Solving Fragmentation in the Rollup-Centric Paradigm w/ Austin King (Omni Network)

**Speaker A:** Hello and welcome back to the Strange Water Podcast. Thank you for tuning in for another episode. There are a few very important reasons that Ethereum is so valuable, but let's focus on one, which I'll refer to as the shared space. You're probably much more familiar with the two major implications of the shared space, composability and shared liquidity. But I find it helpful to frame their property by referencing that all applications, liquidity and users exist within the same shared space, the evm. I find this frame helpful when you begin to consider rollups, which by definition create isolated spaces away from the shared evm, where execution is quick and cheap, but segregated from the rest of the ecosystem. Each time you deploy a new rollup, you're fragmenting and therefore reducing the value of Ethereum. Right? And this is particularly important in this moment, where you just need to spend five minutes on crypto Twitter or listening to crypto podcasts before you hear someone announce that by the end of 2024 or 2025, there will be at least 10,000 rollups. What does this mean for the shared space? Have we lost one of the core properties that made Ethereum so valuable? Well, dear listeners, fortunately the answer is a resounding no. And it's thanks to the efforts of people like today's guest, Austin King, co founder and CEO of Omni Network. Omni Network is building a solution to tie together the rapidly expanding L2 ecosystem and to ensure that assets can be quickly and safely moved through the Ethereum. As Austin put it, one of the more interesting things about Ethereum from a developer perspective was that it felt like you were deploying code onto one computer, but in reality, it was really being deployed to thousands of computers. The roll up paradigm broke that experience. But by the end of this episode, you will understand just how the Omni Network will fix it. One more thing before we begin. Please do not take financial advice from this or any podcast. Ethereum will change the world one day, but you can easily lose all of your money between now and then. Okay, time for Austin King. Austin, thank you so much for joining us on the Strange Water podcast. **Speaker B:** Hey, yeah, thanks for having me. **Speaker A:** Of course. So I'm so excited to talk about Omni and like, really this transformational moment of Ethereum that we're going through. But before we get there, I'm a huge believer that the most important part of every conversation are the people in it. So with that is like kind of a starter. Can you tell us a little bit about yourself and how you found crypto? And I Guess what led you to the. To OMNI? **Speaker B:** Yeah, yeah, 100%. So I've been in crypto for about seven years at this point. I was in university. I was studying computer science at Harvard and really just fell down the rabbit hole. I had an internship at Microsoft my junior summer and I just frankly didn't really have to do anything for that job. So I just spent the whole summer getting into crypto, you know, learning like mining Ethereum, buying Ethereum and then learning how to program in solidity. And so I had always wanted to build a company after I graduated. And so senior year I really just committed to building a crypto company and so spent most of my senior year running around trying to find the most interesting research in the space. Ended up founding my first company right around the time that I graduated. Built that for about two years, which is, you know, interesting in hindsight because in many ways Omni is very much the successor to that network that we built. It was actually an L2 interoperability network, but back then L2s meant like lightning network and other payment channel solutions. And so it's really a like high throughput interop network, but specifically for payments. So we built that for about two years, sold it, then I sold it to Ripple and then worked there for a year until I vested and then quit to build this company. So yeah, I mean, that's the high level background as to like how I got in crypto at large. Really though, like, it was very intellectually interesting from a computer science perspective, but it's definitely the ideology and the like potential of what this technology is going to be able to do for the world that really got me hooked and committed for know, this past decade and you know, certainly decades to come as well for sure. **Speaker A:** And I think, you know, throughout the next hour we'll unpack so much about the ideology and like what's exciting about this space. So I don't want to like harp on it too much right now in the beginning, but I guess like a good way to continue moving this conversation forward was I would love to fast forward to this moment where you've left Ripple. You are an entrepreneur, you know, you're going to build something. Can you talk through, like what were the, the things that you were seeing in that moment? I guess give us the year the things you're seeing in this moment and like maybe just talk us through the story of how you ultimately landed on like interoperability is going to be like the key piece to transform Ethereum into the world computer. And you need to build that. So I guess like how did you, how did you come to that realization? **Speaker B:** Yeah, so when we started this company, actually we built a defi protocol first and it went really well. We, you know, hit the protocol cap of 50 mil TVL like two days after launching. And so we started to, at this point, rollups were not nearly as production grade or validated at this point in time. But my co founder and I, we've always just been deeper in the research community, in crypto. And so we saw where the space was going. It was pretty clear to us that the future of Ethereum was roll ups. And so we built this defi protocol and wanted to scale it across different rollups. And so we started looking into different ways that we could do this really that had three key things we were optimizing for. One, had to provide a good user experience. Two, it could not compromise on security, and three, it could not fragment the liquidity of the protocol. So with those three things in mind, we started thinking about, yeah, different designs of how we could achieve that. Around this time, at Stanford Blockchain Conference, we met the eigenlayer team and so we started going deeper down this path and we realized at a certain point that it would be way more valuable if we just built this as a generalized infrastructure layer instead of just for our defi protocol specifically. And so that's really, really where Omni came from. Like we saw earlier in the like days of the research community. Like, okay, even though rollups don't have majority of the activity right now, this is where it's going and we're seeing this validated a couple years later now. You know, more activity happens on rollups consistently than on Ethereum L1 today. So that's really where Omni came from. We built a protocol and we face this problem ourselves. And as we talked with other teams throughout the ecosystem, we realized that if we built it as a generalized infrastructure layer, it would just be a far more valuable contribution to the Ethereum ecosystem at large. **Speaker A:** Yeah, one of the things that is so unique about Ethereum and that draws me to it is like there is nothing else on this planet where you can actually see the future of like, where the like technology and the business and the community is going. And like, I just couldn't even imagine if, if Mark Zuckerberg like weekly was on like just open to the community calls that go out onto YouTube that like, talk about the product developments and the long term roadmap. And that's what's incredibly special about this space. So I'm really happy to hear the story of a founder who not only recognized that, but moved on it. And for everyone else listening, there is so much coming down the Ethereum pipeline and we have this unique opportunity to know that it's coming and there are billions of dollars in equity to be created just off that insight. So listen to Austin. **Speaker B:** Yeah, yeah, totally agree. I one of my old roommates has worked at Facebook since he graduated and he never tells. I still don't know what he works on because he's so closed lip about it. Yeah, yeah, the open source energy in the Ethereum ecosystem is great. Even now anybody can hop in, go to ETH research and just start looking at what the kind of frontier researchers are focused on right now. There's a lot of interest, honestly, I think this is the best way to do product development in crypto. It's just like you need to understand what the space and what the infrastructure stack is going to look like a solid like two to four years out. And you do that by going to the research forums and just seeing like what core concepts people are exploring right now. That's honestly probably the number one advice I would have to anybody starting a crypto company is just like, because it moves so fast, but you can get a view into what it will look like two to four years from now by being involved in the research community. **Speaker A:** Yeah. And what I like to say is that Ethereum or fine crypto is like the final form of open source, where it's the same things that we learned over the last 30 years of how much more powerful and secure and extendable and just better open sources. And then we created an incentive layer on top of it to say that whatever you build, if people use it, like ultimately value will come back to you. And whether that's like directly in how you structure your protocol or just through like the IP 1599 in the burn and like just value accrual. To Ethan, like there's something just so cool and next level about like when you think of open source and what crypto has done for that. Like this is more than about like finance or whatever. We're, we're reshaping how computer science is actually done in the real world. **Speaker B:** Yeah, completely. This is something that my friends and I talked about a lot in college. We were all just very involved in open source and there's just not a clear, a clear business model for it. For many of these companies, they often become like consulting companies for the open source software that they have created. But crypto totally Flipped that on its head and opened up fundamentally new types of business models. **Speaker A:** Yeah, super exciting. So let's, let's zoom back to Omni Network. So in this moment, you've built a defi protocol, you've got a lot of tvl you're realizing, huh, we want to be Omni chain, we want to be cross chain. But like, it's not really doable unless we build the technology. And so can you talk through like before you guys have built what you've built today, like, why wasn't it doable? What were the, what were the solutions that existed and why did they not achieve your three property rubric? **Speaker B:** Yeah. So what were the solutions out there that we considered? Honestly, not many of them even really came close to. None of them were really thinking about the problem the way that we were for a while. We have had interoperability protocols in the space, but none of them have been extremely developer focused and none of them have been specifically Ethereum focused. If there's two things, things to like, understand what Omni really is, it's like those two key things. We're extremely developer focused and it's for the Ethereum ecosystem. It's purpose built for, you know, to be the best product for the biggest market, and that's Ethereum. So it doesn't actually, you know, you can't connect to Solana using Omni. It's purpose built for Ethereum. So none of these solutions, they were all mostly about moving, mostly bridging, they were mostly bridges for the most part. You know, if you want to move some Ether USDC from Ethereum to Solana, you could do that. But nothing really gave you a native developer experience that Ethereum was shooting for. So Ethereum at large to programmers was built to look like a single computer, despite the fact that it's powered by hundreds of thousands of computers across the world. This is really nice in the fact that it makes it much easier to program and reduces the probability that you make a mistake and you like program in a bug. At large, this is broken with rollups. So the Ethereum ecosystem at large, it's no longer just L1, it's rollups that you have to think about as well. And this specifically, this developer experience was bro. And no other project was trying to solve that problem. And that's what we're focused on. Omni is really just like return Ethereum to the original vision where to programmers it looks like a single computer. They can build an application and it's available to all the users and all the liquidity in the network that's broken with rollups today. But that's what we plan to fix with Omni. But no other project really is thinking about it that way. So that's why none of them really fit what we were looking for. **Speaker A:** Yeah, I love that. And I am a huge believer in the world computer metaphor. I think that that's the best way to understand and let me just like put all my chips on the table. Like I'm an Ethereum maxi. Not because like I believe it's the best chain or it's going to achieve the most value. Like I think the point of crypto is to create one credibly neutral space. One, not like 60, not like a bunch, but like one. And I think that's Ethereum. And I think you're totally like the insight that you just gave, I've never heard it described like that, but you're totally right. The cool thing about Ethereum is that from a developer's perspective, it lets you program like it's one computer even though it's a decentralized network. And say what you will about the roll up centric roadmap, but like we have lost that and it's. That is such a perfect way to encapsulate like the problem you're trying to solve. But I want to slow this down a little bit before we. I just really want to unpack this one piece because when you were describing why all the solutions that existed at the time, like didn't fit what you needed, you said something very specific, which you said they weren't interoperability networks, they were bridges. And so I would love for you to unpack that a little bit and help me understand the difference between what is an interoperability network, what's a bridge? Why did one come first? Like is one just a souped up version of the other? Can you help us who don't live and breathe in cross chain world, like help us figure out what the landscape is? **Speaker B:** Yep, gladly. So at large, an interoperability network picks up some state update, some transaction from one platform and moves that information to a new platform. That's what they do. A bridge really is a product that you can build on top of a technology that allows you to see something in one place and let another place know that that update has happened. So this in like 2019-2022. I think there are other networks that built interoperability networks and didn't really know what to do with them other than build bridges at large. I think we're mostly going to deprecate bridging at large throughout the industry. I think this, we, we implemented very many very poor design choices here and it led to a lot of hacks. You know, we've lost like over a billion dollars in hacks like this. Not just defi, but like specifically bridges. And a lot of that, I think maybe over half of that has gone to North Korea. And so this sector within the industry has pulled in a ton of bad visibility. And really I think it comes downstream core design choices. So what is omni? It is an interoperability network. Are we building bridge on it? No, very intentionally not. We don't think that that is like something that is going to be useful for the space. What we're actually far more focused on is technologies that in our view largely deprecate bridging. So XERC 20, it's this new EIP. I think the formal like ERC is 7281. But the idea here really is wrap tokens that are controlled by asset issuers themselves. So when you have something like this, it removes a huge amount of the risk that comes with moving assets across different domains. Historically what we have had is Interop Network selling wrapped tokens as a service effectively. And so what you'll see is some team wants to have their token available on new platforms. They onboard this asset into it and then they issue the asset on these other platforms. But it comes in a way where it's really a derivative of the like Bridge or Interop network. And this is just really bad design from our perspective because these are really difficult to secure. So anytime you bring the stability and security of an interoperability network and meld that into really three different. We think about this in three different forms, like assets. If you make an asset a derivative of an Interop network, that's dangerous. If you make an entire platform dependent on an Interop network, also very dangerous. But this also applies to developers as well. So instead what we're pushing are open standards like XCRC20, where really what you have is just a standardized interface where if somebody wants to expand their assets asset to another platform, what they can do is they can use a standard and then they just whitelist Interop networks to like facilitate that movement. They can also blacklist that Interop network over a certain period of time if they wanted to, or rate limit. So really it keeps the power in the like hands of the people who are actually building or like issuing these assets or building these applications. So that's how we think about it at Large, like, we are not trying to build a bridge in many ways. We are promoting technologies and open standards that like, remove the need for bridging at large. And so this is something that we care about a lot because we think it's the most stable path forward for the Ethereum ecosystem. And then taking a step back from the ideological perspective on it, it's simply a better product. Honestly, we've had really good traction selling this to people because whenever we are like, hey, you should use this open standard and sure, you can use Omni to facilitate these movements behind the scenes they often try to ask, so what's like, how does Omni lock us in? And we're like, it doesn't. That is the point here. And so when we get people to understand, you know, what the alternatives actually are compared to these proprietary standards, honestly it's pretty easy to sell this thing because it's objectively a better product. **Speaker A:** It is so interesting for me to hear this framing of like, if you build a good interoperability network, that leads to the deprecation of bridging. And I think we might even just, this might even be a point about language because there's like bridging the verb, which is moving assets from one chain to another and then there's bridges, the noun, which are maybe like a very niche specific implementation of an Interop network or maybe their own, their own thing or whatever. But like bridging the verb will never go away. If anything that's only going to get crazier. It's bridging the noun that you're saying. And so first of all, quick pause right there. Is that a fair distinction? Does that sound right to you? **Speaker B:** Yeah, yeah. I mean an Interop network moves data from one platform to another. Bridging specifically are some bespoke implementations we have made for moving tokens from one to another on top of these Interop networks. **Speaker A:** Yeah, yeah. And I think, okay, so I think it would be really useful to unpack like what Omni network is from a like, systems design and just like how what you're building looks and then maybe we can walk through why that's different from a traditional bridge and then we'll talk about like the benefits from that. So maybe just starting from basic, like what is Omni network? From what exists on chain to the network participants and everything in between. **Speaker B:** Cool. All right, so let's do a high level overview here. The one liner really is like, it is an interoperability solution specifically built for the Ethereum ecosystem. And when you build something Specifically for the Ethereum ecosystem, you get to make different design trade offs on the engineering front than you would be able to if you were had to connect like Solana for example. So one really nice property here is the fact that when you're working with rollups specifically they are all posting their data down to Ethereum L1. So there is an ultimate like global worldview of what's going on here. It's just delayed until you see it on Ethel1. When you are going cross chain you do not have that luxury. You have to you know, build a system that looks at two other systems and like they will never converge. And so ultimately you're just depending on like your system to understand what the world looks like. With Omni everything is provable at the end of the day. So you know, even though it's not provable immediately, it doesn't need to be. So let's walk through an example of how you can use the Omni network and talk about the participants along the way. So the way the network works, it's really nice because it's like agile and dynamic. With integrating new rollups, all you need to do is have a smart contract called a portal contract deployed on a roll up. The nodes in the Omni network and these are the participants who are restaking capital, are monitoring transactions that affect that specific smart contract. So let's just say for simplicity that we have one on Arbitrum and one over on Optimism. Some user, Alice could be on Arbitrum and talk to this contract and say hey, I want to make this function call over on this other roll up. What would happen is the nodes in the network would all observe that state update and it's actually a blockchain. Omni is, it just happens to the best design for this type of solution. So all the nodes in the network run a consensus process like in any other blockchain and they all come to agreement like hey, Alice just stated this over on Arbitrum and at that point once they've come to consensus on that, it's like verified with their signatures and a relayer can go post that to the destination roll up. So from a zoomed out level, pretty simple. It's just like a network of nodes watching state updates on rollups. And then there's also these actors called relayers who just take once they have come to consensus these updates and put them on destination rollups. So it's Ethereum native in the sense that the statements that the nodes make about what roll ups look like ultimately are always going to be directly comparable to what is on L1, so they can have their capital slashed. This allows us to have really nice security properties out the gate because no other interoperability solution can have that. One other thing that is extremely nice about this is it uses restaking. So that means that we get to pull the massive security budget that is available from Ethereum into the network itself. So we can have a crypto economic security budget that is far beyond any network that has been able to exist before. Because we're not just securing it with Omni. Anytime you, anytime you secure it with a new network token, the token is going to have a lower market cap, it's going to be more volatile, it's going to be less liquid, and that has direct implications on the security. And so if you use ETH instead, you just get a far more scalable security budget. And so that's like specifically why we used ETH as the asset to secure it, because the Ethereum ecosystem is going to outpace any new token that is issued. So you have to go with something that is massively scalable. And so that's specifically why we use Restaking. **Speaker A:** Yeah, and I can't wait till I get to the restaking part of this conversation. I think there's so much interesting stuff happening there, but while we're still walking through omni like 101. So I guess like some, some brief clarifications. This relayer entity, is this an independent entity or is a relayer like a proposer? Which it's all valid. Like everyone's a validator and sometimes you're a proposer. **Speaker B:** It can be anybody. It's like there's not a rotation process going on. It's really just like a race for who can submit it first. **Speaker A:** Got it. I was really trying to pick apart is the relay or a centralized entity that acts based on the consensus of Omni network or just happens to be one of the nodes? It sounds like it just, just happens to be one of the nodes. **Speaker B:** It's not even one of the nodes. It can just be anybody out there. The way that it's secure is that it can only relay state updates that have been signed off by the network at large. Once the network at large has signed off and come to consensus on these state updates. Anybody, it could be you, it could be me, it could be a company can run a relayer which will go and move these updates. So it's not, it's not even restricted to like having to stake capital because you need the signatures from the people who have staked capital in order for it to work. **Speaker A:** Got it. So the idea here is, as you said, each roll up has its own like, I'm sorry, you called it something like a watcher smart contract. **Speaker B:** Portal contract. **Speaker A:** Yeah, portal contract. The Omni network is like at all times watching to see like a new command come in. When a new command comes in the Omni network independently on all the decentralized nodes, each runs that command, makes sure it's valid and there's nothing interesting going on there, they all sign it, we aggregate these signatures and assuming we reach some threshold, then like we count it as like a valid message, correct? **Speaker B:** Yeah. Good recap. **Speaker A:** And so I guess like that makes so much sense to me when we're talking about the interoperability like base layer of what you guys are building. Like messages move back and forth. But now let's talk about bridging, the verb, because like what you're talking about for this relayer step, without asset bridging, all it is is just sending a new like transaction on chain and then putting the data that's in the transaction on chain. Sounds super easy. For bridging, you actually need to move value that exists. Let's see, where it technically exists is in a smart contract on Ethereum mainnet to a different smart contract on Ethereum name mainnet. And those different smart contracts might have like withdrawal timelines or different security measures or whatever. My question to you is how do you use the generic interoperability network of Omni to like then actually do this action of bridging? Like what's the, what's the next step that happens after the message passes? **Speaker B:** Yeah, so it's, it's funny because bridging at large, everything's just moving data around at the end of the day. But moving value is really more like moving special data that is accepted or issued by some specific smart contract. And so specifically the thing that we are focused on right now is XCRC20. With this, we are not planning to build our own bridge around it. What we care about far more is just moving to a place where basically every asset issuer is using XCRC20. So when you're talking about these smart contract constraints, that is handled at the XCRC20 level. And so the path that we see happening in the Ethereum ecosystem is that there's going to be many, many roll ups going on. And many of these bridging solutions often use kind of like a liquidity pool type model or various other mechanisms to get more into kind of like what one is considered the canonical asset, like the one accepted by the smart contract that deems it like that token in that place. What we think is going to happen here is that we're going to scale the number of rollups that are out there at a rate that basically it becomes impossible to manage something like that. What's really nice About XC or C20 is that you don't need liquidity pools, you just need those smart contracts of the asset issuers to whitelist these different interop networks and it moves these assets around at a zero slippage and possibly at a really low latency. And so at large, basically that's kind of the stance that we're taking on this, is that let's instead onboard and effectively upgrade all these different assets that are out there so that they can be compliant with these new, more like futuristic standards that will fit more nicely into a world where there's like you know, a thousand roll ups out there. Because any solution that uses liquidity pooling or something like that will be unmaintainable at that type of scale. **Speaker A:** So obviously like we're not on here to pick on anyone. So I'm just going to use USDC as an example because no one cares. So in, in this X ERC like paradigm, I guess my question is like where does the actual value itself live? Right? So if I have like X X ERC USDC on Arbitrum and then I want to use Omni Network to, to, to have X ERC USDC on optimism like from the state of arbitrary. Sorry, Arbitrum optimism and Ethereum Mainnet. Like can you help us understand like where does the usdc, the canonical USDC exist and how does it like flow through these three chains in order to like successfully do a interop transact Interop functionality? **Speaker B:** Yeah, it's funny you say like not to pick on anybody and then choosing USDC because actually you know, there are definitely ways that this can be improved. But USDC is actually, they've been pretty forward thinking with how they get USDC across these different platforms to the point that they have effectively implemented a bespoke version of XC or C20. And so it's always like, hey, what determines like is the real true canonical token. In this case it's a server run by Circle. So like specifically what they have is CCTP cross chain transfer protocol. What this is, is effectively, yeah, it's Basically XC or C20 where the whitelisted interop network is a server run by them that just monitors these chains and Says, okay, somebody made a transaction over here and they want to move it over here. It's a little limited in the sense that there's no relayer within this. So developers actually themselves have to go listen to that server update that just gets signed off by like the key that's there and then make a secondary transaction on the destination domain. And so in this case, to answer your question specifically like how does the value actually move? The value actually moves by Circle publicly stating, all right, this is how we're going to do it. Anytime people want to move tokens around, you have to listen to our server. Once our server says like basically listens to an update on one platform of somebody wanting to move tokens, we'll give them permission to move those tokens from that server and then you go make a second transaction on the destination. So really it's from like Circle's own like just, they're just making statements about where it's going. And this makes sense to me. It makes sense for, you know, assets at large do not necessarily run the server infrastructure. They should just outsource that to interop networks in my, from my perspective. But you know, USDC has actually been forward looking to this. You know, we've talked with the research team about one thing that they put out. I forget the name that they use for it, but it was effectively like a way to permissionlessly expand USDC deployments because what they're seeing is that new rollups are deploying, you know, USDC contracts where people try to move USDC into it, but it's not canonically accepted. They even put out a standard for how these teams can structure in a way where it can become canonical and like accepted by Circle the corporation down the line. So it's all nuanced and in the weeds. Like how like what is true value movement. Circle has taken their own somewhat bespoke implementation, but to their credit they have been forward looking on this. We've chatted with the research team about like how we can like apply the same type of permissionless expansion to other assets as well. Yeah, so sorry, that's a roundabout answer but it just nuanced because like Circle does it totally different than any other asset in the space. Really? **Speaker A:** Yeah. And not to like pick on Circle here, like this isn't an episode about usdc, but the way you just described that was super interesting. So let me just rephrase it a little bit. Is that what cc. Wait, sorry. I always get confused between Chainlink and Circle. **Speaker B:** I do too. Yeah, it's Transfer. Circle is transfer. Yeah, yeah, okay. **Speaker A:** Cctv. The idea there is essentially, there is a centralized server that is watching Arbitrum and watching Optimism and it says, oh, I see the transfer command. So I'm going to send a command to the USDC Smart contract on Arbitrum that just says burn this amount. And then I'm going to send a message to the USCC smart contract on Optimism that says mint this amount. And like, that works. It works, right? It's great. But like, my question for you is like, whether we're talking about USDC specifically or any other future asset that might, like, want to use a similar paradigm, like, what's the point of using blockchain? **Speaker B:** Yeah. So what the question more specifically is like, all right, if you're just listening to a single server as you move these things around, like, why is it on chain anyway? **Speaker A:** Yeah, yeah. And I guess, like, what's the. Like, at the end of the day we're saying Circle Server tells us where the USDC is. Like, why not just like, create Dapps on Circle Server? **Speaker B:** Yeah, yeah, It's a funny question. So with Circle specifically, you know, I think the whole point of USDC is the fact that they can take advantage of the global distribution and composability of Ethereum for an asset that people can have reasonable confidence in that is stable. So, you know, there are many Ethereum developers out there and like people building applications that integrate USDC into their applications. They do this because people are comfortable holding usdc. There's a decent amount of it out there. I think like 30 bill at this point. Would people. Would those same people be interested in building applications on Circle's proprietary API platform? I think you might get 1% conversion there. **Speaker A:** I don't know. Do you see how much money is on blast? **Speaker B:** Yeah, yeah. Maybe if you give enough incentives you can make it work. But yeah, I mean, fundamentally, I think it really comes down to like. So even though Circle has a centralized bridging solution that they have implemented, the real value of USDC comes from the fact that it's a stable asset that can take advantage of the global distribution and composability of the Ethereum ecosystem at large. That's my take on why it makes sense for Circle to still be providing this service. I think they could definitely improve their solution because it is just like a little fragile. If you think about the fact that it is just one server that they're running internally saying yes or no to this, but at large, I think they're moving in the right direction of okay, let's just empower the world. Anybody on Ethereum with the ability to hold a stable coin, I think that that's something that's super important. **Speaker A:** Yeah. And I definitely take the implicit point that like man, Circle's a special case. Like it's special. Right. The, the point of it is essentially to be a CBDC without the bells and whistles. Right. So like I, I take your point that like let's put that in a corner and maybe I, I think like a, a cooler example. So the protocol previously called Dopex or Dopex I think they just rebranded to Strike or something but they were defi options protocol that launched right around the same time that Arbitrum did. And something that I noticed is that they minted their like 100 million supply of DPX tokens on mainnet and then minute one bridged 100 million of those tokens to Arbitrum and then they built their protocol in Arbitrum. And so I haven't seen like a lot of things like that since. But that to me is like super, super interesting. And I'm wondering if that kind of paradigm where maybe you keep your home base on Ethereum but you put a bunch of liquidity on different chains and then you allow an interop company to do the mint and burn across the chains while touching Mainnet as little as possible. I could kind of see that as more what you're skating towards as opposed to the Circle example. So I guess do you have any reflections or reactions to that? **Speaker B:** Yeah, that's actually pretty forward looking for when they created the token. I think that makes complete sense. I think having your core token contract on Ethereum L1, that is entirely rational to me. It's extremely important that you have extremely high security properties wherever that that core contract lives. But having said that gas is expensive. The other day I paid like $200 to make a swap. Just ridiculous. Like you know, it's pretty clear that people are not going to be using the average people are not going to be using Ethereum L1. So if you can get the best of both worlds where you deploy your core token contract on Ethereum L1 where it's super high grade security, but then you give access to that token across all these different roll ups, that is a future which strategically just makes sense to me from the perspective of any token issuer. And on top of that just, it's really nice from an accessibility perspective. It doesn't matter if like you know, using something like XC or C20 it wouldn't matter if it's on Arbtron Optimism, you could have liquidity and access to that token across all these different roll ups. **Speaker A:** Yeah. So while we're still like kind of in the mainnet realm. So something you said, super interesting when we were first talking about what Omni Network is, is that you mentioned that like by definition if it's a roll up, that means the entire state and the history of how it got there exists on Ethereum mainnet and like that's always been the role of vision. It's always been like true in the sense that the data is there but like while we're still in this like super permission phase and like haven't really like achieved the roll up vision while we're still in like dev, there's very few applications that are actually like picking through the call data that exists on mainnet and in roll up contracts and then making decisions based on that. And I guess I would love to hear like a little bit about as you're developing Omni, what does that mean to you? The ability to treat mainnet as the canonical state of all roll ups and does that mean that people are running transactions in proof on mainnet and aggregating all this data together to create validity? Is this about off chain actors? Just looking at all the different states on mainnet? Is this about reconciling what's on mainnet versus what's on the actual chain? Like talk to me through how you see the coordinating power of mainnet in the solution that you're building. **Speaker B:** I think it's actually all that is deeply in the weeds, especially for any developer who wants to build like a defi protocol, like parsing through call data. Like that's not going to be a good developer experience. So where it really matters is effectively from my perspective just that it's there. That it is there and people know it's there. So specifically from Omni's perspective, why this is valuable is because we can take signatures from nodes in the network. Like let's say a node signs off on something that didn't happen. What we can do is we can take that signature and compare it to what is posted down at L1 to prove that they are lying. So that's where it matters. From Omni's perspective, no developer other than, you know, the core developers of Omni should have to like think about that level because it's so in the weeds. Anybody who's building an application should not have to think about that and they don't need to think about that specifically for us, it matters because we can take the signatures from nodes in the network and just compare it to reality that is posted down to L1. **Speaker A:** Got it. So for you guys, you look at that as like your job is to abstract all of this conversation away from developers and the way you use it under the hood is just as a dispute resolution mechanism for when a node in the network thinks something weird happened. **Speaker B:** Exactly. That's a great way of putting it. And I would take it even further that we see the great product opportunity here to be the opportunity to abstract away the reality of multiple different platforms from end developers so that we can get back to that vision of Ethereum like we talked about. It just looks like one computer, but your application is accessible everywhere to all the users and all the capital. **Speaker A:** Yeah, no, man, just so you know, I am for sure stealing that, framing that. Like the cool thing about Ethereum is It looks like one computer even though it's 100,000. Like that is awesome. And I really love what you're building to achieve that. So just want to highlight that again to the audience. That's a great way to think about the purpose of blockchain computers. So anyway, I think we've spoken a lot about like how this system is architected. I think it like makes sense to start talking about use this and applications. I don't know if there's that much more to say about bridging. If you have anything insightful or something we should think about, I would love to hear it. But I think the interesting part of this conversation is if we believe that a bridge is just a specific implementation of an Interop network and you're building a general purpose interop network, what type of applications are you looking at that aren't bridging? **Speaker B:** Yeah, so basically all of them. All of them. All of the applications that are on Ethereum should be globally accessible by default. That's our perspective. So what we're seeing today is this kind of, you know, objectively very difficult reality for developers of any application. You're putting a really difficult spot where it's like, okay, do I launch my protocol on L1 and make people pay $200 every time they make a transaction against it, or do I launch on a roll up and be able to give users affordable transactions, but just accept like one corner of the marketplace here? And so this is really difficult, especially when many of these teams are new, you know, they're launching a protocol for the first time, they're still iterating towards product market fit. So it's very important to them to get as much customer and like user feedback as possible, but they can't because they're cornered into one tiny part of the market. And so really where we're heading at large is the a world where people will be able to build their applications and what they'll expand to other rollups is effectively the end user facing interface, like the final step really in talking with those users, but still be able to program as if it's a single computer. So to walk through this in a more like concrete example, let's think through, you know, gmx for example. GMX is on Arbitrum. It's been on Arbitron for quite some time and it's been very successful. It's quite unlikely that they want to move from Arbitrum. What they do care about though is having access to more users and capital. And so what Omni enables for an application like GMX is for them to, you know, let's, let's say like stake glp, let's, let's imagine that that's just the name of the function using Omni. What you can do is you can go put the function stake GLP and let's say it accepts like amount and like token for this function. What you can do is you can go put that on Optimism, but remove all the actual functionality from it and point it to the portal contract that just relays the information to the actual function on Arbitrum. So what this enables for end users is I can be on optimism, I can talk to the Optimism RPC and submit a transaction on Optimism, but at the end of the day that gets routed back to the actual application deployment on Arbitron. And so really, you know, you mentioned the word abstraction. That's mostly what like we're focused on on these like people are building their applications in a way that the EVM empowers them to. Today, Omni is not going to fundamentally restructure what you can do with an evm. It's more about reach and accessibility of these applications. And so in many ways you can think about Omni as really expanding the surface area of these applications just across all the different smart contract platforms that have been built on Ethereum. **Speaker A:** Yeah, I love that, I love that the concept of like Omni network or sorry, an Omni, an interop network, allowing you to like, like project forward the action without having to project forward the code with it and the liquidity with it. And so I think that's really cool. I do, I guess, like, sorry, just to Hop us back to our last conversation a little bit. Because like, my question about that is like, okay, let's say that I am GMX and I want to like push forward the functionality of like, you can buy a perp on Optimism through our platform and using Omni Network, we will like do all the routing for you and whatever and all you need to do is deposit ETH and we'll take care of the rest. And like, ETH is a special token, right? Because it's not controlled by anyone. It actually isn't even an ERC20 token, let alone an X ERC token. And so like in the cases where your customers or like participants or whatever you call them are building from score scratch, like I understand how you can architect your system to like really take advantage of an Interop network, but like, how do you deal with assets that you and your partners don't have control over? Like, how can I get my 1 ETH from optimism to Arbitrum using an Interop network? **Speaker B:** Yep. Yeah. And so again, ETH is a very interesting asset because XC or C20 is going to work very well for, you know, DAO projects. Just anybody that launches a token, like, it's going to be very easy for them. You know, we've like worked with injective mantle flow. It's just like there are, there are core contributing teams that you can go talk to in order to like upgrade or you don't even need to upgrade the core contract, but like you can still just expand it without that. So let's talk about eth, right? We can't go talk to Vitalik and effectively make ETHAN X Series 20 because like you said, it's not even NERC 20 out the gate. So how do we do that with ETH at large tbd, it's kind of like, how nicely are these roll ups going to play with one another? There's been a proposal from ZK Sync about how you can create effectively joint accounts on L1. Like let's, let's imagine there's multiple roll ups in the ZK SYNC stack. What they're interested in doing is effectively like a shared balance across them so that the rollups could talk to each other without having to make an interaction on L1 and it would still all be like provable at the end of the day. Like which rollup owns a certain amount of eth. And so this is something that's super interesting that we're seeing across these different ecosystems in the sense that zksync wants to make technologies within their ecosystem that allow their roles to play nicely with each other. We're also seeing this from Optimism and Polygon and Arbitrum, all these different roll up platforms, are interested in creating technology that makes it more composable within their own ecosystem. At large. We're very interested in how do we do that in a global way for the entire Ethereum ecosystem. But yeah, like there's a number of different ways. Like if you have a shared sequencer, like maybe there is a way that you can layer this on top as well. There are multiple different mechanisms through which we're going to have to get there at large. We will have to get there though as an ecosystem. And if you think about the ZK Sync proposal, it actually kind of mirrors what we did with state channels back in like 20, 2017, 2018. Like it's kind of like two roll ups acting as a state channel implementation. So it's interesting to think about that. But at large, what we will need to figure out though is how we do this in a way that you don't have to talk to L1 and effectively allow them to relay something like ETH, because there's going to be so many rollups that it's going to be impractical to use it if it doesn't. If we don't solve this. **Speaker A:** Yeah, and I'm not super familiar with the ZK Sync proposal, but we did have Brendan Farmer from Polygon a couple weeks ago podcast to talk about Ag Layer and like yeah, it does seem like they're. Everyone is like racing to solve this problem because it's really not easy. And I think like the, the message that I'm hearing from you is that you will leave like the ZK Syncs and the Polygons and like the starkwares and the arbitrary like all these players that are focused on worrying about liquidity can go figure out how to do this. Like the liquidity portion and what you guys are focused on are like the layer below that which is the messaging portion. Does that sound right? **Speaker B:** Yeah, I would say that's accurate. **Speaker A:** Okay, cool. Well, haha, kind of tricked you into this next question which is like talk me through like we've talked through the Interop, the difference between Interop platforms and Bridges and like what that conversation is. But can you help me understand why an Interop platform shouldn't just be called an Oracle? **Speaker B:** I mean from a formal perspective it's all Oracles. The question really is how secure is your Oracle? Is this one server that you're running in Google Cloud that is saying, okay, it moved from this network to another, or is it a distributed network that has over a billion dollars of crypto economic security all coming to consensus and giving this Oracle output? So from a formal academic perspective, they are all Oracles, but there is a very, very wide spectrum about, like, how secure any Oracle solution can be. **Speaker A:** Yeah, fair enough. So it's the same answer as before, which is like, I'm having a language problem. And like, that is always going to happen in a space that moves faster than like, the language evolves. And so like, your response, which is well taken, is like, yeah, I guess it's an Oracle. But what does Oracle even mean? **Speaker B:** Yeah, it's just an external system that is like giving you its view of truth elsewhere. Yeah. And so that's what an Oracle is. And anytime interop ultimately always all boils down to that. But I think the term Oracle is like a little pejorative in the space. Like, it sounds very centralized and there are ways to do it where like literally the entire Omni network, the output of it is an Oracle answer, but it is, you know, or just magnitude more secure than, you know, just a Google Cloud server, for example. **Speaker A:** Yeah, it makes a lot of sense. So I think this is a great opportunity to kind of pivot into restaking, because what you just said is that, like, if maybe we can get away with terming everything Oracles, like, all that really shows us is that, like, we really need to think past functionality and look at implementation and things like security and that kind of thing. And so I guess, like, the way that I want to frame this is that everything that we've talked about so far, like, it is so irrelevant to restaking and eigenlayer and like really crypto economic security. Because what we've talked about so far is technology and functionality. And so what I would love to hear from you is like, can you help us understand the difference in the product that you're able to make today because of this restaking moment? And like, because the whole community is rallying behind it and because there's $11 billion in that smart contract versus if Sriram had never gone on that a 16Z crypto podcast and explained to us what all eigenlayer was. God, almost a year and a half ago now, or two years ago now. So can you talk through what does eigenlayer mean for Omni Network? **Speaker B:** Yeah, happy to. So the way that I think about this is largely, let's go back to framing it as Oracles. Right. So the question is, how can we build the Most secure censorship resistance oracles. Step one, we could build a multi sig. And we've done this a lot in the space. A lot of these networks and like especially the historical ones, some still around today are effectively just multi sigs. There's no crypto economic security here. You're just trusting some, some set of nodes to be honest. And so that's like step one, like okay, at least it's better than one server I guess, but still just servers where like if these people collude maliciously there's no direct economic repercussions on what they do. So that's like not great. But it's where we started as an industry and yeah, we've lost a lot of money doing that. Just that's the objective reality. Step two, we can put crypto economic security on top of it. So instead of just various participants in the network just answering out of goodwill, we can now create a proof of stake system where if they do not answer honestly they could lose the capital that they staked. This is better. It's still fragile though. Like I said before, what we have seen is network secure this exclusively with their own like governance token. And anytime you launch a new token, again like the market cap's not going to be that high so your max security budget is not going to be high, especially not high enough to like meet the security standards of Ethereum. And two, it's going to be more volatile. So your security could fluctuate rapidly especially in like times when and let's imagine the market's tanking. Like you don't want your security to also like tank heavily during that time and it's lower liquidity. So in the event of some activity like it could, the security properties could fall faster. So like this is better than you know, just a trusted multisig. Effectively still fragile though it's effectively the way that we viewed this is that it is not acceptable for the Ethereum ecosystem. Restaking offers a kind of evolution of this where instead of just using a new token to secure these networks, you can use Ethereum like eth the asset itself. So this gives you a massive security budget that you can scale, you don't need to, you know the 11 bill that is in eigenlayer today you don't need that day one, but you can scale to that. So like as you grow the adoption of the network, you probably want to grow the security properties in the network as well. If you were only securing it with a third party token that like was just made for the project effectively the Price would have to go up in order for the crypto economic security to go up. And that's just kind of a risky gamble and you don't want, you don't want to gamble on your security with an interop network. So restaking at large unlocks this new opportunity for an interoperability network to effectively drive security from the Ethereum network itself. And this is really as we were looking at the different solutions out there, it was quite fortunate that we met the Eigenlayer team, you know, about a year and a half ago and started talking about this because it makes complete sense if you're trying to build an Ethereum native interoperability solution. It needs to have, it needs to have taken design principles that like are design choices that you can only make when you're building strictly for Ethereum. And it also should probably be secured by a massively scalable asset that is ETH itself. **Speaker A:** Yeah, for sure. And so I hear you. Agree with you on everything. And for me the most exciting, like the aha moment for eigenlayer is almost not even about crypto economic security, it's about decentralization. And like in all of our endgame state of Ethereum we've got like at least 100,000 nodes and then we've got like at least two, but let's say five Oracle networks and each of them have 10,000 nodes and then we have bridges and then we have like whatever, right? Like, and I just think we're going to run out of people willing to put like computers in their closet to like, to, to be decentralized. And so for me Eigen layer is this like realization that hey, like we have one network of computers, let's build more on top of that as opposed to like spinning up a new network every time someone has an idea. And like for that reason I will always love it and it will transform Ethereum and it's a good, good thing. The thing where I'm like a little bit like, hold on, what are we doing here? Is the second the Eigen layer deposit contract opened up for lsds because like to me that betrays crypto economic security. Because what essentially what you're saying is in this two sided marketplace of AVS operators and services that need things secured, like if the AVS operator, the person that is holding all the stake in order to secure this service, if they do something malicious, they lose nothing. They like when we're in using lsds and then delegating those to somebody else, we're creating delegated proof of Stake, which is essentially saying we're going to solve the crypto trust problem. Sorry, we're going to create crypto trustlessness by forcing you to trust node operators. And so, like, on the one hand, I'm so excited about the path that we're going down, but on the other side, I'm worried that with the way things have gone, we've almost like hoodwinked ourselves into thinking that we have something like, valid, which is really just like, we just created trust again. And I would love to just hear your thoughts, your reflections on what I say and like, am I completely out of line here? Like, how do you understand this, like, $11 billion number? **Speaker B:** Yeah. So it seems like your main concern here is not even with eigenlayer, it's with delegated proof of stake, right? **Speaker A:** Yeah, yeah, yeah, yeah. **Speaker B:** And it's totally valid. It's totally valid. This is one thing I love about the Ethereum ecosystem at large is that when there's a problem, we tend to call it out, you know, like, almost like proactively. You know, people are like, hunting for things to like. Like, there's basically four companies right now building all the blocks for all of Ethereum. That's a huge problem. But Ethereum is an ecosystem that invites scrutiny. And so, yeah, I think this is totally valid to call out because it affects Eigenlayer itself and anybody who's restaking. I can tell you from our perspective, building a network that uses restaking, one thing that we care about is that getting capital that is not strictly delegated. So, like, we've signed NDA, so I can't say specifically who, but there are like, participants out there that are planning to like, you know, stake with sizable capital and be running the nodes themselves. So you get that more direct. Like, this is proof of stake. Like, there is huge, a huge amount of crypto economic security here directly at risk from the people running the software themselves. But zooming out at large, it's like, yeah, you know, with Lido, like, this is something that is. We have a huge amount of these staked at this point, but I don't know, maybe, you know, off the top of your head, but I know a lot of that comes from Lido as well. So it's like these node operators that are being delegated capital, but it's like, we cannot treat proof of stake equivalent to delegated proof of stake. These are very different things. There's like a principal agent problem here that, like, I don't think is solved. And so, yeah, I think that is a totally fair concern to have about any delegated proof of Stake architecture. **Speaker A:** Sure. **Speaker B:** And this goes beyond Ethereum as well. This goes into the Cosmos ecosystem. Yeah. This is just like something that happens throughout crypto that is totally fair to scrutinize. **Speaker A:** Yeah. And we're just like, we're entering this super interesting moment where we had the eigenlayer deposit contract and the vast majority of that came from lsds and some people changing their withdrawal addresses to the eigenlayer contract. And then the next, let's say at least half if not more came from these like literally so brand new that they didn't exist a year ago. LSD providers that like said, hey, whatever you put in here, we're just going to restake it. And like now they're enormous. Right. And I don't really have anything smart to say about that. Which other than like Rex, whatever you think about eigenlayer and this delegated proof of stake problem or whatever, like the most important thing that Eigen layer has done for us is like given us a real shot at challenging Lido dominance and giving us more LSDs and Ts. And so I think what you love about Ethereum, I love it too, that we're all like think we're the smartest guy in the room and not here to call everyone out on their shit. But the other thing too is that what's so cool about permissionless open source technology is that you put it out there and the entire meta can change around it in ways that you didn't necessarily anticipate. And so I guess I've brought us this cul de sac that doesn't really have a strong ending here. So I guess I'll let you walk us out here. But I would just love to hear as you look forward to the future of Ethereum and now that we have Eigenlayer, what are the things that you're most excited about as we walk down the next five year roadmap? **Speaker B:** Yeah, so I think that resaking fundamentally unlocked what the Ethereum ecosystem needed. You know, I've been working on Ethereum technologies for like seven years. It's slow, it's objectively extremely slow. You know, I, I've been in crypto long enough to think that the merge was gonna make this thing soup, souped up and transaction throughput was gonna 10x and stuff. And then the merge incrementally, you know, huge credit where it's due, great engineering achievement, but eventually that, you know, the merge was not just proof of work to proof of stake. Originally the merge the vision of it was that this thing was gonna look like Solana and that didn't end up happening. I think that's actually totally fine. And I think it might even be good that the core Ethereum L1 network itself optimizes for what it's really good at, distribution like decentralization and security. I don't care if it's super slow and expensive. And it seems like the ecosystem at large is coming to agree with that, that like, okay, maybe we just really optimize for these like few core features that we're offering. Restaking though enables us to build new networks that derive security from Ethereum itself and get us to that comparable state where it looks like Salana. So for example, like this is very much how we think about it Omni. It's like the, the real problem in the Ethereum ecosystem is not fragmentation, it's actually latency. Like that's like our kind of like take on it is that Ethereum will never be fully united. You know that like fundamentally in order to scale you need these different machines on top of Ethereum that are all settling to it. But we're not going to get back to a place where they're all working together in the same consensus protocol or something. So what we actually need to do is let them talk to each other really, really quickly at a speed that users don't even notice. We will get to a point where you know, like Omni is working with pre confirmations and you can move across rollups in seconds. We're not there today, but I think, you know, you asked on a five year timeline, I think we're definitely going to be there in the next year or two. Ethereum will look like Solana. I don't think people understand that at large today, but I can see that quite clearly. And again this goes back to kind of how we started the conversation. Like if you stay involved in the research community you can see where things are going. And to me it's quite clear at this point that all of these roll up stacks are going to have some form of pre confirmations that can be issued on the order of like hundreds of milliseconds. What a network like Omni is going to be able to do is listen to those pre confirmations and relay these state updates, new rollups in less than a second. And so we will get to a point that Ethereum looks like Solana, but it's built on, upon a more like sturdy foundation. Fundamentally though, I think this is the proper engineering design where the core network Optimizes for decentralization and security, but you still need to unlock this layer of innovation on top of it. And so, so, yep, super excited for, you know, where Omni will go, but as well as like other networks that you can build on top of this technology because they're all going to complement one one another very nicely. **Speaker A:** Yeah, man, awesome. Austin, I need to cut us off right here because I need to go buy more eth. I'm just so bullish like on the specific things that you guys and everyone's building, but like really just on like people are going to succeed, people are going to fail, people are going to pivot, like, whatever. But the only thing that I really believe believe is that Ethereum and that the world computer is inevitable. And it's just like always awesome finding someone else who believes the same thing and like knows more about it than I do. So Austin, thank you so much. I really appreciate the time and just thank you. **Speaker B:** All right. Yeah, thanks for having me on. **Speaker A:** Of course. Before I let you go, can you just share with the audience where they can find you, where they can find Omni and if they're like inspired by like what it means to be building and in a cross chain interop world, like what are the best things to be thinking about and the best places to get started? **Speaker B:** Yeah, so our website is omni.network. i'm on Twitter 0x Ask Omni is on Twitter omnifd. Yeah, the Twitter we update very consistently with all the news that we're going on that's going on in the ecosystem. For people that are most interested in kind of like how to build applications best, I would, I would actually rephrase it. People who are most interested in how to build apps the best way in the Ethereum ecosystem. Our dev docs, we just hired a lead of Devrel. He's done great work and giving our docs a full revamp on how you can actually do this in a simple way. And then on top of that, go check out the research forums. It's one of the most interesting spaces in the industry in my opinion for sure. **Speaker A:** And everyone go check out the XERC or ERC X and help us push us through. But man, I just, I'm so honored and, and I, I guess I want to leave us on this point which is when I entered this conversation I thought Omni Network was about Omni Chain and like obviously it is, but I'm now walking away from this conversation realizing that Omni Network isn't about this like cross change and. And the thing that you're doing on the technological side, it's about exactly where we started. And what you said was so awesome about Ethereum was this experience of developing like you're on one computer even though you're on 10,000. And that's what Omni does, is like, gives the Omni experience to the developer. And so thank you. Good luck and just. Yeah, I guess. Thank you again. **Speaker B:** Yeah. Said it better than I could, man. Thank you, Sam.