Let’s Talk Cross-Chain
With Arjun Bhuptani, Co-Founder of Connext
Let’s Talk Cross-Chain is a series hosted by LI.FI where we interview founders and teams building key infrastructure for the multi-chain future.
To kick things off, we’re joined by Arjun Bhuptani, Co-Founder of Connext, an interoperability protocol that aims to offer a holistic solution for the multi-chain future.
Let’s dive in!
Interview
It’s been a long journey for Connext, can you tell us about where you came from and where you are going 3–5 years from now?
We started in 2017 as one of the first teams to work on L2 research, as we have always been interested in improving the user experience of Ethereum and the broad ecosystem.
In 2018, after building the first L2 on Ethereum in partnership with Spankchain, we received a grant from the Ethereum foundation.
We soon realized we were heading towards a fragmented and multi chain space, and achieving cross-chain interoperability was going to revolutionize the blockchain experience.
At the beginning of 2020 we participated in the Reddit scalability challenge by building a demo to trustlessly move tokens across optimism, arbitrum, polygon, xDai, Skale, and Ethereum testnets for the first time — definitely we blew users’ minds that day!
We then started to focus on building our decentralized network earlier this year, and in a few months went from 0 to a 20M weekly volume. We launched NXTP, a more generalized communication protocol across chains that is simple and easy to integrate into apps, and to expand into different chains.
What’s next: Connext will become a holistic solution that allows for non custodial and fully generalized communication across L2s and other chains. Users won’t need to realize what chain they are using, enabling a true, smoothless, multichain World.
Which values are most important to your team and which role does decentralization play for you as a bridge provider?
Security and decentralization, to guarantee the long term survival of the network. Let me explain: the amount of animosity towards the crypto industry is currently not very high… But that will change. There will be a time where some sovereign and corporate powers will begin to aggressively censor or otherwise limit access to decentralized systems, similar to how some countries censor parts of the internet based on their policies today. When you are building a decentralized network that aims to be true public infrastructure, you have to make sure that it can withstand an attack from the biggest and most powerful organizations.
Our focus is to make sure that Connext isn’t just the best interop system this year, but is the *only* interop system in 50 years. We are putting a lot of focus on trustlessness and decentralization, and setting up an infrastructure that can remain like this over time, so there is no realistic way to attack it or make it centralized.
Which trades-offs did you make to align with your values?
As with the scalability trilemma, a topic Vitalik Buterin has been very vocal about, bridges and interoperability protocols also have their tradeoffs between trust, extensibility, generalizability: capable of handling arbitrary cross-domain data.
We wrote a deep dive here.
With Connext we are currently trading off the generalizability aspect, as smart contracts cannot call other smart contracts on other chains (yet!).
The way we are going to solve our trilemma is similar to what Ethereum did: create a composable stack of different protocols on top of Connext.
That’s what makes Connext the best option: NXTP is one part of a modular interoperability stack that will integrate and complement other protocols (the IBC from the Cosmos ecosystem, for example) to achieve full trustlessness, extensibility, and generalizability.
What makes you one of the strongest bridges concept-wise?
We built everything with these key elements at the center:
- Trust minimization — Most of the other bridges are sacrificing this feature by using validators or other set ups.
- Contract calls — as developers are able to interact with contracts on other chains
- Capital efficiency — maximizing the value of the liquidity constantly moving across chains, while other solutions force you to lock up capital and reduce its utility.
Any particular features that make Connext outstanding from others now or in the near future?
Apart from the core principles described previously, we are removing all off chain operations to minimize the infrastructure requirements, both for users and developers.
We are also researching ways to enable passive liquidity provisioning from users, a frequently requested feature.
What are your views on bridges promoting their ‘trustlessness’ even tho there are trust assumptions involved
Building a custodial/trusted system is easy. It has always been. But if we do this, we might end in the same system as before. This is not what Web3 is about.
Any intellectually dishonest actor that is falsely claiming trustlessness poses a risk to the users, who might not understand the difference, and it’s bad for the space, particularly when the whole infrastructure starts to hold and transact a lot of value. As the industry keeps growing, real decentralization will become the true critical factor.
How much liquidity is Connext moving? What’s your forecast for 2022?
We currently have more than $40M in weekly volume (you can check more stats on Connext Explorer).
We are now in the process of scaling liquidity, as we went from 2 million to 24 in the last months, and are aiming to reach 100M early in 2022. From there, we’ll focus deeply on integrations and ways to drive demand onto our network.
What are the biggest challenges you’re facing currently?
The bull market creates a lot of fragmentations and it’s harder for users and developers to make conscious decisions that are not hype driven. With a lot of noise, how do you select the safest and most convenient solution? With this in mind, it’s important for us to differentiate our product as the best in the market.
From a technological point of view, the whole tech is really difficult, and we want to get it right and be fully trustless as we continue to improve the protocol and raise the level of interoperability.
Next year we are also aiming for a network hard fork and we are figuring out the best way to coordinate the community to make it happen.
What are your views on bridge aggregation, ie. Li.Fi?
Bridge aggregators make a lot of sense for users to improve their experience.
Aggregators are good for a network like Connext as they bring in more volume, but they also create a challenge as you are now competing head to head with other solutions.
We see the Li.Fi team as a good actor in the space as they are interested, and have always been, in understanding the actual technologies and using the highest quality systems. Simply comparing on cost will not be enough as users will want to know the security level too. That said, we win as the cheapest solution too :)
We appreciate the positive sum game Li.Finance is playing as we jointly enable a multi trillion flow of value and data.
What made you change from a state-channel approach to NXTP? What have been your greatest but maybe also unexpected learnings?
State channels are conditional transfers on-chain. The way the transactional funds are settled is based on some off-chain logic, logic that needs to be stored somewhere — tendentially your browser — while you validate the transaction with the other party.
State channels are awesome, and we are one of the only teams in the world that has built and prorated state channels in production at scale.
That said, the reality is that they might be an overkill for interoperability. Browsers are not performant databases and so storing and executing operations there needed to be minimized.
With the new NXTP protocol users and routers operates statelessly — they are just reading the chain, no need for off chain storage. It’s faster, leaner, and easier to build upon.
What do people get wrong about Connext?
That we are not a user facing project, but an underlying piece of infrastructure where developers can build apps for users — just like Li.Finance did.
We are looking for devs and apps that want to build great things for new cross chain experiences through Connext. For anyone interested, check out some bounties here or get in touch on our Discord.
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