Rhythm NEXT | dialogue NEAR and The Graph: fu can DeFi and Web 3 The backbone of The world

In March, the first phase of the "NEXT" series launched by Rhythm Blockbeats and Kucoin for the Year of the Ox was successfully concluded. The guests of this event are Decentralized Indexing Protocol & NBSP; Yaniv Tal, CEO of The Graph, and Illia Polosukhin, co-founder of star sharding project Near Protocol. The moderator is Mable Jiang, a partner at Multicoin Capital.

The following is the text version of this live broadcast:

Mable:Welcome to the "NEXT" series of events launched by Kucoin. Please introduce yourself first.

Yaniv Tal:OK, thank you Mable. It's a pleasure to talk with you today. The Graph we're building wants to bring together all The APIs for blockchain data, as well as The growing Web 3.0 and DEFI ecosystems as a whole.

Illia Polosukhin:Thank you. It's great to be here. I'm Illia Polosukhin, co-founder of Near Protocol, and our vision is to give people control over money, data, and management. And to do that, we believe that developers are the core group of people that are building new creators and ownership economies through the app ecosystem and really driving adoption of these things. I built a protocol, like a development platform and other things, that was very powerful. This allows developers to get applications there that take on a variety of types.

Mable:All right. We can learn more about the progress of these two projects in future questions. My first question relates to a previous post by DCG explaining why they are focusing on middleware investments. So how do you define the value of middleware? And projects like yours or data stores? In your opinion, what are the trends in middleware?

Yaniv Tal:When we started theorizing in 2017, we really believed in the idea of decentralized applications. All software that used to run on the Web used the standard Web 2 architecture, and the way software works today is that you have to completely trust the person running the server. They have complete control over the data and the logic of the operation. We think this is a very big problem with decentralization of applications and protocols. We believe in decentralizing power in decentralized applications so that users have more control over the software they use.

But when we started building these decentralized applications based on a theory, we quickly realized that the infrastructure wasn't really ready, and one of the key pieces was the indexing layer. You can't really build these decentralized applications.

Because you can get smart contracts to run on a blockchain. But if you want to build a great product on it, it could be a web page or a mobile app. People are used to applications that are very smooth and easy to use. And people expect that when they use an application that loads data very quickly in order for the data to load quickly in the application, it needs to be indexed ahead of time.

The Graph provides this indexing layer. It allows developers to build applications with great user interfaces. But the flip side is to make sure it's decentralized. AAVE, for example, recently supported The Graph and ran a node in The network. This is what The Graph is doing, in building a decentralized protocol for indexing data that no other blockchain network has ever done.

We think the middle part is very important because it makes it easy for developers to build applications for a decentralized stack, and we make it easier for developers to do so. Software is about managing complexity, and everything is possible if you have enough time and resources in software, but we need to make it easier. So the team can deliver a great product and get it to market. So infrastructure and intermediaries are the key elements to make all of this happen.

Mable: That's very helpful for the next question. It's actually a question for both of you. The Graph actually supports a lot of infrastructure, smart contract platforms and even The most recent Layer2 protocol. So what do you think about Layer 2 theory and other smart contract platform services, scalability solutions? I'll start with a dragon.

Illia Polosukhin: OK, let's start with smart contracts. This is a very explosive thing, and this idea gives the whole space a lot of potential to show. I think the relationship between architecture and culture, if you understand. It is clear that it is now at least a place where action can be taken, a place where high-value financial operations can be conducted. At the same time. There is also great potential for decentralising applications, such as giving control back to users.

A lot of developers are creating ownership economies in different ways, figuring out how to integrate society into them and tie them together. What we're seeing now is that people have either started or are immediately realizing that Ethereum isn't the perfect approach for them, and they're looking for a smart contract or a technology that can work outside of Ethereum.

I think, in a way, this is quite normal. I would say that in the middle term, a lot of assets and high value things are still going to happen on Ethereum. And then we'll see an explosion of applications on other smart contracts or blockchains. In the meantime, I believe that at some point, the bloom will return to a few platforms again.

Yaniv Tal:Yes, but we love Ethereum, and we think that if we want to continue to play a significant role in the ecosystem, we certainly believe in the nature of multi-blockchain. That's why we worked with NEAR. In the end, I would say that there is too much software in the world that needs to be replaced, and it won't run on a single blockchain.

We really need all the different blockchains, all the different layer tools. It's nice to have different chains that specialize in different things, like different areas of the trading space. I think developers will find ways to take advantage of all these different features.

Mable: Another interesting question is that it's actually related to this question. Where do you think some of the top applications on the blockchain will be deployed? Would it be better to run on the existing smart contract platform, or on your own chain?

Yaniv Tal:I think it goes both ways. So I think Poca, Cosmos models are interesting, as are smart contract platforms like NEAR. I think we're in the early stages. I don't think Web 3 itself is finished yet, although we have made great progress, and this will be the year that the Web 3 infrastructure comes together. Although we've already seen a lot of traction in DEFI, NFT, governance, as all of these things are still in their early days. But billions of dollars of success have been seen in this regard. So there's a lot more you can do.

We want to see them on all these different chains, and the blockchain is the core part of the stack. There are different protocols on top of them like Layer2, indexing layer, video, etc., and we're excited to see a blockchain like Near really help build and optimize these things.

Illia Polosukhin:I think there are a lot of use cases, different types of things that people want to build, and there's absolutely no one thing that fits all of them. It's kind of like when we talk about the office, even though it has a decentralized communication and video communication platform, it doesn't mean it's completely free to watch. Even if it is a decentralized application, there will be different architectures.

What's produced depends on what people need, for example at Layer 1, which is a way of tradeoff. The tradeoff is how fast and how safe you are, how fast you can calculate. And it seems to me that what Boca has done is, they've focused on safety. They provide a long time for validation in security, and then allow you to do more. You can also have your own chain, and you can have all kinds of different choices.

Yaniv Tal:Yes, some applications might use customizations at the consensus level when you're doing tradeoffs, see how there are customizations, like developing cost models, etc. I think smart contracts can take you a long way, knowing that Layer 1 and Layer 2 have just matured a bit and can now give developers a tradeoff between them; Such as security and extensibility.

Llia Polosukhin:Yes, what I'm trying to say. It all depends on the smart contract itself, choose Layer1 or Layer2, their logic lets them try to choose between different layers. Depends on how you need to index the state and present it to other people and so on. From my perspective, as behaviors mature, we'll bring in standards that make it easier for them to interoperate with each other. I don't think it's something we need to worry about. I think it's all about tradeoffs. You have the flexibility to choose.

Mable: Another question I had for Illia Polosukhin is this rainbow bridge, which is a custom bridge. Would you consider supporting a common communication protocol like IBC? Or do you have plans of your own?

Illia Polosukhin:Yes, the Rainbow design is actually a cross-chain communication protocol. It's very similar to IBC, and it's not that different. I think the main difference is the way it is read. IBC needs to establish a communication channel first. And what Rainbow Bridge allows you to do is actually have a Near application operate on the state of a theorem application. The other changes are the same, you can read the state of the other chain.

So there are some subtle differences in how connections are set up and so on, but there are also a lot of similarities. So in fact, we're working with some people on the IBC Rainbow Communication. So you can connect to IBC from the Hongqiao just as you would from the Hongqiao on the other side. I think some of the problems with rainbows are that they are too detailed and frankly lack some extensibility. Verification of a theorem, like on any other chain, is a very complex process.

Mable:OK, so the next question is what do you think of an exchange chain like Binance Smart Chain or HECO? Do you see them as a temporary solution or are there other potential for the future?

Yaniv Tal:Yes, I take Binance for example, has built a great business over the last few years. I started cryptocurrency trading in 2017 using Binance. Because they listed their tokens quickly, they built a pretty good exchange. And they've added a lot of different financial products to it. I think Binance Smart Chain is an improvement for Binance users, rather than just being a centralized trading platform where you can do things that are not managed. You can give the user more assurance. This is progress. So I think they have a lot of potential in that area.

At the same time, I have seen a lot of things that I personally disagree with. For example, say that these chains are a competitor to Ethereum, and describe it as like a war.

And you see this kind of behavior with these chains, especially now with EVM, just doing a lot of these clones and imitations. I don't think it's going to help them. If you want to get people excited about their ecosystem. They should do original work. That's what gets people excited. I think that's how you build healthy communities. So I think there's definitely room for this kind of thing.

But I think they will be more successful. This is a huge opportunity to build Binance tools and bring billions of people onto this infrastructure. I think they can serve this market. Maybe a slightly different approach would be a good one.

Illia Polosukhin:Yes. From my point of view, Binance Smart Chain shows the market demand and the speed of change. They also have all kinds of products. My view is that we are all in a stadium, and there are centralized exchanges and decentralized exchanges.

BSC is another exchange that uses BNB as a processing fee, which is cheaper, but has many restrictions. And from my point of view, what we're starting to do, which is very exciting is actually what we call the creative economy, the ownership economy, but also like people contributing creative work and getting paid for it. That's the really exciting thing.

Now decentralized exchanges actually remove the middlemen, remove control over large platforms and distribution platforms, and so on. That's what blockchain is really capable of, so in my opinion, BSC is an extension of a product. It sounds like offering something that people really need and showing how much reality and potential exists.

Yaniv Tal:Yes. By The way, The Gragh did announce its support for The BSC a few weeks ago. If there are developers in the audience who are building the BSC ecosystem, you are now ready to build products from the data in it. In addition, we want to see more great products in this ecosystem.

Mable: Very impressive. It's very inspiring. Next question. There are various views within the Ethereum ecosystem regarding Layer2 migration and progress, what do you think of the recently widely discussed EIP 1559. What do you think is the future development and roadmap of Ethereum?

Yaniv Tal:Of course, I'm very excited about the upcoming upgrade. I was interested to hear talk last week about accelerating a merger. I think it's great, especially as more and more mainstream people are moving into crypto and there's a lot of concern about the energy use of PoW. For new players, this can be a concern. If POS proves to work in addition to theory, then we can speed up the timeline, which could be an exciting development for the industry.

Illia Polosukhin:B: Yes, I've had trouble with this question before. From my point of view, this is a matter of theory, not technology. It's like a fact, it looks right, but it's never been tested. The code is running, and so are many ecosystems these days. At least 34 different blockchains now use POS. Probably about half of the blockchains are not the same as they were when they started, and I think some of the projects have changed their purpose. In fact, there's been some talk of changing the architecture, and I'm interested to see how that happens. Like I said, for example, a two-stage merger is unlikely, because it's almost impossible to get everybody to agree on it through coordination, right?

I am also very interested in it. Technically it's not impossible, you just have to write some code, but getting people to move from one platform to another, and to do it in a "forced" way, I think is the wrong approach. Give them new technology and the option to migrate as they wish. I think that's the right approach. And one of the motivations should be that we know that when we do this, we don't destroy the ecology.

In fact, we said that even small subjects are important. This should be an important consideration for users and developers when they decide to move, and it should be what they want, rather than trying to force miners, or developers, or anyone else to adopt it, which would be unfair to the rest of the ecosystem.

Mable: Yes, just like you said. Obviously, this is not a big voice in the American community, but come August, it may be more pronounced in the Asian community. If you are in different areas, you will find different attitudes in different communities.

I've seen similar discussions, and I think we should agree to disagree. With the progress Ethereum has made, between now and Phase 1 and then to Phase 1.5, full migration may take some time. So I think it's definitely very interesting to watch.

Yaniv Tal:Yes, I'd like to share some of my ideas with you. The migration of POS is happening, but that doesn't mean miners don't have demand. The network needs miners to ensure safety. I think it might be different. For example, I know that Filecoin has a lot of miners in China, and they put in a lot of mining equipment.

In The Graph ecology, we also need miners to run The equipment, you need to process a lot of data and do The calculations as quickly as possible, so you need very sophisticated servers and very specialized knowledge. So I think there need to be a lot of miners, which can better ensure the safety of the bottom of the network.

Mable: The next question is, what do you see as the potential next generation of killer apps? We've been asking this question since 2017. Now that we're in 2021, 4 years later, I'm curious what new ideas do you have?

Yaniv Tal:Yes, the best part about me is that it's already started. So I don't think so. NFT is, I think, the first big use case outside of DEFI to make people realize that encryption is available beyond DEFI.

The fact that we're creating new markets for creators right now, that's something that's valuable is a record of showing that you're supporting early creators. If this can fund these creators to create more and more art and other types of work, then the creator economy will continue to grow.

Another area that I think may be overlooked is governance. There have been several multi-billion dollar agreements to decentralize management. I think this is one of the most interesting areas to look at.

Because you can really see the limits of what we can do today, but this is not a speculative use case. The truth is, if you have a billion dollars in the vaults, your question is, how do you allocate that money effectively? The use cases for this are very clear, and the problem is that we haven't built enough tools to do it well. As more and more tools become available, people can organize and allocate this kind of capital efficiently. And we're going to see these kinds of things used more and more.

Illia Polosukhin:Earlier, I mentioned the topic of killer apps, and the innovation of ownership, which is the real killer use case for blockchain that everyone will touch on, such as ownership of crypto assets, ownership of collectibles, and even ownership of votes in governance. Everything seems to be programmable. To redefine what the public likes, it can be done in the way it was originally born.

People have been talking about this since 2017, and we've seen that the financial sector can be disrupted to some extent and give ownership back to the people (note: like DEFI's attempt). Beyond that, there are many innovations to explore.

I think it is worth to think: other economies or industry how to benefit from ownership, this was a very exciting topics, including our daily use of social network, (data) for generating the user also does not have the corresponding ownership, but we can imagine: can give users what's ownership of the social network, it may be as we are using Twitter.

I mention that there are now NFTs that are starting to sell Twitter, will that swap fan bases in some way, or connect with fans in a new way, etc., and that might lead to governance or social tokens.

Yaniv Tal:This is a very interesting idea. Yesterday I sent out a tweet that was kind of like what you just said. I think where we are now and seeing these changes is a little bit like going back in time, when we went back to the Internet Yellow Pages and started creating all kinds of Web Yellow Pages. At that time, we also started copying images or music that we were familiar with in real life.

But 10 years later, you don't realize you were interacting this way. This is actually a huge paradigm shift, user behavior, new economic behavior is emerging. We may not know what they are, but here's the thing: the cost of cutting information into smaller particles has been falling. This fundamentally changes the situation we face.

I want to say, I think you're absolutely right. During this transition, the nature of money itself will change. In the future we may not just have a single currency. We have a lot of different types of things that are valued in terms of numbers, and they can replace a lot of things that are currently priced in dollars or other currencies.

You can even expand your thinking even further. For example, a lot of things need a unit of account, but that doesn't mean it has value. Reputation is a good example. You can put a dollar price on a person, but people don't usually put it with money. It's more of an accountable, potentially transferable thing.

Just like blockchain allows us to think in new ways and program to some extent. Just like before, we need to rely on some platform to tell us what's right, and here we're actually using the rules of reputation.

You can figure out how to use it, and maybe it doesn't work. And then it might fork and try something else. That's the good thing about blockchain projects, if you don't like the way it works, if you don't think it's the right way, you fork it and try new ways to iterate, and to some extent it's about having different views and options and seeing which one wins out. It's a very unique way, like an open economy.

Mable: Very good talk. Let's talk a little bit about The Graph and Near's future plans and what you'd like to share with The audience.

Yaniv Tal:Of course, last December we launched the decentralized network, and this year we will have a large number of subgraphs moving from hosted services to the decentralized network. So we can really watch the growth and development of the economic ecosystem, and we're going to expand into multi-chains. The Graph takes data from different chains and powers new applications on top of it.

Then it's time to continue building the Web 3 stack. I think by this time next year, we'll see this stack mature, and I think people will be hearing a lot more about Web3. This is one of the areas where we like to work with Near, where they have a lot of expertise.

Illia Polosukhin:We also have some plans. First, we have some important updates to roll out, such as support for EVM. We launch apps like this almost every week. And then create an economy, some financial application. Each blockchain is now like an island. This rainbow bridge connects our island to the other islands.

When people use the bridge service, the first thing they need to do is convert their assets. So we need this kind of economic benefit, to attract people to exchange, for example, there are all kinds of collectibles and works of art and so on.

People are trying new things, products like transcoding. It's as if all of this is starting to form a robotic system. To me, it's like how you build a company on this island.

We have a template for work, like experimenting and trying new things, trying to figure out how people make decisions, like how not to become overly dependent. It's hard for everyone to show up and vote, but actually people can still make decisions and make reasonable decisions. All of this, it's like how to build an entire island of ecosystems and make sure that people can participate in the economy and expand between those ecosystems.

Mable: Thank you both very much.

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