Interview: Sunny, DeepTechFlow
Guest: Dan Reecer, COO of Wormhole Foundation
"Our history is deeply rooted in native encryption and hackathon culture, and we maintain this spirit by prioritizing decentralization, security, and open source principles."
- Dan Reecer, COO of Wormhole Foundation
Uniswap released a major cross-chain bridge test report last year, in which Wormhole and Axeler Network stood out among the top six cross-chain bridges in the network, becoming governance underlying infrastructure trusted by Uniswap. And other cross-chain providers - LayerZero, Celer, Debridge, and Multichain, are all leading cross-chain providers in the industry.
Why did Wormhole and Axeler become recognized decentralized cross-chain experts by Uniswap?
How does Uniswap's governance information bridge across various blockchain networks?
Is LayerZero a Web2 company?
DeepTechFlow invited Dan Reecer, COO of Wormhole Foundation, to answer these questions for us. What's more interesting is that unlike other Web3 projects, Wormhole is a "leaderless organization" without a founder leading investment. So in such an organization:
What is the organizational structure of Wormhole? Is it similar to the Web3 trio: DAO, Foundation, and engineer-oriented laboratory (Labs)?
Under such an organizational structure, how does Dan formulate operational strategies and make Wormhole a successful project today?
Dan has rich experience in operations and marketing in the traditional pharmaceutical industry. In his view, what are the differences in operational direction and tool usage between centralized and decentralized organizations?
Why does Wormhole specifically set up a gateway for the Cosmos ecosystem? What are Dan's insights into the Polkadot and Cosmos ecosystems?
We also thank the small partners in the Wormhole Chinese community for raising some questions about the current user experience issues encountered by Wormhole:
Progress of Wormhole's ZK engineering team?
Low liquidity issues when transferring to L2 using Wormhole, and how to solve them?
Factors determining the speed of cross-chain transactions using Wormhole
Below is the complete conversation with Dan, hoping to resolve some of your confusion.
*Note: "Wormhole" and "Wormhole" will be used interchangeably in the article.
History: From Solana Hackathon, Jump Crypto to Wormhole
TechFlow: This is my first time interviewing a deep infrastructure project like Wormhole. I have taken others' advice and made the questions specific. Could you briefly introduce the history of the Wormhole Foundation for my initial question?
Dan Reecer:
The origin of the Wormhole project is quite interesting. It emerged from a hackathon about three years ago. We initially conceived it at the Solana hackathon, with the main goal of bridging the gap between Solana and Ethereum.
The project started as a small team in the hackathon, gained widespread recognition and attention, and gradually developed into a significant endeavor. Jump Crypto played a crucial role in incorporating Wormhole into its framework and incubating the project.
Over time, Wormhole's cross-chain scope has expanded, covering about 30 different blockchain networks. Currently, the individuals initially associated with Jump Crypto and Wormhole have transitioned, and the project is now managed entirely by a team outside of the Jump team. In recent years, multiple entities have contributed to Wormhole's development.
The Wormhole Foundation is based in the Cayman Islands and has about 15 employees, providing funding to support various organizations for Wormhole.
xLabs operates in Argentina, responsible for managing relay infrastructure and is one of the guardians and validators of the network.
Wormhole Labs is the third core contributing organization, responsible for driving many engineering, product, and business development initiatives.
In addition, we have recently funded two zero-knowledge (ZK) engineering teams, but the details of the collaboration have not been formally announced. These teams focus on developing Wormhole ZK, including light clients and bridges. Additionally, multiple teams, including security teams, community teams, and teams within the Cosmos ecosystem, have contributed to the project.
Our history is deeply rooted in native encryption and hackathon culture, and we maintain this spirit by prioritizing decentralization, security, and open source principles.
This commitment to decentralization and open source sets us apart from some competitors who choose centralized and closed-source approaches.
Operating as a Leaderless Decentralized Organization
TechFlow: Could you share the organizational structure of Wormhole (usually divided into DAO, Foundation, Labs)?
Dan Reecer:
The DAO has not been launched yet. We plan to implement the DAO and on-chain treasury simultaneously. What sets this project apart is the lack of a traditional founder in the traditional sense. Although someone named Hendrick was involved very early on, he is no longer part of the project. It is now a founderless project. There are about 12 people distributed across leadership groups in different teams who collaborate widely, leading product development, engineering design, and business expansion. The entities are noticeably decentralized.
TechFlow: Considering the competition Wormhole faces and its leadership position in the field of numerous message transmission protocols and ongoing hackathons, I am interested in Wormhole's operational strategy.
Given your background in enterprise management and apparent expertise in Web2 marketing strategies and operations, how do you carry out operations in a decentralized, leaderless organization like Wormhole?
Could you share your personal approach and emphasize the differences between Web2 and Web3 operations?
Dan Reecer:
This is a great question, and the current work dynamics are very different. As mentioned earlier, we regularly collaborate with about five or six teams, creating a dynamic environment different from the traditional structure where tasks are assigned by fixed levels of managers. The coordination is similar to working groups, often involving individuals from different teams coming together to accomplish specific projects or initiate work. This involves active participation through calls, Slack channels, and similar platforms.
Another notable aspect is the importance of goal setting, which is not common in the cryptocurrency field compared to traditional companies. Based on my experience at Eli Lilly, the company places great emphasis on setting annual and quarterly goals as well as individual goals. My corporate background has given me a deep understanding of established companies that have been operating for over 200 years, so integrating these practices into a decentralized ecosystem presents challenges.
However, utilizing systems like OKRs (Objectives and Key Results) ensures that everyone has the same quarterly goals that are both challenging and rewarding.
It turns out that the experience of enterprises is invaluable for implementing coordinated strategies. This includes collaborating with leaders from different teams, setting strategies, defining goals, motivating team members, and celebrating achievements.
This contrasts sharply with the specific hierarchical system in enterprises, emphasizing individual coordination and a decentralized structure as the main differences.
TechFlow: I understand the challenges of simultaneously handling user event operations, tracking evolving technology stacks, and keeping up with market trends, especially in the rapidly evolving cryptocurrency space. Considering recent developments such as BTC ETF and cryptocurrency regulations, how do you balance these operational aspects internally at Wormhole Foundation?
Dan Reecer:
Yes, you are referring to the various project management tools used in our internal technology stack, such as Notion and Slack.
Over time, I have found the most effective communication tool, with Slack being the top choice. While not decentralized, its efficiency surpasses that of other decentralized tools. Although some teams (such as Polkadot) prioritize decentralization and choose decentralized tools, this approach may be less efficient, especially in terms of mobile functionality. Given Slack's excellent performance, we rely on it to meet our communication needs.
Ensuring that everyone is on the same page is crucial. For tracking product documents and strategic files, we use Notion to organize information in an easily accessible and trackable manner.
Project management is another key aspect, and for this, we use ClickUp.
Centralizing everyone into the same project management tool and consistently using it is crucial for keeping projects on track. To achieve this, we have a dedicated project manager responsible for overseeing all projects, conducting weekly checks on project status, and ensuring that project launches and other milestones are completed on schedule.
This approach forms the foundation of our operational strategy.
Four Wormhole Products
TechFlow: Wormhole includes multiple product lines. Could you briefly introduce each product and explain its functionality?
Dan Reecer:
Wormhole Messaging is our essential main product in the ecosystem, typically classified as a bridge, but it is actually a messaging protocol that can be used to build bridges such as AllBridge, Mayan, and Portal.
Messaging Protocol
It must be noted that Wormhole's functionality is a messaging protocol. Currently, there are about 10 bridges built on the Wormhole protocol. It is a messaging layer that can transmit various forms of data between blockchains. This data can be token-related information or non-token data.
Uniswap's governance is an example of non-token bridging. Uniswap uses Wormhole in five instances to broadcast governance decisions across chains using the protocol. They deploy about 15 to 20 units on other chains, with Ethereum as the parent chain. When a governance decision is made on Ethereum, the Wormhole messaging protocol broadcasts this decision to all connected chains.
Another case involves Pyth, the second-largest oracle after Chainlink. The entire Pyth oracle network relies on Wormhole messaging to broadcast price feeds from its Solana Fork base to about 40 different chains.
At a higher level, Wormhole messaging serves as the foundational platform for various applications.
Delving deeper into this technology, messages are verified through a Guardian Network consisting of 19 validators responsible for verifying the authenticity and quality of each message.
After verification, at least 13 out of the 19 validators must agree on the validity of the message before it is forwarded to the destination chain. This provides us with more technical information about Wormhole messaging, making it the infrastructure for building various applications.
Wormhole Gateway
The Wormhole Gateway you mentioned is a blockchain developed for dual purposes.
First, it enhances the security capabilities of the entire Wormhole network.
Second, its primary function is to serve as a Gateway into and out of the Cosmos ecosystem.
Integrating new blockchains into Wormhole is challenging because one of the 19 guardians must run a full blockchain node every night. The Wormhole Gateway allows any new chain in the Cosmos ecosystem to seamlessly connect to the Wormhole network via IBC, solving this issue, especially in achieving good scalability within the Cosmos ecosystem.
The Wormhole Gateway is a component within the broader Wormhole network, distinct from the overall power of Wormhole.
Another significant difference is that, compared to Axelar Network, their entire bridge network is built on Cosmos-based chains.
Wormhole Connect
Regarding Wormhole Connect, it is referred to as an in-app widget that addresses historical challenges faced by applications such as AAVE. Traditionally, users' bridged funds were transferred to external bridges, leading to user attrition and reduced revenue. To overcome this, Wormhole enables developers to embed a bridge in the application with just three lines of code. Users can seamlessly bridge funds within the application without leaving it.
Wormhole Queries
Finally, Wormhole Queries was launched about three weeks ago. The functionality of this innovative product is similar to an oracle, but it focuses on on-chain data. While Chainlink and Pyth are oracles that bring off-chain data onto the blockchain, Wormhole Queries introduces a new primitive for DeFi. It allows for efficient, low-cost querying of data on different blockchains. The product has garnered significant demand, with over a hundred applications expressing interest in the initial weeks.
Multi-Ecosystem: Cosmos, Ethereum, Solana
TechFlow: I assume you need to interact with various networks such as Ethereum, Cosmos, Solana, and Polkadot. You previously worked in the Polkadot ecosystem, and now we see the connection between Wormhole and Cosmos. Could you share the differences between Cosmos and Polkadot? From what I know, there is a positive sentiment towards Cosmos in the 2024 forecast. Could you explain the reasons for this? Or more aptly, could you explain why Wormhole specifically set up a Gateway for Cosmos?
Dan Reecer:
Yes, we developed the Wormhole Gateway for Cosmos because the Cosmos ecosystem is very active. Notable teams such as Osmosis have recently launched, demonstrating significant developments, such as the WBTC chain team. The introduction of the Wormhole Gateway allows us to seamlessly expand within this ecosystem without incurring additional infrastructure costs when adding new chains - a concept similar to a router chain.
A similar concept has been implemented in the Polkadot ecosystem, where the Moonbeam and Acala teams independently established routers to facilitate information in and out of their chains and connect with any other chains in the Polkadot ecosystem. This approach benefits both parties, increasing network traffic for both and enhancing our scalability within the Polkadot ecosystem.
Reflecting on my experience of about four years in the Polkadot ecosystem, there were some shortcomings in business development and marketing. The emphasis on engineering overshadowed the need for effective marketing and sales work.
On the other hand, Cosmos has made significant progress in these areas, with a longer time in operation and changes in leadership, leading to recent growth.
As a member of the Wormhole team, I have found that the advantage of being in a central and neutral position allows us to observe and participate in various ecosystems. Currently, Solana and Ethereum are the most active, with Ethereum being the second-layer solution, and Cosmos closely following as the third. The recent developments in the ecosystem are evident on Wormhole Scan, providing in-depth visualization of token flows between networks.
Wormhole Scan's Snapshot of Cross Chain Volume
Wormhole's unique position allows us to witness trends firsthand. It is worth noting that Ethereum transfers mainly flow to Solana and Sui. Starting from Solana, our initial goal was to connect Solana and Ethereum, which has made a significant contribution to our development in the most active ecosystems in the industry.
Competitor: LayerZero is a Web2 Company in the Web3 Space
TechFlow: Regarding competitors in the bridging industry, I recall that in your podcast with the Crypto Coin Show, you briefly mentioned LayerZero, emphasizing their centralization similar to Web2 companies rather than Web3 companies. Could you explain in detail the reasons behind this viewpoint?**
Dan Reecer:
An important piece of data is the Uniswap Bridge Assessment Report. The Uniswap Foundation recognized the complexity of community voting on bridge selection, so they commissioned a group of impartial third-party researchers with deep technical expertise.
Over several months, they conducted research on six different cross-chain protocols, including Wormhole, Axeler Network, and LayerZero. The report focused primarily on decentralization and security, with Wormhole being the most highly regarded protocol due to its decentralization achieved through the operation by 19 guardians and open-source code.
Another protocol, Axeler Network, was also approved by Uniswap for use, indicating its open-source nature and decentralization.
However, the other four bridges were deprived of the opportunity to collaborate with Uniswap governance unless substantial changes were made.
One significant reason for LayerZero's rejection is its operational structure: it is controlled by a centralized 2-of-2 multisig, posing potential risks of transaction censorship and fund theft.
In contrast, both Wormhole and Axeler Network prioritize decentralization and open-source principles. The report also highlighted a major flaw of LayerZero - its closed-source code, similar to large companies like Twitter, Google, and Apple.
In an industry where decentralization and open-source are crucial, relying on closed-source methods raises concerns about transparency and security.
Therefore, the Uniswap Bridge Assessment Committee holds reservations about LayerZero, considering it a risky choice for users due to its lack of transparency and decentralized operation.
Three Questions from the Wormhole Chinese Community
TechFlow: Based on current information, Wormhole plans to integrate ZK technology in 2024 to achieve fully trustless transfers between major networks. What is the current progress in this regard?
Dan Reecer: We are about to announce this very soon, and I am working on it today. Several engineering teams have received funding and are focused on zero-knowledge (ZK). We will announce a significant hardware partner who will work with us to enhance hardware support for ZK technology. Additionally, we are advancing a plan where the ZK bridge will utilize a light client. Our Ethereum light client is about to be completed, and light clients for other chains will be announced subsequently.
This development will enable us to launch several fully trustless corridors between chains.
We are actively developing light clients for Wan Tong, Sui, and several other chains, aiming for a challenging but significant industry impact. These are the plans currently underway, and a wealth of new information about ZK will be released in the next two weeks.
TechFlow: Wormhole assets lack liquidity on different second-layer solutions, leading to a poor user experience. How does Wormhole plan to address this issue, and will the liquidity layer improve this situation?
Dan Reecer:
This is a great question, and my answer actually emphasizes the liquidity layer. We are currently building this product and working to release it as soon as possible.
Historically, Wormhole bridges use wrapped assets to facilitate bridging. The new liquidity layer is designed to provide users with a native-to-native transfer experience. We recently launched this technology and will officially announce it this Wednesday. It enables native Ether transfers and native wrapped Ether transfers between six top-tier Ethereum mainnets and second-layer chains, including Optimism and Arbitrum.
This development marks a significant improvement in user experience for those transferring assets between these chains. Looking ahead, our goal is to expand the liquidity layer to essentially include any asset with native liquidity on both sides. Our aim is to minimize reliance on token wrapping as much as possible.
While certain assets (such as Ethereum and Solana) have immutable contracts that can prevent burning, we plan to introduce products involving burning and minting. Assets like WBTC or USDC can be used for burning and minting. However, for Ethereum, wrapping is always required to transfer it to another chain. Nonetheless, our overall strategy prioritizes native transfers and incorporates burning and minting transfers where feasible.
TechFlow: In your discussion about trading and cross-chain areas, what factors will affect the time or duration of such transactions?
Dan Reecer:
The transaction speed depends on the finality of the originating chain. For example, the second-layer solution Polygon may encounter issues with extended transaction times. Even on the Ethereum mainnet, block times can be as long as 20 minutes. To address this, our liquidity layer solution includes the development of a "fast transfer" feature. This feature aims to provide users with near-instant transfers by having the counterparty bear the finality risk, thereby speeding up fund transfer. Users opting for fast transfers will pay a small fee for expedited service.
Finally, I would like to share the latest update on Wormhole messaging activity. If you visit wormhole.com/stats and scroll down to the second chart, you will find that today we have surpassed the milestone of 9 billion messages, a significant industry record. We expect to reach 10 billion messages in the next month or two. This statistic is a profound assessment of the widespread usage of our platform. For community members and readers interested in more compelling statistics, the Wormhole Scan page provides additional data.
Over 900M messages were transmitted by Wormhole messaging protocol
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