An Interview with Coinweb about Solving the Challenges of Cross-Chain Computation

This interview is based on a transcript of the recent Qi Podcast episode with Toby Gilbert and Alexander Kjeldaas from the Coinweb team.

Check out the podcast here:

[00:00:00] Archon: Hello guys, welcome to the Qi podcast. It’s a pleasure for me to have you here today on the show.

[00:00:04] Toby Gilbert: you for having us.

[00:00:06] Alexander Kjeldaas: Thank you.

[00:00:07] Archon: Let me also introduce my co-host today, which is CryptoConqueror from Danxia Capital. You already did a deep dive article on Coinweb on our Qi Capital Blog and you have probably seen some of his tweet storms on Twitter already. If not, please give @Danxia_Capital a follow, Toby and Alexander, would it be so kind and give us a short background on each of you personally, your role at Coinweb and also your experience and what got you hooked up with crypto and blockchain technology and technology itself.

[00:00:35] Toby Gilbert: Sure. Toby Gilbert here. I’m the CEO of Coinweb. I spent the past 15 years in the telecommunications sector and for the last six years of that, I have been working alongside Knut Vinger, who is now the CTO of Coinweb. We ended up actually going on a trip away over Christmas and New Years together with a group of friends and work colleagues and he ended up explaining the blockchain space to me over the course of a week in real in-depth ways. He completely got me hooked on it. I think it probably took someone to take their time to be able to explain what the potential of the technology was and really to give a clear picture and understanding. It transformed what I thought I should be doing at the time and no less than a month afterwards, we started to work together on Coinweb.

[00:01:32] Archon: Amazing. Thank you Toby and Alexander, how and when did you join the project?

[00:01:36] Alexander Kjeldaas: I’m Alexander Kjeldaas, I’m the chief architect. I joined a little bit later than Knut, which was there from the beginning. So, my background is I worked on cryptography back in the Linux kernel. So, way back when there was President Clinton in the U.S., restricted exports of strong cryptography from the U.S. I distributed crypto code for Linux kernel when I was at university and that sort of was the beginning of when I got hooked on that. That was way before Bitcoin, but then I also ended up following all these cyberpunk developments on the cryptography mailing list where also Bitcoin was discussed and presented. So, always sort of been there in sort of the space, but I had a long stint of commercial programming. I worked for Google for many years. Search technology and video.

[00:02:40] Archon: Amazing to meet someone who witnessed the development of Bitcoin and crypto from the very first day, right? Many people just joined a few years later and it’s quite an exception that we have somebody that went through all the cyberpunk phase.

[00:02:55] Alexander Kjeldaas: Yes. I did a review of the code actually in the beginnings. I found some thread, race condition issues and stuff like that. So, I got a little bit involved. I have a few commits on the code base at the very start or in the early beginning, but then I sort of left it. And then I came back.

[00:03:14] Then in 2017 I joined the project. I thought it was a very, very cool group of people. That got me really excited and we have a lot of interesting research. Sort of researching the space together and trying to figure out what this really is. How can we solve the problems that we’re trying to solve?

[00:03:36] Archon: Exactly. So, now let’s talk about what you’re trying to solve. Now, the two of you are building at Coinweb and what is the actual problem you’re trying to solve when it comes to blockchain and cryptocurrency space? And when did you first realize that there is actually a problem? How did you experience it and what are the current symptoms that we’re seeing in this space?

[00:03:53] Alexander Kjeldaas: The beginning, it was sort of, we have a kind of simple problem which was names. Having stable names across different blockchains. But, we left that because we dug ourselves down into this and we had a lot of interesting discussions. What we ended up with was, Toby can sort of speak to the commercial side, but on the technology side, it was that in the beginning, there’s sort of been a little bit parallel exploration of this area around the same time has Bitcoin was published there was similar research. There was sort of a parallel research area for outsourcing computations to cloud systems. How can you do that securely? I also did a startup on secure cloud computing at the time, after I left Google and I thought that was sort of a very interesting problem. I didn’t see, sort of, the connection right away, but around 2018 there was this project called Truebit that did some interesting work on Ethereum and what we realized is that we can separate blockchain into two stages. One is the consensus and availability part and the other is the pure computation part. The pure computation part is what’s called, it’s a deterministic process. When we saw that we took that and sort of ran with it. We developed the whole Coinweb technology based on the idea that how can we avoid consensus and sort of non-determinism as much as possible and how far can we get with deterministic computations. We saw that, okay. Our core technology part is the ability to prove deterministic computations and then we saw that we could put that on top of other blockchains and then we could also solve the interoperability problem. I think maybe this is a lot of gobbledy-gook for some people, but part of our approach is also related to some things that the listeners might know about like roll-ups, Truebit and other approaches but we take these deterministic computations further than all these other projects because we let the clients arbitrate who has done the correct computation.

[00:06:27] Archon: Let me get shortly back to the underlying problem you’re solving and perhaps Toby, from a business side, how do you think the fragmentation of the blockchain space that we see right now manifests in what kind of symptoms or what kind of problems?

[00:06:40] Toby Gilbert: You know, I think the way in which it was explained to me and described to me at the end of 2017 when the space was being introduced to me and a parallel was being drawn to the early days of email. When, if you had one email client, you could effectively only send messages within that client to other people on the same platform and you couldn’t send an email between different email clients. Hearing that in 2017 was very difficult to wrap one’s head around it and really to understand how useful that would be. You’ve got a Gmail account and you can’t send an email to a Hotmail account, for example. It was really an alien idea. It was explained to me that’s exactly how blockchains sat. Effectively within their own silos. And if you were to build a project on top of them all to take advantage of that blockchain, then you were tied to that one blockchain and if something happens, if it became too slow, it couldn’t scale, it became too expensive, then you would live or die effectively with the blockchain that you had anchored yourself to. So, the concept of a cross computation platform at the time, which would allow you to build a project in an abstraction layer above the chains which the platform sat and therefore, you could not only take advantage of the functionality of multiple underlying chains, but if there were a problem with the underlying chain, then you can move and you weren’t tied down. So, you would mitigate a lot of your risk. Which is what I spent the past, at that point in time, the past 15 years doing in telecoms where we would have multiple redundancy and routes and fail overs. So, it just made perfect sense as a concept to build an interoperability platform to mitigate those risks as well as delivering the added functionality and feature sets at the time.

[00:08:44] Archon: So, you were able to foresee this problem relatively early because it got worse and worse, right? With the increased adoption of smart contracts, because 2017, we didn’t have a lot,of decentralized apps. Now we have them and now we have them on multiple blockchains so now we feel this issue on a day-to-day basis.

[00:09:03] but Coinweb, you said it’s not a new project. In fact, you’ve been building it for three and a half years but many of us haven’t heard about it before. Why is that?

[00:09:12] Toby Gilbert: Well, it actually goes back to your last question of being able to see the second bounce of the ball and foresee the problems that were going to arise. And at the time, especially in early through to mid 2018, no one, really, or very few people wanted to listen to the problems that we were proposing to solve that had not yet occurred that we were foreseeing were going to happen.

[00:09:38] People were really focused very much on Bitcoin and the price of Bitcoin and the next ICO that was going to launch specifically of the Ethereum platform. Really people were disinterested I think at the time about problems that had not yet occured and they questioned whether or not that those problems would occur I would say. We were doing three things in parallel. We were flying around the world, speaking at events, meeting the community and we were raising or looking to raise monies to build the platform past the small seed round that had been raised. And thirdly, we were building the platform in parallel and we realized that the raising part had hit a brick wall because of the crypto winter that had occurred and we also realized that we were expending far too much energy flying around the world to all of these events and getting very little back from them. So we decided that we would self-fund, get our heads down, build the platform, but also we would look to work with projects that were built in parallel on top of the component, working parts of the platform that we had already built and were building within the short to medium term.

[00:10:57] We began working with two DeFi projects that were building on top of our platform and specifically our ability to issue a cross-chain token. We had a broadcasting system that was able to broadcast transactions down to multiple Bitcoin derived blockchains. We had the beginnings of a working e-wallet and we had the beginnings of a customized Explorer.

[00:11:24] So, we found two DeFi projects that wanted to build. We also invested in them ourselves and we built our platform in parallel with those two DeFi projects. The whole reason for this was that we believed that the best way to prove what we were doing, by way of proof of concept was real customers and real revenue streams.

[00:11:49] So, instead of just having a white paper, that was a promise of what we were going to do and trying to prove that the promise was realizable by advertising a competent team, we wanted to take it one step further which is very much what the traditional model is within technology to get a working MVP out, proved that it can withstand customers and transactions and then look to raise and in our case launch on the public markets. That’s what our strategy was and we went to beta with those two DeFi projects in July of 2020. And we went into live prod at the end of December which I don’t recommend for anyone. The stress levels of it. Of 2020. And between, I think the 22nd of December of 2020 and through til today, with our two DeFi platforms on top of Coinweb, we have handled no less than one and a half million transactions that represent $80 million worth of token sales. Those two defy projects have in excess of 110,000 active customers today that the Coinweb platform handles all of the transactions that pertain to it — writing them down to multiple underlying blockchains. So, only when we had delivered stability for the broadcasting system and the ability to track those transactions via the Explorer did we then look at taking Coinweb to market and looking to raise funds and bring on some fantastic strategic partners that could help us in that next leg of the journey and that’s where we find ourselves today.

[00:13:37] Archon: So, you were a bit too early actually by building the product and this happened to many, many in the past. Not only in technology, but also in other sectors. But you were able to sustain for the bear market. What kind of shape are you right now as a company? Tell us a bit about the team and the people working at it.

[00:13:54] Toby Gilbert: We’re in very good shape at the moment. As I’ve pointed out, we have a considerable amount of transactions hitting our platform every day. They’re stable for nearly just under a year now. The team is 36, I think. I mean, it’s growing at a rate of one to two a week. Out of the 36, we have 18 developers now. All in house. We’re on a constant recruitment drive for new developers. The problem that we run into is every time you employ a new developer, they have to get up to speed and up to scratch with the projects and that takes no less than three months and it also takes the time of the existing developer team. So, it can be quite detrimental. You have to onboard new developers organically and relatively slowly so that it doesn’t interrupt the work on the core at the same time. But we fully expect with operations and with developers to be a team of in excess of 50 people going into the new year of 2022.

[00:15:00] In addition to this, we have, obviously the DeFi projects to whom we’re very, very close and we worked very closely with and we share some resource with, and they have no less than 60 people additionally that work for those projects. I believe that between the two we’re well over 100 today.

[00:15:20] CryptoConqueror: Wow! That sounds incredible. I have a question. Back to interoperability. So obviously, you are not the only ones working on this type of project. Could you give our listeners a high level comparison on the different solution concepts out there and the advantages and disadvantages? Also, if you can please give us an example that you would consider is your closest competitor?

[00:15:45] Alexander Kjeldaas: Yeah. I think that the main thing that, as I mentioned earlier, the main thing that we sort of run with is trying to make as much of our system deterministic as possible. So, we can look at some of the interoperability or most interoperability systems have some sort of say in between chain, let’s say you have a bridge or something, which has its own consensus. You might have an oracle system or something like that. Then you have other systems where you have some sort of thing that needs to be implemented by the chain. Say, you might have a parachain system where the member chains need to adhere to a sort of parent consensus. So, you have sort of two layers of consensus. And you have Cosmos, the IBC protocol, stuff that should be implemented and sort of be internalized. So, the difference that what we’re doing is that we build on top of the existing blockchains. So, Ethereum and Bitcoin, for example, but we don’t create an external extra consensus. So, let’s say you have very, very secure, big, powerful networks, and then you connect them with a consensus chain.

[00:17:19] So, what I believe is the danger or the problem is that that interoperabilty chain becomes then the weakest link. So for example, Bitcoin and Ethereum are very secure networks, but then maybe you put something in between and then that becomes the point of attack.

[00:17:37] You know that there’s an effect called the Lindy effect where it’s like, if something has lived and survived for a very long time, then it will continue living and surviving. If you have consensus on something that was very old, so let’s say a transaction that has a hundred confirmation or a thousand on Bitcoin, it’s very unlikely that it will change and so we’re saying that, okay, if you have two chains and we’re building this neighborhood network, we’re building a network of chains. So, we’re saying that, okay, let’s say this other network that is a neighbor of say Bitcoin, it might not be as safe or secure as Bitcoin, but something that happened, let’s say far back in time on the neighborhood chain, has a pretty low probability of being reorganized or attacked. The trade off that we using is that we say that we can spend more time. We can wait for data but the data that is on the neighborhood chain is still visible to, for example, the Bitcoin chain or a neighbors of Ethereum is still visible to the Ethereum chain. But it takes a while for it to be visible so that the probability of reorganization on the neighborhood chain is insignificant compared to the probability of reorganization of the main chain. And, by the way, we consider all chains. Even if they have so-called “finality”. We consider all chains to be reorganizable because we have examples of chains where they just by decree change stuff regardless of what algorithm they use. So, they might say that, you know, because of our constitution we can change stuff or because of whatever — the consensus algorithm is not the primary thing. So the trade off that we were doing is that that requires time to settle the final state but then on top of that we use information markets that move things really quickly. And those information markets, they are actors that know what the state is on various chains, and then they are basically betting or they are guaranteeing what the state is. Then they take the risk of reorganizations or any change between the time when they state the fact and the time that we have final settlement of state. The reason why we can do the whole thing is that we are using a different proof mechanism. So all chains and basically everything in blockchain is using state routes and merkle proofs and what we are doing is we’re using state routes and Merkle proofs as leaves in a proof mechanism that looks at the whole blockchain as a big computation and that is called the delegation of computation. So, refereed delegation of computation. And that is a proof mechanism that is specifically made for deterministic . Computations. And it has much better properties than consensus based. So, everything that we do are based on something that’s consensus at the lower level, but then on top of that, we do the deterministic computation and you only need one honest node in the network instead of, say 50% or two thirds. That is sort of the difference.

[00:21:00] CryptoConqueror: Yeah. That sounds all very interesting, but also at the same time, quite complex and technical. You haven’t answered the second question I asked, which was basically, if you had to point out one project, which one would you say is doing something that is similar to what you are guys doing? Or let’s say it’s quite similar or in a way similar?

[00:21:26] Alexander Kjeldaas: Yeah. I would like to mention roll-ups. Different roll-ups projects on Ethereum. What they are doing is they are doing also layer two computations. So, they put what’s called call data on the layer one, and then they do computations outside of layer one but then they take the results of those computation and put them back into layer one.

[00:21:51] So the similarity is that we are both based on computation, on data that’s injected into layer one. The difference is that we don’t necessarily inject the result back into the layer one chain because when you do that, you introduce non-determinism into the system. So, then you’re back to deciding what the result of the computation is by voting and you don’t know exactly when the result is ready and you introduce this non-determinism. So, that is what I think is most close to this on the sort of scalability side. On the interoperability side with this sort of delay graph and things like that. I don’t know exactly any project that is along those lines. So, I’m a little bit unsure about that who I would say is the most similar. But, it’s interoperability. So it’s sort of any project that makes it possible to move information between chains would be in the same area, I guess.

[00:23:02] CryptoConqueror: Okay. This sounds also quite interesting and you explained it really well. So, thank you for that Alexander. I have one more question. What benefits will users and protocols have by building on top on Coinweb.

[00:23:16] Alexander Kjeldaas: I think one of the things that you get is this ability to read data or react to data on different blockchains. The way that Coinweb is not a closed system, it doesn’t require the blockchains to adhere to some sort of protocol. So, it’s not closed like some of the multi-chain systems. You can think of it as a Pareto frontier, where you can say, okay, there are blockchains that are really bad but there are a lot of blockchains that are really good and they’re just different in their parameters. Some are more safe, more secure and slower and more expensive and others might be cheaper but also less secure and less tested. It’s not necessarily so that there is one size fits all.

[00:24:06] Although there might be blockchains you should never use. So, the idea of moving from one blockchain to another based on your requirements, I think is quite useful because it depends on the sort of economics and requirements, real-time requirements and stuff like that for your project.

[00:24:25] And then I think, although it sounds complex, what we’re doing. I think what we’re doing is actually a simplification. What we are doing is we are making the proof mechanism that’s in the clients a little bit more complex. It’s like a browser. The difference between a browser that can only show a webpage versus a browser that has JavaScript in the browser. Maybe a little bit more complex, but it’s generic technology. But, on the blockchain side, I think we are simplifying things and we’re sort of clarifying the responsibility of a layer one versus layer two and layer one should be responsible for consensus and availability and span management. And then layer two can do high-performance computations that is basically impossible to do at layer one in a secure manner.

[00:25:17] Archon: But if you look at it from a higher level, what benefits would protocol have from building on it? Like can we also to take a conclusion or a comparison from traditional world where for example, you decide for a cloud wether it’s AWS or Microsoft Azure, you’re kind of locked in if you start to deploy on one. And in your case, if I build a protocol on Coinweb, I can deploy it actually on any chain I want. Correct? And not be completely dependent on, like, let’s say, Ethereum or EVM compatible if I started to build on that.

[00:25:49] Alexander Kjeldaas: Yeah, exactly. So, you can run that on any chain that you want. And then you get this sort of trade off. As I said, this Pareto frontier. You can choose to go, let’s say Ethereum becomes really expensive or Bitcoin, and you can move to another chain because your trade-offs. For example, Bitcoin might become really expensive and then it becomes like to secure for your needs. It becomes the backbone of nation states debt systems. So, like it’s the backbone of Brazil’s national debt. And that’s maybe more secure than what you need for your particular project.

[00:26:26] Maybe you want to move to a cheaper chain in that case, as an example, and you don’t want to lose your state and start all over. You can see all these copycat projects where you have an EVM based systems where you have the same project with different names because they’re on different chains, for example.

[00:26:45] So, that becomes a little easier when you can do that. But also when it comes to computation, I believe that it’s the same argument, basically, that goes for roll-ups. I think this type of technology where you’re doing deterministic computation, but where you’re sort of doing fully deterministic computation is much cheaper. It’s much, much cheaper, because if you look at the cost of running a network, let’s say you have 10,000 nodes, every node needs to validate every transaction in every block. And let’s say you need 51% of the hash power or proof of stake or whatever, some sort of resource or two thirds and then all of those need to be executing everything and that is expensive even if the coin is cheap, just the electricity and the running of that will not scale compared to a system where you only need one honest node. One network with say 10,000 nodes where you need 50 or 67% almost participants, as an example, will never be able to compete with another network that only has 500 nodes and you need just one honest. If you look at the overhead, just like the bare minimum, absolute minimum, like the cheapest possible way that you can run a network. The deterministic computation network will always win.

[00:28:14] Archon: And help our listeners a bit better to understand, like, whom are you targeting right now? Are you talking to DeFi protocols to deploy like their smart contracts on Coinweb or more talking to enterprises to bring their blockchain based use cases on Coinweb because they aren’t sure where to deploy and have you already found those, let’s say customers from your perspective

[00:28:36] Toby Gilbert: We’re running a three pronged approach at this moment in time. The first one has already begun and I referred to it earlier with the two DeFi projects that built on top of us and in an incubator state I may add, where we effectively acquire their customer base become our customer base.

[00:28:57] We’re also engaged in advanced negotiations with no less than three, top 50, by way of market cap, existing blockchain projects and looking at ways, not only how we can launch on their launch pads, but also integrate fully with their chains, use their chains for our transactions and also help solve some of their interoperability problems and pain points that they have.

[00:29:26] And then the third prong approach is big traditional business where we can become their inflection point effectively, their entry point to be able to integrate and use blockchain technology. We’re talking to the likes of car manufacturers, very high profile NFT projects that are looking for cross-chain tokenization which could work off our platform and also we’ll be creating and releasing a wallet as well which will have a cross-chain design set up. An issuance functionality that sits within it. And that’s very much to allow our community to engage with the project directly. To be able to touch and feel what a cross-chain retail platform looks like instead of just really believing in what the project is going to do on a B2B side via an API document, which the majority of our token holders in the first instance will be blind to. We would like to be able to engage with them. So, we’re looking to release that at the end of Q1, beginning of Q2 2022, and we’re already working on that and beginning to code it now as we speak.

[00:30:44] Archon: I mentioned the beginning, obviously, we now more and more level one blockchain getting traction and also having the funds to set out adoption programs in the hundreds of millions in terms of size. How do you think you can still win over let’s say customers of builders for Coinweb competing with those heavyweights and what’s the strategy to do that?

[00:31:05] Toby Gilbert: We’ve already been backed by a number of funds in the space for which we’ve just put out our press releases now, and they have been in the space for a number of years and they are working with, and have invested a number of projects. They’re active investors in those projects.

[00:31:22] And they’re at the moment, the whole group of them, are looking at the top projects that they’ve invested in within their portfolios, and they’re looking at how we’re a right fit for them. And even for their cohort of investment portfolios, we would have the next five years of development work just to be able to integrate and build for them and they represent tens of millions of customers today. So, we really already have our work cut out. I would say the space is still in its infancy and there’s a lot of room for a lot of players here to build and deliver solutions and I suppose ultimately the different approaches that the different solutions offer, are what will drive adoption for those platforms at the end of the day.

[00:32:20] Archon: And you talked before, like, from an end-user perspective, you are building a multi-chain wallet, but what will be the experience for end-users that will interact with Coinweb? Will they actually know that Coinweb is kind of utilized in the end when they use a certain like decentralized application or how can we imagine this?

[00:32:39] Toby Gilbert: Yeah. Absolutely. Outside of us being able to deliver the usual feature sets of any tier one wallets — multiple fiat rails for fiat on-ramping, off-ramping, a prepaid card issuance, that the cross-chain design setup in issuance parts of the wallet is really going to be more about an educational experience.

[00:33:02] So, it’s whereby an end-user can come on, they sign up for the wallet, they submit their KYC, they’re able to buy a stable token which they will hold a balance in before they swap out to other pairs. But when it comes to them wanting to set up and design their own token and then to transfer that token between different Coinweb wallets, they will choose which blockchain that that token will be encoded and recorded in and that will come with different speeds and different fee bases and different trade-offs. And we’re going to explain that to the end user so that they can actually design their own token in a way that suits them best. Which means they have to pick the functionality of the underlying chains to which we connect to to make that happen and that’s going to be a whole, as I said, educational experience so that people can really understand what cross-chain functionality and tokenization is all about. By way of the Coinweb platform itself, they will have to hold a balance of the native token, the CWEBEBeb, to be able to run any of the functionality within that wallet.

[00:34:11] So, they will very much be aware what the platform is being used for. What the native token is being used for. And we aim to make that as simple an experience as possible to try and unravel the complications of blockchain technology so that an end-user can actually have a low touch point and really get to grips with it.

[00:34:34] Archon: And I mean, there are some concerns regarding interoperability solutions and let’s go over a few of those. We already talked a bit about the trade-off between security and transaction speed, where try to solve it in a way that you kind of, not inherit the security weakness of the underlying chain, but perhaps you can double down on this? Let’s take another example that many of our listeners know, like THORChain is, for example, is a cross-liquidity solution between multiple chains. Also like Bitcoin and Ethereum. And back then in May, there has been an exploit based on ERC20 security leak. How could you prevent those things from happening in practice?

[00:35:15] Alexander Kjeldaas: I think the security issue in this ERC20 contract and what you mentioned, that was a bug at the application layer which would be what is running on top of Coinweb. We can’t eliminate those bugs, all of those, because the application layer, the programmer is free to write buggy code, but we do remove quite a few classes of attacks. We’ve removed the consensus layer between the chains which removes a whole class of attacks on say a bridge or an Oracle. There’s also censorship issues. So if there’s any sort of censorship problem where miners collude or sandwich attacks, these kind of things where communication between chains are sort of interrupted, delayed, censored. That’s also eliminated by this neighborhood graph because the state from a neighborhood chain is visible at a fixed point in time. There’s no way to censor it. And then it’s the deterministic computation, as I mentioned, you just need one honest node in a network. Those things that I’mmentioning now are a little bit more at the network layer. So they don’t fully eliminate the sort of THORChain issue that you mentioned. It removes some of the problematic attack.

[00:36:43] Archon: If you think about all the transactions now or smart contract interactions that go for multiple chains, at least like for your layer and let’s say, Ethereum, and we know Ethereum gas fees are extraordinary high right now, what would a user need to pay in terms of fees? Would he need to pay on the Ethereum transaction fees and some kind of Coinweb based transaction fees on top?

[00:37:08] Alexander Kjeldaas: Since we’re running on top of different chains, it’s practical to pay using the CWEB token and also you can have intermediaries that basically compress and make it more efficient to embed data into layer one. But the fees that you’re covering, it needs to cover the cost of the data representing the transaction to get that into layer one and a little bit for the processing on Coinweb. But that is less than what you would pay for the whole transaction processing. For example, if you take UniSwap on Ethereum, the data that I want to swap this token for this other token, that’s a fairly small amount of data. That you need to pay for. You need to pay the gas to get it into the chain. But the whole logic with the liquidity pools and calculating and figuring out who gets what and stuff like that, that you don’t need to pay at the Ethereum level. Then you pay at the Coinweb level which would be much cheaper. So, it’s a little bit in between and it depends on how much computation happens, but on Ethereum where you have, for example, the UniSwap a significant part of the fees that you pay and I think the savings would be very significant.

[00:38:30] Archon: And especially more complex contracts or multiple contracts.

[00:38:34] Alexander Kjeldaas: The more complex the contract, the bigger the savings. Yes.

[00:38:38] Archon: Because you only pay for the information update on the underlying chain but the logic happens on the Coinweb.

[00:38:43] Alexander Kjeldaas: Yes.

[00:38:44] Archon: How long will I have to wait for typical transaction to happen? And let’s say, a transaction that involves like Bitcoin and Ethereum with different settlement times?

[00:38:54] Alexander Kjeldaas: The information propagation between the two chains, it’s not immediate. It will take some time before the Bitcoin shard sees data on Ethereum and vice versa. But given that that will happen eventually, we have the information market on top of that. That means that you have actors that know that the final data or the final result or knowledge about the transaction on Ethereum will be visible on Bitcoin and that means that they can be a middleman and say release a token on the Bitcoin side immediately. Those information market makers, they will basically have different strategies. They can look at the mempool in Bitcoin and Ethereum and act even before there’s any confirmation on either side, depending on how easy it is to replace transactions in the mempool.

[00:39:51] So, depending on what the semantics of the mempool is, and it could even be based on the history of the user and other things, they can act immediately. So, you could potentially have a transaction in the mempool of Ethereum and then information market maker that is basically, immediately issuing a transaction on Bitcoin based on the fact that the Ethereum transaction will be committed. That part is taking a risk. At the point where it’s acting on transactions in the mempool, they are taking the risk of some sort of consensus update of the transaction or censorship but when it’s been committed, they take the risk of reorganization. Still a very small risk because typically the same transactions will come in and the semantics will be the same. After that as time confirmations progresses, they only take the basically, interest.

[00:40:49] They are outstanding for some blocks until the state is committed and visible on the Bitcoin side and then whatever stake they have or similar that will then be released. It depends on the system that’s built on top of it. Could be very fast. Either like the minimum time for one of the transaction to be confirmed in one of the blocks, or it could be maximum of Ethereum and Bitcoin block time or something in between.

[00:41:18] Archon: Okay, based on my needs for my protocol top of it.

[00:41:21] Alexander Kjeldaas: But yeah, based on the risks and what you pay for the information market makers. What risk they’re willing to take based on what you are paying them basically.

[00:41:31] Archon: Okay. Perfect. Thank you.

[00:41:32] CryptoConqueror: I have another question. Obviously, guys, people are interested to know when the mainnet would be ready and also like by mainnet, we mean something like a fully functioning chain. So if you could provide some information, that would be amazing. Thank you.

[00:41:49] Toby Gilbert: We’re going to make an announcement very, very shortly about beta mainnet in the coming week or so. Past that point, the projects that will build on top of the platform in the short term will be all built in a permission state, I would say and that is whilst we build out the core and whilst we also carry on pen testing that the security of the platform constantly, and only when we are really prepared to, will we launch, mainnet in live production allowing third parties to be able to build in a permissionless state on top of the platform. Which is at the point that will be at most risk. By that point in time, we will have a substantial amount of users from the permission projects that we’re currently working with to build on top of us.

[00:42:41] Archon: Let’s look a bit more ahead in terms of your roadmap for the next like 6–12 months and the most important milestones on this raodmap and by the way, please everybody check out like the Coinweb website. I think you have the most roadmap that I’ve ever seen in my life. First, going back to the very start of the project, but also giving a look out for the next many months but perhaps you can deep dive a bit on, on the most important upcoming milestones.

[00:43:05] Toby Gilbert: Sure. We’re looking, as I said before the end of the year, relatively soon to make an announcement about beta mainnet. I don’t want to say too much about that because it’ll go out in the press release that is ready to be sent out. I need to reserve a little bit when it comes to this.

[00:43:22] We’re also in very advanced negotiations with a number of top tier launch pads and exchanges and we’re building together a launch strategy for the token. We also hope to release some news about that imminently. As long as the market withstands. And then past that point, we are connecting to the Ethereum chain, which is a very interesting project, connecting Bitcoin to write trains to the Ethereum chain which Alexander has touched on earlier.

[00:43:54] And then past that point, we will be launching the wallet and the cross-chain tokenization platform. We’re aiming for the end of Q1, beginning of Q2 of 2022. And then past that point, we’ll be making regular announcements about the partner projects that will be building on top of the platform with the end goal of those delivering a significant user base to Coinweb, including revenue streams and millions and millions of transactions for 2022. A culmination of the strategy of the past four years, which has really very much been, as I said when we first started this podcast, that we want to build the product in parallel to building the core so that we are driving adoption in parallel at the whole time as solving these very ambitious, these great problems in a very ambitious way that was solving them and so we’re not just going to be setting out what our ideas are and look to build it over a number of years. You will hear constant news coming from this project which is in parallel to the problems being solved and adoption that we will be proving through the life cycle of the project.

[00:45:19] Archon: Okay. Thank you Toby for this outlook. And Alexander, we talked quickly before about the CWEB token. Let’s get a bit deeper on this. What’s the utility and the purpose of the token and how will the token accrue value?

[00:45:34] Alexander Kjeldaas: The token is partially spam prevention as they do in layer one blockchains. It’s also, you pay to do the work that is done when you’re computing. It’s also the sort of ground token for when you build, let’s say a liquidity pool or staking. You need a token for that so that’s also what the CWEB token is for. Since this is an interoperability system also, and you have different chains, it’s also useful to have one native currency so that users of the system don’t need to have all the tokens that you need to pay the L1 networks.

[00:46:21] Archon: This means whatever chain I’m interacting with, I can always pay all the fees with CWEB so don’t need the underlying token as a user.

[00:46:29] Alexander Kjeldaas: Exactly. That is quite practical to do it like that. Then we also have burn of the token to pay for the execution. That’s also sort of use for the token. Everything you do basically, involves it in some manner. Whenever there’s any resource that needs to be paid for or any spam prevention or incentive that is needed in the system.

[00:46:53] Archon: Okay. Thank you, Alexander and Toby, you mentioned before, like launch pads on existing blockchains. Will you use them for the token launch and when can we expected it?

[00:47:03] Toby Gilbert: We’re going to use a mix of top-tier launch pads and exchanges for a parallel launch. I would say just watch this space. Sooner rather than later.

[00:47:13] Archon: Okay. Great. And yeah, actually we’re already at the end of the podcast and you mentioned watch the space. So how can people inform themselves about what Coinweb is doing, better understand like technology, reading white paper and also like exchange with the community. What are the best sources right now?

[00:47:30] Toby Gilbert: So, the best two sources I would say at the moment are both Telegram and Twitter. We have a number of articles that are going to be published shortly. We have animation videos that are going to be released and these are the two main media channels that we’re using. Two social media channels at the moment for the release of information.

[00:47:47] Please subscribe. Join the channels. Keep a close eye on them. They’re being updated several times a day and really will be the first place that you will learn about any token launches and participations and so on and so forth from both Twitter and Telegram.

[00:48:04] Archon: Yeah. And you can find all this information and the URLs in the description of this podcast. So Toby and Alexander, thank you very much for being our guests today for this Qi podcast episode. Thanks a lot.

[00:48:17] Toby Gilbert: Thank you very much for your time.

[00:48:19] Alexander Kjeldaas: Thank you so much for having me.

[00:48:21] Archon: And also CryptoConqueror, thank you for co-hosting it today and helping out with many of the questions.

[00:48:26] CryptoConqueror: Thank you very much. It has been a pleasure.

About Qi Capital
Qi Capital is a group of like-minded and experienced individuals from around the globe, sharing two common objectives: providing insights about crypto and DeFi, and proactively working with ambitious teams on the future of decentralised finance. Our core principle is to promote and foster individual creativity, growing not only as a group but also as creative thinkers and builders. To learn more about us, check out our website www.qicapital.org and our “Qi Podcast” via www.buzzsprout.com/1729379/ or engage with us on Twitter: @QiCapital.

Disclaimer
Qi Capital is a strategic investor in Coinweb. This statement is intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token or participate in any farms. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice. All market prices, data, and other information are not warranted as to completeness or accuracy, are based upon selected public market data, and reflect prevailing conditions and the author’s own views as of this date, all of which are accordingly subject to change without notice.