EP26: Scroll: Elevating Value Innovation Beyond User Rivalry
31:15 Share

Hi everyone, welcome back to Web3 Founders World Talk. We are here to bring you very engaging conversations with movers and shakers in Web3 industries. Today we have Sandy, the co-founder of Scroll. Welcome to the show, Sandy. Hi Blair, thanks for inviting me. It's a pleasure to be here. Thank you so much for coming. Can you please briefly introduce yourself and your project?

Yeah, sure. So I'm one of the co-founders for Skrull. We're building a ZK-EBM layer tool for Ethereum using very cutting edge zero knowledge technology. And the mission of Skrull is to help Ethereum scale.

And I think as a matter of fact, we've just kind of set our recent kind of mission statement, which is to codify trust, bring forth personal sovereignty and to scale scale Ethereum. That's really impressive. Also, would you mind telling us a little bit about yourself? How did you land in crypto space? How's the journey so far?

Yeah, of course. I have somewhat of an unconventional background for someone who is a crypto founder. So I studied political science and law in college. And then my first job was a researcher at the SFC, which is the equivalent of the SEC in Hong Kong.

And as a part of that role, I covered market research like ETF research and also as a part of it started covering fintech and found Bitcoin as something that's kind of adjacent and vaguely in the regulatory purview back in 2013.

I started kind of going to local meetups and Bitcoin events and started meeting some like Ethereum people. And then the later, the subsequent chains that emerged afterwards and stayed very closely, like socially integrated with the space and got deeper and deeper in my kind of personal journey. I think I started working full time in crypto around 2017. That's when I

I launched a fund with some of my friends and then as a part of the fund, continued doing research. From '19 onwards, I became more and more focused on Ethereum protocol research and just saw myself going deeper and deeper down the rabbit hole.

Until one day, you know, I met my co-founders Ye and Hai Chen on the Ethereum research forums. Ye was a PhD student at the time and he had been doing zero knowledge research for five years and he had a major breakthrough and

And had a paper that was pending publication on kind of prover acceleration. And that made us realize that perhaps this was a good kind of entry point to try and use this for scaling Ethereum by outsourcing some of the on-chain proving overhead using like off-chain hardware.

And then Hai Chen was a very important piece of the puzzle. He leads our engineering team right now. And prior to joining Scroll, he led a large team of engineers in Amazon, also working on hardware acceleration, compilers. But Hai Chen was also kind of predominantly an AI engineer and then kind of pivoted very, very quickly to crypto and now leads our engineering efforts.

You know, I think a scroll started off as kind of like a kind of a research project and very snowballed into very quickly snowballed into an engineering project. And then we got we started really scaling the team after receiving some kind of early initial feedback from the Ethereum community and from members of the Ethereum Foundation. And and that gave us a lot of confidence and validated the approach.

And so we very quickly started the slightly more stereotypical founder startup journey of raising capital and forming a team and building out the core product functions of making this a key part of the Ethereum scaling roadmap.

Wow, that sounds amazing. I personally love your story about how did you just make a pivot from traditional to crypto? And also, how did you form your team with the co-funding members? So here's my next question. What actually motivates your team to focus on this specific niche at the offset? Is there any moment that clicked which makes you go, "Okay, that's something I want to go for"?

I think a lot of our core team, especially early members, actually even like I think most, like all of our team members now, everyone really resonates with the Ethereum values.

And, and we're big believers in, and also there's a lot of like research oriented type of talent within the team and, and, and who are interested in zero knowledge or in ecosystem building. So I think that the aha moment for me was, you know, the first time we published our POC and just to see how this could work, this piece of software could,

actually be used to scale Ethereum by an order of magnitude. That was really special. And just seeing how much, like, you know, we also had like a lot of people willing to test it and lots of people willing to contribute to it. All of these things just kind of compounds every day and made the project more and more real.

Got it. So it sounds like your teams are a bunch of Ethereum, I would say, adopters, early adopters. And also you guys are passionate about building up the better Ethereum ecosystems. Also, I noticed you guys achieved significant milestone by successfully launching its mainnet last year, following the thorough testing and the security audits.

I would say this accomplishment will definitely hold very substantial importance for the entire Ethereum ecosystem. Could you provide us a brief overview of its features? Additionally, how has the journey been so far and were there any noteworthy challenges or resistance faced during the launch process?

Yeah, thank you. Thank you for that. Yeah, Mainnet is definitely a milestone and we've been working towards it for the better part of the last two years. So it's definitely a very exciting moment for me specifically as the more ecosystem and external facing co-founder. The work really starts at the point of Mainnet.

And this is the beginning of the ecosystem building process. So prior to Mainnet, the main focus is to build the most technically secure and rigorous product that mimics the developer behavior of Ethereum exactly. So the goal in the first iteration of the product is to just be exactly the same as Ethereum. And we took a very complex

complicated kind of engineering route of building ZK kind of wrappers around every single bytecode or bytecode level equivalent. And the goal of which is to make the whole ecosystem building process easier so that developers doesn't need to do re-audit or retooling and everything that works on Ethereum works as is. So the ask when we go to an ecosystem project is to say like, oh, well, do you want to like

use something that is 10 times faster, but still secured by Ethereum. So same level of security and you don't need to do anything, just need to point to a new RPC router. And that makes the ecosystem building process a lot easier.

Before the mainnet, we probably had the longest running testnet in history. I don't know if that's like a good or bad thing, but I think it speaks to Hightune's sense of responsibility to the community. And we want to make sure that the funds that are bridged into scroll are absolutely as safe as we can manage. And obviously there are still training wheels and we're working as fast as we can to remove them so that the chain can...

increased security by various different factors of verticals to be like holistically more and more secure as we mature as an L2. So during the testnet, we had like 19 million transactions and almost kind of, I think,

20 million unique wallets. And, but that, you know, I think there's a lot of expectations of future airdrop built in there. And we're very, you know, we're very motivated to make sure that, you know, our early community members are,

are rewarded. The second part is post main ed. We've been running a lot of, we ran the first community campaign to try and onboard developers to get people's hands touching the scroll layer two and to gather early feedback. We ran the scroll origin NFT program and through that we've managed to get 1.3 million smart contracts deployed on chain and

And that's an astounding number for smart contract deployment. If you think about even for a very simple ERC-20 or NFT contract deployment, not many people know how to do it. I wouldn't say it's impossible to figure out for your average user, but it's just a lot of effort.

Hopefully this led to a lot of people kind of interacting more with the chain and thinking more about the stack from a hands-on way and experiencing what it's like to build on Ethereum. Yeah, it sounds like you guys were aimed to lower the barrier for developers very much, gaining all those feedback from those developers directly and making iterations on top of it.

Also, I noticed that you guys actually made the decisions to co-develop with the community from the very beginning and has been constantly follow through on this commitment. And Skrull is pretty, I would say Skrull is very community driven to me. Can you share what factors influenced your team to adopt this kind of co-develop mission with the community?

Is that something that you will consider as a must-have for a Layer 2 project?

Yeah, it's definitely not a must-have. This is more of an organizational thing. I think the origin of this community focus started from the founding story of Scroll is that the core members met as a part of a wider community, and we found our initial supporters and initial engineer team working

as a part of the community. So we were just kind of essentially built that way. And we believe, you know, a strong community begets more community. And one after another, that's just how the scroll story kind of started to unfold. So we want to remain true to that belief

kind of initial sense of energy, that sense of like everyone's a part of a community and we're here to kind of share our code and share our resources and share what we know and also to grow together. I think that's a really nice way for people to get onboarded into, you know, whatever the journey that we're on. And it's also how I initially got my start into crypto, like, you know, while I was making the TransFi transition.

Yeah, I think that's exactly aligned with blockchain, the whole Web3 spirit. So I love that. So let's just talk about something like about the competitions that we have with OP because there are a lot of controversies around like OP, like optimistic roll-ups, ZK roll-ups.

Well, undoubtedly, ZK Rollups presents higher development difficulty but offers a lot of benefits like instantaneous validations, consistent fees, and also stronger securities. So Vitalik has also expressed a strong preference for ZK solutions as well. Can you elaborate on the specific challenges faced in ZK Rollup development compared to other solutions?

I maybe want to take a step back a little bit first and just say that we have a huge respect for the optimistic roll-ups. And they were early. And as a set, it's more mature. And some of them have achieved a higher level of security. And

And they're kind of great. And we've kind of learned a lot by observing their growth while we're kind of putting the team and putting the product together. I think the network effects by being early is, you know, it's a huge advantage. And I can see why it's still like a very competitive product.

And it'll be interesting to see how things play out. It's definitely way too early to say just because ZK is superior technology, this will win in the user adoption or go-to-market race.

The way we see it, the minute you launch Mainnet, everything resets. And at least from our perspective, there's a new type of kind of growth phase that comes in from engaging more with the user and figuring out what they need. And what users or developers tell us repeatedly is that they need like still get cheaper fees. And that's something that the optimism stack tends to provide.

And I think for us, like as a kind of a newcomer, the key is to figure out like what are the use cases that absolutely hate CK. I think there's always going to be kind of...

kind of projects that can work on both. And I think, you know, from our perspective, we were in the process of kind of discovering a few kind of use cases that are sticky and can only work on ZK-ROAP, such as scroll. And I think that's going to be the key to kind of discovering more value and also like creating more value and creating new information as opposed to kind of like going after the same customer set. Yeah.

Yes, I'm actually signing with you on this. We're definitely not trying to pick the winning solutions here. It's good to see that as many players come in, which means here we are, we have a lot more players now. And here just to figure out what kind of solutions we could help us to really solve the pain points along the way.

Okay, considering there are some challenges on like OP and also there are some challenges on ZKs such as, you know, some like increased development complexity and also decentralization issues on particularly on, you know, sequencers and provers. How does like Scro assess the current landscape of the ZK technology?

I mean, we just want to know that what kind of strategy does Scroll have in place to mitigate all those kind of ZK challenges in particular. Moreover, like I said, there are a lot more competitions now. There are a lot more players coming in like ZK Fear, like Menta. What kind of distinctive features...

set, scroll apart as a unique differentiator when compared to other kinds of CK solutions.

I think we don't really focus a lot on our competition. We're very focused on the developers. And at least our current ecosystem developers are constantly challenging us to add more features and be more compatible. And these specific requirements we're trying to respond to on a regular basis. And that informs us for our technical roadmap going forward.

I think a lot of kind of the Polygon CDK stack projects will have the leeway to do a lot of interesting go-to-market experimentation. And we're very, we're keenly kind of observing and learning from these exercises too. And hopefully these lessons will be helpful for us to kind of, when we see the need to kind of put the gas pedal and accelerate kind of our ecosystem growth.

I think our core mission is to continue building out the tech stack in a way that our developers set demands. And that's a slightly different vision from like, I think some of the stack customer L2s are more focused on go-to-market alone. So there's a slightly different dimension of competitive viewpoint.

And our North Star is predominantly the type of projects and developers and the type of the use case that they're working on that's net new to the space entirely. And I think basically, I think the whole space is still so new and so nascent. And it's great that so many people are excited to experiment on the various different competitive verticals.

And I think all of these things are helpful from our perspective in terms of seeing how market responds. And, you know, I think there's a lot of great lessons in there.

Yeah, agreed. I mean, yeah, the whole like layer two scaling, even like ZKs, everything is super nascent. So that's actually the beauty of the, I would say like Web3 entrepreneurship as a whole, because we get to experiment different kind of innovations and seeing those kind of different like

like solutions, validating their theory and put everything into the productions and we get to see like the whole journey of it. Okay, I guess my next question is that what are the next steps for Scrooge in 2024? Since you guys just released the 2024 roadmap, can you just walk us through it? And also, are there any plans for token generation event?

I think that's something that the community would love to know. I think for 2024, our true North Star is the number of projects and developers that we support.

And then kind of a sub goal of that is how many native projects and novel use cases we can create on the scroll ecosystem. And so anything that helps accelerate those metrics, we will consider. Other than that, I probably can't comment too much about these things.

Okay. From your Twitter, you mentioned a lot of things on your technical roadmap, like make things cheaper, more compatible, more security, more decentralized. Is there anything that you want to add on, on top of what you just shared with us? Yeah. Yeah.

I think with each major technical direction, there are a lot of sub things like small things, incremental things that we're building contribute to these goals. But on a high level, we can kind of aggregate these goals and directions to A, being cheaper and faster and

and more decentralized and then more secure. I think these are the four verticals that really matter. And we want to kind of continuously improve on all four metrics. As a part of it, we're also going to be starting to experiment a little bit with adding features to the EVM. So I think...

as a part of an Ethereum scaling vision, L2 should be the place to experiment with new things. And if such thing, you know, starts to pick up adoption, then there's a chance that this might get in shine back into Ethereum so that Ethereum doesn't take these like risky technical moves and,

And this innovation is the responsibility of L2s. And I think that is the beauty of having so many great L2 teams who are able to take these kind of technical bets in the direction of the EVM growth.

So we've seen kind of the Arbitrum team take a big strategic bet in Stylus, which is kind of incorporating Rust language smart contract development into part of their core stack. And Polygon similarly have taken a few major bets. And I think you're going to see us making a few bets in various directions. These directions will most likely sit under the form

main directions that we go into.

And so it's either about kind of making the chain faster, cheaper, more decentralized, or more secure. So I think there's a lot of innovations that are very, very far along already internally. And we have a habit of not wanting to-- anything that we talk about externally are probably very close to being implemented already. Yeah, definitely looking forward to seeing more innovations and experiments on scroll.

And we will see. We would love to know that how do you actually perceive the current

like the whole layer two sectors, like overall, because there are definitely multiple solutions and also a lot of players, a lot of experiments, innovations happening on these sectors. Also people, well, they're making speculations on the whole, you know, roll up sectors and people that are saying that, oh, we might be seeing roll up summer,

in this market cycle. So what's your take on this? Any insights that you want to share with everyone? I think if I were to put my investor hat back on, knowing what I know now about the L2s as a builder, I would say I can definitely see a ROAP summer coming, mainly because all of the ROAPs have

like, you know, there's a lot of roll-ups that have built through the bear. So there's a lot of announcements and news and tools and POCs that probably will start to see user adoption and start to see fruition come the summer.

And I think right now the investors set as a whole, I'm talking about like, you know, this might be anecdotal, the macro view is that there's a lot more attention on Bitcoin right now because of the ETF. And there's also a lot of attention on Solana as a whole, because they've pulled out, come out of the bear market with a very strong community and kind of projects and people rallying around that ecosystem.

I think come like slightly later on in the year, more attention will come back to Ethereum. What investors generally, when I speak to them, are sleeping on is the fact that, you know, like Bitcoin,

Bitcoin still has a huge amount of like emission, even with the half ink coming, it's still like, you know, like billions of dollars of new Bitcoin emissions per year. And Ethereum have been in negative emission for, I think almost 500 days now, cumulatively. And, you know, do you want like a cumulative asset, uh,

with a new influx of capital allocation coming, I think these could be huge catalysts that kind of build on each other.

And then the second thing is, I think some people have been saying in terms of like, you know, I think it's kind of spreading FUD, saying like L2 is fragmenting Ethereum liquidity and driving developers and users on kind of like different interfaces. I would probably disagree with that. I think that's a view that thinks our current market size is already saturated. So that's kind of like a zero-sum thinking mindset.

If you take the mindset, like zoom out a little bit, you know, like the entire crypto population compared to internet population is absolutely negligible.

And Ethereum has itself, essentially through the bear market, found itself in a position with multiple kind of strong teams with different DNA and different setup and different approaches to scaling the Ethereum stack and expanding the decentralized computer vision.

And all of these L2s are paying huge amounts of Ethereum gas fees because we want to pay for the premium decentralization and security standards that Ethereum offers. And there is no other competitor in that vertical. And with the 4844 kind of upgrades coming up, hopefully in the summer, that's going to make all of the L2s even more competitive.

We're kind of at the moment kind of collectively when, you know, I think at least in my childhood, we were playing games on the phone like the snake games. We're kind of there in terms of how efficient the block space transactions are and how price competitive it is to most people. There's still a long way to go and there's a whole lot of new use cases to be discovered.

And I think at some point, like the L2 space will consolidate a little bit, but we're very far from that stage yet. I think we can see more consolidation probably towards the end of the bull market. But at the beginning, I think all the L2s are very well prepared and will be kind of going, you know, guns a blazing because we've just done a lot of preparation for this.

Wow. Thank you for sharing all those insights. Here's my last questions for today's podcast. Grow has secured a pretty substantial amount of investment, I would say. So for some of the web-based entrepreneurs, they're struggling with their product market fit, they're struggling with their investment. There are a lot of things that they may find it challenging to overcome a

along the way. So is there any insights that you can share with other Web3 builders based on your own experience since you have pretty, I would say, like you said, unconventional background? Do you have any advice for projects looking to make a really significant impact in a blockchain space? What would be your secret recipe for keep building up

in the crypto space with the whole fast-paced environment and things can may go off easily anytime. I think my advice might be at risk of sounding very corny but

I think what I've learned in the last two or three years of building scroll is that we need to, A, find an area that is very interesting. And at least like you feel like you can resonate with the mission because it's a long journey that requires consistent efforts. And you need to really believe in a future that you want to build.

So this sounds corny, but I think it does help a lot when you're trying to pick a direction or pick a product to build. The second part is you really need to find yourself with the right kind of teammates and people with the right kind of values.

At any, you know, whether bull or bear, there's always going to be, you know, different incentives and different choices facing the team. And you really need that core group of people who, given a similar situation, will make the similar kind of decisions. And that comes down to core value and the why of the organization.

of the organization. And so I think we were very lucky to kind of get that right at the early stages of scroll. And I think in terms of investors, I think if I were to be an investor again, having gone through the, you know, having kind of spent some time being a builder, I would think about kind of, I would kind of think about the infrastructure space as a very, very fast evolving one.

And there's never been so much competition at the infrastructure layer in Web 2. So the social dynamics and then the long-term positioning and they're just like various different verticals of competitiveness that needs to be considered. But again, just, you know, even from a basic level, like just thinking from first principle, like, you know, what is this tech kind of direction going to work?

And is it going to have traction? And then just basically like, is his efforts going to drive value to the core people who are contributing? So these are all things that I would kind of think more deeply about if I were an investor again. Yeah, well...

Thank you so much for sharing all those insights and expertise. And those are really authentic. And I'm pretty sure we've learned a lot today. Thank you so much for coming today, Sandy. And yeah, here's our show. Thanks for having me, Blair. It's been great chatting to you. And yeah, good luck with everything this year. We'll stay in touch.