[00:00:00] Hello everybody and welcome to the Crypto Hipster podcast, this is your host To be on the Crypto Hipster where I interview founders on to Benor's executive's thought leaders
[00:00:10] Artists, you name it all over the world of Crypto Unblockchain and today I have an amazing guest coming to me from Portugal His name is Karel Kubat, he is the founder of Union Karel welcome Happy to be here Thank you for joining me It's going to be great
[00:00:32] So we asked you the first to take things off, you know what is your background and is it a logical background for what you're doing now? So my original background is actually biochem way back in 2013-14
[00:00:47] Went to Crypto around 2015 as a programmer initially did some work in the dirty space and Invested in different ICOs and then later went to contribute to cosmos and polka dot So my background is originally like many people got floating into crypto getting my toes wet and
[00:01:06] And slowly more on the tech side itself and by now I've contributed to cosmos polka dot Ethereum Worked as a city of the Bosco finance and now found a union are into 50 projects Great biochem to tech to crypto What makes you choose that?
[00:01:30] So biochem has a little of statistics and programming on the sides especially mathematics it's pretty hard for STEM degree And so that kind of gave my foundation in logical thinking as does programming about not Python are and such
[00:01:45] Biochem in Europe however is very hierarchical basically all big pharma companies are in Germany And you can imagine a very core project or a man wearing a tie being your boss for 30 years and you need to pay your dues before you can finally
[00:02:01] Get promoted and actually get the job that you want and there was no really an industry I wanted to go in for me I needed to make a bigger difference overall and working a field that was a lot faster moving overall
[00:02:13] Obviously I had the skillset to work in tech Given that I had the program in background and the algorithmic background so that's why I initially made the pivot And for me crypto aligned very well with what I want in my life which is the sovereignty portion right
[00:02:30] If I excel and do very well, I want my career to excel or I want my contributions to the world to be very significant And I want to be a full control of all that and to be honest that to me is what crypto really is right
[00:02:42] It's a meritocracy. I like you already That's good So let's get into it then Union what is that all about? Yeah, so we found a tuning about 14 months ago to bring better infrastructure better bridging
[00:03:03] Faster and more secure to the modern tech to all these new chains are being created Which you're seeing kind of right now happening is we got loads of new ecosystems being spawned Consistency of many chains slash row laps dimensions saga
[00:03:19] Movement labs but also L1s like bear chain we see apps going to their own chains specifically Like the YDX and hyper liquid and ENS and so we're slowly moving to this world our crypto is no longer a hundred chains with ecosystems on each chains
[00:03:36] But more 10,000 individual chains and row lips with apps on top of that Now for an end user this is going to sound like a nightmare of course with the current infrastructure right It would constantly to bridge reuse well that's this actually not the utopia that we want
[00:03:50] But for a developer it kind of is because it means that you control your product much better Like you you don't have congestion anymore You don't need to share your group space with all their apps so no longer fighting for that rare commodity if you're Apple's viral
[00:04:04] But the question now is can we give the end use of what they want like still that Consistent, composable user experience where they don't need to shoot wallets
[00:04:14] They don't need to necessarily go to ritualize they can just interact with all these different chains as if they're one app That's kind of the thesis that we found a genuine wind like that's what the world needs to be for all of this to work
[00:04:27] And the question is how do we get there and Realness the fundamental that the point still is the low level virtual infrastructure it's slow It's relatively centralized like few Oracle's or multi sticks when most of it and that may means that there's a kind of scaling
[00:04:42] Event on how many networks they can support there's a security Back to work kind of right if your Oracle is run in the US by US company For your bridge then technically the US company government controls this bridge controls the Oracle and so
[00:05:02] For union that's the first thing for fixing making sure the bridging infrastructure no longer relies on any outside entities And that it is Permission to hide is cure and the way we do that is using zero knowledge per photography some follow-ups there so you Well
[00:05:26] Yeah, I'm gonna ask it With you. We're not gonna need the Oracle's anymore Well it depends on what the purpose for the Oracle is right you kind of have Oracle's for price data and such If you need information combined and so all will always need an Oracle
[00:05:43] But if you need an Oracle to facilitate the bridging between one chain and the other chain then you really don't need an Oracle in between that
[00:05:50] You can do this without any third party entities by generating a ZKP for the one chain and sending it to the other chain And then you have a trustless connection between the two Interesting I see it okay, so
[00:06:05] You have partnerships you mentioned barricine but you have partnerships with ag layer barricine and others You know What improvements have you been able to bring to the market as a result of those partnerships? Yeah, so
[00:06:19] What you're seeing right now for example what we're going to put to test net probably next week is connections into bear Chintest net for celestial strides and soon double on as well Currently there's like no way to get those assets in and
[00:06:34] And at the same time there's loads of stakes assets from this ecosystem so lots of value that can be unlocked That can be executed participating in D-Fast With the acclayer basically what we offer is the entirety of the cosmos ecosystem
[00:06:48] Access to different road-lapse running in the polygon ecosystem And without needing to go through Ethereum so with a little of these kind of legacy solutions that existed
[00:06:58] You could perhaps facilitate this not always by going directly through Ethereum the problem with directly going through Ethereum is it's expensive as hell Right? Like you're paying a hundred bucks in gas fees
[00:07:09] So really the trick is always can we like have the same security and higher speeds without actually needing to go through Ethereum for these different routes because then we save the endfuse or a hundred bucks in fees
[00:07:22] All right, it transforms celestial to bear a chain needs only cost maybe like a sense or something like that's like a very small amounts And so you're dealing with very different skill of economies He hundred hours each time
[00:07:40] Well if you if you go through Ethereum right because that's any therian gas fee, but if you use union you don't need to pay that God, it's your already saving users a lot of money That's really cool so I want to find out from you
[00:07:55] This concept of the sovereign trilema right what is the sovereign trilema and then what opportunities and challenges Exist because of it yeah, so this is mainly Trilema for builders let's say you want to build your own Community ecosystem your own protocol, right?
[00:08:17] Your choices really are do a smart constructs or build your own chain When you build a smart construct and you build your own product around that
[00:08:27] Then what you gain is a lot of interconnectivity so that's that's our one check you do have that because you're connected to all all this Marks concepts and users on that chain
[00:08:37] But you no longer so far the chain itself controls your gas fees if your transactions get included If a crypto kitty's lunch is the same daily or a week later and gets very popular
[00:08:48] Then your users pay more into infection fees because some other app is slurping up all of this block space Right, so you lose it kind of sovereign control portion yourself Now if you choose the blockchain building that like your own chain then you are very sober
[00:09:06] You have like your own users Other apps don't A compete with you on your block space which you lose that interconnectivity You're no longer able to access liquidity of other users of other chains or easily interact with them Unless you rely on a centralized bridge
[00:09:25] But if you rely on a centralized bridge now we're giving the keys to the kingdom again to this US or an oracle or they select third part company, right? So we're not really sovereign we're technically like in control by a bridge protocol now
[00:09:39] And finally the third thing is you can choose to basically Just most connector chain to anything then you are fully sovereign But then you lose that interconnected to see altogether and so with the toilet is hard to get all free
[00:09:53] And that's what we saw to like fix with union is how can we enable builders to have a sovereign app Be completely connected to everything out there and at the same time not be surveillance to a bridge protocol So
[00:10:15] So okay, so I understand that's being solved if you're doing it how are you like how exactly are you able to do it? Not having that third party off chain components be a security critical feature So without that oracle or multi-sake
[00:10:36] Well the system becomes is ZKP being transferred between the two chains now anyone can generate these ZKPs So it's not just union labs to compete. It's not just our specific relays any user could generate them in the browser
[00:10:53] Any like validate a four different chain or two units programmer or technology and who's just could spin up one of these relayers in generates their knowledge proofs And that means that the union labs disappears entirely
[00:11:05] We all retire or pack up our bags and close the project this system still functions It doesn't go down so it has the same property that a blockchain basically has since truly the sense last and That means that as a
[00:11:18] Product builder building your own app chain union does not become an Achilles heel. It's not a vector or it's not something that might Take down your product or censor your product at some point. It's something that you can always rely on
[00:11:36] The innovation really has to do with the zero knowledge, right? so There's rule of zero knowledge and there's a narrow event there modular versus monolithic It's been a narrative that I've seen all the these all the salonavices yell about for a year
[00:11:59] The role of zero knowledge in monolithic versus modular text acts You know What is the troll and why is it an ex big opportunity in both? Yeah, so Zero knowledge cryptography Let's assume like I'm not gonna go into how it actually works
[00:12:18] What it allows you to do is Perform a lot of Computation of chain and then verify all that computation on chain in a very lightweight program So let's say you do massive data analysis of chain
[00:12:32] You can verify that the data analysis is correct on chain with spending just very little gaps Like it's very cheap to verify this and so you can rethink a lot of products because and right now
[00:12:44] Some smart context take the cost of some of gags to do something right because the smart context very big Excuses loads of lines of codes now in small cases is more efficient to do all of this execution of chain
[00:12:56] And then just provide the zero knowledge proof on chain and then you get a gas saving in total That's the scaling components of CKP tech and that's actually what zero knowledge roll-ups are based on That's their whole idea
[00:13:09] Perform all of this computation of chain on process and transactions and then just But approval validity on chain We use it very similar to CK Roll-ups because Trustless bridging which is based on light clients
[00:13:26] Is basically running a chain inside another chain that's kind of fundamentally what you're doing here and And so If you don't gonna do that naively It's gonna double the computation cost per chain and you're gonna be wasting a lot of gas So that's in the feasible approach
[00:13:43] So we actually run that other chain inside is your knowledge proofer and that's the proof We submit to all their chains That gets you the same scaling behavior and we get the same security guarantees and the chains are fully aware of each other
[00:13:56] But because we use EKP tech, we spent very little gas on that which keeps Consection costs for users very cheap And you see if you can be tech being used in privacy as well That's a completely different kind of use case category for it. So
[00:14:14] That's like I we ask people not confused those In modular versus monolithic so how does it apply here In modular chains Usually chains offload certain parts of their function to other chains or they become row-lops and a kind of instead of being Then let's say like one
[00:14:35] Confident that there's everything a conglomerates instead they are bunch of lean start-ups They use each others like products and just focus on their core business Now in the blockchain world that works very well
[00:14:48] If you know that apart as you are working with our not cheating you right like I offload security critical components to another chain
[00:14:56] I do need to know that a chain is executing it properly and that's very often where ZKPs are being used for for example in Celestia and I can be a They're used for verifying that the data has been made to favorable right so when you actually do this
[00:15:12] Data availability boasting and the core is cryptography to verify that it's actually occurred and so it Rearzes ahead in lots of small places or small a little big places all the time as a core technology components What if you are being cheated?
[00:15:31] Hmm and what if you are being cheated? In in this case for example If Celestia let's say is not actually storing the data or is not storing it in a sufficient amounts What happens when you a rural access on Ethereum
[00:15:47] It needs to post the data to Ethereum itself so Ethereum can basically deny The next settlement of the rollup Because the contracts going to say I do not like have sufficient access to the data
[00:15:59] It's necessary to settle so you need to provide me the data directly and that keeps users secure in this case Right so the ZKP side is used for verifying that stuff has been executed correctly guys, so as it checks the balance really It's always checks the balances but
[00:16:18] Like computing checks and balances in contracts can be very expensive Doing it as a ZKP can be very cheap Guy So I'm intrigued You said you know if ZKPs enable us to
[00:16:34] Reimaginary or reinvent the way the products are designed and products of built so I'm wondering what products are possible because because of you guys Because of union because of ZK's What can be reimagined? Yeah I would say it's not necessarily a reimagining because
[00:16:54] We already have very wide to the products in crypto right, but I would say is right now our products are actually very limited And when we want to have very scalable products we need to post them to last right
[00:17:04] People use Binance and Binance is a much more fully featured product than unispots for example And then that's because you must stop being driven on the Ethereum or one can only do a limited amount of features
[00:17:16] And cannot do like proper order groups for example, needs to use liquidity pools and all of that And when you go modular and you see a K-tech you could just build a decentralized Binance right on half
[00:17:28] Exactly the same features and everything available between that as a fully decentralized product as its own chain That's to be on a very close to what hyper liquids and the YXR and perhaps my transform and next couple of years
[00:17:42] And so with the lot of products we have right now I would say We kind of had like the fee one of the products where they kind of work But there's still very limited and they only work if you have like a thousand or two thousand users
[00:17:56] We can't really handle 500 million users right carry build those web skill product chat And the reality is not only Ethereum right we just cannot Ethereum itself cannot happen to users And so you need to offload computation go margin or two accomplish this it's interesting
[00:18:19] I think things would change change, but I want to find out how much it changed Couple years ago I had conversation with B&B who somebody there who was getting they were getting in the defy right Ethereum side I'm seeing IVA I'm seeing synthetics
[00:18:34] I'm looking at it being be chain they have wrapped like one wrapped Bitcoin wrapped Ethereum but not too much else You know how has it grown since then and what are the new possibilities because of because of growth and development
[00:18:51] You mean defy in general what you believe CK will allow their two care I think you can do much more complex products overall and right now defy if you look into the actual codes how the products work
[00:19:06] It's you can only access data like within that block like the current state so it works kind of okay for Options and such become harder and Automatically rebalancing ETFs are quite difficult as well because you don't really have access to historical data in a context
[00:19:24] You only have access to like the current data itself and that makes the full of harder So as you can take here and make things a lot simpler because when you do this use for example Herodotus or XM you can create zero-nodges proves over historical Ethereum data
[00:19:41] so comes for it can request Give me the average price of these 10 assets over the last three years and then do something with that So that allows you to create more complex financial derivatives And that's the most big one another one is right now
[00:19:58] We have to keep our financial products kind of simple and we can't into connect them too much Because when one price of dates and all the price needs to update you kind of give us like Cascading price of dates when products depend until each other and
[00:20:13] And computing what those new prices are should be is quite expensive as well one chain So we mainly rely on Oracle's and on the creation rules To accomplish the goal of updating those prices and balancing all of this out CK tech you can improve that as well
[00:20:30] What I am myself most excited about To be honest so the defy portion. I think we'll just become a little more efficient I'm gonna see new users more activity, but not necessarily products that look very new Like that to you will feel very new
[00:20:45] But we're going to see better integration with the web too world so projects like ZKP to P allow you to actually All ramp yourself so you can use bank transfers to get money on chain and mint your own stablecoins
[00:21:02] And they use zero more cryptography to verify that you have transferred the money in the correct accounts Before meeting the focus and the same When you want to release the tokens You can also go over and yourself
[00:21:16] Without the need for senseless part here except of course the bank Enjoy for me too. I want to ask about the centralized market You said um you know web 2 has a better opportunity Great and you also said to be useful for ETF rebalancing
[00:21:35] You know in January you know all these big companies and you know got the ability in the U.S. to to sell big Queen ETFs and recently they got approval for Ethereum ETFs How do you see union
[00:21:48] And what you guys do being able to help these you know massive you know financial institutions And so yeah for us ideally I'm really excited about products which are kind of DeFi in the front business in the back and connecting the kind of
[00:22:07] Transfile world to defy like Athena right Athena basically allows you to get exposure to yield That's been generated completely of chain if you want to do this properly You need very secure connections to the Transfile world all right like defy needs to be able to rely
[00:22:26] That we're not being right by the Transfile worlds and that's basically union products Right that's basically secure perching is verifying that the other party indeed is doing what they're saying That they're doing looking up tokens looking up funds
[00:22:40] So that's one portion of very excited about so we probably gonna see a look more hybrid D-Fi Or DeFi connected to permissioned ledgers right getting products on chain that have exposure to private ledgers that Thanks use in between each other
[00:22:59] That's the kind of what we're looking to support and regarding ETFs and such union industry to care about that too much to be honest I'm a crypto maxi token maxi so for me that's the more important portion here is actually getting the regular person
[00:23:15] To make yields to see better products. I'm not too excited in helping boomers make more on their massive retirement if I'm gonna be honest for me it's the for the deejins and the hipsters that I like to support I told you to be getting I like you
[00:23:32] Yeah, same same I don't want to see boomers get more money You mentioned early on One one rabbit hole and I'm not a rabbit hole, but you know Privacy right um Challenger store main in our you know current Environment right for that and those include privacy
[00:23:57] censorship and user control right What would be the result of building you know a fully decentralized internet That solve these issues hmm so Not you like a fully decentralized internet like Indeed like there is the possibility for censorship, but a fully decentralized internet is very hard
[00:24:22] Because the internet in the end needs physical infrastructure and physical infrastructure It's kind of always controlled by governments like perhaps a Starlink or something like that you can do it right But as always have wires going through the ground there's always a point for entry here
[00:24:37] Within crypto itself for these topics and privacy especially I think privacy is very overlooked at the moment And like to like I'm just divided with two categories. There's the category of like Perimence privacy and that's the one we are all very familiar with that's tomato cash
[00:24:56] Z cash a number like these chains that try to provide you privacy forever as a human right now these Like here the discussion always goes R.Ds for criminals right why do you need to have to be private forever?
[00:25:10] I personally think that privacy is a human right especially for an edge of privacy a little people overlook Insurely privacy Perhaps privacy for just 10 minutes or for half an hour and now why is this important? The only way to protect against M.E.V. is privacy
[00:25:29] As long as you can inspect the transaction Someone will always be able to front-view right because they know what the transaction is going to do So they will always use their technological advantage access to valid days or to try to make use
[00:25:44] If you ever have a private chain where you don't know what transactions will do it's impossible to extract M.E. And so shortly privacy let's say just three minutes 10 minutes actually gives users better
[00:25:57] premises right when they perform swaps on uniswap or when they take out loans or whatever they do They actually get a better price in the end than on a public chain So that's why I think like especially like short-lived privacy is something we shouldn't overlook
[00:26:12] Because right now if you look at for example pimples fun or the at least like different meatcoin access arbitrage bolts and M.E.V. bolts are extracting about I think 150k so
[00:26:24] a month I'm not sure what the timeframe was but pretty messy for months is would use this are losing out of Let's hear how familiar you are with the whole intense and chain abstraction narrative You could if you could briefly that be great
[00:26:42] Yeah, so there's these chains like particle network but also what's a method to student with swaps Whereas an end user you can just describe like I want One ethereum and here's 3000 USD and some of chain bolts
[00:27:02] But you describe like the end result if you want and you let some other part if you get out what to do So that part you might say I'm gonna use you a swap and just buy straight up or I'm gonna trade your USD for
[00:27:14] ReptBTC and then trade the reptBTC for each like they figure out the code next path that you need to do You just get the end result now without privacy you're always going to be paying the maximum price
[00:27:28] So if you say I want to get as much ethereum as I can from a 3k USD But at least one eat then you're always gonna get one eat because you're gonna get from front to the max
[00:27:41] If you add privacy on top of this then you're actually gonna get Better or best execution so you're gonna end up with more eat in the end through these protocols
[00:27:50] So that's why privacy is such an important feature here interesting the invention next I was just thinking about how to had it Had it not be seen by the emiv by the bots The other day when I was buying some stuff so Good so Yeah
[00:28:12] Interesting interesting times we live in right now. So I want to thank you, you know very much Presbyting with me today about this I enjoy speaking with you and I have one last question Really is how can people find it more information about union about you
[00:28:31] Start using you know your your protocol about you know and what you guys are up to Yeah, just go to your union don't bills and they'll lead you down the repitol and follow us on Twitter
[00:28:45] At union underscore bills and the same follow me at Kaiser Carol on Twitter too, and then you're gonna find all about our products Awesome. Thank you very much for your time today. Thank you very much have a good day