Dialogue with Wormhole Foundation COO: Uniswap's Cross-Chain Options, Founderless Organization, and 900 Million Message Milestone

Interview: Sunny, Deep Tide TechFlow

Guest: Dan Reecer, COO of Wormhole Foundation

"Our history is deeply rooted in crypto-native and hackathon culture, and we maintain this spirit by prioritizing decentralization, security, and open-source principles."

------ Dan Reecer, COO of Wormhole Foundation

Uniswap released a significant cross-chain bridge assessment report last year, in which Wormhole and Axeler Network stood out among the six major cross-chain bridges across the network, becoming governance infrastructure that Uniswap can trust. Other cross-chain infrastructure providers include LayerZero, Celer, Debridge, and Multichain, all of which are leading cross-chain providers in the industry.

Why did Wormhole and Axeler become recognized as decentralized cross-chain experts by Uniswap?

How does Uniswap's governance information bridge across different blockchain networks?

Is LayerZero a Web2 company?

Deep Tide TechFlow invited Dan Reecer, COO of Wormhole Foundation, to answer the above questions. Interestingly, Wormhole is different from other Web3 projects as it is a "headless organization" without a founder leading it. So under such an organization:

What is the organizational distribution of Wormhole? Is it similar to the Web3 trifecta: DAO, foundation, and engineer-led labs?

How does Dan formulate operational strategies and manage to operate Wormhole into such a successful project today under this organizational structure?

Dan has extensive operational and marketing experience in the traditional pharmaceutical industry. In his view, what are the differences in operational direction and tool usage between centralized and decentralized organizations?

Why does Wormhole specifically set up a gateway for the Cosmos ecosystem? What are Dan's insights on Polkadot and Cosmos ecosystems?

We also thank the Wormhole Chinese community members for raising some questions regarding current user experience issues faced by Wormhole:

What is the progress of Wormhole's ZK engineering team?

What is the low liquidity issue when using Wormhole to transfer to L2, and how can it be resolved?

What are the determining factors for the speed of cross-chain transactions using Wormhole?

Below is the complete dialogue with Dan, hoping to resolve some of your confusions.

Note: Wormhole and 虫洞 will be used interchangeably in the article.

History: From Solana Hackathon, Jump Crypto to Wormhole

TechFlow: Today is my first time interviewing a deep infrastructure project like Wormhole. I took advice from others to specify the questions. For my initial question, could you briefly introduce the history of the Wormhole Foundation?

Dan Reecer:

The origin of the Wormhole project is quite interesting; it was conceived about three years ago during a hackathon. We initially brainstormed it at the Solana hackathon, with the primary goal of bridging the gap between Solana and Ethereum.

The project started as a small team in the hackathon, later gaining widespread recognition and attention, gradually evolving into a significant endeavor. Jump Crypto played a key role in incorporating Wormhole into its framework and incubating the project.

Over time, Wormhole's cross-chain scope has expanded to cover about 30 different blockchain networks. Currently, the personnel initially associated with Jump Crypto and Wormhole have transitioned, and the project is now entirely managed by a team outside of Jump. In recent years, multiple entities have contributed to the development of Wormhole.

• The Wormhole Foundation was established in the Cayman Islands, employing about 15 staff members to fund various organizations supporting Wormhole.

• xLabs operates in Argentina, responsible for managing the relayer infrastructure and is one of the guardians and validators of the network.

• Wormhole Labs is the third core contributing entity, responsible for driving many engineering, product, and business development initiatives.

Additionally, we recently funded two zero-knowledge (ZK) engineering teams, but the details of the collaboration have not been officially announced. These teams focus on developing Wormhole ZK, including light clients and bridges. Furthermore, several teams, including security teams, community teams, and teams within the Cosmos ecosystem, have also contributed to the project.

Our history is deeply rooted in crypto-native and hackathon culture, and we maintain this spirit by prioritizing decentralization, security, and open-source principles.

This commitment to decentralization and open-source sets us apart from some competitors who choose centralized and closed-source approaches.

Despite the challenges, we firmly believe that appropriate decentralization and openness as an infrastructure layer are crucial for ensuring security and scalability during our ongoing development process.

Operations of a Headless Decentralized Organization

TechFlow: Can you share the organizational structure of Wormhole (typically divided into DAO, foundation, labs)?

Dan Reecer:

The DAO has not yet been launched. We plan to implement both a DAO and an on-chain treasury simultaneously. What makes this project unique is that, in the traditional sense, we lack a conventional founder. Although a person named Hendrick was involved early on, he is no longer part of the project. Now, this is a founderless project. About 12 individuals are distributed across different team leadership groups, collaborating broadly to lead product development, engineering design, and business expansion. The entity setup is noticeably decentralized.

TechFlow: Given the competition Wormhole faces, and its leadership position in a field with numerous messaging protocols and ongoing hackathons, I am very interested in Wormhole's operational strategy.

Considering your background in business management and your evident expertise in Web2 marketing strategy and operations, how do you conduct operations in a decentralized, leaderless organization like Wormhole?

Could you share your personal approach and highlight the differences between Web2 and Web3 operations?

Dan Reecer:

That's a great question; the current work dynamics are very different. As mentioned earlier, we regularly collaborate with about five or six teams, creating a dynamic environment that differs from the traditional structure where tasks are assigned by fixed hierarchical managers. The coordination resembles a working group, where individuals from different teams come together to complete specific projects or launch initiatives. This involves active participation through calls, Slack channels, and similar platforms.

Another noteworthy aspect is the importance of goal setting, which is not common in the cryptocurrency space compared to traditional companies. Based on my experience at Eli Lilly, companies place great emphasis on establishing annual and quarterly goals as well as individual objectives. My corporate background has given me deep insights into operating a legacy company with over 200 years of history, so integrating these practices into a decentralized ecosystem presents challenges.

However, utilizing systems like OKRs (Objectives and Key Results) to ensure everyone has the same quarterly goals is both challenging and rewarding.

It has proven that corporate experience is invaluable for implementing coordinated strategies. This includes collaborating with leaders from different teams to define strategies, set goals, motivate team members, and celebrate achievements.

This contrasts sharply with the specific hierarchy in corporations, emphasizing that individual coordination and decentralized structures are the main distinctions.

TechFlow: I understand the challenges of handling user event operations, tracking an evolving tech stack, and keeping up with market trends, especially in the fast-paced cryptocurrency space. Considering recent developments like BTC ETFs and cryptocurrency regulations, how do you balance these operational aspects within the Wormhole Foundation?

Dan Reecer:

Yes, you are referring to the various project management tools we use internally, such as Notion and Slack.

Over time, I have identified the most effective communication tools, with Slack being the clear choice. Although it is not decentralized, its efficiency surpasses that of other decentralized tools. While some teams (like Polkadot) prioritize decentralization and choose decentralized tools, this approach may be less efficient, especially in terms of mobility. Given Slack's exceptional performance, we rely on it to meet our communication needs.

It is crucial to ensure everyone is on the same starting line. In tracking product documentation and strategic documents, we use Notion to organize information in an easily accessible and trackable manner.

Project management is another key aspect, for which we use ClickUp.

Consolidating everyone into the same project management tool and using it consistently is vital for keeping projects on track. To this end, we have a dedicated project manager who oversees all projects, checks project status weekly, and ensures project launches and other milestones are completed on time.

This approach forms the foundation of our operational strategy.

Four Products of Wormhole

TechFlow: Wormhole includes multiple product lines. Could you briefly introduce each product and explain its functionality?

Dan Reecer:

Wormhole Messaging is an indispensable core product in our ecosystem, commonly categorized as a bridge, but it is actually a messaging protocol upon which bridges like AllBridge, Mayan, and Portal can be built.

Messaging Protocol

However, it must be noted that Wormhole's functionality is a messaging protocol. Currently, about 10 bridges are built on the Wormhole protocol. Underneath is a messaging layer that can transmit various forms of data between blockchains. This data can be token-related information or non-token data.

Uniswap's governance is an example of non-token bridging. Uniswap uses Wormhole in five instances to broadcast governance decisions across chains using the protocol. They use Ethereum as the parent chain and have deployed about 15 to 20 units on other chains. When a governance decision is made on Ethereum, Wormhole messaging propagates that decision to all connected chains.

Another case involves Pyth, which is the second-largest oracle after Chainlink. The entire oracle network of Pyth relies on Wormhole messaging to propagate price feeds from its Solana Fork base to about 40 different chains.

At a higher level, Wormhole messaging serves as a foundational platform for various applications.

Diving deeper into this technology, messages are verified through the Guardian Network—a network of 19 validators responsible for verifying the authenticity and quality of each message.

After verification, at least 13 of the 19 validators must agree on the validity of the message before it can be forwarded to the destination chain. This provides us with more technical information about Wormhole messaging, making it the infrastructure for building various applications.

Wormhole Gateway

The Wormhole Gateway you mentioned is a blockchain we developed for dual purposes.

First, it enhances the security features of the entire Wormhole network.

Second, its primary function is to serve as a gateway in and out of the Cosmos ecosystem.

Integrating a new blockchain into Wormhole is challenging because one of the 19 guardians must run a complete blockchain node every night.

Wormhole Gateway allows any new Cosmos chain to seamlessly connect to the Wormhole network via IBC, addressing this issue and achieving good scalability within the Cosmos ecosystem.

The Wormhole Gateway is a component of the broader Wormhole network, distinct from the overall dynamics of Wormhole.

Another significant distinction is compared to Axelar Network, whose entire bridging network is built on Cosmos-based chains.

Wormhole Connect

Regarding Wormhole Connect, it is referred to as an in-app widget that addresses historical challenges faced by applications like AAVE. Traditionally, users' bridging funds were sent to external bridges, leading to user attrition and reduced yields. To overcome this issue, Wormhole enables developers to embed a bridge in their applications with just three lines of code. Users can seamlessly bridge funds within the application without leaving it.

Wormhole Queries

Finally, Wormhole Queries was launched just three weeks ago. This innovative product functions similarly to an oracle but targets on-chain data. Chainlink and Pyth are oracles that bring off-chain data onto the blockchain, while Wormhole Queries introduces a new primitive for DeFi. It allows other blockchains to efficiently and cost-effectively query data across different blockchains. This product has seen significant demand, with over a hundred applications expressing interest in the initial weeks.

Multiple Ecosystems: Cosmos, Ethereum, Solana

TechFlow: I guess you need to deal with various networks like Ethereum, Cosmos, Solana, and Polkadot. You previously worked in the Polkadot ecosystem, and now you see the connection between Wormhole and Cosmos. Can you share the differences between Cosmos and Polkadot? As far as I know, there is a positive sentiment towards Cosmos in the 2024 predictions. Can you explain the reasons behind this? Or more aptly, can you explain why Wormhole is specifically building a Gateway for Cosmos?

Dan Reecer:

Yes, we developed the Wormhole Gateway for Cosmos because the Cosmos ecosystem is very active. Notable teams like Osmosis have recently launched, showcasing significant developments, such as the WBTC chain team. Launching the Wormhole Gateway allows us to seamlessly scale within this ecosystem without incurring additional infrastructure costs when adding new chains—this is akin to a router chain concept.

A similar concept has been implemented in the Polkadot ecosystem, where the Moonbeam and Acala teams independently built routers to facilitate information in and out of their chains and connect with any other chains in the Polkadot ecosystem. This approach benefits both parties, increasing network traffic for both and enhancing our scalability within the Polkadot ecosystem.

Reflecting on my roughly four years in the Polkadot ecosystem, there were some shortcomings in business development and marketing. The emphasis on engineering overshadowed the need for effective marketing and sales efforts.

On the other hand, Cosmos has made significant strides in these areas, having been launched longer and undergone leadership changes that have led to recent growth.

As a member of the Wormhole team, I find that being in a central and neutral position allows us to observe and participate in various ecosystems. Currently, Solana and Ethereum are the most active, with Ethereum being the second-layer solution and Cosmos closely following in third place. Recent developments in the ecosystem are evident on Wormhole Scan, which provides in-depth visualizations of token flows across networks.

Wormhole Scan's Snapshot of Cross Chain Volume

Wormhole's unique position allows us to witness trends firsthand. Notably, Ethereum transfers primarily flow to Solana and Sui. Starting from Solana, our initial goal was to connect Solana and Ethereum, which significantly contributed to our development in the industry's most active ecosystems.

Competitors: LayerZero is a Web2 Company in the Web3 Space

TechFlow: Regarding bridge competitors in the industry, I recall you briefly mentioned LayerZero in your podcast with Crypto Coin Show, emphasizing that their centralization resembles a Web2 company rather than a Web3 company. Could you elaborate on the reasoning behind this viewpoint?

Dan Reecer:

A noteworthy piece of data is the Uniswap Bridge Assessment Report. The Uniswap Foundation recognized the complexity of community voting on bridge choices and commissioned a group of impartial third-party researchers with deep technical expertise.

Over several months, they studied six different cross-chain protocols, including Wormhole, Axeler Network, and LayerZero. The report primarily focused on decentralization and security, with Wormhole being the most highly regarded protocol due to its decentralization achieved through the operation of 19 guardians and open-source code.

Another protocol, Axeler Network, was also approved for use by Uniswap, indicating its open-source nature and decentralization.

However, the other four bridges were deprived of the opportunity to collaborate with Uniswap governance unless substantial changes were made.

One significant reason LayerZero was rejected is its operational structure: it is controlled by a centralized two-of-two multi-signature, posing potential risks of transaction censorship and fund theft.

In contrast, both Wormhole and Axeler Network prioritize decentralization and open-source principles. The report also highlighted a major flaw of LayerZero—its closed-source code, akin to large companies like Twitter, Google, and Apple.

In an industry where decentralization and open-source are crucial, relying on closed-source approaches raises concerns about transparency and security.

Therefore, the Uniswap Bridge Assessment Committee expressed reservations about LayerZero, considering it a risky choice for users due to its lack of transparency and decentralized operations.

Three Questions from the Wormhole Chinese Community

TechFlow: Based on current information, Wormhole will integrate ZK technology in 2024 to achieve completely trustless transfers between major networks. What is the current progress in this area?

Dan Reecer: We will soon release these announcements; I am working on this today. Several engineering teams have been funded to focus on zero-knowledge (ZK). We will announce an important hardware partner that will work with us to enhance hardware supporting ZK technology. Additionally, we are advancing a plan where the ZK bridge will utilize light clients. Our Ethereum light client is nearing completion, followed by announcements for light clients on various other chains.

This development will enable us to launch several completely trustless corridors between chains.

We are actively developing light clients for Mantle, Sui, and several other chains, aiming for challenging yet significant industry impacts. These are ongoing plans, and a wealth of new information regarding ZK will be released in the next two weeks.

TechFlow: The lack of liquidity for Wormhole assets across different second-layer solutions leads to poor user experience. How does Wormhole plan to address this issue, and will the liquidity layer improve the situation?

Dan Reecer:

That's a great question, and my answer actually emphasizes the liquidity layer. We are currently building this product and working hard to release it as soon as possible.

Historically, Wormhole bridges have used wrapped assets to facilitate bridging. The new liquidity layer aims to provide users with a native-to-native transfer experience. We recently launched this technology and will officially announce it this Wednesday. It enables native ETH transfers and native wrapped ETH transfers between six top Ethereum mainnet and second-layer chains (including Optimism and Arbitrum).

This development marks a significant improvement in user experience for those transferring assets between these chains. Looking ahead, our goal is to expand the liquidity layer to essentially include any assets that have native liquidity on both sides. We aim to minimize reliance on token wrapping as much as possible.

While certain assets like Ethereum and Solana have immutable contracts that prevent burning, we plan to launch products involving burning and minting. For assets like WBTC or USDC, burning and minting can be utilized. However, for Ethereum, wrapping is always necessary to transfer it to another chain. Nevertheless, our overall strategy prioritizes native transfers and incorporates burning and minting transfers where feasible.

TechFlow: In your discussion about transactions and cross-chain areas, what factors influence the timing or duration of such transactions?

Dan Reecer:

Transaction speed depends on the finality of the original chain. For example, the second-layer solution Polygon may encounter extended transaction times. Even on the Ethereum mainnet, block times can be as long as 20 minutes. To address this, our liquidity layer solution includes developing a "fast transfer" product. This feature aims to provide users with near-instant transfers by allowing counterparties to assume finality risk. Users opting for fast transfers will pay a small fee for the expedited service.

Finally, I want to share the latest updates on Wormhole messaging activity. If you visit wormhole.com/stats and scroll down to the second chart, you will see that today we surpassed the milestone of 900 million messages, a significant industry record. We expect to reach 1 billion messages in the next month or two. This statistic is a profound assessment of the extensive usage of our platform. For community members and readers interested in more statistics, the Wormhole Scan page provides more compelling data.

Over 900M messages were transmitted by Wormhole messaging protocol