Layer 3 HYPE: Interview with zkLink CEO Vince Yang

Hey everyone and welcome back to Box Mining. It's Michael here and today I really want to touch a topic that's very exciting. It has number three in it, layer three. And we have a special guest to talk about it and it's Vince Yang from ZK Link. How are you? Good. Hi Michael. Hi everyone. Thanks for having me today. I'm very excited to be here to have this conversation with you, Michael. You guys are building a layer three project. Let's start with that concept first because we've heard about Ethereum being a layer one and we've heard about layer twos being very hot right now, whether it be Armatrub or Manta or anything else. But what's a layer three? That's a great question. To start with, layer three is the third blockchain layer. You're on top of layer twos as you can directly imagine it. And layer twos are built atop layer ones and the layer of most popular ones like Bitcoin, Ethereum, Solana. So there are many layer ones and many layer twos. And now people are starting to build layer threes. And probably the next question you want to ask is why we need layer threes. Yeah. Why would you do this? That's because layer twos are solving the problem for layer ones and layer threes are solving the problem that layer twos are not able to solve. For example, being more scalable, higher scalability, more bandwidth, more throughput for high performance applications like gaming, blockchain gaming, like a derivative trading product that is audible driven, that needs hundreds, maybe even millions of TPS to match the experience of a centralized platform like Binance or Coinbase. And second, to lower the cost of the transactions made on blockchains. Layer twos are cheaper than layer ones, faster than layer ones, but they're not necessarily fast enough, cheap enough for the scale that we really need for mass adoption. If we talk about a mass adoption layer threes, an inevitable future of printable. Yeah. Now we're not the only layer three builder on the market. People already have heard about layer threes based on the layer two stacks like stack from ZKC, stack net Madara. Arbitrum launched their layer three solution, Arbit, and the Polygon also has the aggregation layer with their Polygon. Already the layer two builders are already launching their layer threes. Then there are already hundreds of projects building on these layer twos. There are layer three solutions for their application specific diverse demands for those kind of applications that I just mentioned. It is not limited to those layer threes are unlocking new types of applications that requires high performance and low cost. Yeah. And just to bring it down here. Right. So when Ethereum first started, people were thinking, okay, everyone can be done on chain, but now it's expensive. Now, if you want to do, say, for example, staking operations or doing some decentralized finance applications, each transaction now is costing around $18. It's not going to be for everyone each, especially if I say, for example, you're going to video games, you know, if you're telling a gamer, Hey, that transaction is going to cost you $18. But so then we have layer two, sometimes we see transactions going from like, say 20 cents to maybe a dollar 20, but even a dollar 20 is too much because let's say, for example, in a video game, you're maybe opening a lockbox or getting a key. And those little transactions are like, like 20 cent transactions or stuff like that. Right. So maybe the total, the fee can be more than total value. Layer threes are where things can be cheaper and faster. And even for smaller applications like that, in video games, for example, I used to play auction houses a lot and I list a thousand items per every three days. You don't want to be spending a thousand dollars every three days. That doesn't make any sense. So that's where you're starting to see it, but it's not just for video games, but for derivatives, for kind of like even faster. Especially consumer applications that's going to serve like hundreds of thousands of users. At the same time, you're going to have like a lot of transactions happening at the same time. And you want to reduce that cost of transactions to as low as possible to be able to onboard as many users as you want. And yeah, we're talking about that you will want to bring the cost down to 0.01, 0.0001 your store per transaction. That is the kind of scale that the consumer apps really, really needs, especially for payment solutions for like a high frequency transaction. Exactly. So layer threes are where it's at for high performance and anything that touches real life at the end of the day. We're at this race here. One thing you mentioned is that this is not a new concept. This is an entire genre. There's multiple parties in this field. So I guess what sets ZK Link apart from everyone else then in that case? That's a great question, right? What is ZKLink is trying to build and why would the industry need it? Right. So first of all, ZKLink is not another layer suite. ZKLink is unique kind. ZKLink is being the first aggregated layer suite. So what is aggregated layer suite? Aggregated layer suite is meaning that it is integrated naturally, natively with, multiple layer two. So ZKLink is a unified aggregated layer suite setting, sitting on top of multiple layer two, trying to solve the problem of liquidity fragmentation, fragmented user experience and complicated developer experience. Because there are hundreds, there are dozens of layer two emerging or emerged, and there's going to be more. And this brings the pressing issue of liquidity fragmentation, reduced capital utilization rate. And you have dust everywhere. You have dozens of wallets for each of the layer two. And you have to frequently move your funds. It's expensive because you make the bridging solutions, the asset bridge are expensive. Each, each bridging transaction you make, you could have cost you from several dollars to maybe, you know, even more. Right. And three, it is risky. The people are not really comfortable with frequently using the asset bridge. But if you could stay on one unified interface for multiple purpose that can serve multiple purpose, this is a great value adder for user experience and to onboard more users. ZKLink is building the first aggregated layer suite to aggregate the assets and the liquidities from the fragmented layer two. It is also serves the purpose of higher scalability and reduce the cost because it's layer three. So it makes perfect sense, right? Because something you highlighted is fragmentation. And I think people don't really understand how fragmented it became because Ethereum, there's a lot of value. We see billions of dollars flowing to Ethereum. But when it comes to layer twos, these layers twos are built on top of Ethereum. But every project, there's just so many people building on top because anyone can build a layer two. Increasing number of layers twos because now all the layer two technology builders are offering standardized surveys. And there are dozens of RAS projects, helping you to build a layer two within few cases. Yeah, and pretty much you're combining all of that into your layer three. That's what attracted me to this project, right? Because we definitely see this as an opportunity. But at the same time, I see like, okay, there's so much fragmentation. You go into MetaMask and you say, which layer two do you want to select? And there's a whole list of them. I have like ETH on every single one of them. Let's say a hot new project comes on ZK Fair or whatever, right? I need to transfer funds over. Right now I use Orbiter. So I've been teaching Orbiter to this channel. It's probably one of the easiest ways to transfer from Arbitrum to StartNet. But yet again, it costs a little bit of money. So what you're doing is you're just combining everything into your layer three, right? How does that work? Do people need to bridge it over or how does that integrate? So from tech and corporate point of view, Ziklink is deploying contracts to these layer two. This allows the assets and users to enter this layer three from the layer two, including the layer one Ethereum. I need to clarify a little bit because this layer three is a Ethereum based layer three. It's not a Bitcoin based layer three. So first of all, it's Ethereum centric approach. Users can enter this layer three directly from Ethereum or directly from one of the layer two. It doesn't matter which layer two you are currently sitting on. You can deposit your funds to Ziklink layer three. And this is similar to the process that you deposit your funds from Ethereum layer one. And also this is how these layer three functions because it is a Zikro of layer three, right? So it's similar to Zikro of layer two. So it mathematically inherits the security characteristics of the layer two and which inherits the security of Ethereum. The layer three is Ethereum equivalent in terms of security. And then in terms of user experience, it is similar to how you bridge funds to layer two. But the difference is that you don't have to move frequently among the layer two. Instead, you could stay in this unified layer three for multiple purpose for different applications. So now we are working with a lot of application builders to build applications on top of our related layer three, where you have different kinds of applications for trading, for NFT, for yield farming, gaming, prediction market, derivatives, financial purposes, consumer apps or payment solutions. So most of the applications that we have seen today on the market are possible on Ziklink layer three. But the difference is that you would have the aggregated assets from different ecosystems. This simplified user experience, you could just stay here and you are entitled with the opportunity to be part of the emerging ecosystems, emerging assets. Here we have better offering than a single fragmented layer two ecosystem because it's aggregated ecosystem. You also have the opportunity to trade assets, to buy new assets from different layer twos. And on top of that, since it's aggregated, instead of spreading out your funds to 10 different layer twos, you can have the liquidity merged in one application utilization rate of your funds. It means higher capital efficiency, which is important for crypto users because you don't want to manage your funds in 10 different wallets. A lot of times you forget how much you have on there. I mean, this is definitely facing a, you're touching on subjects that face the people who are power users face all the time. I think this is something that like our channel, we've been discussing quite in depth about some of these power features on top of Ethereum built on top of Arbitrum and SarkNet. There's so much going on, but I feel like something that you touch upon here is how to use funds on every single platform. So obviously this is built in as the key point is the collaborative effort, right? Because you recognize that there are so many different layer twos as implementations of layer twos, you're choosing collaboration. You're saying, why don't we try to build on everything? So how does the integration work? Do you have to integrate into different chains? Who's responsible for that? And how does that work? We have two technical solutions for the integrations. So starting with Ethereum centric layer three, we were launching a new platform. We call ZKNK Nova. This is a general purpose ZKEVM aggregated layer three, basically even compatible. So you're able to build anything with solidity, right? So 95% of the developers are solidity developers. So we're tapping to mainstream developer community and mainstream kind of, you know, a lot of different applications. And we have another platform, which is application specific, as I just mentioned for certain types of application, consumer apps, derivatives, that needs really high TPS bandwidth and really low cost per transaction. We do optimization for these specific executions. And for the integration part, we have two technologies, which one is called Neknexus. It utilizes Ethereum layer one as the synchronization layer. So we deployed a smart contract on Ethereum layer one, and they're all receiving information from the Ethereum layer two through the official bridge. The mystic row ups is seven days for ZKE row ups is a couple of hours. They're receiving the information from the row up contracts. The ZKE link layer three is compressing the transactions and generating a ZKE proof and sending this compressed information together with the zero knowledge proof to the integrated layer two. And the layer two then are sending the information to Ethereum contract. The ZKE link will have an Ethereum contract where it will compare the information that receives from different layer two contracts. There, they synchronize the states across layer two. This is how the states of transactions happened, are settled. It is finalized on Ethereum layer one. So that's why we call it, it's Ethereum equivalent because your transactions are written in an Ethereum block. The security is guaranteed by Ethereum nodes. Got it. Yeah. I'm trying to think of a good analogy for this. Cause back in the day, we made this analogy that layer twos are like an elevated rail that goes on top of a city. Say for example, right now, I always like to make this analogy, like it's Bangkok, right? Cause Bangkok traffic is the worst, right? Because they all the cars are just like jammed in this, these streets. So I made this analogy that layer twos are like an elevated highway. It has posts that connect to the ground layer, but it's on top. So then it's faster, right? Because there's fewer cars on top. I guess that's what the analogy breaks down, but let's assume that there's more space on top. This is like a space highway, right? And a lot of people worry here about layer threes is that layer threes are built on top of that. So that you have a stack upon a stack. And then you're thinking if there's so many things stacking together, it's going to be wobbly, right? It's a very top-heavy structure. And the analogy would be that you directly connect to the ground floor, which is the layer one, which means that you have a lot of stability. Your structure is very stable and it also connects to the layer twos. So it's kind of got super high weight and people don't have to worry about it. It's an analogy. You have different railways, elevated railways on top of these city roads. The problem is that these railways are not interoperable, but they did not communicate with each other directly. You are entering each of these railways separately from the roads. We're building another layer, another highway, which is interconnected with each of the railways. And each of these railways have different technical specifications, but they're all talking to the same layer one. They're all talking to the same- A contract at the end. It's the complicated math, but let's assume that the math is solved. I'll refer you guys to the white paper and look at how it's done. Documentation on the website. Then you can run all the calculations that you want. So you have two networks that you, the one is the EVM one that you said, how fast is it? How cheap is it? Good question. We have this one network, which is even more compatible and the other one's application specific. Okay. So let's get back to this general purpose EVM compatible. We temporarily call it the Zaken Nova. For this Nova network, the transaction can be one order of magnitude cheaper than you can see on the L2s. Yeah. The TPS is similar. We're not seeing any significant gain in TPS in this layer three, because eventually this layer three is not serving the purpose of high performance applications. If the applications needs really high performance, they should go for the application specific layer three solution platform. We call it Ziglink X is offering the application. Yeah. For general purpose network. Why you need a general purpose network? Because you need composability. You need atomic possibility on the smart contract level, on the codes level. You want to compose transactions, compose liquidity. That's where you would make more sense for this aggregated liquidity together. Then you unlock new types of applications. You unlock new use cases with the assets from different ecosystems with the liquidity aggregated. And for the composability purpose. So you're actually two networks in one. So there's two prop specific networks here. One is called Nova. So the way I understand Nova is it's cheaper than everything else there. And it offers this combined liquidity, right? So because it's pooling everything together, it's combining all those layer twos together. That's what makes it sexy, right? Let's say if I funds in Arbitrum, well, I can still use Nova. I have funds in Starknet. I can still use Nova. I have funds in Ethereum. I can still use Nova. It's like, it's the combined everything together. And it's one order of magnitude cheaper. So I'm assuming that's maybe like 10 cents to one set. Let's say it's still cheaper. And a TPS is similar to everything else there. So this is like the world hub for everyone, right? This is the one combiner. And then there's a second product that's application specific. So let's say, for example, we're talking about gaming earlier and everyone loves Fortnite as an example. Let's say Fortnite wants to make their application specific game. Then they realize they don't need to have the ultra security or ultra aggregation. They just want it to be very performance based for their users, serving billions of users. So if they want to just optimize and choose an application specific method, that's what the application specific one is. Right? That's where like Fortnite, the World of Warcraft or Blizzard one, or maybe it's a trading one, a DYDX one. Right? So that's kind of the two products they have. Yeah, DYDX is a very good example for that purpose. Yes, exactly. You, as a five-type increasing trader, you need a product that can match the performance of a centralized platform. While at the same time, it still, you know, keeps the essence of crypto. You have decentralized, self-custodial, self-sovereignty, everything in the transparency, right? Because this crypto is blockchain. Allaire 3 applications can offer the scalability needed for a trading product that matches a centralized platform. That's a good example. And also blockchain gaming is a good example. A lot of game studios are building new blockchain gaming, especially on-chain gaming with Allaire 3 solutions. Yeah, exactly. Because video games are very different from financial applications. Financial applications, sometimes you want to secure billions of dollars. But here, in gaming, you want to secure billions of gamers with 10 cents each. And all of those gamers, they want to do multiple transactions that don't cost $20 per transaction. So yet again, I think that's a really great way of thinking about it. Because I think before, people were asking the wrong questions. Is it decentralized? Sure, it's decentralized. But the problem is, I think I want to move away from this full decentralization or absolute full decentralization with the most trackable. I think that would be like Bitcoin, right? Bitcoin is not suitable for video games. Exactly, and you shouldn't go for video games. At all. Yeah, it's not at all. But gaming is very different, right? So now we have these two different products. Nova is for general. It's Ethereum-based. It's for anything that's built on top of Ethereum or the layer 2s. And then combining that with your own layer 3. And then you have the application-specific one. So we talked about these two products, which is great. Now, we want to talk a little bit about your whole ecosystem, right? Like, obviously you guys have your own product, your coin that goes with this. What benefits are there for token holders here? Like, how does this fit in? For the ecosystem part, I'll just briefly give you some stats to start with. In 2023, we have onboarded roughly 130 partnerships with different types of projects, including wallets, market makers, application builders, Questa platforms, socials, NFTs, across a few different categories this year. In Q1, we onboarded 10 plus application builders onto the Ziglink X platform, building mostly financial products, high-performance financial products, mostly trading, other book trading, including some projects that have a high trading volume, which we're going to announce in the next couple of weeks. And for this Ziglink Nova ecosystem, we're going to build it out in the next few months. We're about to kick off the Nova platform, the general event compatible layer 3. We're very excited about it. It is something brand new, and it will be a brand new ecosystem offering brand new opportunities for application builders. As I said, 95% of the builder community, they use Solidity. We will launch developer programs to welcome developers from worldwide to build out applications. We have the similar offering than other event networks. And then as aggregated alerts, we also have our differentiation offerings. So coming back to the tokens, as we're a ZK-based network, we need a lot of computational resources to coordinate and decentralize. And the decentralized approvers that needs to sustain the operation of the network in long-term. And then the token is needed for the coordination. Long-term speaking, all ROPs needs to find a way to decentralize the components like sequences, right? Also, this token is needed for this purpose. And also, of course, it will be the governance token for the network, for the protocol. There are a lot of different things happening. And so a governance token is needed to coordinate the process and to make decisions for the key proposals and subjects related to the non-term development of the protocol. As we have in a layer 3 general purpose network, there's also a possibility to make it as the optional GAS token for this network. Just like other layer 2 rollups, you have ARB, you have OB-GIMIT token, and also have STACnet stock token, which just recently launched. And then these tokens are not yet used as the GAS token for the network, but there's an option to turn on the switch and use their governance token also as a payment token or GAS token to capture more value of the network for the token holders. The ZKlink ZKL token could also be utilized as the license fee payment token for the application builders using ZKlink X solution. The ZKlink X is application specific. The transactions are all off-chain and the application builders, we already released this information on CoinList that we plan to make this token a payment token for the license fee for those application builders using our ZKlink X platform. This is similar to how DYDX utilized the stock X, paid the service in cash, probably part of the token. You could imagine that is a big amount of money because the DYDX platform is successful. They made higher than above one billion US dollar trading volume per day. So you can imagine how much profits and how much revenue they're generating. Right. So as the infrastructure provider, the Stockware Labs, their scaling engine stock X was the engine behind the DYDX products. So ZKlink X is also capable of providing the service to the technology license, right? Yes, exactly. We're breaking that down. It's kind of a two front. One is if you're using Nova, then it could be eventually turned on its governance for that. And then it's also licensing for X. It's a governance token, but there's an option to make it a gas token too. Okay, cool. Let's talk about call to action here. If someone wants to be part of your network, the early adopters, what should they do here? How can it be early participants for you guys? We already have applications running live on mainnet. ZKEX is the first order book that's, omni-chain order book that's using our ZKlink X solution. And there are a few other applications on testnet like ZKEJUMP, OpenWorld, ZKEHAP, and a few more coming. And as I just mentioned, we're going to launch the new general purpose platform very soon, where users are able to make some deposits, do some transactions and interact with the network. Those are all the ways that you can interact with the actual network. And of course, follow us on Twitter, read more about the digital information on our website, and join our community on Discord. We already have a very vibrant community of more than 300,000 members. Hit, hit, hit. Early adopters and people playing around. So this is a big hint for you guys. You know, if you guys are airdrop farming or you're looking to be early adopters of various projects, this is where opportunity is coming, right? Because I definitely see this isn't just one project. This is an entire narrative. It's an entire story. It's going to be having an entire ecosystem, right? So definitely, I would say 100% be part of the Discord and 100% be part of the playground and play with the stuff early because, yeah, lots of stuff building. You know, when people build, they need community, so they can stay, right? So summarizing towards the end of this interview, what's kind of your big objective this year? This year, 24 is going to be a great year for Ziglink because we're launching exciting new solution platform, building out a brand new ecosystem that has never been seen before in the industry. In the first half of this year, we aim to do TGE. This is our target. We're working hard to deliver the general purpose layer three and build up the ecosystem. And then when the right time comes, then we will probably will, you know, approach the TGE. And of course, on top of that, we're building up new technology solutions to accelerate the adoption of crypto in general. For example, we're going to optimize the execution efficiency of our Ziglink X platform to support the next GenPYDX or something even bigger to match the user experience of a centralized platform. People are still trading on centralized exchanges, but this is not the answer that the crypto industry needs, right? Because we all want something that is really self-custodial. You should be in control of your data, your assets, it should be yours. And two, we're going to continue to explore the boundary of the efficiency of the Xerunology proof systems. We are going to implement new ZK proof system that is more powerful performance and efficient based on the Nova solution. Third, we're going to explore the decentralization of the WAP6 system. We started with something that is workable, usable, and go through the steps of decentralization and implement all the utilities that we promised for the token. And I'm sure we continue to build out our community, continue to build the ecosystem. It's going to be a packed year for you, but it's a good year because crypto, crypto moving up. We'll finally see the central applications almost performing as fast as centralized ones. And I think that's going to be the key here. I'm very excited for X. I'm very excited to see what people can come out and build on top of X. It's kind of finally solving this issue of blockchain being a little bit slow. Everyone was like, oh, this is a slow database. Now, finally, we're at a stage where we have the technology to build something that's super fast. So I really want to see that happen. And I really want to follow more and we'll ask community and build questions and kind of follow on with this, because I feel like there's so much to unpack here. Vince, thank you so much for coming and answering some questions and talking about layer three with us. I definitely want to see you in the future to just like talk a little bit more about how you're building the enter, how you're building that. And obviously with the token launch and stuff, how you can build a community with that. So I wish you the best with that. Thank you very much, Michael. Thank you for having me today. I'm so excited to see what will happen in 2024 for layer twos, for layer threes. Stay tuned. Yeah, it's the best timing for Vince. Thanks for us for coming in. I definitely feel like this is more exciting. And I hope these analogies work. Vince, thank you for coming to this channel. And then thank you guys so much for watching as well. Thank you guys. Bye bye. Bye bye.