The Wolf Of All Streets - Zero Knowledge, Privacy, And True Decentralization | Evan Shapiro, Mina

Episode Date: September 25, 2022

I sat down with Evan Shapiro, the founder of Mina protocol and the current CEO of Mina Foundation, to cover everything from Zero Knowledge SNARKS, privacy, and scaling, to what true decentralization means and how to achieve it. Mina was created by Evan Shapiro and Izaak Meckler in 2017. It is one of the lightest blockchains, just 22 kB. To achieve this result, Mina implemented zk-SNARKS, a cryptography technique that leads to a significant decrease in the computational requirements needed to support a full blockchain network. Evan Shapiro https://twitter.com/evanashapiro Mina https://minaprotocol.com/ ►► Get 20% off on your ticket to W3BX. Use my code: WOLF20. Register here: http://web3expo.live/  ►► 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   TRADE ON THE WORLD’S BEST DEX, BULLISH: ►► https://thewolfofallstreets.info/bullish/youtube  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  #Mina #ZK #Blockchain 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.

What's better than listening to the Wolf of All Streets podcast? Listening and watching the Wolf of All Streets podcast? Listening and watching the Wolf of All Streets podcast live. Well, they say what happens in Vegas stays in Vegas, but this time that's not the case because I'm hosting a stage at a conference from October 10th to 13th. That's the WebEx conference. I'm going to be bringing you live podcasts,

live panels, masterclasses from the leading minds in the industry. This is going to be absolutely epic. It's going to be live streamed, recorded, and presented to you live. You can come have a happy hour with me, eat dinner, potentially play golf, and watch all of your favorite content being recorded in real time. Guys, the link for this is web3expo.live. that's web3expo.live. Use code WOLF20 to get 20% off your ticket. WOLF20 for 20% off your ticket. Guys, let's hang out in Vegas, October 10th through 13th.

The first time I heard about ZK Snarks and ZK Rollups, I thought that we were talking about cartoons that I would watch on Saturday morning, but in fact, that's the future of cryptocurrency and the way that we're going to be able to have fast and cheap transactions without sacrificing our privacy. Evan Shapiro at MENA is leading the charge to make this happen. I think one of the predominant narratives in crypto at the moment is scalability, especially in context of the Ethereum merge going, hopefully successfully, seemingly successfully thus

far. And so it seems that now the move to faster, lighter blockchains, of which yours is the fastest and lightest, layer twos, that's going to become the prevailing narrative. Do you agree? I think it's like half of the prevailing narrative. I think the other half is going to be things around privacy and like starting to really build in the real world. But at least half of it is going to be scaling. Yeah. Talk about privacy and the importance of it and perhaps where we're lacking in privacy at the

moment. So we have all these blockchains. They're running fairly well um but they have this property that if you want to interact with them you have to put if you want to use a smart contract you have to send your data to that smart contract and in doing so disclose that data to a public network maybe that's fine if you're like just like sending a transaction or something but say you were uh connected with like a social profile that is off-chain, your financial data off-chain, your voting record for how you're voting on a protocol. So it starts becoming a little concerning having all these things tied together. So do we have a bigger problem than the big tech companies that we rail against all the

time and blockchains are public? That's kind of the question, right? It's like, there's kind of like this, I think, vision embedded into crypto that we can build something better than all of these existing platforms. But if we don't have privacy as a primitive, would we end up doing something better? Or can we build something better? Or will we build something worse? Or can we build anything at all? That's, that's a question, I think. But I think that people believe that, certainly legislators and regulators believe that crypto is being used for nefarious purposes because it's private.

Not the case, right? I think for one, a lot of regulators really understand that privacy is important, that building systems that just disclose everyone's information is just as bad as something that is, you know, 100%, 1000% private. The great thing about crypto is we can kind of customize where we want things to be private and where we want things to be disclosed, such that we can achieve a balance that is good for everyone.

And so how do we do that? I mean, that's zero-knowledge proofs. With zero-knowledge proofs, you can do things which disclose parts of information while hiding other parts of information. And you can really get fine-grained control over that. You can actually decide exactly what you want to disclose and what you want to keep private. So for example, you could have a DeFi app where you disclose that you are KYC'd, just like the one bit of information that you have been KYC'd, but nothing else.

So you can be in this world where you're not revealing all the other information behind your KYC publicly on-chain. You're not putting your address, your social security number, everything on-chain. Bad idea, but you are revealing that you have been KYC'd. So you can do things like that that are kind of in this middle ground, I guess, between the two places. I think that the first time I ever heard of ZK was when I did my first deep dive into MENA, but now it seems to be pretty prevalent. You see a lot of chains and projects talking about

optimistic roll-ups, ZK roll-ups, ZK snarks, et cetera. At least from a scaling perspective, they're kind of going mainstream, which is sort of as predicted, but there's still a long way to go, I think, you know, we're hearing about them a lot for scaling, but we just talked about a bunch of privacy use cases. I think those are going to be as much or if not more impactful. Yeah, I agree. So we're at a point, I guess you could debate how many people actually use crypto on a day-to-day basis. We have these numbers, 100, 200, 300 million.

I think that's probably more people who have just bought a Dogecoin and we're giving them credit for being a part of the ecosystem. So even if it's 10, 20, 50 million people that are regularly using it, we've seen problems at scale. Solana being down five or six times. Obviously, we have plenty of examples. What happens when we have a billion people yeah i i guess maybe this is like maybe a little bit of a futurist outlook but i think uh with zk rollups and with like zk protocols like you know we've kind of solved it in a lot of ways like uh we have someone right now building a zk roll up on top of mina that like it's like one person and they're like making really quick progress and there's going to be a ton of these and they're all going to be able to

through parallel proving of transactions compute huge numbers of transactions like like ridiculous numbers i i mean once we have that it's like it's not concerning to me anymore like how do we scale it's more like you know i don't think we're gonna like if everyone if like you know another 100 million people buy another dog coin that's not going to be enough to justify that scaling. We're going to need real applications. And that's the question that becomes more interesting to me. I think we kind of have the scale figured out with ZK already. Once we have that, what are we going to use that scale for?

Is it just going to be sitting there or are we going to do something with it? Solution in search of a problem rather than a problem in search of a solution. But I think that everything we've seen in crypto and with technology in general, there always ends up being that one tipping point that you don't expect. And then it's this massive rush all at once. And if we're not prepared for it, that would be horrible. I think people have had faith that like there will be a reason to use that scale. So there's been like a good argument for building it. But it's turned out like, you know, I think we're getting closer to that tipping point,

but that's not the, yeah, that's not the hard part. The hard part is going to be actually making things that need that scale. Okay, so what are some ideas for things that would actually need that scale that might legitimately happen? Yeah, I mean, like,

there's a few easy ones to mention. Like, I think, like, I'll start with, like, kind of the easy ones. Like, DeFi is, like, one. a few easy ones to mention, like I think like I'll start with like kind of the easy ones like DeFi is like one. I think there's some statistic like 1% of Ethereum addresses have interacted with DeFi in some way. And it's like such a small number of like effectively like, you know, crypto whales that like are of enough ETH to like over collateralize and then use DeFi in some big way. It's such a small amount of like of possible activity even on ETH today. And this is also, you know, it's not like ETH has like a billion people on it. It's like small numbers, small number. So, you know, how can we build financial products that actually are interesting to like way more people? Is like, just like crypto,

is it a fundamental question for crypto? Because it's already going down that direction, but it's just a small number. It's still hit It's do you think it's a matter of disinterest or do you think that it's a lack of education? Just not not enough people know about it Or do you think that it's still a UX UI problem where the few people who? Would come in and are not whales go. I can't figure this thing out. I mean, it's a bunch of things like I think like if if i was like you know i be trying to build a company for uh you know users to use crypto finance as their primary

thing to do first i think a lot of companies are trying that but uh you know it's like little things here and there it's like oh like uh, we've got some over collateralized lending product. We have, you know, some kind of custody solution or some kind of debit card that like turns your crypto into cash. There's all these kind of like piecemeal solutions that I don't think are like real fits for users. I think there's a there's this question of what will really get users using crypto finance first. And I think to look at that is like a harder problem but one in which i don't know if i'm gonna live figure out on this podcast the solution to it but but but um i i think it's prime it's a partially ux ui issue i think it's also partially a like um it's a newness of the space issue i think like as we have more primitives it'll become easier to build bigger and better technologies

that leverage them to build more complete solutions for users. Six months ago, I would have argued that it was simply the mainstream understanding that they could earn yield in a safe environment, but that's utterly exploded. Yeah. I really thought that that was sort of the road to mainstream adoption. Anecdotally, even my friends who are, you know, 40-year-old Wall Street guys who I could never convince to buy Bitcoin, they would buy USDC and park it somewhere that they viewed as safe for 10% yield. So I thought that was what was going to start bringing people. But I think that now that

that's exploded, people are terrified of the yield side. I think that's still the story I believe in. It should be. You know, it's like we're kind of like following this like crazy like sine wave of yields and returns on crypto. And like maybe it'll eventually, you know, balance out somewhere reasonable. And whoever it balances out, it feels like it should balance out to add or slightly greater than like the interest rate you would get from like your high yield savings account. Right. At which point maybe there's some neobank that's crypto first and then that's... Right.

Or maybe you could argue that the ETH staking interest rate becomes sort of the benchmark rate for crypto. But then again, ETH remains volatile. Yeah. So earning 7% if it goes down 50% is not that appealing to the mainstream. Yeah. I think it's also a question like what I think a lot of these cases I'm super excited about are like less on the financial side and more on like the platform side.

And then there's a question of like, I think crypto has like been finance first for so long. Like, does it like kind of finish out these finances cases before it goes to other platforms or other platforms come first? Yeah. I mean, I think obviously we've seen the proliferation in bubbles of NFTs and metaverse. So it did get beyond sort of the DeFi summer and financial aspects. But again, that's all sort of waned. I think a lot of the use cases I'm excited about to go mainstream are like these kind of like platform use cases that are how can we build new things that are not like competitors but also just brand new that you know people can kind of think it was plugging into like this this uh for lack of like a better phrase like web 2 slash like gen z like content creator like

decentralized social media yeah like like i think like at a super high level like that kind of thing but then like what specifically within that is like the, can be a driver of activity. Yeah, that makes sense. You effectively created the ZK roll-up, right? ZK Snarks. And like I said, now it's sort of everywhere. What do you think about now seeing sort of your creation and what you've done being,

I won't say copied, but utilized elsewhere? Maybe I should say copied. It's hard to say based on the timing. I think we were earlier first to the idea. I think for one, it's awesome to see the narrative being borne out that this stuff can allow for scale and verification in ways that are working and useful. I think still we feel like only a fraction of the potential though.

And it's like greater potential I'm like mostly excited for. Yeah. So at this point it's, we're small enough that you can sort of cheer for even the competitors who are using the technology to be successful because it proves the technology and brings it more to scale. Yeah. And I i mean i think it also like um you know there's so many different pieces of the technology we need to bring together to make some of this stuff work uh scale is one thing but we also have like uh you know things on the privacy and verification

side that are very useful for actually building applications um So it's... Can you give some examples? Yeah, I mean, I think like, you know, there's a bunch here. I think for one, you can imagine that we're going to want to be able to take off-chain data, things like your credit score, things like your bank account information, things like your social media connections. And well, clearly, we're not going to want to just share those blindly on chain. That seems really bad. But we're going to want to be able to start interfacing those with on chain things.

If we're going to have hope of like building platforms on crypto, which go back to the real world and use a lot of information, whether it's a financial platform that's using like your bank account history, like on Plaid, whether that's a like social media platform that is using your, you know, Twitter followers or something. There's like this connection that has to take place between the real world and the crypto world. And that's like something I'm very excited about, because I think that is like a both place where privacy is needed

and also a place where you can start building more real world adoption things. So privacy has been somewhat in the news, but from a more negative standpoint, obviously, with the tornado cash saga, ZK is not the same as tornado cash, but we don't exactly have the most highly educated regulators and legislators, I would argue. And it seems that actually they're targeting privacy, which is something that you're building. So do you have concern that they won't understand what you're doing and maybe could target this as one of the technologies? My hope is that what they're doing is they're looking for places where bad actors are congregating. And oftentimes it is like the strong privacy like enabling

places which are allowing that activity to take place. From people I've talked to I think they understand the value of privacy they also just are worried that like you know that will create places for people to congregate that they don't want to happen so I guess I'm less worried about the kind of privacy that like we've been talking about and I'm thinking that will be useful for things like Mina, things like giving users sovereignty and privacy over their data. It's up to applications in the end what they want to allow here. An application could say

we're going to allow any and all transactions specifically privately or they could say I need users to allow any and all transactions specifically privately, or they could say I need users to be KYC'd before they are able to use this application. They need to have some history on crypto that kind of like shows they're probably not a bad actor. There's all these things that can be done that don't require users to show anything about themselves except for they're probably not a bad actor. And I think that there's a,

it's kind of like this middle ground that gets created where we have privacy, but in a way that is not causing the kind of bad activity regulators are concerned about. You have what's been described as the fastest and lightest blockchain. Does that mean that Mina could be the only blockchain we ever need and could operate at scale and one chain to rule them all? Or do we need to live in this multi-chain world?

I think that's a key question. And if you look at what we built with Mina, it's kind of funny. You see, I think, this convergence of protocol roadmaps. If you look at the E3.0 roadmap, one of the things is is like snarkify everything. That's you. You start saying that, you know, there's this question of once we launched the programmability layer for Mina, which is happening pretty shortly, does that then be a place where Mina has kind of achieved this like converged layer one state? I think that like at this point, I think that like with Mina we have the technology a little farther out than other chains and we'll see I think it's like a huge advantage for people

building on it and using it but I see these cryptocurrencies really as communities so it's like will there be one community to rule them all like probably not but i can see me being like a very large community in that space if you put 20 crypto people in a room you'd have 15 communities probably yeah or like 50 communities they're all like yeah yeah so yeah i have my doubts that they will all come together certainly into one community so what you talk about programmability coming soon to me now what does that look like so we've talked about a bunch of privacy stuff this is the ability certainly into one community. So what do you talk about programmability coming soon to MENA? What does that look like? So we've talked about a bunch of privacy stuff.

This is the ability for developers to actually use that in a meaningful way in terms of building applications. MENA as it is right now is like, you know, payments, staking, that kind of stuff. And we've had this programmability layer with ZK Apps on Testnet for a while. It's soon going to go to mainnet which is very exciting because it means that as a developer you can build smart contracts

deploy them on mainnet and those smart contracts unlike on other layer ones can use your knowledge proofs in a super native way to get access to like the scaling and privacy so you don't need to bring something else in to be able to do the roll-ups like a layer two that you would need on another layer one it's all built in yes um the yeah so basically there'll be um from the scalability perspective every application that gets made on mina can also just like be a zk roll up so like this like you know idea of like uh application specific zk roll up zk roll ups is just kind of built in uh plus, you get access to all the privacy and verifiability, off-chain data, all that other stuff that you might find very useful if you're a developer. We touched on this a little bit before, but then do you view, A, if Mina is becoming,

you said, sort of a hybrid layer one, I don't remember the exact term, but what would you describe Mina as now if not a layer one? I think that sometimes we think of it almost as a layer two, actually, where you might want to keep your application on your DAO or DeFi app or whatever on Ethereum or something. And you're going to want to pull privacy information in from Mina. So Mina becoming almost this like layer two for privacy, where let's say I have like a DAO on Ethereum, I want to do a vote but privately, I can kick that vote out to Mina. Mina does that vote in like this verifiable, private trustless way.

Mina kicks the result back to Ethereum and you can use their private voting result from Ethereum, but you've done like this, you know, crazy big private computation on Mina. I think it's really cool because like, ultimately like this is this, you know, crazy big private computation on Mina. I think it's really cool because like ultimately like this is like, you know, these features can be useful to anyone across the space. So it really like will, I think, bring this functionality to them. So I'm hoping it's useful to people. If that someone answers my next question, which was part B, which was do you see yourself as competitive or complimentary?

But it seems very clear that even if you took a bulk of the market share, there's still a role for Mina with the other blockchains. Oh, yeah, exactly. Yeah, yeah. Like, you know, I think all the zero knowledge proof stuff is very useful to people. So if we can just like bring the people across crypto, that would be exciting. And because Mina is so cheap to verify, like it's very trustlessly bridged to these other chains so you just said the uh ultimate new four-letter word in crypto even though it's not four letters which is bridge

um obviously that seems to have been a major point of failure uh for hacks and exploits of late so how do we secure these bridges when you are going back and forth from Mina or any protocol to any protocol in the future. So I think there's like two aspects here. One is like sometimes these bridges just like aren't fully audited or they just like have bugs. And that's like, you know, that's avoidable. We have to spend more time auditing our code and pushing it out. But the other half of it is a lot of these bridges just fundamentally involve some trusted intermediary,

which is saying, oh, the state of Ethereum is this, and here's the tokens that I've bridged over. You can trust me. What's cool is thinking of ways to get around that so there isn't this trusted custodian for this bridge. And when you have a chain that is succinct like Mina, you can do that very

easily and inexpensively because you can just put that very small, tiny little proof of Mina inside of a smart contract on another chain, which then is fully verifying Mina. So if you do something privately on Mina, you can then pull that data back into Ethereum in another application. So I think that if we can make zero-knowledge proofs of layer ones, they can all be verifying each other, and then you've kind of gotten around at least the custodial side of the bridging question. That makes a lot of sense.

We talk often about the trilemma, obviously. You're the fastest, arguably the cheapest, the lightest. What do you sacrifice, or have you solved that? I think, for one like when we think about scalability on mina it's not like oh you know we do like you know 5000 tps or whatever it's more like we just have like a infinitely extensible set of recursive zk rollups that like that you know uh the actual like kind of throughput of proof verification on the main chain is is fairly low but each of those proofs can be a huge number of transactions. They can even be hierarchical nested zkrollups of applications.

So it's a different mental model for what it means to be high scale. So I wouldn't necessarily call it a sacrifice, it's just like a more of like a flexible model over what scaling means is there anything else i i i guess like uh it's it's more kind of like the deployment of like a new technology it's like you know we didn't have this before it's like what's the trade of like an airplane versus like a hot air balloon it's like what we have airplanes yeah um that's how i think about ZK. There's some differences, but it's just new. So people are trying to solve the trilemma

and you're like existing outside of it almost, just creating something completely different that makes it somewhat irrelevant. Yeah. And like you said, I mean, it's not like you're trying to process thousands of financial transactions like the Visa network all at once.

Yeah. I think there maybe will be a new trilemma for data availability. I'm just thinking about this now. There's still like a limit to how much bandwidth you can shove through a network while still being decentralized. And so maybe you can get the throughput really high, but you still can't be like kind of moving infinite data around inside of like the super clustered decentralized network uh it's like orders of magnitude i think greater than what

we're seeing now but it's still uh still something so is true decentralization even possible yeah yeah definitely um it i i think um well it depends it depends how you define true decentralization, but I would argue that getting to a place where everyone's devices are accessing the chain in this peer-to-peer, trustless way. We have hundreds of thousands, if not on top of these chains so that we're not converging to like you know two or three people that can like you know halt the network due to like centralization of stake and they can actually make real decisions like all these things come together to me it's like you know we can all kind of exist together in like this decentralized space you talk about centralization of stake that's been arguably the largest criticism of Ethereum immediately after the move that 60 to 70 percent of the staking is five or six entities. Yeah.

I think what's funny there is it's still like a step better from proof of work, which is like it's like everyone is like saying, oh, no, it's like it was like three before. So we've gotten like a little better. Yeah. Yeah. I don't really understand that argument because mining pools are centralized. I think that like moving from three to five is like it's better, but it still points out like, do we really want decentralization of crypto to be like the number to be five? Like, I think it's too small. Yeah. But like staking still, I think inherently can be dominated by wealth right i mean the wealthiest

people still have and that's true of dao's that's true of everything that we call decentralized which is why i asked the question yeah yeah yeah yeah you a dao is great and everybody gets to vote but if one person owns 80 percent yeah yeah and i think i think that's no good i think that like that's not not the point um i've been thinking about this recently and I think as far as I've come so far is to think that if we base these protocols and their consensus power on wealth, it's going to be inherently centralizing. That's just how it's going to work. The opportunity is can we base consensus on things besides wealth? We tried compute that was kind of basically wealth. Now we're doing wealth directly, it's kind of the same. But can we base it on other things?

For example, can control of a DAO be based on contributions over time? Or can we integrate identity into these protocols such that we have some kind of balance between how much money someone has and how much control they get over the network you can imagine like a simple version of something playing with and thinking about is like uh what if you just take the square root of how much tokens you have and uh that's your effectively a maximum level that you can have that is not you can't buy the entire all the power yeah yeah yeah and i think that like this is uh i think it was a lot because i think it's like kind of a place for crypto needs to be thinking about next um it depends what our goals are for the system

obviously like if our goal is to like attract maximum capital maybe we kind of want to do it this way but if we want to build something that's like democratic and collectively like kind of more integrated then i think uh there's some kind of adjustment that needs to take place to this weighting of stake. And then, of course, there's the fact that most of it's running on Amazon Web Services, right? Yeah. That's the other, I think, less talked about argument of what decentralization versus decentralization mean. Yeah. I mean, it seems eventually we'd have to build our own infrastructure as well that's decentralized yeah i i think one

thing that is nice there is um i i there is like i don't know so uh there there's like enough data centers out that out there and people with computers out there where if one of these gets shut down um people migrate pretty quickly to other ones so as long as there's not like some kind of nation-state attack on it I think it's like kind of okay not ideal but ideal it's hard to it's hard to achieve in the very short term do you see a point where the biggest companies in the world use your technology for privacy seems like this would be a layup for the visas and the mastercard yeah basically anyone in the financial realm yeah easier and faster and cheaper way for them to verify information yeah i mean i think there's a good argument for that

like if any of these companies want to both get access to zero knowledge proofs so they can do things with privacy and also work with other companies in ways where like they aren't the, you know, sole holders of like kind of the keys to the platform. They want to have a shared platform with other entities. Then building with zero knowledge proofs on a cryptocurrency becomes like a very logical choice. I think it's kind of the next step is like, okay, like Mina will have this programmability

around privacy at scale. It'll have a bunch of Web3 applications, private voting, DeFi things, some integration with off-chain data. When does that become interesting to like these bigger companies that will want to get access to this new set of technology and things they can integrate with? Yeah, it would be amazing. Yes. And now that Mute is becoming programmable, we obviously are talking about sort of the financial and privacy applications.

But do you also get NFTs and GameFi and everything else that we're seeing built on Layer 1s in the crypto space? Yeah. else that we're seeing built on layer ones in the crypto space yeah i mean i'm hoping with like a twist like you know uh you know with things around privacy with things around um uh you know zkps integrated into them uh i think it's like that's like the fun thing i think if you're a developer like it's like oh you know i can build an nft or whatever but what can i do uh if i can build an nft where i can privately verify like off-chain website information and use that to mint an NFT like there's all these like fun things you can start thinking about so I'm hoping like yes but like with with twists for like zero knowledge brief things also sounds like thinking about it that you could focus more on NFT utility and not the NFT

art side and for real world transactions the things we talked about for NFTs years ago mortgages and title of your car and any basically legal document that you could then transfer from one person to another knowing it's verifiable and then can't be transferred without confirmation exactly yeah so like there's all these like ways we can start using the technology that uh is more than just a photo of something some artwork it's like we can do way more like kind of application-y stuff so yes i look forward to seeing what gets built uh after the next main net yeah and uh hopefully seeing this all adopted in the future it's i think it's hard for a lot of people here in the depths of the bear market to still be as exciting as they were.

But I don't think there's any slowdown to the building. People are still building. I think it's still exciting. Like the real, like, you know, unlocks are still taking place. So I think there's a lot of reason to still be excited. Great. Thank you so much. Yeah.

Thank you. Let's go.