The Buildooooooor - Chris Whinfrey of Hop Protocol
Crypto bridge alpha
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Hey everyone, today’s newsletter continues with our buildooooor series and I have a special guest today. Chris Whinfrey is the founder of Hop Protocol and is tackling one of the most complex challenges in the space: bridging. A true giga-brain and I don’t use that term lightly.
I had a fascinating conversation with him about his past, how Hop Protocol has emerged as one of the most trusted bridges and what he’s excited about in the future.
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What’s your crypto origin story?
I first learned about bitcoin shortly after graduating in 2014. I ended up living with some folks that had started the Bitcoin club at the University of Michigan and I just kind of went down the rabbit hole. At the time blockchain development was just forking bitcoin and doing these different things with it.
Vitalik had already proposed Ethereum as a white paper at the time. Once I got wind of that I really fell in love with this stuff. I would say the best word is probably obsessed.
I was just absorbing every single thing I could find online and learning as much as I could and starting to mess around with Solidity.
There was basically just the main web page that helped you code up a token in Solidity, but often that didn't work because they were upgrading the compiler so fast. And then there was the Solidity gitter. There was this guy called Arachnid, who's Nick Johnson from ENS, and he was helping everyone learn Solidity. He definitely got me up to speed in those early days.
Then I moved to Boston and at that point I was just doing iOS development. My background is in computer science and I just really wanted to join crypto full-time and was looking around for opportunities.
I wasn’t finding anything in Boston, so I quit my job and started the Boston Ethereum Developer Meetup. I also started this Ethereum dev shop called Level K with a couple friends. And so we started doing smart contract development and eventually auditing for different folks in the space. So yeah, that's kind of how I got started.
How much has the Ethereum dev resources and tooling improved and what impact has that made?
Yeah, it's extremely different. Even all the way up to 2017, I would say most people weren't really building useful things. In 2017 most of the serious code was just the token and then there was some pretty minimal contracts for accomplishing some amount of utility, and that was kind of like the major narrative at the time.
And so yeah, before that it was even harder to just get things deployed and there were very few projects doing things beyond a token. Nowadays we have the OpenZeppelin Library, which is huge in terms of being able to take these basic building blocks and compose them in different ways. And then we also have all these different applications, that are like these lego bricks that you can build on top of. So we have exchanges and lending markets and all this base layer that really unlocks a lot of different things. So I would say today it's very easy just to get an application up and running, connected to a front end and actually build something useful. Back then if you were able to do that you could easily raise tens of millions of dollars in an ICO and be one of the biggest projects out there.
What do you think you've learned over the last few years?
I guess being a member of a dedicated crypto community and observing everything that's happened, I would say the biggest thing is just thinking long term. If you have a long term mindset in crypto, I think that will put you ahead of probably 90% of the teams out there, especially this cycle where crypto Twitter has played a much larger role in the narratives and is where all the discourse happens.
There's just so much noise. There's a new hot narrative every two weeks and if you're chasing those narratives then you're probably too late because it's often some people trying to pump something that already exists, and if you're just getting started building then you're already behind the curve. But there's also so many different opportunities to build things in this space and they're always in the background if you're looking for them.
What I found useful is having some conviction and staying head down, not chasing whatever the hottest narrative is. Just kind of thinking beyond the current cycle is really helpful in terms of cutting through the noise.
How did Hop Protocol come into existence and why is Hop needed?
Hop really came into existence as a necessity. So the same team we have now was previously building a contract based account wallet called Authereum. The project was targeting users that were newer to crypto but still trying to give a web2 experience, whilst staying true to all of the ideals of web3. Authereum was fully non-custodial, but you could still log in with just a username and password. And then we abstracted things away, like gas costs away from users and made things really easy to use.
But then DeFi summer happened.
Gas prices went through the roof and pretty soon we pushed the cost of this contract based account over to the user, and it just kept getting more and more expensive. At the height of DeFi summer, I think it cost over $200 just to deploy a contract based account. And this is a super lightweight proxy, we would just deploy this proxy and assign the ENS name and that alone would cost over $200. So all of the regular users or new users had just been completely priced out of Ethereum.
And so we realised that if Authereum has a future, it's going to be on layer two. We needed to figure out a way for users to not only get on to layer two and use layer two, but just never touch layer one. And so eventually we kind of landed on Hop and realised that this has a lot of potential even beyond just an application for Ethereum.
While we were working on this, Vitalik came out with his rollup centric roadmap for Ethereum and listed cross rollup transfers as one of the unsolved problems for the Ethereum scaling roadmap. That got us really excited. So at that point, we started to seriously consider focusing on Hop and let Authereum kind of go to the wayside. This was an opportunity to build core infrastructure for Ethereum and that was all of our dreams.
So, we released a white paper and a demo at the beginning of 2021 just to get some feedback from the research community and see what people thought. And the response was really good. Then that summer we released Hop, which was just over a year ago. Since then we have just passed $3 billion in total volume.
$3 billion is a big number! Did you have any targets when you released Hop?
We had targets, but then we kept hitting them fast, so then they weren't that useful in terms of pushing ourselves.
I think the numbers that we see today could really pale in comparison to what we see in the future. I think bridges are still fairly new, especially in terms of being really core to the crypto user experience.
I think as Ethereum scales, if we really do see finance happen on Ethereum and happen in the broader multi chain crypto universe, then we'll probably see trillions of dollars of bridge volume a year.
And it will probably be comparable to DEX volume as well. Whereas right now we see DEX volume is a lot higher than bridge volume.
What is Hop’s approach to building a scalable token bridge? And how does it differ from other bridge providers?
With Hop we've taken an approach that focusses on trustlessness and security. Those things, in our opinion, go hand-in-hand.
I actually did a talk recently on bridge security and got to dive into every single bridge hack that's happened over the past two years. And so almost $2 billion has been lost to bridge hacks and most of that has been because of compromised multi-sigs.
Just the fact that Hop doesn't have a multi-sig that's propagating these messages and is a fully trusted bridge already puts it above a lot of these. That sets it apart from a security standpoint because there is no multi-sig that can be targeted and then drain the bridge.
And so then the other thing we've done with our approach is we have this unique hub and spoke model. With Ethereum as a hub, we use the native message bridges for each of the networks we support as a way to communicate with those networks. And then when we communicate across multiple, or two different layer twos, it goes through Ethereum and then back up to the destination layer two. Our model means we can silo each network and the liabilities that network presents to that network alone.
The native bridge that we're using to communicate with this network also underpins that network's native token bridge. So these networks are already completely reliant on the security of native token bridges. If Hop can also silo these risks to just those networks, then Hop gets very close to the security of the actual native bridge.
We see this as a very secure approach that doesn't have any of the issues of the 12 bridge hacks that we've seen happen. Well, I should say actually most of those 12 were smart contract vulnerabilities. That can happen to anybody. But a lot of them were related to signatures or other mechanisms that we don't see in Hop.
If we're able to add extra support for more networks and more layer twos and plan for a catastrophic event on one of these layer twos, then it will be siloed to solely that network and all the users on that network are at risk anyway. We see this as the only way a bridge is going to scale horizontally from a security perspective, so that's been our approach from day one.
What kind of effect has the bear market had on your team and your progress?
I think it's been great. Our team has been around a while and we love bear markets. It's a great time to build and just put our heads down. We're a super lean team too, so we're able to get a lot done without a ton of cash. And so from that perspective, the bear market is not nearly as scary for us as it is for lot of teams that are quite heavy in terms of spend who will need to continue doing very large raises. But yeah, I think we’ve seen a lot of the noise disappear during the bear market and we've had our heads down and should have some cool updates soon.
What's a successful outcome from liquidity mining? What does that look like for you?
One of the goals is distribution. Hop has a very large treasury. One of the things that our team did differently compared with a lot of teams in the space is not raise a huge venture round ahead of launching the token. We really want the DAO to be where the value is and the entity that is in full control of everything.
We saw that if we were to raise a lot of funds as a company then we might not necessarily have the obligation to put the DAO ahead, and that kind of creates a conflict of interest. We would be more incentivised to drive value towards equity. We see a lot of teams doing that and didn't really like the model.
Our different approach has been to not do a large raise and instead put more tokens into the DAO’s treasury, that way the DAO can benefit from the effects of any kind of distribution from that treasury, whether it's a private sale from that treasury, or liquidity mining and so on.
Hop has a lot of tokens to distribute and I think that's going to be important for its long-term success. We want to achieve a broad distribution across the Ethereum community. And so liquidity mining does provide a great outlet for any folks to get their hands on the token if they want to earn it by participating in the network.
I think subsidies are good for capturing new markets but aren't necessarily something that is long-term sustainable. So specifically for the Hop program, I think this makes a lot of sense for where Hop is today. Given that a lot of the markets, especially the DAI and the USDT bridge, benefit heavily from these subsidies, it makes a lot of sense today. And then in the future, I think it would make sense for Hop to slowly back off subsidies after it's achieved broad distribution with the token and start looking at more sustainable models that don't involve this perpetual cost to the DAO.
One of the big things that will help there is the next version of Hop which should be a lot more efficient, especially for longer tail assets that don't get quite as much volume as DAI and USDT. When that comes around, then I think the community can start thinking about different ways to achieve distribution that might have other benefits if we don't need these subsidies anymore.
Hop seems to have a really solid community. Is that a result of the decisions that you made at your genesis? How have you been able to attract a strong community?
We observed the same and it's really hard to say that's a direct result of our early decisions, but we really want Hop to be community owned. That was the driving reason behind not doing the big raise and allowing the community to take over early.
We try to strike a good balance for the community, too, in terms of governance, and prod things along that need to be prodded. And also be almost too hands off for other things, where we allow opportunities to form, for different community members to step in and fill different roles. I would say having a really strong community is really important to our long term success.
Lito is one of the best community managers out there. Lito and I met when he was first establishing the cryptotesters community, and I was so impressed with the work he was doing over there. It felt like such a natural fit from the beginning.
We also have a designer that we work closely with named Genesis. We've been working with her since the Authereum days and I’m always impressed with her design work and the brand that she's helped develop with Hop.
Anything you want to say about the next version of Hop? What's next?
So I know the newsletter is about alpha, but all I can say right now is that we're going to be releasing details about what we think the roadmap should be very soon. But it is going to be an open discussion with the community. So stay tuned. But yeah, we should have some more details soon.
Will Hop move away from just focusing on rollup-to-rollup transfers?
I think we're definitely very focused on the rollup ecosystem right now. But the main kind of requirement for Hop to support a given network is a message bridge with Ethereum. Right now that is rollups, and then Polygon has a message bridge, as well as Gnosis chain. I think in the near term it's going to be mostly rollups, but as we see message bridges develop with other layer ones, it would make sense perhaps to look at those networks for support. And this is a community decision. All these things go through DAO governance voting and the community will weigh the cost benefit of adding a new network.
I think there's some really exciting tech happening or being developed around messaging with Ethereum and other chains involving SNARKS to do the proofs, and accomplishing an IBC-like mechanism with Ethereum. Once that tech is ready I think that's going to unlock Hop bridging to a lot of non-Ethereum chains.
What do you think of your closest competitors at the moment? Are there any you really admire?
I think a lot of the competition that we're most worried about are the folks that don't necessarily care about being decentralised, or being trustless, like Hop does, because there's a lot of shortcuts you can take with bridging that make things a lot more capital efficient and a lot more flexible to support different chains. Particularly like the multi-sig model where you have a set of authorities that control all of the funds in the bridge. And so I think those have been able to get a lot of traction in terms of volume.
I would say that with those teams I do admire the business development and those approaches, but would like to see the space take trustlessness and decentralisation more seriously and not just go down this direction of commoditising bridges regardless of the trust model.
Ultimately, I think if we can build a very secure system because it's fully trustless, our thought is that ultimately that's going to win out because that's going to be where the cost of capital is the cheapest.
Do you think there'll be multiple bridge winners? Or do you think one bridge will emerge to predominantly rule them all?
I think we'll probably see a power law distribution just like we do in a lot of different markets where there will likely be a dominant winner in each category. So like L1 to L1 bridge, rollup bridge and then also same thing for the messaging layers. But then I do think that there will be long tail bridges and we will see a pretty diverse bridge ecosystem, but probably not a super even distribution in terms of bridge volumes.
Which L2s do you think are going to make it?
With Hop we're definitely betting on Ethereum having a very diverse rollup ecosystem. I would say all the rollups that do have an ecosystem already I think are going to make it. They're going to keep compounding those network effects and that's just going to work really well for them.
What we're also seeing is more new entrants on the ZK side. That seems like it's a very competitive space, which I think is great for end users. There's a lot of different teams taking different approaches, and ultimately end users should receive the best of the best there. It should be interesting to see who survives and who doesn't on that front. But I do think that we will see multiple ZK rollup ecosystems emerge.
The other type of rollup that we're starting to see is this Arbitrum Nova style rollup. I guess you could consider the current DyDx StarkEx deployment as similar. That also used off-chain data availability, so does ImmutableX from StarkWare. This rollup construction, it's not technically a rollup, doesn't use Ethereum for all of its data availability and could find use cases like social media or gaming. And while this isn't fully decentralised and fully trustless, the cost just drops off the cliff and gets very cheap. Having these rollups even if they don't share the full security of Ethereum, gets really, really interesting. They do have these centralised components, so we should keep that in mind, but it’s very interesting.
For example, Reddit is now trading their tokens on Arbitrum Nova. This is something that the regular rollups just aren't cheap enough for. Because the cost needs to be basically zero, as Reddit doesn't want users paying for the cost and doesn't want to pay the costs themselves. That being said, now all of these tokens are on Arbitrum Nova they can be bridged to Arbitrum One, and bridged to Ethereum to enjoy the full security there. You can see how having these ecosystems adjacent to each other is really valuable. So, I do think we'll see some use cases utilising scaling solutions with off-chain data availability gaining some traction as well.
If you consider that we've been talking about layer 2s for four or five years now without really seeing use cases play out, it's really cool to actually be using this stuff on them now.
What are you bullish on for the future?
I’m definitely bullish on a lot of ZK tech, maybe I should say SNARK tech because it's not all zero knowledge, but SNARKS and STARKS, not just for rollups, but also for different use cases, like privacy, for doing things like storage proofs across different chains. Yeah, I think it's just some really powerful technology and we're just scraping the surface for the user.
Any advice for crypto investors right now?
Take a long-term view. It's always good to zoom out. If you stick around for more than one cycle I think that you'll see that the stuff that's genuine is being built by folks that truly believe in crypto. And that’s usually the stuff that pans out across multiple cycles. That tends to be what I look at the most.
Provide liquidity and earn HOP, or bridge funds across chains using Hop Protocol
And that’s your alpha.
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Do your own research.