Key takeaways

• Blockchain scalability is primarily constrained by the storage layer.
• LayerZero achieved 3,000,000 updates per second with its storage layer innovation.
• Blockchain inefficiency arises from nodes reproducing the same computation.
• Zero can scale up to 2,000,000 transactions per second at a very low cost.
• Current blockchain solutions face a trade-off between centralization and scalability.
• Future blockchain systems should aim for millions of nodes and transactions per second.
• The transition from MPT to log-based databases enhances performance significantly.
• Generating proofs for transactions increases node efficiency without full computation.
• The shift towards centralized systems by institutions undermines decentralized tech value.
• LayerZero’s architecture allows small nodes to operate without trusting larger ones.
• Most smart contracts today are not immutable, emphasizing real adoption over tech.
• Institutions are moving from proof of concept to actual system building in blockchain.

Guest intro

Bryan Pellegrino is the co-founder and CEO of LayerZero Labs. He co-founded the company in 2021 with college collaborators Ryan Zarick and Caleb Banister to solve blockchain interoperability through an omnidirectional messaging protocol. Under his leadership, LayerZero Labs developed the Zero Blockchain, achieving 2 million transactions per second per node without sacrificing decentralization, and secured partnerships with Citadel Securities, DTCC, and ICE.

The storage layer as a scalability constraint

• The storage layer is one of the primary things constraining like almost every chain

  — Bryan Pellegrino

• Scalability in blockchain is heavily impacted by storage limitations.
• LayerZero’s storage innovation allows for 3,000,000 updates per second.

• Once we had this original insight around qmdb, we made this storage layer

  — Bryan Pellegrino

• Efficient storage solutions are crucial for improving blockchain performance.
• Storage constraints affect transaction throughput and overall network efficiency.
• Addressing storage issues can lead to significant advancements in blockchain scalability.

• It’s like the storage layer is one of the primary things constraining like almost every chain

  — Bryan Pellegrino

Blockchain inefficiencies and scalability solutions

• The core problem with any blockchain today is that if you have a million nodes, every single one of those million nodes is reproducing the same exact compute

  — Bryan Pellegrino

• Blockchain inefficiencies arise from redundant computations across nodes.
• Zero can achieve up to 2,000,000 transactions per second at minimal cost.

• The culmination of those four effectively are 2,000,000 scalable up to 2,000,000 transactions per second per zone

  — Bryan Pellegrino

• Efficient computation strategies are essential for cost-effective scalability.
• Reducing redundant computations can significantly lower blockchain operational costs.
• Scalability solutions must address both transaction speed and cost efficiency.

• You’re paying effectively a million times the cost of doing the computation itself

  — Bryan Pellegrino

Centralization vs. decentralization in blockchain

• Current blockchain solutions often face a trade-off between centralization and scalability.

• The real premise of the original like at us starting was that nothing can scale right now

  — Bryan Pellegrino

• Increased centralization in blockchain development is seen as limiting.

• We think the last couple of years has just been continuing to push on a more and more aggressively centralized road map

  — Bryan Pellegrino

• Future blockchain systems should aim for millions of nodes and transactions per second.

• We think the thing that we care about… is scalable to tens of thousands, hundreds of thousands, hopefully millions of nodes

  — Bryan Pellegrino

• Balancing decentralization with performance is a key challenge in blockchain technology.
• Centralization trends could undermine the foundational values of blockchain.

Database structures and blockchain performance

• Transitioning from MPT to log-based databases enhances verifiable database performance.

• The first was qmdb which is actually a paper we published a year ago

  — Bryan Pellegrino

• Aptos blockchain can achieve up to a million transactions per second on a single node.

• We published our paper fafsa which shows that you can get a million transactions per second on a single node

  — Bryan Pellegrino

• Efficient database structures are crucial for improving blockchain transaction speeds.
• Verifiable databases play a significant role in blockchain scalability.
• Enhancements in database structures can lead to significant performance improvements.

• It is… a 100 x more performance than state of the art for database structure

  — Bryan Pellegrino

The role of proofs in transaction validation

• Generating proofs for transactions increases node efficiency without full computation.

• Rather you’re going to run that computation once generate a proof and then all the nodes in network only need to validate the proof

  — Bryan Pellegrino

• Proofs allow nodes to validate transactions efficiently, enhancing network performance.
• Efficient transaction validation is crucial for scalable blockchain systems.
• Proof-based validation reduces the computational burden on blockchain nodes.
• This approach can significantly enhance the scalability of blockchain networks.

• Verifying the proof is you know effectively free relative to doing the computation itself

  — Bryan Pellegrino

• Proofs play a critical role in improving blockchain efficiency and scalability.

Institutional trends and blockchain centralization

• The shift towards centralized systems by institutions undermines decentralized tech value.

• The only reason we got here was because like the whole value of all of the technology was the underlying principles

  — Bryan Pellegrino

• Institutions are moving from proof of concept to actual system building in blockchain.

• I think the recent administration change and everything that’s happened on the space clarity bill upcoming

  — Bryan Pellegrino

• Centralization trends could conflict with blockchain’s foundational principles.
• Institutional adoption of blockchain technology is shifting towards practical applications.

• Now we have these systems in this demand that nothing else can meet

  — Bryan Pellegrino

• The evolution of institutional engagement is reshaping the blockchain landscape.

Decentralized architecture and network integrity

• LayerZero’s architecture allows small nodes to operate without trusting larger ones.

• But the small nodes don’t need to trust the big nodes

  — Bryan Pellegrino

• Larger nodes must not be able to create fake data or spoof transactions.

• You absolutely do not want any of this to live off chain

  — Bryan Pellegrino

• Ensuring data integrity is crucial for maintaining network security.
• Decentralized architecture enhances blockchain security and trustworthiness.
• This approach supports a more secure and decentralized blockchain network.

• Everybody must be able to verify exactly what has happened in the state of the network

  — Bryan Pellegrino

Smart contracts and real adoption

• Most smart contracts today are not immutable, emphasizing real adoption over tech.

• Most contracts now are not immutable almost everything that builds today is upgradable

  — Bryan Pellegrino

• The focus should be on real adoption rather than just technological advancements.

• You have to build and be adherent to the principles and then you have to go and actually get like real adoption

  — Bryan Pellegrino

• Emphasizing practical applications is crucial for the success of blockchain technology.
• Real adoption requires a focus on practical and scalable solutions.
• The approach to smart contracts is shifting towards practical usability.

• Almost everything that builds today is upgradable

  — Bryan Pellegrino

Market fit and financial institution collaboration

• Crypto has product market fit primarily in markets, payments, and smart contract development.

• We view these right now as the biggest problems in crypto

  — Bryan Pellegrino

• Collaboration with major financial institutions is crucial for future global markets.

• We went dtcc holds a $100,000,000,000,000 of assets and processes 4 quadrillion dollars per year in volume

  — Bryan Pellegrino

• Blockchain technology could eventually support systems like the NYSE.

• You could build nyse on a blockchain

  — Bryan Pellegrino

• Partnering with established financial entities is essential for market evolution.
• Blockchain’s potential to transform financial infrastructures is significant.

LayerZero’s strategic approach and market dominance

• LayerZero has achieved significant market share and volume through strategic partnerships.

• If you look at the success so now lego zero is you know 82 85% market share

  — Bryan Pellegrino

• The focus should be on building meaningful technology rather than relying on token incentives.

• We’re not launching a new token right this is a piece of technology

  — Bryan Pellegrino

• LayerZero focuses on building systems that drive real adoption.

• We care about like real systems that will drive adoption

  — Bryan Pellegrino

• Strategic partnerships play a crucial role in LayerZero’s market success.
• Emphasizing technology over token hype is key to long-term success.

Technology focus over investment narratives

• The focus should be on the technology rather than the investment round.

• I don’t want you to think about it as around… it really is about the technology itself

  — Bryan Pellegrino

• Prioritizing technological advancement is crucial for blockchain development.
• Traditional investment narratives should not overshadow technological innovation.
• The emphasis on technology aligns with LayerZero’s strategic vision.

• That is the only thing that we care about

  — Bryan Pellegrino

• This approach supports a sustainable and innovation-driven blockchain ecosystem.
• LayerZero’s strategy reflects a commitment to technological excellence.