The Wolf Of All Streets - Why Interoperability Is Everything | Derek Yoo, Purestake & Moonbeam

Episode Date: December 22, 2022

Why is interoperability essential for blockchain protocols? What is Moonbeam? Why is it unique? What stops the mass adoption of crypto? I sat down with Derek Yoo, CEO of Purestake, the company behind Moonbeam network, an Ethereum-compatible smart contract parachain on Polkadot. We discussed what’s going on with all layer zeroes and ones, and why crypto needs interoperability. Derek Yoo: https://twitter.com/derekyoo ►► JOIN THE FREE WOLF DEN NEWSLETTER https://www.getrevue.co/profile/TheWolfDen GET UP TO A $8,000 BONUS IN USDT AND TRADE ALL SPOT PAIRS ON BITGET FOR ZERO FEES! ►► https://thewolfofallstreets.info/bitget Follow Scott Melker: Twitter: https://twitter.com/scottmelker Facebook: https://www.facebook.com/wolfofallstreets Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Blockchain #Moonbeam Timestamps: 0:00 Intro 1:00 What is Moonbeam 3:43 Bitget ad 4:40 Interoperability 6:20 Wy Moonbeam is unique? 10:00 Are protocols competitors or partners? 13:05 The biggest obstacle to crypto adoption 14:25 The most exciting thing built on Moonbeam 15:20 Blockchain gaming 16:10 Vision for Moonbeam 18:40 Decentralization issues 20:00 Web3 The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

In the crypto space, we often talk about layer ones and layer twos, but what about layer threes, fours, fives, and even layer zeros like Polkadot? Derek Yu is the founder of PureStake, who's built Moonbeam and Moonriver. We talk about why interoperability is so important and the way that we're currently doing it doesn't work. Yeah, PureStake, Moonbeam, Moonriver, you're building a lot of things. Yeah, yeah. Give us the very quick and dirty on everything that you're building and why you're doing it. I'll just introduce myself.

I'm Derek, the CEO of PureStake, but we're known for being the primary developers of the Moonbeam and Moonriver networks. So what is Moonbeam? Moonbeam is an L1 smart contract platform that is optimized for cross-chain use cases. And so that's what we're really trying to focus on servicing this new emerging kind of cross-chain set of scenarios is the thing that we're focused on. And part of how we're able to do that is because we're a parachain on Polkadot, so that means that we have access

to some special cross-chain functionality. Talk about why you chose to build on Polkadot. Yeah, I think it was clear from the beginning that we needed a chain, basically, that was gonna be needed. And so as soon as you reach that conclusion, there's really only a couple options that make sense these days. So that's either using Substrate, which is the development framework that you use to build chains in the Polkadot ecosystem, or Cosmos SDK is what you use to build a Cosmos-based chain.

These frameworks are things that make the development of a chain a lot easier. I mean, it dramatically reduces the amount of effort you need to put in to create your own blockchain. And so that was the first, I think, choice. And for us, Substrate and Polkadot made a lot of sense. We had a team that already had some familiarity with Rust as a programming language,

so that was a better fit. And actually, Polkadot has a little bit of a different structure than Cosmos, which we felt would be good for the kinds of cross-chain scenarios we're trying to support on Moonbeam. But I have to imagine that your base premise, first principles, was that everything is going to be interoperable and we're going to live in a multi-chain world world and that we're not going to live in a world where one chain dominates. Yeah, that's right. If I go back to the mindset that led us to the Moonbeam idea in the first place, definitely that was the premise, is there's going to be many blockchains.

And even when you accept that, you realize that this ability for the blockchains to communicate with each other or to connect to each other becomes this kind of critical capability, right? And so that was also like a you know, a key thing that we were looking for even, you know, even back a couple years It's like well, who is it that has some point of view or some take on how this cross-chain communication is gonna work? And that's where you know, the the Polkadot system itself That's I would call it one of the key the key features that it has is this Like built-in networking capability, if you want to call it that, that allows blockchains to talk to each other.

It's called XCM. Right. If you've been following me for the last few months, then you definitely know that I've been trading and investing on BitGet. Now, listen, it took me six months to decide that they were going to be the sponsor for the newsletter. But once I saw their partnership with Juventus, that they were the world's leading copy trading platform in crypto, and also that they're a top five exchange by volume. Well, I was sold and I was convinced. I've been using it ever since to dollar cost average and to invest in Bitcoin. You can also

trade there with leverage, but of course, be careful if you're going to do that. And I don't know if you saw the recent news, but they've also done a deal with Lionel Messi. Now you can get up to an $8,000 bonus using my link below, and you can trade spot with absolutely no fees. You also get a 15% discount on trading leverage. Go ahead and sign up right now using the wolf of all streets.info slash BitGet. Claim that huge reward and use the world's best trading platform. I mean, you described Moonbean, obviously, as a layer one. Does that mean that Polkadot's a layer zero? That's the terminology they use.

It is kind of the terminology they use because you kind of have these layer ones and then there's something underneath it. So I guess you have to subtract one and go to zero. But I think people are using that branding. There's a project called Layer Zero, right? That's thinking about the same ideas although they're arguably smart contracts on top of layer one so it gets a little confusing but yeah I think that's the idea is crypto vernacular is so incredibly confusing I think even for the people who are deeply in it

but obviously if we start from the idea of interoperability that's going to be important I think it's important to also take a look at what interoperability looks like now and I would say that it's not there yet at least and in fact I think you could argue that a lot of the exploits and problems that we've had have been because of their attempts to make change interoperable. Is that a fair assessment? I think that's fair but I would say that you know this kind of idea that the cross-blockchain interoperability is a key capability, the demand is there. The users want to use this, it's just that there's security issues that need to be dealt with. But I would say that

in that intervening two plus years since we started the project, obviously a lot of other things have happened. So the rise of bridges, there's a lot of new interoperability protocols these days. I mentioned one, Layer Zero. We just had an announcement with Wormhole today, actually. Axelar. So there's a number of other protocols that are attacking the same problem of, hey, how do we network these blockchains together?

I think a lot of this actually happened this year. So they're all pretty new things. So there's these new kind of tools that the developers have in their toolkit. So what's unique to what you're building versus all of these other attempts? Yeah, I see it as that on Moonbeam, we're looking to support as many of these cross-chain interoperability protocols as possible.

We're in a moment right now where it's, you know, there's definitely not clear if there's going to be kind of consolidation to some handful, like what that will be. And so what we're seeing is that it's really developer-led, where the developers are often choosing, hey, I'm going to work with layer zero, or I'm going to work with... They're choosing what they want to work with. And so for us, we just need to support as many of them as possible.

And we're seeing definitely different of these protocols getting adoption from different development teams. But there are patterns that are starting to emerge that are pretty interesting. I'd say what's become clear, so if I back up for a second, we have this concept called connected contracts. And so the idea is a smart contract on Moonbeam can work with service users, work with assets, access functionality on any blockchain regardless of where it is. And it's using this cross-chain messaging under the hood to connect the smart contracts and Moonbeam to other destinations.

And so what we're seeing happen now is people are starting to use this functionality to create apps that span multiple blockchains. And the thing that's probably most interesting for me is there's two kind of key benefits I see coming out of a lot of the experiments and other protocols that are under development. One is that people are creating protocols that are more efficient than their un-network counterparts. And we can go into an example of that. And then the second thing is around user experience. So I think that people are using these techniques to create apps that have better and less complicated user experiences than what was previously possible.

I'd love for you to expand on both of those things. Yeah, sure. You said you had an example of the first. Sure. So an example, so I actually just met yesterday with Colton from Prime Protocol. So Prime Protocol is, think of like a maker-style over-collateralized stablecoin. So you put collateral assets in, you can mint stablecoins out.

But the architecture is different. So the traditional way of being a multi-chain deployment of that would be that you'd have separate instances of that on many chains. And so what he's done instead is, I call it kind of a hub-and-spoke model, where there's a master set of contracts on Moonbeam, and then there's a remote branch office set of contracts

on a bunch of other chains, so Avalanche, Polygon, ETH Mainnet, and so on. Then the idea is, let's say that you would deposit AVAX into the local branch on Avalanche, then a message gets sent back to the center on Moonbeam saying, hey, Scott just deposited this much AVAX on Avalanche. The asset doesn't move. There's no bridging. There's just this information that's coming back to the center. And so then the central set of contracts on Moonbeam have visibility into the state across all the chains.

So then if you go to mainnet, you could say, okay, now I want to mint stablecoins. And it says, oh, okay, look, Scott has this balance available from deposits that happen on Avalanche. So let's allow for minting of stablecoins on mainnet. And so I think the interesting thing here is that you see it's like if you compare against having separate installations everywhere, you get this effect where you can leverage any of the deposits on any chain, like on any other chain.

So I think it's going to be a more efficient protocol, right? Yeah, it also seemingly eliminates you actually moving the asset from one chain to another. And you don't move assets. You don't move assets, exactly. I mean, doesn't that effectively solve the exploit and hack problems on the bridges? I think it reduces the, you know, the problem with the bridges is it becomes this huge honeypot because then there's all these assets getting locked up. So yeah, I think it does address or get at that problem as well.

So yeah, I think that's, you know, in DeFi in particular, I think DeFi is like leading on a lot of these things. But I expect there to be, you know, you don't even, you can just take any existing idea and say, hey, I'm going to make the new cross-chain networked version of it. And I think there's going to be a lot of benefit, you know, kind of protocol efficiency to be gained by doing that. So it sounds like all these protocols you see as not competitors, but as potential partners. For other chains, for sure. I mean, I think, and this is kind of a mindset difference, I'd say, that we definitely take as part of optimizing for these cross-chain use cases.

I think a lot of other L1s see it as this zero-sum game where they're like, I want to just fill my block space. I don't want to work with anyone else. But these use cases are naturally cross-cutting. So we're saying, no, no, we want to support these messaging integrations with as many other chains as possible. And I think the developers want that too, right? Because they, you know, what I've seen on the developer side is

that previously there was this nail-biter of a decision up front, like which chain should I deploy? Do I want to be a big fish in a little pond, a little fish big pond, which, you know, if I get this wrong, I'm screwed. So I think now with this approach you can kind of deploy in one place but then organically expand to like other chains. You're also hedging your bet. I mean, if you choose a chain and that layer one

ends up being exploited and useless, you've wasted years of development, right? So now if you have access to all of them, you don't have to worry about making the wrong choice. I think it's quite helpful and de-risks the situation for developers, for sure. And I want to get back to the second example. I mentioned the second kind of driver is around the user experience.

So the example, I just, while I was been here at Mainnet, we recorded this video with Osmosis and Vaxilar. So we did kind of a three-way integration with those two teams. Let me explain how that went. So Osmosis, for those of you who don't know, is an app chain DEX on Cosmos. Sonny really values the user experience. He wants to create the best possible user experience by being an app chain. And so what he wanted to do was to do one-click dot deposits.

So it's on Cosmos, but if you want to deposit dot into one of the pools he has, just make that very simple. Present the user with a Dot deposit address, a native Dot deposit address. And so here's what happens behind the scenes. So the user gets this Dot deposit address. If they transfer Dot to that address, there's a whole series of events that get kicked off. So the Dot goes from the Polkadot relay chain

where Dot lives natively. It gets transferred via XCM to Moonbeam. So we call that XCDOT when it's on Moonbeam. Then it gets forwarded to AxelR. So it's routed from Moonbeam across to the Cosmos interchain ecosystem. Then IBC is used to move it to Osmosis. And then there's an LP action

on the Osmosis side to LP it in. And so I like this example because it shows that the user's not aware of this. They just get the dot deposit address. Oh my gosh, if they were. I mean, if you hit all those steps, it's like a 50-step process. Very complicated. But I see this as a key thing where this is like Web 2 where you start hiding away some of the infrastructural complexity away from the user.

The user expresses what they want to do. And sure, maybe there's a bunch of chains needed to fulfill that request. But the user doesn't have to be interacting with each one. This is enabled by cross-chain messaging. I would argue that what you just described is the single biggest obstacle to mainstream adoption for crypto in general. Yeah. Is that it's just not easy to use for your average person.

Yeah, I agree. I agree. I see that this cross-chain messaging enables this hiding of complexity, which I think is going to be an important driver. Do you think then that we get to the point with DeFi and these protocols where it's like your cell phone? I make a call, I don't really worry about it. I don't worry about voice over IP when I'm using Zoom.

I don't worry about how the internet works. I just do it. I think so. I mean, yeah, I think so. I mean, obviously, there's unique things about crypto where they're not your keys, not your coin. I mean, there's certain things that are probably a bit unique and will always need some level of user interaction. It might be different than a Web2 application.

But, I mean, adoption is adoption, right? And so I think that, I mean, this is the story I tell people. I came from this Web2 background building, like, cloud products. And so, and that's a bit unusual sometimes. I think a lot of Web3 founders are the first-time founders. Yeah. And so when I explain to people, like, look, the products, the mobile and other products that we've built in this Web2 company, a third of the product staff was UX people. It's either designers, people doing research.

And that kind of blows people's minds. But no, that's what people do when they're making Web2 products that are going to be easy to use as you put like a lot of energy into the user experience. So what are the most exciting things that are being built on Moonbeam? Yeah, I mean, it is around these cross-chain connected use cases. You know, I'd say that a lot of adoption is happening in DeFi. I think a lot of those teams are kind of the most aggressive to adopt and also for looking for competitive advantage, right, relative to other protocols. So we're definitely seeing a bunch of those in the lending borrowing space and, you know, different areas of DeFi.

But I would say we are seeing games too. So like the gaming use case could be like there's a project I just met with that, you know, they have a racing game. And the idea is that like there is like this kind of master kind of deployment on Moonbeam. But then they have like racetracks on a bunch of the other chains. And so each of the races happening on those other chains can be an event in its own right. You can have that kind of provides value

both to the chain and the users there. But then there's this aggregation of all the race results coming back to the master chain, where you can have, let's say, a season or a competition kind of thing. And so I think that's pretty cool. It's, again, back to this idea of organically expanding different chains but having it all be part of the same system.

I love the idea of GameFi and play-to-earn gaming, of course, and everything, but it seems like none of the games are anywhere close to the quality of what's coming out of Hollywood-level studios for gaming. It just feels very early to me for gaming. I mean, do you agree or do you think? I agree. I mean, I think back on some of the same comments I was making where I think to make a great game is like,

that's not just, hey, I'm going to try making it. I mean, you have serious people. It's like it takes probably a couple failures first before you learn how to make a good one. Yeah, and I think obviously you have to adapt yourself to Web3 in the sense that blockchains are slow. And so there's certain trade-offs that need to be made. Well, we've obviously had sort of a DeFi summer, NFT summer, Metaverse fall. Will all of those sort of categories of crypto be built on Moonbeam?

Or do you think there are more specific use cases that you're better tooled for? Where I see Moonbeam going is, I mentioned around these cross-chain applications. But what we see is I can see Moonbeam being a hub of cross-chain messaging activity, ultimately. I mean, that's really where the value is that we're providing. As these techniques I've been describing get adopted, Moonbeam is strategically positioned to be, let's call it this central routing point for all of these different cross-chain messages. We have unique access into the Polkadot ecosystem, that's one thing.

We're starting to see other things that there may be scenarios that cut across multiple messaging systems. You need an ability scenarios that cut across multiple messaging systems. You need an ability to route between these different messaging systems. Developers want to use more than one. They might want to have redundancy in their system. These are the kinds of scenarios that we're thinking about and even baking in features and into the L1 itself to help make it a better deployment destination for these cross-chain use cases.

Are there ideas or concepts being built either on Moonbeam or just in general beyond sort of the obvious categories I've talked about that are really exciting you for the future? Some use cases of crypto that maybe we're not even thinking about? Yeah, I mean, well, the technique is this cross-chain, but obviously the use case can leverage that capability to kind of make a better version than you were able to do with just a single chain environment. I think what I see is that my vision is a bit that Moonbeam could be something like

an AWS. So it's basically, instead of having these single spoke chains, like you used to have single computers that people care and fed and do these things, moving more to a model where it's on demand, right? So you might have the ability to get like block space on demand. And I think developers are going to care less in the future about where that comes from and do they just need it to be decentralized, secure, and then have it be available like when they need it.

And so that's kind of the vision we're marching to is having different kinds of specialized chains, using Moonbeam as a way to connect them together, and then provide that to developers so they can leverage these specialized chains to build apps that can scale more than when they're just running on a single chain. Talk about being decentralized and secure. It's something that comes up all the time now, but didn't seem to be a huge narrative. You mentioned AWS. How is anything decentralized if it's all being built on centralized cloud services?

Well, that's, you know, obviously a lot of the nodes get run on the cloud, so that's definitely a thing. But, you know, this decentralized AWS vision I have, like, it would be AWS, like, in the sense that there's

different developer services, but it would all be, like, Web3, you know, based services. So if you wanted to build a decentralized application, you might say, oh, I need compute, I need, like, storage, I need, like, you know, an ability to store my user accounts. And you'd use those specialized blockchains to, you know, build, like, the

application. So we could eliminate AWS from it entirely. Yeah, I think that, well, there's still probably now, but yeah, I think if you wanted to build a Web3 application, yeah, I think that, you know, you'd use these services in the same way where they're kind of easy to consume as a developer. And you talked about the fact that that's what you were somewhat doing before this. Can you talk about your background and how you landed here? Well, yeah, I mean, it was building a Web2 traditional. And I've actually been building software my whole career. But I did spend quite a bit of time building up a cloud communications company in the Web2

space. I did spend quite a bit of time building up a cloud communications company in the Web2 space. The way I got into crypto is that my co-founder from that effort left and started a crypto project. That's Steve Kokinos. He left to start the project Algorand. Of course. So yeah, it was through then discussions with him that I got quite interested in crypto

as well. Is Web3 an evolution of Web2 or is it a parallel rail? I see it as parallel. I mean, Web2 is not going away. It still serves a useful function, but I see it as parallel and there will probably be increasing incorporation of concepts from each other, I think, into applications. Are there things that exist on Web2 that cannot be improved in Web 3? What'd I say there?

I mean, I think there is, I mean, there are certain things that Web 3 is not well designed for, right? And given just the speed of blockchains and other things, and there is this tension point we talked about around UX and around users being able to hold their keys. But on the other hand, there's properties that Web 3 has, obviously they can't be serviced well by Web2, like censorship resistance and some of the things you were just talking about with AWS.

Are we going to get solutions that simplify that private key process that you just hinted at? Because yet again, I think as much as we talk about people being their own bank, that means most people are going to fail at being their own bank or they're going to be too scared to even try. Right. Yeah, I mean, there's a lot of, frankly, that's not an area that I'm an expert in, but there is obviously already a lot of thought that's gone into different kinds of solutions that make end user key management easier. But yeah, I do see that as one of the key UX challenges, right?

I mean, if you want mass adoption, you really have to make it both easy and at the same time hard to lose your funds. So it is a difficult problem. Yeah, I mean, I think everything, if we want true mainstream adoption, billions of people has to be as easy as logging into your Facebook or doing a transaction on PayPal. Right? Yeah, for sure. Can that happen?

I think it can happen. But some of these problems, they take a while to crack. It's not just, hey, we solved it. If you look at regular computing, just to get to mobile UX where it is now, that took like 30 years or something. So it just takes a while. And your iPhone updates every three days, it feels like, just to continue to make those improvements. That's right. It's continuous.

So a lot of people, I think, in crypto want the final iteration now. I think that there's a really, people, it keeps coming up every time in the conversation, the idea of moving fast and breaking things. But when I think you're talking about people's money, maybe this is a longer timeline than they would expect. I think it's just people have to realize that right now we're in an era where we're moving from shared blockchains to you can build your own. Moonbeam is part of that wave of using these new frameworks to build your own. But also they're just becoming networked.

It's back to when computers were first accessing the internet. That's the kind of era we're in. You just think about all the cloud, there, all these things that developed once those things were available. We're just at the beginning of that now in Web 3.0. Five years, 10 years, 20 years? I think 10, I'd say. There's probably a lot of specialization and developments that happen over the next five

to 10 years. Then in 10 years, we have a Web to UX, UI equivalent and people are generally just using it. They don't know that blockchain is the underlying technology. You don't need to use terms like bridging and NFTs. I think so. It's just absolutely just like, well, I look forward to that future. Thank you so much for helping build it.