Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Fig: Squid Router – Sub-20 Second Cross-Chain Swaps. Axelar-Powered Interoperability

Episode Date: June 2, 2023

As crypto evolves, it becomes clearer that the future will be multi-chain. Presently, moving funds between different blockchains is frustrating...to say the least. The current bridging solutions are prohibitive from a UX perspective, mainly due to how finality is reached across different blockchains. This translates to long wait times and anxiety when interacting with new protocols, caused by the incertitude of funds arriving safely on the other side. Another major blockage consists of gas fees, particular to each blockchain, which often require an additional swap. But what if, users could enjoy near-instant cross-chain swaps (sub-20 second) and one-click transaction aggregators?We were joined by Fig, co-founder of Squid Router, to discuss how they leverage Axelar's infrastructure to achieve one-click, near-instant cross-chain swaps, creating user-friendly interoperability.Topics covered in this episode:Fig’s backgroundHow Squid tackles interoperabilityBuilding a better DevEx & UX on top of Axelar’s securityChoosing what DEXes to wrap & aggregate in SquidOptimising gas fees, prices & MEV cross-chainSquid’s business modelIntegrating other messaging protocolsAddressing finality to reduce swap times below 20 secondsHow Squid x Axelar solve other bridging protocol issues (e.g. multichain hack)Squid use casesEpisode links: Fig on TwitterSquid on TwitterAxelar on TwitterThis episode is hosted by Felix Lutsch. Show notes and listening options: epicenter.tv/498

Welcome to Epicenter, the show which talks about the technologies, project, and people driving decentralization and the blockchain revolution. I'm Felix, your host for this episode. Today we're speaking with Figg, co-founder of SquidRouter. Squid is a cross-chain swap and liquidity routing protocol. Welcome Fick to Epicenter. Thanks, Felix. Great to be here. We generally start by like sort of going into what got our guests into crypto, so it would be interesting. interesting here, your background, how you wound up in the space. Sure. So I studied medicine in university, which sounds very far from crypto. It's really interesting. It's a combination of like really complex systems and you get to work with people.

But it wasn't creative enough. I thought, you don't want to be on the operating table and your surgeon comes in. and he says, I had this great idea last night, I'm going to try it on you. And you really want your doctor to be doing something evidence-based following the protocol, like, word for word. And so I wanted to try the things. I left medicine, and I went to New York and slept on couches to make it work, and also started to lend to code and worked as a UX designer as well. So I worked as a developer and designer for different startups for a while. And I was a musician as well during that time.

And one of the couches that I slept on was of this gigajurious friend of mine who works as an algorithmic trader. And he taught me about markets and how you have all these bots like fighting each other in the market by the microsecond. I was just really fascinated by how similar that was to medicine. And it's this constantly changing system that you can't really solve per se, like it's always moving. And it's also you get these symptoms that are the result of the wider world in the case of market. It's been in the body. It's whatever you've been exposed to you in your environment, your diet, whatever. So I got really interested in finance and got a job in traditional finance.

But while I started that job, I also was getting to crypto. So I just started seeing these inefficiencies in my day job, which could be automated by crypto, and I just thought it had to be the future, or at least part of the future. And crypto was also super creative. It was a really complex system, so it was just perfect, and quit my job in traditional finance to go crypto full-time. And in my first year out, I spent a lot of time traveling and got really interested in interoperability.

I spent a lot of the traveling was particularly. to go visit leaders in the space, people who had designed some form of interrobability protocol or consensus protocol and trying to build up an understanding of these things. And after all about traveling, I really found Axelar's vision and their founders to be the most impressive and the most compelling for me. So decided at that point as well, the squid, we had met my co-founders and the squid team has started building. So we, we, we, we all decided to commit to Axler and start building on the protocol. Yeah, here we are.

That's awesome. Yeah, that's a cool history. I think glad that you didn't become the next Elizabeth Holmes and made a Terra-Nus. Yeah, it's quite interesting how the, yeah, there's still like large systems, I guess, generally, like this coordination problems and how you can end up in crypto from different angles. Quite interesting. So yeah, I guess you mentioned already Axelar.

and a bunch of things that we definitely want to talk about. But maybe, yeah, initially we can just focus on squid itself and like maybe trying to approach it from the angle of, you know, what's sort of the problem that you saw that squid is in the end solving? Yeah, sure. So like squid came out of the experience we were all having in Defy Summer. So in DeFi summer back in 2020, you had Ethereum was starting to get product, well, DFI was getting product market fit.

and Ethereum was getting a lot of use. Gas prices were spiking. And also these new L-1s like Avalanche and Polygon were popping up. Roll-up started popping up. And every time you needed to go and try a new application on one of these ecosystems, you had to do all these things to get there. So you needed to bridge your funds over. Maybe you needed to get your USC across.

You needed to get gas because you couldn't use this new application if you didn't have gas in the blockchain. And to do that, you had to visit a bunch of new websites. You often had to click up to 20, 30 times. And in crypto, every time you try something new, it's really scary because you don't know if it's a scam website for one, but you don't know if the protocol is safe. And just the user experience in general was atrocious, we thought. And also, we're interested in we're aware of Axelower and just getting more and more bullish on interoperability generally, because it just seemed like there was no other option that these roll-ups in blockchains would have to form some kind of internet, the internet of blockchains,

this I envision that the Cosmasters had. And so we decided to build something in interoperability. And we started with the most basic primitive you can have in really any crypto application, which is sending money somewhere. And in order to do that, you actually need to swap. And so Squit is primarily, like the core feature is a swap, which you can say go from native USDC on one chain to native USC on another, or you can swap to the gas token, you can swap to anything. And then once we have that swap, we also built the architecture so it's fully generalizable

and you can do payments across chain. So you can do, say you have USDC on Avalanche and you want to buy an NFT on Ethereum, you're able to swap your USTC on Appalach into wrapped ETH on Ethereum and then purchase an NFT and send it to your account in the same transaction. So we want one click for everything. You should be able to do any action, cross-chain that you would have been able to do, single-chain. And also we've just brought in everything as an under 20 seconds as well.

Maybe we'll talk about that later, but time is something in cross-chain, which really hinders U.X. It's often 20 minutes to do a swap. And we've done some amazing things to bring it down. Really exciting about that. Yeah, awesome. Yeah, let's definitely get into that.

So I guess generally, is it fair to say that you are sort of focusing on the layer of, like, the user experience more, like actually and maybe the developer experience too, versus like, you know, starting to build like an entire, interoperability protocol, which I guess, or like a bridge system, which it feels like a lot of the other like systems that do bridging try to do, and then maybe that ends up being like too much work. And your your sort of ability to rely on XLR for that part is what enables you to like improve mostly on the UX. Is that fair? Yeah, I think that's that's really fair. That's one of the luckiest things that's happened to us,

so the best decisions is to be, we've been able to focus completely on the developer experience and user experience layer, and Axelar can focus purely on the infrastructure, security, and openness at their protocol. So we have this really symbiotic relationship with them where we both have the same incentives,

we're both moving the same direction, but have much more fun. focused product strategies than maybe some of our competitors have. And that allows us to reduce our scope. Really, the whole thing in cross-tune is about reducing complexity. I feel a lot of cross-chain models actually increase in complexity. We're really lucky to be partnered with Axler so that we can just focus on very simple as little things as possible and make them work really reliably and quickly.

And is it like that XLR that in themselves, like, how is the difference between like trying to like use XLR yourself versus like using Squid? Is that just that XLR maybe doesn't have that focus on UX or you just like sort of you are more expert, you have more expertise there essentially? Is that what it is? Asqually, Axler is a blockchain, it's Cosmos chain, which connects other blockchains. So every message that you want to send between, say, avalanche with Oligon or Ethereum and Arbitrem or the Cosmos and Ethereum now is validated and verified by the validator set that is on the Axelar blockchain. So it's a similar method to proof of stake. You have 66% of the validators vote that something.

is valid and once they've done that, then you can send a message across chains. And what Axler ships with is the ability to send any message across chain. So you can call any contract and you can also send value across chain. You can bridge tokens. But if you want to do something as a user, that's quite limited. You need to take a lot of steps. So you might need to, I'll go into how squid works, this is what we're doing behind the scenes. Say you have USC on polygon and you want to get USC on avalanche. In order to do it without squid, you'd need to swap your USTC on polygon into Axler USDC, which is a bridged form of USC on Ethereum.

Then you'd go to Axelah's website and bridge the AxeliusTC to, I think it was avalanche we were going to. And then you'd go to a swap protocol and you swap Axel UTC for. native USC on Avalanche. And what Squid does is it has wrapper contracts around the Axler Gateway. It's called Axler Gateway contracts, which allow you to automate that whole process. So you can do the swap, the bridge, and the swap all in one click. And you can also add on more functional things like we said, like buying enough T's and

getting into staking position, then on none. So I think Axler is focused on the core security and the ability to, to maintain this fully generalizable messaging. And they're connecting to more chains. They're building really amazing relay infrastructure. But Squid is more the application layer and the developer experience layer of where if you want to add cross chain to your app,

there's a lot of things you need to do, like paying gas across chain. You need to coordinate contracts on multiple chains at once. You need to be able to tell the user, if this transaction is complete or not, because that's not actually quite simple in cross chain. You have to realize that it's complete on the source chain, complete on Axler, and then on the destination chain

and report that in a user-friendly way. And so Squid solving all of those issues around the developer experience and the communication of cross-chain, which Axler isn't focusing on as much. Right, that's super cool. you're essentially building a bunch of these wrapper contracts around the different like dexes on the different chains for example how do you i guess you know choose which which texes to support or yeah what what to what to build in general i guess because i guess there's a lot right you also said like nfti buying um do you already like ask your users do you see like i guess generally where the tvl is or something? something like that? How do you go about that? Yeah, it's been really simple, actually.

With the dexes, we have connected to every chain which Axler supports, which is most of the EVM chains, much of the major ones. And then we've partnered with really as many dexes as we can on each chain. So we have partnerships with the main decks on every chain now except Ethereum. We've got Pancake Swap, I think, is going public today, so I can talk about it. Polygon, we've got QuickSwap, Stellar Swap and Moonbeam, Bube Swap on Salo. So we just made partnerships with these Dexes, and the partnership there is,

we'll integrate your contracts so that our cross-chain swap volume routes through your protocol, and you get volume from it, and in return, you integrate our front-end widget so that you can upgrade your swap interface to have cross-chain swaps as well. So we've just gone on an integration spree, trying to integrate as many dexas as possible. And then in terms of the wider use cases like NFTs and staking widgets, I think for now it makes more sense for the partners to use RSDK to build a specific application with Squid.

And we've got a lot of cool developer tools. for that but because every I think it's less feasible for us to build fully generic tools for every single application out there like at some point we have to make decision to have a

tool which the partner can go and customize themselves so yeah that's what we're currently shipping we've got tools for buying NFTs tools for staking tools for depositing across chain and the plan with those is to have more of a Shopify experience where you go

to the Squid website and you've got this application or product you want to sell or you want to have people to be able to buy with crypto and you take our developer tools and plug in a little bit of your code to make it custom and then you'll be able to buy by a cross chain using any token in your wallet right that's super cool so you already mentioned right there's this widget there is a bunch of these customization ability there's SDK API I So these are sort of the products you have. Can you like go a bit into them and maybe, yeah, who are the users? I guess these are essentially the Dexas or the apps on the other chains, right?

Is that correct? The main products we have are that an API, which is running it. We've got a backend behind it. And this API is able to generate call data for, so generate a transaction, which the user can sign to do across chain swap, to do a purchase, and it also allows you to track the status of these transactions across chain. So that's the core feature, and then around that we have an SDK, which makes it really easy to build front-end apps, and then these front-end widgets, which are React components or I-frames,

and those are for front-end integrations. If you want to just customize it and put into your website as fast as possible, that's your option. And the users of these, the API is mostly used by wallets. So we're integrated into X-DFi is coming live soon. And a few other names I can't save it, some really big wallets. We will be powering cross-chain transfers and swaps inside the wallet. So you now have to leave. You can, you know, this is a huge UX issue, right?

You go into your wallet and someone who's not used to crypto, it says they have Avax, B&B, and Matick, and they want to swap them, but they can't because they're all on different blockchains. And to someone who doesn't know about crypto, that would make any sense. So it doesn't have to make sense. So now that they've integrated Squids, so you'll be able to swap between any token in your wallet without even knowing that they're on different blockchains. That's something we're really excited about, is extracting the chains away.

Yeah, that's great and congrats on the partnerships. We said already, right, that this wrapper contract is different Dexas. Now, I guess, like, Squit is also sort of a Dex aggregator in that sense where you're trying to find basically the optimal price between these routes. Can you talk a little bit about how you approach that sort of problem? Is this something you're, like, also, like, how much are you focusing on that? like, I guess, optimizing the price that users get. So we have a routing back end, which is for every request,

comparing all the dexes that we're supported, that we support, across chains and finding the best route to route through them. And we're also doing that across chain as well, and we'll be building out the capability, especially as we support the cosmos with dexes like osmosis and duality and Crescent, you'll be able to route your liquidity through a cross chain to the decks that has the best price. So it's not just the best decks is within a chain, but the best chain to go to, to do your swap. And this is like a big frame shift, they think, where the application-specific blockchain thesis, I guess, like, takes,

finally starts to take effect where you have chains like osmosis who've optimized entirely for swapping and they should be able to outcompete a lot of other dexes and and so if they can if they have tools like squid to effectively compare them to other dexes then we can you know they can compete in the in the wider ecosystem for for swap volume um and Yeah, we're doing that as well where we're close to much in Cosmos. Yeah, that's awesome. Yeah, that sounds really cool. So basically what you're saying is because

like if you swap probably you're also paying gas fees and, you know, like these other costs that essentially maybe an app chain can optimize more and then in the end your price might be better than even if there's like, let's say less liquidity on osmosis for a certain pair than on Ethereum, it might still be cheaper for you. to go through that. And N-squit is able to optimize from that dimension as well.

Yeah, exactly. You've got, gas fees are definitely a big consideration in cross-chain generally. But you've also got M-EV, so these outchains like Osmosis and Duality are able to optimize their consensus layer specifically so that you can do an arbitrage after each swap, for example. Osmosis has the Protorev module, and Jewelty have some really amazing things they're building. you're able to do things that wouldn't be possible in a general EVM decks. And we're hoping to get some kind of revenue from sharing the MV

from these swaps that we route through those dexes. And it also means we can get better prices because the MEV, which is captured, goes back to the user at the end of the day as well. Right. So you're thinking that like Squid itself would capture some of the MEV essentially, and then you would redistribute it? Is that correct? Yeah, I think that's an option for sure.

We've also got other providers in the EVM world who have backrunning solutions, so you're able to be able to do a backgrounding arbitrage behind any swap on the EVM or most swaps. And the user still gets as good execution as they can, but the arbitrage which has created, the MEV, which is created after their transaction, can be returned back to them. So it's one of the ways that we're looking at getting revenue for Squid, but also just improving prices for the users. Right, that's quite interesting.

So I guess, yeah, that was also something that I definitely wanted to get into maybe where, given your like sort of this cross-chain infrastructure and like cross-chain MEP, I guess also like a big topic where a lot of people expect, yeah, there to be a big market. since I guess you know on many on the main chains you have like sort of flashboards and I guess somewhat solved maybe a bit the some of the issues the MEVs but it gets very complex in the cross chain world so yeah I guess I was wondering also is squid like something where yeah people like searchers maybe go to like actually you know realize cross chain MEV but or also I guess yeah you know your approach so so yeah what is the state I guess right now or like how do you expected to be to be used

or a squitmore just for I don't know the traders or the people that like buy the tokens like literally the users versus like you know

like some sophisticated market makers or something and they would yeah yeah I think so the emuaging the cross-chene space is super early

I think we're just working out how to transfer tokens across chain effectively and reliably let alone making complex, like risky trades and across different chains, it's still super early, I think, and not the front of mind right now. I think, you know, I really enjoy reading about MEV and understanding it,

and there's a lot of really concerning things that could happen to the crypto-gists generally if you start getting cross-chain MEV, you start getting centralization of validator sets, and you get, potentially a lot of the cross-chain systems could start breaking. down, but I think that's a long way away, realistically. Something interesting I've been thinking of recently with Squared and MEP is around intent. And so there's, I know who's been, who of your listeners have read about this, but an intent is essentially the idea that you can express what you want, you don't express how it happens, and then essentially the market just gets it done for you.

It's almost like task rabbit for general computer. on blockchains. And that's essentially what Squid is doing already. We have an API which lets you do anything across chain. You tell us that, and we have this big backhandled massive routing infrastructure, which just works out the best route and combines everything into one tiny package,

and you can get it done. So I think what we're building is actually really suited for that future, where MEV starts to become how things happen across chain. we're essentially building a solver for intent and currently it's exposed by an API and you go to a front end and use the API to communicate what you want but maybe in the future there will be an intent market where you communicate what you want there

and then Squid can be one of these solvers that is fulfilling orders that requiring cross-chain transactions. Yeah, that's quite interesting and I guess you're so right now the way it works like you are essentially paying the XLR fees for the passing like essentially to the XLR validators and then that is sort of taking into account for the swaps and whatnot. And then on top you're thinking, I guess yeah, maybe going a bit into this business model idea, how does Squid generate money? Is it like, I guess, you know, what's sort of the options? Is it like, you know, Metamask, you add like some sort of fee on top?

and or this MEV ideas are, is there anything else that you can think of? Or is there also like some sort of additional thing you have to pay to XLR? Or is it essentially just these fees that XLR is charging? Or is there like some more symbiotic thing between X-Line squid that I, that is there? So the squid doesn't actually pay any fees to Axelior. It's always the user. And currently, everything is just gas fees. There's no fees that are actually taken out by either of us.

But I think we're really fortunate as a crypto project in that our job is to route a lot of volume and people trade via us. We'll be trading a lot via us. So there's a very simple business model. You don't have to get into crazy tokenomics. You just charge some basis points. And we don't have media plans to do that. But I think it's a pretty tried and true business model that we might take up. Something which we've had a lot of demand for is a lot of our partners are in this crypto black hole where you don't know how to charge fees and they integrate squid and they're like, oh, this is a way we can finally charge fees because people are trading a lot in going in and out of our platform via squid.

So we have not referral fees, but essentially the partner will be able to charge a fee and then we'll take a portion of that. So that is going to happen and that's being built right now. MEV, I think there's room for that. That's how some of the decks aggregators, business models work with backrunning. And I think the last one is, you mentioned gas earlier, and we don't charge anything on gas, but there could be fees on being able to provide really efficient gas prices. So being able to predict what the gas price will be in the future, or at least taking some risk for that, and being able to just guarantee a price for the user

and take a cut because of that. Currently, the gas experience in different blockchains is really variable and not a very good user experience. Right, right, another expectation there. Yeah, that's quite interesting. And I would agree, like, the business model probably relatively simple. If you have the volume, then I guess you don't need to, like, overcomplicate it. Yeah, I think that's quite cool.

guess maybe going back a little bit to the XLR choice. So if you mentioned, like, is there, is there some chance of you guys like adopting multiple message passing like protocols? I guess one could think that maybe, you know, some is cheaper or like it helps you to like even get a better price or, yeah, how are you thinking about that? I guess currently it seems like quite, you know, you're going with XLR, mostly, yeah, maybe you can expand a little bit on your thinking there. It would be interesting. I mentioned the benefits earlier of why of having one protocol really gives us a lot of advantages. We get to focus entirely on what we're doing and it reduces the complexity in our system so we can ship faster. But we had always

committed to integrating CCTV, which is Circles transfer protocol. And The Axler team have also been working with Circle and we'll be integrating CCTP so that whenever it's possible to do a cross-chain swap via CCTV, we'll use that if it's cheaper, or potentially if it's fast enough as well, because with Axler, everything, we can do everything in under 20 seconds and CCTV that may not be the case. So we'll be integrating that. Whereas we're integrating IBC, which is, you know, we don't necessarily see it as a competitive Axelaw, but it's part of Axler is a cosmos chain and is connected to the entire cosmos via IDC. So we'll be, oh, we'll be shipping this very soon, but you'll be able to swap any token

between any chains within the cosmos and also between the cosmos and EVM. And so that has been technically a similar process. We have to integrate a different mess. protocol to be able to implement these swaps and transfers. But I think with interoperability protocols, there's less of a reason to have multiple supported between the same two chains. It's not really like the decks aggregation world where every new chain could just have a couple of debts, could fork uniswap and deploy it there, and suddenly you've got 20 different dexes. So you have to, you have to. or aggregate them to be able to provide any tangible experience, like any competitive experience.

But with messaging protocols, the core thing is actually just getting it done, getting it done really securely. So we, yeah, we didn't want to compromise on that. I wouldn't be comfortable integrating the other generalized messaging protocols. I wouldn't name them just because of the security and centralization that they introduce. And yeah, we don't want to have the brand risk of of potentially getting out of a hack or even just exposing our users to that. Right, right, right. That makes sense. Cool.

Maybe we can, yeah, get a bit into like how this. Yeah, we mentioned a bit the time, right, is quite important in swaps. Obviously, you guys are very focused on the user experience. And that's probably like, I mean, after the price or maybe even on top of the price, like the most important thing to like, you know, don't take so much time. how do you optimize it, how are you able to do it in less than 20 seconds? And I guess in general, how do you improve that even further? Is that something that you're working on with XLR itself, or are you doing something there?

Or is it, yeah, what is like the approach there? Yeah, totally. Just introduce the problem a little bit. So the cross-chain experience of bridging and swapping can be really slow. So you'll go to the website, you'll say, I want to swap from, say, Arbitram, E, to Polygonmatic and you click swap and then an animation appears we've on our website we go this beautiful anime cute animations which we we've made but you'll sit there and you'll watch the animation for 22 minutes and then the swap will go through and if you're a new

user you don't you really don't know if it's worked or not or if you've got your money until that 22 minutes is over the user experience is like is awful and the reason for that is because of finality. So different blockchains of different finality times in Cosmos, everything is running on tendermint and so that it has instant finality. But in the Ethereum world, Ethereum main net has finality in about 16 minutes. Arbitrum has works, it adds up to about 22 minutes overall in polygon six minutes. So all of these times, they're just far too long to have any competitive edge over, say, Web 2 if we want to have a system which is going to be used a lot by normal people.

And the reason finality is important in cross-chain is that if the bridge is going to give you money on the destination chain, the bridge needs to be sure that it's received money on the source chain. So it's only once that the payment that's received on the source chain is finalized, that it can credit you money on the destination chain. And so that's why we have these 20-minute lags with swaps and squid. And we've worked in this with Axler. They've built a lot of the tech, but the architecture is you have another wrapper contract

between Squid and Axler, which essentially allows a service provider to witness your source chain transaction as soon as it's been included on the chain before it's reached finality, and then they can provide the bridged funds out of their own wallet on the desolation chain, and they can execute the exact payload which you've requested. and that they can prove that they've done exactly what the bridge would have done in 15 minutes time and they register that against the contract. So you get your bridged funds, you get them executed however you want, maybe it's a swap. And then 15 minutes later, when the bridge funds come through, they get diverted over to the service

providers to pay them back. So it's a bit like a loan which has been collateralized by a cross-chain transaction. And if you can prove that you've loaned for this specific transaction, then when that transaction comes through, you get paid back. And you can take a premium over that. Right. That's quite cool. And these service providers, this is like, you know, I don't know, market makers or like, who are these users, like utilizing that?

Is that like something like that? Yeah, right now we're running the company. X Lara and the design has a lot of similarities to this intense system that I told you about earlier. Yeah, exactly. Yeah, so it's

very much like the user declares on a chain somewhere that they want something done and then it just happens immediately. And then, so the service provider takes a risk. Yeah, so it is currently in about, it takes about 10 seconds on average

up to 20 seconds. down to like four seconds, which is totally insane. But we can get it down to basically instantaneous, because if you sign the transaction and send it off to a different, to the relay, then the relay can send both transactions on source and destination at the same time. There's definitely technicalities that come in when you start to do things like that. That's really aggressive, but I think we can in the future get the transactions time, times down to essentially instantly across chain.

There's no reason why you can't provide that service. Gene super excited about. It's like the kind of language. That's quite big, right? I think that's, you know, essentially also, if you think about cross-chain and MV, I guess often the idea is that, okay, how do I guarantee, I guess, the execution on both sides in like an atomic way? So I guess this infrastructure could sort of help you do that as well, which might be quite a big use case.

Cool. Yeah, that's very cool that you guys are focusing. And then that, I guess the risk they're taking is essentially just, okay, you get paid a bit later when it actually arrives on your destination chain. But and you take like a small like, I guess premium on that, right? That's what you said. Okay. Yeah. there's no change in the security so you're never at risk of losing funds but there's

they can be the service provider can decide not to fulfill it so maybe you have to wait the full 20 minutes if they break so not too can service providers compete among each other between like or do you have to like choose one that like will like execute this yeah you can't yet So I think that's how we've built this minimum viable product of almost this intent system, right? You declare in advance, you pay one provider, you say, yeah, you pay them in advance. So, yeah, we've got the designs for opening it up

and making it so that any service provider can fulfill these transactions. But right now, we're just, you know, it works really well. So we're doing that for now. Right, right, right, right. Yeah, be pragmatic here. And you're already working on a lot. So, like, that's awesome. Yeah, that's quite cool.

Thanks, that's very interesting. Okay, and then, yeah, I think we probably covered a lot about, like, the basics. I think, you know, maybe some anecdotes. You know, I recently read your tweets or, like, I guess there were some issues with, like, some of the assets of, like, other of the Bridges protocols. And, you know, Squit was sort of, or, like, X, Squids were the ones still active. Can you sort of expand what the issues were with this other rigid protocols and why sort of the XLR design wasn't affected by that?

Or maybe, yeah. Yeah, of course. So what happened was multi-chain, which is the name of another bridging protocol, had some issues where users weren't able to transfer across chains. And I go into why that happened. I don't know if anyone knows yet, maybe they do, but essentially the assets on a bunch of chains were frozen. You couldn't move them around. You couldn't exit, as it were.

And so what happened was the multi-chain price fell and users were trying to get out and get to safety to Ethereum or something like this. And the really interesting thing that happened was a lot of our competitors, people who run other routing protocols, but using different systems other than axler, had to stop. And the reason for it was that they run point-to-point systems, which, so the underlying network, not squid, not the squid level, but the axel level is running in a point-to-point system,

rather than a hub-and-spoke system. And if you have a point-to-point system, then every every connection is unaware of all the other connections. So say you're on Phantom, which all the USC on Phantom was collateralized by multi-chain, so it was like hugely at risk. And say multi-chain has like the hack essentially makes multi-chain USDC really cheap. So it's as if you can get infinite multi-chain USC. This is the attack factor. And in a point-to-point system, you could tell all the points that you have,

the full supply of USC on Fatum like you are and you are going to bridge it out to this real chain and then swap it for real USDC on the other side and then in a point to point system you'll be able to get drain all of the liquidity on all of the points

but in the hub and spoke model like Axler since you limit the liquidity that you can drain to the particular spoke because you're swapping it in the squid model you could only swap all the multi-chain USC for Axler USDC on Phantom, and then bridge the Axel USBC over. So that Axelar USDC was still, like, at PEG, it was still secure.

And so the only thing you could steal was this, the amount of AxelaiUSDC we have in the liquidity pooled on Curve on Datum. And so Squid had a really good few days where most of the other protocols had to actually shut down every chain just so just to stop this attack from happening. And we got a lot of volume through, yeah, through Phantom. We actually just stayed running through the whole thing, even though multi-chain USDC was at really high risk. We had, you know, traders and arbitrage people who were keeping the pools fairly balanced.

So we got a lot of low volume that day. And it was cool to see Axler's design and like foresight actually play out in a real situation. Right. Yeah, that's super interesting to see that. I guess there were also like other hacks where this sort of drain system, like I guess a wormhole hack was sort of like that too, if I remember correctly that, you know you basically could mint infinite and then sort of drain the liquidity from other chains. So yeah, very, very interesting to see it in practice, I guess, because, yeah, in theory,

many people can claim many things and maybe it gets too confusing for many or like people don't even look into it. So if you see it in practice, then obviously that's great. And yeah, that's a cool, cool episode, cool, like, proof of the XLR architecture. So, yeah, I guess we covered a lot about, like, the architecture infrastructure. I think maybe we can slowly, like, get to wrapping up. I think what would be really interesting is sort of, you know, the use cases. You you guys see i think you're like already talking about obviously the swapping uh but also you know purchasing nfts cross chain is there anything else you want to highlight on sort of the the use case front that you guys are thinking about or that people in the squid ecosystem are working on yeah the other

use cases i mean it's anything you can do single chain you can now do cross chain you can pay them to chain so with we're trying to limit it to certain things just so that we can focus. And I think staking is a really interesting one. So the liquid staking providers, lending protocols, and whatever other staking product that is out there,

you can, we've got a bunch of partners doing this, but you can essentially, with whatever token you have in your wallet, you can get this staking product. So it shifts a little bit, this mental model from, say you have eth in your wallet

and you want to lend it, you have money in your wallet and you want to buy this lending product. You want to get a loan, which is denominated in ETH, and you can get this API on that ETH. So I like this idea. I'm shifting the focus onto the product instead of onto the token. So you have different use cases, and you just have money in your wallet, and you want to use the use case, use the product.

So Staking's one. Derivatives exchanges are another. So worked with Vela Exchange and Arbitrum and working with a bunch of other exchanges, where in a derivatives exchange, you essentially need to stake USDC as collateral to be able to trade derivatives. And we're doing that across chains, so you can move between markets in a single click. And Cosmos is something I'm really excited for because you have all these different app chains, which have really specific use cases. But the onboarding experience has been, like, if you thought it was bad in the EVM world,

Like, it's, think again, like, the Cosmos world is insane, so hard to get assets into a chain to try something and get gas. So I think every Cosmos chain will benefit from, and probably, like, wisdom speaking with all, and they'll be able to onboard users from the EVM world in the single click. And then hopefully this app chain technology starts to get use. Yeah, awesome. Yeah, that sounds super cool. I'm very excited for the future. of squid and you know what you already achieved in such a short time so yeah really cool to see like

this whole like idea of I guess the modular architectures in a way where many of you both talk about and sort of you guys I feel like are like one of the earlier adopters of something like that where you really like utilize like the XLR's piece and then you can sort of expand on a lot of other things so that's I think a great like choice you made there and seems to like pay off. So yeah, very excited for you guys. Thanks for coming on and diving deeper into how it all works. And yeah, hope to have you back on every center maybe in a few years when when it's all like even further cross-chained everything and see, see where you guys are at. So yeah, thanks, big for being here.

Yeah, sounds good. Thanks a love, Felix. It's fun to chat. you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts. And if you have a Google Home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast. Go to epicenter.tv slash subscribe for a full list of places where you can watch and listen. And while you're there, be sure to sign up for the newsletter, so you get new episodes in your inbox as they're released. If you want to interact with us, guest or other podcast listeners, you can follow us on Twitter. And please leave us a review on iTunes. It helps people find the show,

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