Bankless - Hop Protocol AIRDROP and DAO Launch! 🟣_🟣

Episode Date: May 7, 2022

Chris Winfrey from Hop Protocol tells us all about the launch of the Hop Protocol DAO! ------  OPOLIS | Sign Up to Get 1000 $WORK and 1000 $BANK https://bankless.cc/Opolis ------  SUBSCRIBE TO NEWSLETTER:          https://newsletter.banklesshq.com/   ️ SUBSCRIBE TO PODCAST:                 http://podcast.banklesshq.com/   ------ BANKLESS SPONSOR TOOLS:  ️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum  ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  ALTO IRA | TAX-FREE CRYPTO https://bankless.cc/AltoIRA  AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave ️ MAKER DAO | THE DAI STABLECOIN  https://bankless.cc/MakerDAO   BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave ------ Topics Covered: 0:00 Intro 4:30 Chris Whinfrey 7:30 Layer 2 Bridges 10:25 The Hop Origins 14:45 No VC Funding 19:07 The Hop Airdrop 23:56 The Airdrop Meta 28:15 The Distribution 32:57 The Trinity 35:27 The Token 41:00 Yield and the Bridge Wars 47:08 Layer 2 Airdrop Szn 50:57 What's Next? ------ Resources: Chris on Twitter: https://twitter.com/WhinfreyChris?s=20 Announcement Post: https://hop.mirror.xyz/AI5fOUR0X_l0mktShDOx3mwr-hsB24gp8GvTWtS-MBc Hop Links - Twitter:          https://twitter.com/HopProtocol?s=20 - Discord:         https://discord.gg/PwCF88emV4 - Exchange:     https://hop.exchange/ ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Welcome Bankless Nation to a very special episode, a live stream that we got to do just because this is what happens when the news breaks. We have the hop drop on our hands, the hop protocol, the bridging protocol between Ethereum Layer 1, Ethereum Layer 2s, and other chains. Did a token. And of course, they're launching a Dow. So we are talking all about these things today on the Bankless live stream, because apparently that's what you do when you launch a Dow. You come to Bankless and we live stream about it. It's a ton of fun. The community shows up. they're all in the YouTube comments right now. I'm really going to enjoy this one. For those that don't know, we've also had Chris Winfrey on before. Chris Winfrey, of course, has been with Hop Protocol for a very long time. He will be joining me and unpacking the hop drop and the launch of Hop Protocol Dow.

Some of the typical questions that you would expect, as well as the unique things about Hop Protocol. Because Hop as a system, as an org, as a Dow, got spun up with a unique Genesis story that lends itself to the long arc of what hop is and what hop will become as well. So, of course, what is the token responsible for? How much responsibility did we just receive? The airdrop details and the distribution, of course. There is a new hop foundation. There's hop labs.

There's the Dow. How do these things all interface? And where is the hop protocol going? And then, of course, like Chris has been in the space for a while. So I just want to pick his brain about the coming layer 2-2-2. This is the second layer two related token to come out in the last two weeks. And there are definitely more on the horizon. So what happens next when more of these tokens come out and about

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They've been here since the beginning. They've seen it all, and so you can mint dye with the assurance that your collateral is safe. Soon, Maker will be present on all chains and L2s, so minting dye can take place on oasis.app, Zerion, Zapper, or any other defy protocol that you use. Follow Maker on Twitter at MakerDAO and learn from the oldest and most resilient Dow in existence. All right, Bankless Nation, let's go ahead and get right into the show. I'm joined with Chris Winfrey of Hot Protocol. And Chris, exciting news, man.

Welcome to the show. Thanks, David. It's great to be back on the show. It's definitely been a crazy week. But yeah, super excited to be here. Yeah, all of a sudden, oh, there you go. Camera just became in focus again. Wonderful.

Okay, cool. Let's get into it, man. But, like, there's so many things to discover and so many things to talk about. Like, of course, all the airdrop details, the distribution, all the things that people would expect. But, of course, we need to actually talk about what we are talking about. So what is HOP protocol and what does it do?

And why do people use it? Yeah. So HOP protocol is a cross-chain bridge. We're very much focused on the Ethereum ecosystem. So we have a hub-and-spoke model where Ethereum is the hub. And then we support layer two networks like Arbitromb and Optimism. We support other L-1s that are close to the Ethereum ecosystem like Polygon and Nosis chain. and ultimately we can support any chain that has a message bridge with Ethereum.

So, you know, we will be expanding and connecting Ethereum with kind of the broader crypto ecosystem. But we, you know, keep Ethereum at the center of it. And this allows us to have this really secure bridge model where we can put these stop gaps between each network. So if any one network were to fail, the users on the other networks are safe. So that way, users on Arbitrum and Optimum. can enjoy, you know, trustless, you know, enjoy the full security of Ethereum.

But then you can still jump, you know, straight over to, to another chain like Polygon and, you know, enjoy the low fees and so on. Right. Okay. And of course, just asking the very basic questions. Why do we need bridges? Why are bridges necessary? Yeah.

So, you know, within the Ethereum ecosystem, you know, we're seeing this movement from layer one Ethereum to layer two. And with the kind of roll-up-centric Ethereum roadmap, scaling roadmap, you know, usage is moving to this, you know, very diverse layer two ecosystem. So right now, you know, we have Arbitron, we have optimism. You know, we have we have some StarCware roll-ups that are application-specific, but, you know, they're going to be launching their own roll-up. ZK Sync is live.

Their V2 is coming very soon. And so we just have like all these different solutions. They all have different use cases, different tradeoffs. But ultimately for regular users, layer one is super, super expensive. So if you want to be using Ethereum, you actually want to just be this layer two native citizen where you jump from one layer two to the next and never have to touch the base layer of Ethereum. And then also, you know, if you want to jump to outside the Ethereum ecosystem, you also need a bridge to kind of get your assets. it's over there. Okay, of course, of course, right. We are going into a multi-chain world, whether you think it's a multi-layer-2 world, a multi-layer one world, but we're going to need

bridges around these things. But each different layer two has its own canonical bridge, right? Can you help the listeners unpack the difference between the layer two bridges that are built by the layer two-twos themselves, like the layer-to optimism bridge and the layer-to arbitram bridge and things like hop and connects? Can you differentiate between these things? Yeah, absolutely. So, you know, like you, you said at each of the layer twos as well as kind of these like Ethereum side chains like Polygon and Nosis chain have a asset and a message bridge with Ethereum. So this lets you, you know, like one contract can talk to each other and then also if you just want to move your

assets over, you can. With specifically with optimism or optimistic roll-ups, this message bridge takes a full week to get back to Ethereum. And this is enough time for any kind of fraud detection to play out on chain, make sure that all the assets on those, you know, those networks are secure. And then also all of these bridges are just between the networks and Ethereum. And so what Hop does is we basically leverage these bridges, specifically the message bridges, to create this broader kind of cross-chain bridge so that you cannot just go from like polygon to Ethereum or optimism to Ethereum or Arbitrum to Ethereum, but you can actually go directly between each of these. And the way that we do this is we bundle messages on one chain.

So we get, you know, thousands of messages that are sending some, say, you know, Polygon to Arbitrum. We pack those up and then we send them through layer one Ethereum to the destination, but that's, you know, a very small package. And then we can unpack them over there. And this creates this, you know, very scalable way to get a message from one, you know, non-etherium chain to the next by using Ethereum as a hub. Certainly. And without these cross-layer-2 bridges, if you were on Polygon and wanted to get to Arbitrum, you would have to go down to the Ethereum layer one and then send your money over to the Arbitrum bridge and then up to Arbitrum. And then if you wanted to go to optimism, you would go back down. That would take seven days. And then you could go over to Arbitrum

or optimism and then up to optimism and then getting off of optimism would take another seven days. But with these cross-layer-two bridges, we can just go and hop from layer two to layer two to layer two without any of that time delay. One of the cool things about this whole thing is that we knew that this was a problem for layer twos, like from a long way off, this whole seven-day withdrawal thing is just not going to be tenable for users. And so, like products like hop and connects started getting built even before the layer twos had launched. So it's one of the cool instances of problems being solved before they were even coming into existence. And that brings me to my next question about the genesis of Hop. How did Hop come to be?

Where did it come from? Because, of course, now that it is turning into a Dow, I think it's important to understand the genesis of this whole thing. So how did Hop come to be in the first place? Who created it? Yeah, so, you know, our team has been around the space for a long time now. And so previously we're working on a contract-based. account wallet called Ethereum. And so this was targeted towards regular users that just wanted to kind of log in with

the username and password, but we, you know, stuck to kind of the core Ethereum ethos where it was like non-custodial, you know, you could access it on your own. And but it still made it like very easy to onboard. But, you know, Defy Summerhead, we saw, started to see a lot of these users just get completely priced out of main net Ethereum because unless you're dealing with, you know, tens of thousands of dollars, if you're paying hundreds of dollars of transaction fees, like you're just getting your yield cut. It stops making sense very, very fast. And so what we did with Ethereum is we started integrating with different layer twos. At the time, it was like diversify and loop ring.

So primarily application specific layer two's focused on exchanges or being exchanges. And we saw our users, they would kind of move to these layer twos. They'd make a few transactions. transactions, and then they moved back. And by the time they paid the bridging costs, you know, they deployed their layer one account, they might as well have just used Unswap on Layer 1. Like they weren't really saving money. And so, and meanwhile, we are, you know, seeing like our onboarding flow just get destroyed by fees because now all these new users that have this smooth onboarding flow now have to pay, you know, $100, $200 just to deploy their account and get started, which was just like a deal breaker for.

for most regular people. So we do that, okay, we need the onboard users directly to layer two, and then just let them hop around from one layer two to the next, never touch layer one, never have to deploy that contract-based account. And, yeah, started to think about different ways we could do this. And yeah, so we came up with hop protocol. It's a very unique design. We put the white paper out towards the beginning of 2021,

just to the research community. And then, yeah, not too long after Vitalik released his paper on the roll-up-centric scaling roadmap. And that post actually called for exactly what we were building. Like we need to do, you know, we need to be better about transferring assets from one roll-up to the next. So we got super, super excited, just kind of went heads down, built the thing as fast as we possibly could, you know, went through a bunch of audits, made sure everything was secure, released it last July. and then, yeah, have been grown at since.

Man, that is a cool story. So how many people who are working on the original Ethereum project were rotated into the Hop project? Yeah, so it's the three founders. Yeah. That's three guys. Okay, great. And then how has the Hop community grown since then?

I mean, in terms of the team, we have Lido on our team as well. So it's, you know, Shane, Miguel, myself. and Lido. And, you know, we're going to be growing the team pretty aggressively coming up. So, you know, if you're interested in, you know, building a bridge and, you know, helping us scale Ethereum, definitely reach out. And then as far as the community goes, like, that's been one of the coolest things to see

is, you know, we've really seen a lot of people step up, you know, take charge, whether it's like mods in the Discord or people building Dune Dashboards or Twitter bots and all kinds of stuff just like making small contributions to hop. Yeah, and I think this makes for a really unique story out of HOP protocol where you guys saw a need ahead of time based off of what you were building. It's like, well, this is a problem for our current product. And then you had like this nice immaculate, just like Vitalic paper saying, hey, this is going to be a problem coming forward.

And you guys were like, oh, we already knew that. Let's keep on building. It was like the Vitalik validation. but then like you rotated Ethereum into Hot Protocol a way ahead of the curve before the roll-up-centric roadmap was even well understood by the broader Ethereum community. But you guys never actually took any additional VC funding from anyone after the rotation from Ethereum into Hot Protocol. Is that correct? So we did do the round with Ethereum, like you said.

And then we did actually do a very small round just to get a... a few DFI founders. And so, you know, we brought on Kane and Stani from synthetics and ABE, and then as well as Stefan from DOSIS and then a key, a few key individuals. But this was just, you know, a very, very, very small allocation just to kind of keep us going and get these folks involved. So, yeah, we've really kept funding to a minimum and, you know, have been, like, super lean with, you know, how we've built out hop.

But that's allowed us to give, you know, just a ton to the community and make sure that the Dow has like a bunch of firepower in the treasury. And yeah, really happy with the way everything turned out. Yeah. And where the current state of crypto right now is that seed funding and seed rounds are just like going bonkers and valuations in the private markets. And Hop never really engaged with that. And so you guys had the one round with Ethereum years ago. and then I think and then what you just said just with a few key more people just to keep to keep a gas in the gas tank but it never really seemed to be about like how much can we raise from from VCs can you talk about just the ethos and the vibes that that you guys have tried to make into the whole hop entire into the hop ecosystem yeah I mean that that's exactly right like we truly believe in in decentralization and you know ultimately if the the company behind or that that like initially develops the product as like, you know, all the funding, then, then, you know,

the community only has so much control. And so what we want is really for Hop to be community, truly community let. And so, you know, the community will own the treasury. And, you know, there may be opportunities for investors to, to get a piece of that treasury if they decide. But we as, as kind of the initial development team, are now kind of transitioning to being a service provider for the Dow. And so in terms of like our budget and, you know, that's all going to have to be requested from us to the community saying, you know, here's what we're providing, what we're bringing to the table and what we're asking to kind of like keep ourselves going. Okay. So and one final question before we get into the fun stuff, the token stuff. How many full time

hoppers are there? How many full time people like work for the hop protocol? So there's four of us. Four of us? Okay, cool. Yeah. That's not that meant. Not that many, but, you know, like I said, we're going to be growing the team pretty aggressively. So hopefully we'll have a bunch more hoppers here pretty soon. How much like bottom up community involvement has there been? There's been a lot. You know, we've seen, you know, definitely people have picked up, you know, like I said, Dune Dashboards, Twitter bots, you know, someone did a Nosis Safe integration.

We've seen tons of like integrations across different products in, the crypto space. Like David Meehal with crypto fees has been pretty cool. And yeah, you know, definitely seeing the community start to pick up anything they can. Amazing. Yeah, I'm just reminded of how lean and simple, not necessarily simple, but just like, it doesn't take a whole lot to make a whole lot of value out of this base. Like Uniswap doing as much volume as Coinbase only had like 20 to 30 employees.

And now we're seeing entire across layer two bridges. come out with just four people and a community. I'm going to imagine that community is about to get a lot bigger coming up soon here. Yeah. And, you know, the three of us founders are all super technical. We all still are writing code, you know, are in the weeds. And then, you know, Lido's just incredible on the marketing side and growth side. So, you know, feel good.

You know, even though we're a small team, we can, you know, definitely pack a punch and get stuff out there. Amazing. Okay. Let's go into the details of the hop drop itself. What were the criteria for getting the airdrop? And how was that criteria decided? Yeah. So with our air drop, the goal was to, one, reward early participants of the network.

So, you know, if you provided liquidity, then we wanted to basically like reward for that contribution. And then beyond that, we targeted achieving as broad of a distribution as possible. So, you know, like I've been talking about, we really want Hop to be truly community-led. and truly decentralized. And so in order to do that, we need to have like a very healthy distribution of tokens across, you know, a broad set.

This has become an incredibly hard problem to do. And just like I don't think people really realize the scale of people farming air drops. Like it is truly an industry. I, you know, I would guess that over the past year, you know, billions of dollars. of tokens have been given away. And these farms are making, you know, probably hundreds of millions

of dollars. And so you can imagine, like, if they're scaling things up, they're hiring people, they are, you know, it really is a massive scale. It's not just like Joe Schmo over there, kind of spinning up 20 accounts and claiming 20 air drops. And, you know, so these folks have Discord accounts, they have Twitter accounts, they have EMS names, they're spending millions of dollars in transaction fees. Like the going into this, we were like mindblown once we started digging into the different transactions. And so with Hoppe specifically, we saw that, you know, a lot of these air drop farmers were

kind of like on, on the low end where they would send, you know, 50 cents back and forth, back and forth a bunch of times with a bunch of accounts. And then we saw everything from that to like, you know, much more. sophisticated, you know, farmers where they, they actually have, you know, millions of dollars, like, you know, they're making hundreds of thousands of dollars of volume, you know, really solid the full spectrum. And so what this creates, it's like really hard problems. It's like, we want to give hop to the community. That's the goal. But how do we sort out our actual community from, you know, one, these large-scale bot farmers, two, people who see kind of the

air drop as the product themselves. They don't care about the bridge. They just really want to get the air drop and then bounce on to the next thing. And then there's like our actual community. And so we tried a bunch of techniques. What we landed on was like creating these like initial criteria where it's like, hey, you know, we can't sort out the box if we just look at everybody. But if we create this like initial criteria, most of the bots will fall under it.

And then we'll be able to actually manually go through. through and both programmatically and manually go through and find our actual users and get them hop token. So what we did is we set the initial criteria. This moved around a little bit and we set it as low as we possibly could at two transfers and $1,000 of volume. So an average of $500, if you're just doing two transfers, if you're only working with $100, you could still make 10 transfers and you'll still be included.

And so this kind of gave us our initial set of addresses. And then what we did is we ran this, you know, algorithm that actually tracked every single transfer that these addresses have made, every single bridge transaction that these addresses have made. And then we filtered out all the exchanges, all of the contracts, all, anything that might have interacted with multiple individuals and split up the interactions. And so this kind of like allowed us to isolate these groups of addresses that we could identify as being individuals. All of that, it's done programmatically, spits out a list of groups.

And then we actually manually went through every single group and said, hey, you know, this group, they all are doing this exact same transaction at this exact same time looks like a bot farm eliminated. Or this group, you know, looks like a bunch of NFT users that are all friends with each other, sending each other money. they're still included, they're getting hot token. And that kind of led to where we landed. So out of 40,000 addresses that met the criteria, we eliminated 10,000 of them. And now the community is kind of helping to eliminate a bunch more.

I don't know if you want to get into that already. Yeah, no, we certainly will. I think this is really cool and just kind of illustrates the changing meta of airdrop dynamics. Uniswap had this just immaculate. blessing of not having to worry about this because they invented the whole concept of a retroactive air drop. And so no one was farming the Uniswop Airdrop because that wasn't a thing to do. But they were the only people that were able to do that. Whoever was going to do the retroactive air drop first

had the blessing of like, cool, you get to do it first and it's pure that way. Following that, every single app was like, ooh, retroactive Airdrop, Retroactive Airdrop, and it's starting to become gamed. And now it seems to be like there's this arms race of AirDor. droppers versus air drop farmers. Like who can get more creative in trying to figure out the mechanisms to farm the airdrop

versus which teams can figure out how to mitigate against these retroactive irdrop farmers. How would you, if you had to like rate your efforts, your guys' efforts, as in like give your guys a scorecard

of like how well you did in achieving your goals of mitigating the farmers, how well would you, how strongly would you rate yourself? I think we did really well. You know, trying to figure this problem out.

And the whole time we're so jealous of Uniswap, just kind of being able to put it out there and there's no expectations. But yeah, we knew people, you know, had expectations. And we really wanted to get, not just do like a plutocratic air drop where we give to just the liquidity providers or just based on volume, like stuff that can't be gained.

But it was such a hard problem to figure out. But yeah, I think we did really well. I think there are more bots that may still be there. But I think that we've already seen some really promising submissions from the community. And so what we've done is said that, hey, if you submit a group of addresses with very solid proof, we don't ever want to accidentally eliminate a legitimate user. So it has to be like super tight. But if you do, you get 25% of the tokens that would have gone.

on to the civil attacker. And then also, if you are a civil attacker, you can report yourself. So if you are scared that you are going to get caught by the community, which they likely will, there's a huge incentive to do it, you can just report yourself and you will get 25% of the tokens that you otherwise would have gotten. Or you can wait and get nothing. And so I'm super excited. That's amazing.

That's such a Chad move because, like, It's game theoretical rational to just turn yourself in. Because, like, you still get the, you still are farming the air drop, but you're mitigated by 75%. So you, like, you still, like, congrats. Like, you got something, but like, you're still getting kneecapped in the total supply of what you're getting. That is genius.

It's a little, little tip from the IRS. Right. Oh, my God. That's too funny. And so also what you're doing with allowing people to report this, report, the farmers, the airdrop farmers, is like, you're allowing other people to farm the farmers. And so, like, it's, it's, you're putting this out into the market and you're allowing just raw financial incentives to, uh, reduce the distribution of tokens into the hands of people that shouldn't have gotten in the first place. This is really cool.

Exactly. Yeah. And so is this, is this like, you do you think going to be like the standard mechanism going forward? I feel like all future air drops would probably use some. sort of like mechanism like this? I do. I do. And I, but like you said, like I think it is an arms race. And ultimately it comes down to solving civil resistance. And, you know, you've seen people work on it for years.

Like notably, Gitcoin has been working on it for a long time. It's a really hard problem. I don't know if it's solvable. So, you know, I do think people will use this if they try to do civil resistant air drops. But we might see this be one of the. last civil resistant air drops because the incentives are just too big for the farmers and it's too easy for them tied well this is going to be an involving story as we go forward of course

okay i actually want to go into the actual distribution uh and so chris you're not seeing it because i'm live hearing my screen but i'm i'm showing the hop distribution pie chart we got the treasury we got the air drop we got the investors we got the team we also have the future team uh and so i kind of want to just go through these one by one starting with the actual treasury uh so Typically, I think I've seen the Treasury for like typical Dow's gets spun up at just 50% seems to be like the shelling point. But you guys have chosen 60.5%. Is there any just like grammar reason into how that number got decided?

Yeah, I mean, it's a symptom of like how lean we've been able to stay and get the protocol out there. So, you know, we think of like insiders as both team and investors. And the typical slice for insiders in a Dow is like 40 to 5. 50%. And for us, it's, you know, right around 30%. And so that's what has allowed us to give an extra 10% of firepower to the doubt. Fantastic. Fantastic. Okay. And then also, I should also start with, there's a one billion hop supply, correct? So that makes it, what is that? 650, 650 million tokens of hop tokens are in the treasury. And there's no other, there's no plans for those,

right? They're just in the treasury, right? Yeah, it's going to be up to the community. Okay, so I'm not sure if there's consensus on this, but I want you to check this take of mine. If it's in the treasury, it's basically tokens that aren't in circulation, but are minted. But like when it comes to like the trading like volume and also the market cap of this thing, they basically count as like unmented tokens. And so I actually consider the 605 million hop tokens to not actually exist because they're in the treasury, right? And also, does the treasury have a lockup? I think that's a fair take.

And the Treasury doesn't have a lockup so the community can kind of spend them as they see fit. Okay. So if you take my take, there's actually really just about 400 million hop tokens out there. The $605 million from the Treasury will slowly make themselves relevant over time. So this is why we call fully diluted valuation. But if we're talking about like today, theirdrop and what people are going to be clamoring about as soon as this token starts trading, for those purposes, like, these tokens just don't exist. But also, there are some other categories where that falls into the same category as well.

So we'll talk about that. AirDrop at 8% of the total supply. So what is that? 80 million hop tokens. How did you guys decide on 8%? So we really wanted to get a lot of tokens into the hands of the hands of the community. But, you know, like giving too much to bots was a concern. And then also the bridging space is incredibly competitive right now.

And liquidity mining plays a huge role in this. So what we imagine the community will do, you know, soon after the Dow launches, is set up like a liquidity mining to get, you know, more liquidity into the pools. That's going to allow larger transfers and cheaper transfers through the bridge. And so we do imagine that a large portion, of the Treasury is going to be distributed, you know, over the next year, over the next two years,

and moving forward. Yeah, and I definitely want to talk about the yield opportunities that Layer 2 Bridges present, but we'll save that for the second half of the show. Investors 6.25%, you talked about those. It's the people that invested in Ethereum back in the day and also some select angels. How long was a lockup on those people? So for both team and investors, we have a three-year lockup. with a one-year cliff.

So both the team and the investors will have zero voting share in the doubt. It's really going to be the bridge users and the liquidity providers who are in control for the first year. Okay. 22.45% for the team. That's the four founding members of the team, correct? Yeah, just three founders. Three founders, excuse me.

And then also 2.8% for the future team, which also will lead into a topic here in a second. But I would imagine the same lockup on those as well. For a future team, it will likely be a standard four-year vesting schedule. The reason we did three years is because we've already been, you know, the founding team's been working on this for three years, if you count Ethereum. And yeah, we've all been doing it at least one year. Yeah, okay.

Well, definitely congratulations on this event. This has probably been a long time coming to have a token out and about. So this is probably pretty exciting for you. Thanks, yeah, it definitely is. There's one other part of the announcement post that we'll have linked in the notes as soon as this live stream is over. It's the Hop Foundation plus the Hop Labs. And of course, the Post itself is talking about the Hop Dow. So there's three entities now. The Foundation Labs, the Dow. Can you just talk about all these entities and how they relate to each other and what each one does?

Sure. So Hop Labs is kind of this initial entity. It's a U.S. N, you know, Delaware Seed Corp. We, you know, developed Hop Protocol. And this is, you know, who employs us. And so now that, you know, we're turning into a Dow, we, you know, the foundation is spun up in the Cayman Islands. And so this kind of acts as like a legal layer for the Dow. Because there's a lot of stuff still figuring, being figured out as far as like how to treat Dow's legally and, you know, what that looks like, you know, how taxes are paid and and so on. And so this, you know, helps kind of limit liability and give like an entity for regulatory bodies to interact with if necessary. But ultimately, it's controlled by the doubt.

You know, the foundation is beholdent to the token holders. The token holders can add and remove board members of the foundation. The entire treasury is actually held, you know, in the you know, governance contract. So it's not like the foundation has like large amounts of funds or anything. So yeah, it really just acts as like a legal layer for the Dow. And then, you know, us as Hop Labs now that, you know, once the Dow is out there, we become a service provider to the Dow. So, you know, we've stayed super lean. We don't have like a massive treasury or a huge budget or anything. And so what, you know, you'll see moving forward is that we will actually request funds from the Dow from the get-go. I know lots of other projects are going to do this eventually, but, you know,

they still have a long runway of VC funding to burn through before they really need to make the ask. But, you know, we want, we think it's important to, you know, actually, you know, be beholded to the community. And this is one way to do it, where if they don't like what we're doing or, you know, not providing the services promised. Like we, you know, our funding relies on it. Yeah,

you guys get asked just like anyone else. Yeah. Okay, cool. And then just one of, last few set of questions before we go to the second half of the show, which I think will be very, very fun.

Of course, what does the token do? What sort of responsibility does the Dow have? What are the powers of the token? What does it govern over? Yeah. So, so right now,

it is very much a like purely governance token. So, but we do have like a, a bunch of key parts of V1 hop that need governance. So, you know, one, like, top of mind one is incentives for the AMMs. So we do imagine the community will choose to set up incentives, you know, get a lot more liquidity, make, you know, transactions cheaper. And then we have this, like, active liquidity provider role called the bonder.

And V1 of Hop has this constraint where, you know, we can't just. just open up the bonder to be a completely permissionless role because they, they, you know, with V1, like, bonders might step on each other's toes and, and it has to be, like, a little bit more coordinated. So we have a bonder white list, and ultimately the community will be able to choose which bonders are kind of running for, for each asset until we get to V2, where we completely remove the white list. The bonder is like a fully permissionless role. Anyone can spin one up like they would spin up like E2 node in their living room. And yeah, so that's the Bond or whitelist piece.

And then, you know, we'd love to see the community set up like grants programs, you know, like a lot like other Dow's have done. And then, you know, obviously manage the treasury funds. It would like likely make sense to diversify a little bit, make sure that that Hop can survive a bear market, but then also is like competitive with, you know, a lot of these other bridges that have like massive, massive treasuries to, you know, spend on various things. And then lastly, like I said, you know, our own funding needs to come from the hopped out self. So the community will be in control of like, you know, what that looks like and, you know, what they asked from us.

And I'm now cognizant that I forgot to ask the very important question of this is not an irdrop that you can claim at this present moment. There will be a claim date in the future. This is the period of time where all the sibblers can get identified and all of that shenanigans. But when does the token actually go live? When will actually be able to be claimed by the air drop recipients? So we're going to give the community at least two weeks to make reports of any kind of like

civil attacker groups. Depending if we're seeing like super high quality groups being reported still after that two weeks period, we might extend it a bit. But yeah, so I think we're looking about two to three weeks. You'll be able to claim your tokens. And then, you know, Hop will be in the community's hands. So it's like the timing of a microwave popcorn bag. If you still hear the pops going off, we're going to wait until we don't hear the pops going off anymore. Exactly.

Yeah, that's a good way to put it. Amazing. Okay, cool. Chris, I want to just pick your brain about layer two's. There's a bunch of yield opportunities with layer twos, especially as volume picks up over layer two summer. And overall, you talked about how competitive the cross-chain layer two bridge landscape's going to get.

So I also want to pick your brain on that. And overall, just your takes on the layer two ecosystem, the L2-2 movement and whether you subscribe to that ideal or not. So all of those conversations are coming up in the second half of the show right after we get to some of these fantastic sponsors that make the show possible. If you're trying to grow and preserve your crypto wealth, optimizing your taxes is just as lucrative is trying to find the next hidden gem. Also, IRA can help you invest in crypto in tax advantage ways to help you preserve your hard-earned money. Also, crypto IRA lets you invest in more than 150 coins and tokens with all the same tax advantages of an IRA.

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but more than 100,000 Dow members are all robbing about at governance.ave.com. All right, guys, and we are back for the second half of this show. And Chris, this is where I want to start first. You talked about how competitive the cross-layer-2 bridging ecosystem is going to get and kind of alluded to how a lot of that treasury will likely be used for liquidity mining incentives. So I want to talk about just the yield opportunities for cross-chain layer-two bridges and how yield farming might begin in this whole entire paradigm. Like how much yield is out there?

Like how much yield is it available to capture? And when the competition for these layers layer twos really heats up, like how big of a deal do you think this is going to get? Yeah, I think it should be really interesting. Like, you know, we're super excited about optimism's token launch. You know, we'll see what else happens from there. And then, you know, with the hop token out there, you know, if the community lines up incentives there,

things could definitely get really juicy. I think already, you know, with hop, you know, you're seeing double digit returns for stable tokens on some of the pools that are already incentivized, like the Polygon and Nosis pools. And yeah, so there's, yeah, tons of opportunities. And then I think like what you want to get into is like, you know, once we do see like these layer twos warring with each other, it's going to be tough to, to, to, you know, win liquidity.

And so, you know, we might see, you know, the returns start to get really, really nice as, you know, it gets more and more competitive to see, like, who's going to attract the most TVL. And so if we're looking to be liquidity providers for hop, and I think the crossed layer two bridging liquidity providing ecosystem is actually unique and different and, like, more attractive to me personally than just like liquidity or uh yield liquidity providing in uniswap right because if i want a liquidity provide my eth and uniswap i kind of have to do it with like stable coins which means i have to cut my eith position in half and turn it into 50% stable coins but like i'm way

more bullish on eth than just holding a 50% supply of stable coins so like with with a cross layer two bridge like hopper connects or something i can provide ether only and get ether fees uh and provide liquidity that way. So I get to hold my ETH position, but also getting ETH fees and also potentially yield farming hop tokens along the way. So question to you is like what are the volumes that our people are seeing? Is it a largely ether being transferred over or is it stable coins? Like what's the distribution of fees that are being collected by the protocol? Yeah, but by far, ETH is our biggest bridge. And so, you know, liquidity providers can definitely, you know, provide liquidity with ETH and H-Eth. So, you know, pretty much no risk of impermanent loss because you can always claim your H-Eath

on layer one for the underlying ETH. So yeah, it's a great way to just get straight yield on ETH without having to like expose yourself to like impermanent loss that, you know, if EF goes up, you'll end up with just a bunch of stable tokens. And then, you know, second is USCC. USC is like a hugely dominant asset. And yeah, most of the stable coin volume is from there. And, you know, USDT and Dye are a little bit smaller. But yeah, I mean, it should be interesting what the yields look like after the token is out. I think right now there's a big chunk of liquidity in the pools.

I think a lot of that was folks kind of like hoping for thisirdrop. but now that it's out, you know, there's going to be need to be some incentives if the community wants to like keep these LPs around. And do you know the rates that people are getting for supplying ETH? Is there, I don't know if there's like maybe a Dune dashboard or analytics that we could look at, but is there like a, what's like the average yield

that people are getting on their, on their ETH? Yes, so you can see it right on our site, you know, HOP Exchange. It will, when you go to LP, it will show you, the trading fees and then also if there's a staking pool set up, it will show you the additional staking rewards. And right now, you know, because there was, you know, folks like hoping for the air drop, the yields aren't like super attractive. But that's because there is a lot of liquidity. There's an outsized amount of liquidity for just the trading fees. But that's going to change really fast once, you know, if the community decides to add some additional incentives there.

So now that this token's already out, do you think all these like disgruntled farmers that got cut out, are they just going to like migrate to Kinext, which hasn't done their air drop yet? And so they're just going to go and retroactively farm like the next layer two bridge. It's possible, but, you know, we're going to be pretty, or, you know, we'll see. But like I'd imagine the incentives will be there fast. and, you know, people, I don't think we'll move too fast. And one thing I forgot to say is that the eth, eth rewards on Polygon andosis chain,

those are both incentivized right now, and I do believe that the yields are pretty juicy. Lovely. Lovely. All right. Well, we'll get some links into this show notes so people can check out those yields. And then, of course, as layer two season progresses, like optimism token came out, hot protocol token came out, Kinex has explicitly stated. their token is coming.

And I can only guess Arbitrum's token is coming out. Like just zooming out over the broader like Ethereum ecosystem. Do you subscribe to this being like the major catalyst needed to instigate a L222 layer 22? Yeah, I think so. You know, I think like especially like the optimistic role of teams were super concerned when they were launching because like people were so desperate for cheaper fees and like what they were bringing to the table.

But from a security standpoint, I think there was a lot of concerns about, like, just having a flood of, of, you know, liquidity move over. And, you know, before things, like, got really battle tested and played out. But I do think the teams are feeling super a lot more comfortable than when they launched.

And, you know, like, obviously optimism is, is ready to incentivize things already. And, yeah, like, there's just, so many flywheel effects here. Like if optimism starts really creating juicy incentives on their chain and we see like others do the same thing. And those are competing with each other. And then we see a lot of activity move to layer two.

And so now if you're on layer one, you're competing with, you're competing on block space with other layer twos. And layer twos can use block space so much more efficiently. So now you're like even more likely, you're potentially more likely to get priced out of layer one and, you know, even more incentives to move to layer two and that flywheel plays out. So I really do believe it. And this is an incentive that will kick it off. Yeah.

And a nuance here that's important to unpack is that back in 2020 or in 2021, layer twos were just not ready. Their infrastructure was not refined yet. And really just the story of 2021 was alternative layer one's beating layer two to the punch because layer two tech wasn't really developed yet. would you say that the state of layer two tech is ready to onboard a bunch of liquidity, a bunch of users, a bunch of transaction volume without having any major hiccups? Like, is there any sort of insights you know about what's going on with the layer two teams?

Yeah, I think so. You know, as far as security goes, like, I think they've done a good job. You know, like there hasn't been a hack of, you know, the optimistic roll-ups. And, you know, I do think that there is still progress being made as far as, like, decentralization and fraud proofs and, you know, which is like kind of allows you to not trust what's known as like the sequencer who's kind of moving stuff along. But, you know, knowing the teams, like, they're, you know, all super committed to, like, to like being truly decentralized, being, you know, really not having any trust involved.

So, you know, beyond that, the user experience is amazing. Like, you know, if you haven't messed with one of the optimistic roll-ups, like just going from Layer 1 Ethereum where you make a transaction, you're waiting 10 minutes, you're trying to guess at the gas you want to use, you go to Layer 2, you make a transaction. It's just a set fee. You don't have to think about it. And it gets confirmed immediately. It's like almost like a Web 2 experience.

you make a transaction, you see the effects. And, yeah, I can't imagine going back to layer one after moving over. Yeah, if you have not used a layer two, which I imagine a lot of the viewers have because, you know, that's what Hop deposits you on. Still, though, if you have not yet used one, you've got to do it. It is pure magic. Chris, I'm sure you're a busy guy. Your AirDrop just got launched.

I'm sure your Discord is just in just a very, like, energetic place to be right now. So I want to let you get back to the very, very busy life of a post-airdrop team. But first, some final questions for you. What's next for Hop? Like, what are you going to have to go do right now after this live stream ends? And then what do you guys focus on over the next few months? Yeah. So right after this podcast, you know, we're focused on kind of reviewing the reports that are

being submitted, getting ready to actually, you know, get the Dow live, get the tokens live, allow people to claim. And then, yeah, you know, turn it. over to the community. That's going to be super interesting. See people kind of step up. We're, you know, taking delegates right now. So if you're interested in, you know, participating in hop governance and want people to kind of delegate their voting share to you, please apply on our forum and, you know, we'll help promote you and everything. And yeah, beyond that, you know, we're, you know, excited to see where the community takes it. We have some thoughts as far as like,

next iterations of hop that could be really interesting. Yeah, just excited to see where it goes from here. Amazing, Chris. Well, I do believe that Layer 2-2 is on the horizon. And it's because Airtrop season is back on the menu. So thank you for being the number two layer 2 token, layer-2 related token, to come to the table. I'm really excited about this coming revolution of the layer 2 Ethereum.

And of course, I'm going to go do some hopping myself right after this. So, Chris, thank you for coming on and explaining the launch of the hopped out for us. Thanks for having me, David. And yeah, super excited as well. It should be a fun year. All right, Bankless Nation, you know what to do and you know what you're about to hear. Crypto is risky. Defire is risky.

Layer 2s are also risky. And so are bridges. We know bridges are risky. You can lose what you put in. This is the frontier. We are headed west. And we are glad you are with us on the bankless journey. Thanks a lot.