Background

“The beautiful thing about the way we've used cryptography and this database technology to create new forms of money and new forms of value. And even now, new communication systems that is, you know, I'm lucky to be alive. “

- Taariq

In this episode of Citizen Cosmos, host Sergey Simanovski welcomes Volume (volume.finance) and Paloma Chain founder, Taariq Lewis. This discussion covers the multi-chain world, DeFi, communication pigeons, research & development, user adoption, validation, and interchain relaying

Taariq is an OG in the blockchain world bolstering over 10 years of experience and leadership in the cryptocurrency space. He has founded several companies including Bitcoin Business, Serica, Aquila Services, Promise Software, UniFi DAO, and more. Today, he is a thought leader in the cross-chain world. As the president and founder of the Cross Chain Coalition, Paloma Chain, and Volume Finance, Taariq looks to usher in the cross-chain future.

Paloma Chain creates a centralized control center experience for its users paving a way for commands and messages to be transmitted to any connected blockchain from the Paloma Chain. Smart contracts deployed on non-Paloma chains can be prompted and controlled from the Paloma hub. It will be able to connect and integrate with any Proof of Work chain, EVM Chain, or IBC Chain.

Definitions

Multi-chain – multiple blockchains

Tendermint – a blockchain protocol used to replicate and launce applications across compatible machines on multiple blockchains

Cosmos – an ecosystem of interoperable and sovereign blockchain apps and protocols

Relayer- a third-party that takes on individual orders and organizes them into an order book simulating the experience of an exchange without actually being one

Validator – users that volunteer a computer’s computing power to maintain a blockchain’s integrity by computing or tracing the origins of a block to its present state

IBC - Inter-blockchain Communication Protocol, an interoperability protocol used for communicating data between state machines

SDK – Software Development Kit, brings together a set of tools that facilitate the programming of applications. It enables the uses of APIs

Tragedy of the Commons – a situation in which individuals with access to a public resource act in their own interest ultimately depleting the resource.

GRAIN – Paloma’s native Token

Osmosis Labs – decentralized exchange protocol built for liquidity providers

Avalanche – a layer one blockchain that uses smart contracts to support a variety of blockchain projects

Twilio – a platform that provides programmable SMS messaging using its web service APIs.

Topics & Timestamps

Tendermint’s Beginnings (2:48)

Paloma & Inter-Blockchain Communication (5:01)

Pigeons Anywhere, Everywhere (10:53)

Bridge Security (14:04)

Outside Paloma (29:10)

The Future of Smart Contracts (35:50)

CCC & Paloma (42:03)

Taariq’s Motivation (44:30)

Tendermint’s Beginnings

Although the term multichain has only recently been included in the mass crypto vernacular, the guest shares an early, if not earliest, presentation on the topic.

In 2014, Taariq was running the SF Bitcoin Desk Meetup in San Francisco, California. He shares that in one bitcoin meet-up, a young Jae Kwon asked for Taariq’s permission to showcase the Tendermint Protocol. According to Taariq, this was the first ever public presentation of Tendermint. Today, it is one of the biggest and most-used software protocols in the entire cryptocurrency space. With Jae Kwon at the helm, Tendermint powers Cosmos, the leading multi-blockchain ecosystem.

Inter-Blockchain Communications

Sergey asks Taariq about the current atmosphere around cross-chain communication, if it’s decentralized enough, what its future looks like, and what downsides, if any, there are. Taariq provides a comprehensive response:

“Absolutely. So it is our view that inter chain relaying is a massive problem. It is a massive problem because without the right incentives and without the right structure and architecture, it becomes a choke point for the entire multi chain universe in the Cosmos. We know currently that we sort of have to beg and pray for our IBC relayers. …And when we built, in the Cosmos ecosystem, and we launched Stargate last year, around 2020, that brought the promise of IBC – inter-chain blockchain protocol, to the Cosmos ecosystem. It depends on relayers who are relaying or sending the transactions or pieces of information from one blockchain to another. If they're doing this out of the goodness of their heart or altruistically, usually what happens is you have a tragedy of the commons, right?

Essentially it's hard to get your messages out on time, because you don't have a system to demand performance. So we think that in a multi-chain world particularly led by the Cosmos, the relayer network will continue to become more and more important. This means simply that relayers need a new architecture and in Paloma we're taking the approach that, and we're testing and we're learning, that relayers should be validators and validators must relay. And so in the Paloma architecture, validators have to relay or else they will be slashed. So currently most of the Cosmos status quo is that if you are a validator, you don't have to relay, relay is optional because you are validating and verifying the chain. Integrity. What we have said in Paloma is that chain integrity and message latency, which is the message must get to the next chain as fast as possible, is a validator responsibility.”

Running a validator node himself, Sergey asks Taariq to go deeper into validator incentives. Taariq shares conversation he had with Jack Zampolin, Founder of Strangelove Ventures, and former Director of Product at Tendermint:

“In September, 2020, I was in Berkeley sitting with Jack Zampolin, we were chatting about the problem and re-incentivization. And I said, Jack, how are we going to incentivize relayers? In this model, if they don't get paid, how do they perform? And Jack was like, ‘Taariq, you stress out about these things,, man, it's going to work out.’ And I was like, Jack, I love you, dude. You're so awesome. And I want to get a shout out to Jack Zampolin. He's a visionary. And because of him, we have cosmos relay architecture and a lot of new stuff coming out. So really good stuff that he's working on in that area.

What this means is in the Paloma network of the Cosmos SDK. If you're using Paloma as a validator in the Cosmos, if you're not running a relayer, you get slashed. So we literally say, it's impossible for you not to relay messages if you want to be a validator. But what we say on the other side of that is the reward. Users who send messages, you get to essentially charge them both a security fee, as well as a relayer service fee. And that is free for the validators to price themselves as they would like. So in Paloma because the relayers are the validators and the validators have to pay for running a node, they have to pay for gas to send a message to the target chain. And in Paloma target chains can be either messages that go across the IBC network on the IBC network, or it can be messages that go across EVM networks or the Solana network. But users who send messages cover the cost of essentially being a relayer by paying for gas and then relayers/validators. We call them Pigeons, get to charge that fee and it's a market. So they get to charge whatever fee they would like to make it on. We assume that the curve is going to be somewhat inelastic because we have a limited number of validators in the set. We will find out that if you want to get your message sent on time, then you are going to want to make sure that the Pigeons in the Paloma network are well compensated. And this is the Paloma approach.”

Pigeons Anywhere, Everywhere

Paloma Chain is able to send messages through the use of Paloma Pigeons. These pigeons are effectively relayers. A relayer helps users create, sign, or find orders to fill. It can send a user’s transaction cross-chain and pay for the gas fees itself while getting rewarded in the process. Only network validators can play the part of a Pigeon.

For sending these cross-chain messages, Paloma Pigeons are rewarded by the network with GRAIN – Paloma’s native token. This incentivizes Pigeons to constantly be on the lookout for new messages to send and new jobs to be filled. More work equals more GRAIN.

If Pigeons stop monitoring for messages on other blockchains, they will be jailed and unable to operate. Furthermore, should a Pigeon fail to deliver a message, that Pigeon will be slashed and effectively cut out of the network.

The incentive and penalty mechanisms are designed for optimal Pigeon performance. The goal for Paloma is to increase the size of the Pigeon flock vis-a-vie user and demand growth bringing forth the fastest cross-chain experience in the entire cryptocurrency space.

After Taariq clarifies Sergey’s question about Paloma Pigeons, he shares specific cross-chain use-cases and the actual Paloma TestNest deployment on Ethereum:

“Message communication should happen anywhere. We don't want to hear this statement. Well, I'm in the Cosmos, but I can't send a message to Avalanche ($avax) because we don't have that access here. We don't have Solana ($sol)… Should we never adapt? So what we want to bring to the Cosmos is essentially any cross-chain communication will happen. Currently, we have already deployed to Ethereum Mainnet on the Paloma Testnet. So if you look at the Paloma Testnet right now, it's our Testnet 10, we're already executing cross chain messages on Ethereum Mainnet.

We're also currently working on Solana bridge. It will be the first Solana bridge in the Cosmos that will essentially be routing messages to Solana, and that bridge of course, will be IBC accessible. So even if you're on an IBC chain on Osmosis, you can execute a message to Solana and back.

What we want is that anybody on any Cosmos chain can IBC execute queries into Solana, execute transactions on Solana, and bring them back. That's what we want. We want that on Avalanche. We want that on Aptos and Sui. Cosmos should be fabulous. And that's our view.”

Taariq is sharing some incredible news here. Not only the first bridge between Cosmos and Solana is massive for both networks, building the bones for an inter-chain, cross-chain, messaging platform is huge for the entire blockchain space.

Pigeons will be anywhere and everywhere.

Bridge Security

Sergey asks Taariq about the current state of bridges. How decentralized they are, and how they can be improved. Taariq gives another comprehensive take:

“Bridging is not perfect and bridging is high risk. We have a lot of good people that have lost a lot of good money on bridges that were not secure. And we have a lot of well-intentioned people who are presenting bridge solutions that are highly centralized and can be essentially at risk, put everyone at risk, not for essentially an exploit, but for centralized control or rug pull. The bridges can rug you. A lot of bridges can rug you and we have to acknowledge this, but we have to acknowledge this as unacceptable.

Taariq’s eloquently covers the state of bridging. In 2022 alone, according to Chainalysis, around $2 Billion worth of tokens have been siphoned from bridges. Attacks on bridges account for almost 70% of cryptocurrency stolen funds in 2022 alone. Major bridge exploits in 2022 include The Sky Mavis bridge hack for $625 million, The QBridge hack for 80$ million, The Wormhole hack for 325$ million, the Harmony bridge hack for 100$ million, and the recent Nomad bridge hack for 190$ million. It is one of the biggest, if not already, security vulnerability in the entire blockchain space.

Categorically against bridge exploits, Taariq shares the Paloma Chain infrastructure designed to decentralize and secure users and protocols from bridge exploits. He shares:

“It is the Paloma position that validators who have sufficient stake and who have an interest in acquiring stake and seeing their stake go up in value will want to do the job of making sure that the bridge is secure because their stake in the bridge is also combined to the stake of the users.

So if they lose the users, lose value, the bridge loses value. It is our view that Cosmos essentially proof of stake model allows us to build a path by which validators can take on the job of helping secure bridge communications and bridge state, because they will be slashed. And if they see activity that is bad behavior, they can quickly respond and take that bad activity out. And so Paloma's approach by requiring the validators to belays as part of our process, is that again, consensus on message delivery and consensus on bridge activity must be agreed on by all the other pigeons, quote, unquote validators in the set. And if there is not consensus, then not only will the transaction fail, but if there is bad behavior, then pigeons and validators will be slashed. So essentially because the validators have to carry the water and make sure the water reaches the thirsty people.”

Taariq is confident that the decentralized Paloma relayer/validator security set model is the current ideal setup to perform bridging functions. The Cosmos space has yet to experience a successful exploit with this model.

Sergey loves the answers coming from Taariq. They paint an ideal future for bridging operations. The host goes on to ask the difference between IBC and other bridges. Taariq gives his thoughts:

“I keep coming back to the first principle of the validator set. Again, what

Cosmos brings is a security model where the validators, the ones minting new blocks, are the ones who have to come to consensus on what messages should be sent through the network. And if those validators are both acting as securing the integrity of the transactions, but now also secure or take on the additional role of securing the integrity of the message, the contents of the message from where it's coming from. It is itself, the new thing, it's not just the transaction, but it's also the source of a message, right?

In interchain we talk about the source chain and the target chain. In IBC and the beautiful thing about interchain security, which I want to say, you know, shout out to the Informal (informal.systems) team….On the consumer chain, you can outsource the security of those connections to other validator sets. And this is something again, that is really cool about the Cosmos. You can't do this in Bitcoin. You can try to do it in Ethereum, you'll be starting from scratch. You'll have to copy the Cosmos and you can't do this in Solana and Avalanche. Is it such that the validator set of another chain we call this interchain security can offer to secure the transactions on your chain using this IBC network. And that's what we think is also great. So Paloma itself can grow to provide security to other chains. In addition to the Paloma blockchain using Cosmos interchain security.

So I tell folks that the entire Cosmos ecosystem combination of all the chains can become security guards to other chains, security guards to themselves. This is huge. This is big.”

The two talk about competition among validators and agree that it would be positive for the space and function. Taariq draws an example from the Paloma community:

“So at Paloma, we have a massive community of Indonesian, Vietnamese, Turkish, Ukrainian, Slavic, and Russian members, currently nearly over 4,000. And what everyone is trying to do is build a business for themselves where they can be a validator and say, listen, you know, I'm living here in Hanoi. I am validating, I have a great network connection. I have uptime the path for me to make sure, you know, these messages are secure and being sent is available to me. And now I can make money from that. I can make a business and I can make this business being in a place where, you know, what these regulatory issues are. Not so much my concern because I'm outside of these jurisdictions and my jurisdiction lets me run this computer and I'm running it in my home and I got it set up.

…That to me is going to continue to lower the cost. In Paloma, we're really committed to saying, ‘Hey, let's continue to lower the difficulty level, lower the barrier of access where we do validators.’ I think one key note is when we started our Testnet, we started with a hundred validators. Now our Genesis is to 1 75. We are looking for more ways to increase the validators that, and I think a lot of R&D on Paloma will be like, Hey, how can we continue to upgrade our consensus engine? Our block production and block augmenting engine so that we can go from 175 to 1,750 validators relays sending messages so that this is truly a global network. And that's something we're passionate about. Absolutely.”

Outside Paloma

Sergey asks to put Paloma aside for a moment and asks Taariq about other companies or concepts he’s watching out for to integrate into Paloma. The host mentions Twilio. Taariq agrees and loves the solutions Twilio addressed. Paloma is taking a similar approach by facilitating the same experience for its users.

The host moves on and talks about experiments being done in the space with smart contracts and architecture. Sergey brings up the concept of autonomous smart contracts. Taariq gives a shoutout to Marco from Tendermint for bringing this up with the team. The Paloma team has built this layer. They call it Logic. Taariq fleshes out the concept:

“…This is what the pigeons are meant to do. The pigeons are essentially saying, ‘Hey, listen, contract, we will send you a message. So user you send us on a journey. We send a message. We've come back from the chain with a message to the contract, because the user's gone. The contract receives this message and now there's a change in state. Because pigeons who are the validator set can see the change in state and approve it to the contract. The contract can execute. It can execute another message. It can execute a state change. So this is something that we love. What you're talking about, we think is the way to go. So if you're seeing it already, it is a validation of where we're heading on Paloma, logic and execution of state changes from message awareness by pigeons is something that is already baked into the protocol.”

The Future of Smart Contracts

Sergey picks Taariq’s brain further by asking where smart contracts are headed and what they can achieve in the future. The guest gives a straight answer that right now, it’s all about security. Since the inception of smart contracts, there has been a staggering amount of exploits and hacks causing massive losses to both retail users and billion-dollar organizations. He mentions that the cryptocurrency space just lost $160 million in the last two months from exploits. As for Paloma, he emplores users and developers not to use upgradable contracts with the Paloma messaging system. This threat of bridge hacks is the 1st level of the attack surface area. That area will grow and scale directly with Paloma’s expansion to other chains.

The host asks Taariq about his ideas on improving security. Taariq answers:

“The pigeons want work. They're annoying, but they serve a use. And one of the things that we want the pigeons/validators to do is we're looking at maybe doing contract awareness, like actually checking contract state as a service. So you could come to this Cosmos chain Paloma and say, ‘Hey, would you please execute an audit check on contract A on blockchain Z and then come back and tell me if you see any issues?’ And so that means that the pigeon will have to go query the contract API, actually debug the contract API separately, and then send the results back to the Paloma chain user who requested it…It is possible on Paloma.”

Taariq shares an example of how the pigeon use-case can get complicated when a pigeon finds itself in a situation where it has to interact with a blacklisted account. The guest hopes to find the solution within the community by using the infrastructure the team has built.

Sergey jokes around by suggesting dressing up some of the community members as pigeons with baseball bats.

CCC & Paloma

The host yet again plays devil’s advocate and asks if the relationship between the Cross Chain Coalition could cause more damage than good.

Taariq clarifies the relationship dynamic between the various entities. He states that on one hand, Volume is the founder of the Cross Chain Coalition. It’s the Coalition’s job to educate its audience about all things cross-chain. On the other hand, Paloma is looking to invite people that are interested in cross-chain to the Cosmos ecosystem to start building.

Taariq’s Motivation

Sergey asks Taariq on what motivates him to push the envelope and continue, as a thought leader, the important work he’s doing in the cross-chain world. Taariq answers:

“I'm addicted to people. I'm addicted to people who continue to push the boundaries of what is possible. I'm a boy who grew up on a Caribbean island, Trinidad & Tobago, which is 1.2 million people, a small island, our biggest export for sugar cane and oil. So just having an opportunity to work on a global platform in a global audience of people, wherever in the world who are constantly saying, you know what? The status quo is not sufficient. We want change. We want freedom. And we want to explore the way we as humans interact with each other, keeps me going. And I think the beautiful thing about the way we've used cryptography and this database technology to create new forms of money, new forms of value, and even now, new communication systems. I'm lucky to be alive. Serge. I am lucky to be here. I'm lucky to be talking to you. And this is a privilege for you to have here and a privilege to share these ideas. I mean, where else in the world can I do this?”

A fitting ending to a beautiful podcast. For more content on the Cosmos ecosystem, follow Citizen Cosmos on Twitter and Spotify. And for more information on the guest today, follow Taariq @LewisTaariq, @paloma_chain, and @crosschainco, and @volume.fi.