have their cake and eat it too have more Supply without sacrificing security

11:41definitely and you mentioned there about app chains I've been over a few discussions in the past week about app chains and one of the main benefits from what I understand is the sort of as you're talking about having many blockchains and almost a standalone app so that it's not like as you would see in an erc20 token it's sort of stuck with ethereum if anything happened to

12:04ethereum um that would it could take down the that app um is it is that one of the main benefits or maybe you can dive into more of the BET of the benefits of an app Chain versus an app in that it's its own blockchain so it can't get hurt by the overlying ecosystem or what else is actually good about it yeah so a big piece there's this Noisy Neighbor problem so in blockchain so

12:29let's say you've you know everyone's happily using this chain and all of a sudden this hugely you know high volume transaction application comes in it just starts chewing up all the bandwidth right this happens a lot and then people are like let's shut this thing down and it's this Noisy Neighbor it disrupts everybody else so an app chain enables uh really noisy neighbors to you know

12:51live on their own wild garden where they can have pay for as many transactions as they want now the the other issue with that is it fragments liquidity it creates ux issues for people to get assets over to those chains and that's one of the reasons why scale has created app hubs and I'm going to be tweeting a lot about this in their future because I

13:11think we've we've been the first to Market with multi-chain a true multi-chain pooled security environment what we found is that creates a lot of usability issues where if you just have one chain and you're show up with that one chain and you put up you know everything's there your money's there I can go use that game that defy app you know there's no ux issue you just plug

13:31your wallet in and and for people who aren't familiar with this in it if you're in a if your money's in one chain and then you try to go to another chain you can still use the same ethereum address but you need to somehow Bridge those assets over scale actually has a zero transaction free uh ux product that lets you move assets instantly for free between all scale chains and you know

13:56even that can add some issues so we have app hubs where lots of you know similar type products can use similar type chains like there's a D5 Hub there's a gaming Hub Etc okay that's great to know because and I think looking back uh it through the start of gaming in blockchain we saw one of the examples was axi Infinity there were so many transactions going on that

14:19all of a sudden anybody else who was using ethereum they were paying high gas fees because of this one app that they're not even using and this is like that's like the Noisy Neighbor and I feel like as we get to more mainstream adoption of gaming with blockchain integrated this is going to happen again because the gaming industry is so big there's millions of players on specific

14:38games one game comes in if it's not on layer three it's going to disrupt the whole network and everyone's going to be paying more just because these new people that come in is that right yeah and that's exactly why we built scale the way we built scale and why the community behind scale and you know hey we're just the core team getting things started and you know there's you know

14:58hundreds of people every day building on scale um across the gaming ecosystem and web3 ecosystem and you know different open source contributors and I say this because people realize especially in gaming and that's why scale has uh if you go to DAP radar we're typically in the top five every single day in terms of transaction volume it's because we have a lot of games and games need a lot

15:21of transactions um so uh and guess what they don't want to be in another chain where they're driving up their own price or other people's price and so that's why we have a gas-free model on scale that's great to hear about the gaming and from what I understand games are still very early on there's very few games that have millions of players that are going to drive new people into web3

15:44I'm curious on your insights into you know web3 gaming and where we're at right now as opposed to where we're going to be in the coming years yeah and you know the thing about gaming gaming I I don't I I'm forgetting the exact number so instead of guessing uh trying to remember I'm just gonna tell you to look at people look it up um Gaming revenue dwarfs uh the rest of

16:06the entertainment industry like it absolutely dwarfs it's like 50x or something of of movies for example right and look how much actors get paid and yeah even though they're on strike right now um but you know look how much revenue these businesses do but gaming is just massive but so gaming is a big big category and there's lots of sub categories in gaming web 3 gaming

16:29specifically I think will will create its own niche in gaming but the real growth in gaming will also be when there's this integration behind the scenes of web3 properties to traditional gaming because traditional games don't need to change their culture they don't need to change uh you know how they interact but they can up you know the YouTube players can get a ton of value

16:53out of having seamless secondary marketplaces and owning their own assets with uh nfts having digital currencies that have transparent open uh you know permanent properties so these game companies can't just keep minting things and you know kind of making Revenue at their whim and kind of hurting users which why is why vitalik started ethereum in the first place if you go

17:14read about uh his World of Warcraft story definitely um and you know Gamers they when you're doing all these transactions or getting items and you know if everything's tokenized um all of that's going to be on the blockchain but they don't necessarily want to see that you know hopefully it's all in the back end and they don't really have to worry about you know

17:35watching transaction confirming it should be instantaneous for the most part um I was looking at one of the recent studies that I saw scale was involved in it said it was one of the fastest blockchains for confirming transactions maybe you can touch on that yeah yeah so Dartmouth blockchain actually did a research study they worked directly with core teams at Solana Avalanche polygon

17:58scale um and they literally validated their white paper technique to test time to finality which is how much time does it take from when a user hits a button to to and then to get to finality on chain and skill has instant finality but there's still this kind of you know networking piece and it was like one in some odd seconds uh scale skill is the fastest in time to finality and it had

18:22the highest throughput higher than Solana in real world throughput so and a lot of these projects claim they have thousands per second and if you go look at the study one of them claims thousands on their website and in reality it's only six when they're using ethereum virtual machine and and this part scale actually uh created a C plus plus ethereum it didn't just

18:42Fork yeah like go ethereum which almost all of these ethereum killers all their power and throughput just gets wasted because there's still a bottleneck and Gaff of how fast you can operate and whereas we you know or the skill uh open source Community created its own uh C plus plus ethereum which is super fast wow in addition senses and does that help with being able to develop easily

19:07uh on the network yeah so if you go play Untitled platformer or uh zero X Battleground which is like just like this you know Battle Royale game that's AAA style um if you go play one of these games you grab a you know in uh Xerox battlegram you grab a gun well guess what you have that nft you own that now you've had the special weapon the special tool you do

19:31something all these things are getting registered on the blockchain the user doesn't have to hit metamask and accept and do these things in game um and so these things are really you know we thought of them in 2018 as a pipe dream to be able to do and you actually you can do them now so uh gaming is just I think cutting the the frontier for what we're going to see in

19:52all these other web 3 enabled internet products and you know gaming is a great I'd say leader and Pioneer in a lot of new tech and we're you know the same will be true with blockchain amazing to hear and we don't have a lot of time left but I wanted to touch on one more thing before we touch on the road map and what's next for you guys you mentioned earlier about uh the ZK

20:13and zero knowledge proofs uh part of scale I'm curious on why is that important for maybe for the gamers or for people that are using the network and you know does it really matter yeah um you know what uh so if you think about zero knowledge proofs it's added security and so for scale let's say I'm playing a game and I'm running around and picking up things I'm shooting

20:36things I'm grabbing coins you don't need to pay extra for a zero knowledge proof to make you know validate that that happen the skill consensus is way more is has more than enough security for that and I believe to a whole world of D5 but for people that say Hey well I want an extra level of security because all of a sudden I got this nft and it's worth ten thousand or a million bucks

20:58what you can do is you can integrate a zero knowledge proof into scale and for those high value use cases which the user is not going to see any of this the user just you know picks up buys this valuable thing well guess what that gets imprinted onto another blockchain um back to the ethereum mainnet through a zero knowledge proof and it validates it and then that could never be taken

21:19without taking the overriding the security of the ethereum mainnet and so what scale levitation part protocol does is it enables zero knowledge proofs and scale consensus to operate in Harmony and and we're actually going to be partnering with a zero knowledge proof Builders as opposed to building our own our scale Zone ZK Tech so scale is a network in a community will be really

21:41this having this wrapper that lets ZK techniques interact and but it's all about use cases it's all about you know build developers building for the right ux in terms of cost security and and experience very cool thank you for explaining that Jack and before we go I'd love to know where the next steps and the growth and what do you think is going to happen in

22:04the industry and how is scale uh getting ready to grow for what's going to happen moving into 2024 anything on the roadmap that's big that's coming up yeah I mean well so one launching levitation the zero knowledge proof uh is going to be huge um there's also next govern and skills to centralize on-chain governance is live there's gonna be a lot of cool

22:25things happening with chain economics that we're going to see push forward I'm excited to see you know uh community members and developers push forward these new initiatives but in general I think the main thing scale needs to do well over the next year is just keep executing on the plan because the tech is there that other people are trying to build and enable through uh layer three

22:48and you know and that's I think there's a first mover Advantage happening right now and it's all happening behind the scenes because you know you go to the headlines you're reading about the price of Bitcoin and you know chat GPT and other things but behind the scenes there's just so much happening and you know that's really I think you know my feeling and when I talk to the core team

23:09and talk to people in the community I say hey let's do the blocking and tackling let's do the basics well we have what other people are trying to build let's just go support developers and you know and help ethereum developers be successful and then you know let the other stuff pan out but obviously you have to keep building for the future but you also have to focus on

23:27what you have definitely good approach I love it and I'm going to be following along for the updates and levitation protocol sounds like an amazing name I'm gonna dive into the details of that as well um for the viewers that want to learn more about the network and also the games on it or developers that want to try it out what is the best way for them

23:46to learn more yeah so scale dot space scale if you're looking at my hat there scale with a k um is the website will guide you to all the links you can go to atscale network uh on Twitter and at Jack o'holleran on Twitter you'll see um just Twitter is one of the best places as well as Discord scale.chat will take you there on telegram there's a skill official telegram channel so

24:10kind of uh whatever your uh where you like to consume information there's probably you can get on the newsletter you know whoever you are you can you can keep up pretty easy amazing thank you so much Jack for all the information I will leave all those links in the description box below as well to make it easy for the viewers all the best with everything moving forward

24:30in gaming and with scale Network and let's follow up in the near future thanks Ashton foreign