In an exclusive interview with cryptonews.com, John Shutt, Smart Contract Engineer at UMA and Co-Founder of the Across Protocol, talks about encrypted messaging systems, UMA’s Data Verification Mechanism, and the importance of DAO governance.
About John Shutt
John Shutt is a smart contract engineer at UMA and co-founder of the Across Protocol, a secure and decentralized cross-chain bridge. He has been working on cryptocurrency and encrypted messaging systems for over a decade.
John Shutt gave a wide-ranging exclusive interview which you can see below, and we are happy for you to use it for publication provided there is a credit to www.cryptonews.com.
Highlights Of The Interview
- Encrypted messaging systems
- Solutions for making on-chain transactions based on off-chain voting decisions
- UMA’s Data Verification Mechanism
- The importance of DAO governance
- Optimistic Oracles – asking any verifiable question and providing deciding solutions
Full Transcript Of The Interview
Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast. We are buzzing as always coming in hot from Mexico, still if you’re watching this on video, my apologies for the background behind me there’s only so much I can do here we do not have a dishwasher, and it is what it is we’re making it work on to my guests super pumped to have John Shutt on the show today. Smart Contract Engineer at UMA, our second guest from the UMA Team coming in hot we’d love to see it, and also the Co-Founder of the Across Protocol, a secure and decentralized cross chain bridge. John has been working on Cryptocurrency and Encrypted Messaging Systems for over a decade. Super pumped to have you on John, welcome to the show my friend.
John Shutt
Yeah, thanks for having me excited to talk.
Matt Zahab
Your background we got to start with that, and for our listeners who don’t have the pleasure of viewing this and not watching along on YouTube or TikTok, or Insta reels, or wherever you are following along, John has an absolutely absurd background, not the one you see. But the one that’s just to my right and his left. He’s shown us right now it is just box haven. Hundreds of boxes literally looks like he’s in a warehouse. John, you mentioned that you and your lovely wife have over 11,000 books how the hell does two people snag 11,000 books? It’s absolutely crazy.
John Shutt
Yeah. So a couple of years ago, I guess it was 2017, a friend and I were trying to start a bookstore, and my neighbor’s ex-girlfriend’s father passed away, and my neighbor knew that I was into books and he was like, hey how many books do you think you could fit in here, kind of looking around where I was staying in San Francisco, because Butler Parnell Crittenden III had been collecting books for over 60 years, he had this very incredible collection, really deep cuts of history, sociology, that kind of thing. But when you have a collection of 12,000 books, there’s nobody that can absorb that even as a donation. So the family was just happy to have somebody who was willing to come out and just spend like, a week of 14 hour days packing it into U-Haul Trucks just to save the books. Because at that point, you just kind of have to pay somebody to throw them away. Unless you’re starting a bookstore. That’s just way too many books, like the library can’t absorb that. Bookstores won’t buy them from you, it’s too many and you’re kind of dealing with the passing away of a loved one too. So there’s no way that like, you have the mental or physical energy to handle all that. So this is the inventory for a future bookstore, we brought them all down to Las Vegas at the take to 22 foot U-Haul Trucks on separate occasions. It’s around six tons of books total. So you know, we only have an estimate based on like average number of books per box and total weight, like average weight of like, how many books there actually are. But it’s around 11,000, because I think we’ve sold about 1000 sets then.
Matt Zahab
Are there any like old school gems? I’m sure there’s got to be a couple of dozen discontinued books like some super rare ones. How do you and your wife like, even categorize these books that you have them in alpha? Is it just like, box by box? Sorry if getting nosy here, but like, I’d love to read and I just this is this intrigues the shit out of me.
John Shutt
Yeah. I know we started we were selling online with Amazon. So we were just sort of using like Amazon search for the title a lot. Most of these books don’t have ISBN they’re like pre 1970s, no ISBN nothing to scan. You just look it up by like the title, the author, condition, that kind of thing. We don’t sell on Amazon anymore. It just it doesn’t really make sense. This is just kind of reserved for an in person bookstore. So now it’s a little bit different. We just opened the box, we say like, oh like what is this book about? Like we already put it on a shelf? And then kind of categorize it that way and just go box by box and do it that way?
Matt Zahab
What’s the bookstore coming out? What’s the plan for that? It’s going to be a wacky, cool, futuristic bookstore. What do you and the lady have planned?
John Shutt
Well, I don’t have time for it right now. It’s uh you know, I’m all about Crypto at the moment. So the bookstore is for retirement, the books will be here from retiring in 40 years good. All these books will be out of print books or then. So depending on how long I’m working in Crypto, it depends on whether it’s a normal bookstore, a rare bookstore, I guess.
Matt Zahab
Well I mean, heck if Bitcoin keeps doing what it does last couple of days, you’ll be retiring and heck before the end of 2023 and I’ll be written down to Las Vegas to go visit your bookstore. Let’s jump into that. Crazy, folks for reference we are recording on Tuesday, March 14. This episode will air six days later, on Monday the 20th of March. Last weekend this weekend rather, we had the SVB Silicon Valley Bank fiasco was an absolute shitshow to say the least, and as a result of that the general population perhaps some larger financial institutions, want some more hard sound money and have been flocking into Bitcoin. It’s been easily the hottest story of the last sort of four or five days. John, I’d love your 2 cents on it. What do you think about the whole fiasco the whole shitshow and will this parade continue on? Are we ever going to see the regulator’s actually lay the hammer down on the banks and the fun and the big boys or will the parade just keep going?
John Shutt
I mean, I think that the regulators did lay their hammer down on the banks that dealt with Crypto. So it felt like kind of a deliberate targeted kind of thing to me. I think a lot of banks were situated similarly to signature which got shut down on a Sunday, and then they said, Oh we’re bailing out every other bank, except for the ones that dealt, you know really heavily with Crypto when we’re close to the edge. There are still banks that are dealing with Crypto, I mean the industry hasn’t shut down. Coinbase still works. But it’s just kind of a reminder that banks are kind of inherently fragile. The nature of banking is that you take short term deposits, and you make long term loans, and you hope that people don’t come back for their money all at once, and if they do there’s not really anything you can do about that. Like, okay Silicon Valley Bank made some bad decisions. But you know ultimately, they just got a lot of cash all at once they put it into something that traditionally would be really safe, and then interest rates went up, and everybody came back for their money all at once, and maybe there’s just an aspect to it with social media that happens a lot faster now, which makes banks more fragile, which I think does kind of increase that regulatory pressure, there is kind of a sense that smaller medium banks might be in trouble. Personally, you know the Fiat that I have is sitting in a bank that if that one went down, society has got a lot of problems. I think a lot of people are kind of making that calculation, and especially if you have over 250k in the bank, like why would I have that anywhere except for like Bank of America or you know, Chase or one of these big ones you know, it’s they’re fungible from a consumer perspective. So I think that it is kind of really troubling news for any bank besides like the top 10 American banks.
Matt Zahab
Pretty crazy. It’s definitely scary big eye opener as well. One of my favorite things is seeing like just the mayhem on Twitter of people being like, oh I can’t believe never knew that when I loan money, or when I give money to the bank, they can go and spend that and try to make the yield on that. I’m just like, what kind of rock have you been living under? It’s absolutely nonsensical to me, I can’t fathom that. Let’s jump into Crypto for a sec. Before we get into UMA and Encrypted Messaging Systems which I’m pitching treat the shit out of me. I want to hear about how you got into Crypto. You’ve been in it for a hot minute, I’m sure you must have had a really cool origin story about getting into the space.
John Shutt
Yeah. So when I was in middle school, I read Cryptonomican and I was like, Ooh this is cool, and so I learned how to partition my laptop and install like Linux on half of it. Use like TrueCrypt to encrypt all of my important like middle school secrets on like, the windows half of the partition, and I was like sweet Cryptography.
Matt Zahab
John, you were like, 12 13 years old.
John Shutt
Yeah something like that. I’m like reading Slashdot for like a while before that, and sort of like reading about it. But that book pushed me over the edge just like, let’s learn how to like install this, and you know I didn’t really do that much with it, besides just like reading pretty heavily on it. So I did find out about Bitcoin really early on, I think just because I was you know, queued into that, like I was ready to receive that information when it popped up I understood like, Oh this is what this is about. This is actually really cool. So I started looking at that and like 2011 is kind of my senior year in college. So I was doing like, Mount Gox day trading, you know it was like, Oh I’ll buy it at like $3 and set to like sell if it goes up 50% Then it goes to like 450 the next day, and I’m like, Oh sweet and you know, I’m a terrible trader though, and I did like sell all of my Bitcoins and you know, 2012 because Bitcoin had not worked as digital cash. You know, I always thought it was interesting, and you know I came like back and forth on it. But I sold my Bitcoins to get a plane ticket and, you know a couple of months at a hostel in San Francisco to kind of go and start like, you know let’s find some hackers there and let’s get involved in like building this kind of thing. Got pretty heavily involved in Noisebridge, which is a hackerspace out there, really improved my coding you know, did a lot of web development type stuff, but also got pulled into some journalism work. So the encrypted messaging part, I got invited to an early hackathon for SecureDrop I was kind of picking up some work that Aaron Swartz was doing the project was called Dead Drop at the time, and there was like, renamed kind of over the course of that hackathon to get it ready for production. A lot of news agencies now use SecureDrop as an encrypted messaging platform between journalists and their sources. But that was really interesting to do that at the outset. Because that’s like setting up a physical server that you control. It’s not the biggest thing going and buying like, you know a laptop with cash and then getting a screwdriver or like take the you know, the drive out of it, you know remove anything that could connect to a network because that one’s only gonna be through like your OS you’re connecting to it and then like move data to it on like a CD. So that was a lot of fun. It felt very cool to that was kind of like a fun project. Well, I guess that wasn’t technically my first like Crypto ish work. When I was still learning web development, I wrote a ruby client for the local Bitcoins API, and that was probably, I forgot that was probably like 2013 or something and they had a bounty and it was like 100 bucks worth of Bitcoin, if you like do something on our thing and so that was like one and a half Bitcoin at the time, which I then forgot about until many years later, when they sent me a message that was like, you know you should set like a stronger password like it’s a while please like stronger password, I logged back and I’m like, wait a second. So I had like, you know 2.2 bitcoins in there because they like when bitcoin cash happens is before Bitcoin cash. So when that happened, all the coins in their custody, they sold all the Bitcoin cash for Bitcoin and then put that in your account. So that was like the only Bitcoin that survived for me for the early days, until the president, fast forwarding a bit 2017 kind of made that move, in addition to getting the 12,000 books, kind of made the switch of like do less web development, I’m doing smart contracts. Now smart contracts on Ethereum is super interesting. Maybe we can actually succeed where Bitcoin failed to be digital cash, you know I underestimated the kind of digital store of value digital gold type narrative. But Ethereum seemed to give away to do a lot of like really interesting things and the same Ethos and I had been following it and I just decided this is what I do now as a career and stopped looking for web dev gigs and was only doing smart contracts from then on out.
Matt Zahab
And wow, what a story. What gets you going about writing smart contracts so much? Because like again, someone as talented as you and who has heck there’s not a lot of people who’ve been in Cryptos for 10 years as a whole and then on top of that, you have been coding for that long as well. Why build on Ethereum of all the other Blockchains? So many of them are picking up so much speed, obviously, it is the classic. It’s the you know, the digital gas if you will but why Ethereum over all the others?
John Shutt
Yeah, I mean I guess I focus on Ethereum I think the well a lot of the energy is there, like a lot of the interesting stuff that you would want to do is either on Ethereum, or at least on EVM compatible chains. I’m not like an Ethereum maxi or anything, I do think that what the devs are doing is really cool. I do think that the Ethos is strong. But if there was a smart contract network that came out that could do a whole bunch of stuff that Ethereum or Ethereum like chains could not do, I would make the jump and explore that and you know start learning like a whole new stack to do that. But I mean that’s mainly why like I think we barely started exploring the space of what smart contracts can do. I don’t see a strong reason to go somewhere else. It takes a lot of like work. Like let’s just keep on exploring this for a bit and see what we can make it do.
Matt Zahab
Right. I love that. Again, so rare. Your rare breed John been in the space for that long. One last question before we get into UMA, the Bitcoin you had can you give us a little sneak peek? Did you have like, I guess you sold your Bitcoin for a plane ticket, you must have bought close to 100 Bitcoin kicking around?
John Shutt
Well yeah, I was in college, and I got well as basically I was a creative writing major in college, and I got to my senior year and I was like, wow this I am about to graduate with a creative writing major. I’m not sure what I’m supposed to do with this. Let’s like learn how to code, you know which isn’t that far of a jump, like I was doing computery stuff. So I just bought like a stack I bought like one of those for dummies books there was like HTML, CSS, JavaScript, PHP, MySQL, Linux and Apache, like you know learn how to do web dev and just kind of work my way up and build my first web application got my first like local Tallahassee, Florida web development job, first paycheck after buying all of the college essentials, I still had like, I guess it was like 300 bucks left. So I was like alright, let’s buy 100 Bitcoins. So the first purchase and you know, I should have honestly what I should have done is I should have lobbied the people I knew in my life at that time that had way more money than me, you know like 1000 instead, pick 300 and like, wouldn’t need to sell it, and just say like no, like trust me, you like this weird thing like this is a real thing you know? And if it’s not like, you should still make a bet on it. But yeah, so it was like it’s very easy to calculate when I could have been a millionaire off of that, if I had just like, not done anything with my life and didn’t go to San Francisco and just like chill at home. But I think that it was definitely a good move. I met my wife out in San Francisco, met a lot of cool hackers got involved in a lot of interesting things. I don’t think that I’d be working on the kinds of things that I’m working on now, if not for that experience, and you know the space has evolved a lot more now to you know, I think it’s like, I’m happy to be at this phase right now, where smart contract networks are enabling things that have never really been possible before, and it’s barely started. So it’s really exciting.
Matt Zahab
Well said we are still truly at the bottom of the first top of the second inning. Let’s jump into UMA you and the team have been absolutely you guys been on a tear and a half, first quarter of 2023 very busy. Tons of notable announcements and shipments, UMA 2.0, and the launch of oSnap. I got a nice little cheat sheet in front of me, but I’m gonna let you rip these off, give me a quick little sort of SparkNotes of what each of them are and then we’ll get into the nitty gritty stuff.
John Shutt
Yeah, so what we’re calling UMA 2.0 is kind of a package of upgrades that we’re making across the UMA stack, we launched UMA staking which is a big improvement on our voting system. Just to like, zoom out a bit. What UMA is an Optimistic Oracle that you can use to deliver any kind of verifiable data onto a Blockchain to your smart contracts. So people who are more familiar with chain-link style Oracle’s, the difference with UMA is, you can ask it any kind of verifiable question, receive an answer to it, anybody can propose that answer, and then anybody can dispute that answer. So it creates a lot of flexibility. You don’t have to have a predefined endpoint. You don’t have to have a node network, you only need one honest actor who’s online within whatever the challenge window is, which is a really cool flexible system, which is why you can build so many different things on top of it, the staking system basically means to resolve disputes within UMA about what the truth is, you have to stake your UMA tokens, and they’re kind of locked up, and you receive a continuous stream of rewards kind of like, I think the APR right now is 28.5 which is really good, and you just kind of sit back and collect that as long as you do show up to vote when disputes happen, and you get like some of your stake reallocated to people that do show up to vote, if you don’t work you like vote incorrectly, and you don’t actually look at what the question was. So that was a really big change. We have a lot of improvements to the Oracle Contracts, which are more of a kind of a developer focus thing. So if you are a developer looking to integrate, I would be a good person to reach out to and I can kind of walk through what those differences are, if you’re familiar with earlier versions, or just kind of like walk through what it looks like in general, and then oSnap is something that I worked a lot on. Because UMA allows for human readable questions, you can basically write the rules of a DAO and attach a module to your DAO that says, if transactions follow these rules, they can be executed, and oSnap is using that framework to execute the results of snapshot votes, because that’s a really common DAO pattern that you would have a vote on snapshot, and then hopefully, a multi-sig executes that at some point. But sometimes they don’t and even if they like, do executed it’s not an efficient system. There’s a lot of legal and regulatory risks of being a multi-sig signer, there’s a lot of pressure also with this, all of the transactions that are going through our public, anybody can dispute them if they don’t follow the rules in this case, if they don’t pass a snapshot vote, or if they violate some other rule, which you can define for your DAO too. So we work closely with snapshot on that we got directly integrated into the snapshot interface, we should be rolling that out fairly soon with Across, which is Across chain bridge that’s built on top of UMA and kind of like grew out of the same team. I think it’s really early stages. For that I’m curious to see how that one grows, I think it immediately makes all of these standard DAOs that have like, here’s a safe with some assets and some smart contract control permissions, and then here’s a snapshot, and then here’s a multi-sig in the middle to set that multi-sig on the side, like you don’t need to use that multi-sig, and like 99% of the cases, once the DAO votes on something, anybody can execute it then and it’s actually a permissionless system. So it makes the DAO more decentralized, it makes it more autonomous, and then hopefully as you add more rules to your DAO, it makes it more organized too. Because kind of personally, I think the reason why multi-sig and voting schemes are very popular is because those are the easiest to write out in code. Other forms of human organization are kind of hard to write out and enforce in code, but because UMA is able to enforce these human readable rules, it really opens up the DAO design space, and you can start to design your DAO in a way that you would if it was just a group of people, you know and you can kind of treat it as though you know, it’s this on chain legal ish entity and UMAs stepping in to enforce it if needed. But for the most part people get along, you know like people don’t have to like, sue each other to collect the rent every month, like people reach agreements, mostly those agreements they just execute amongst themselves, and then you go to court which is, you know annoying and expensive if necessary. UMA is kind of providing this quasi court system for smart contracts based agreements, which can be open ended anything that is publicly verifiable is fair game.
Matt Zahab
John, that was you threw a lot at me there couple of things I want to dissect. Let’s go back to UMA as a whole the Optimistic Oracle, give me some more use cases. I’m not gonna say I’m a huge gambler, but I definitely like to dabble in some sports gambling from time to time and there are tons of incredible use cases for the Optimistic Oracle. One of them is the and I believe it was Clayton, who said this when I had Clayton on but Clayton was talking about the ability to bet on like the next presidential election for example, and you can literally open up not betting lines per se, but you can open up sort of things like betting lines for each side of the coin to bet on I’d love if you could give a couple use cases on the Optimistic Oracle and just for me being nosy and selfish here and perhaps throw in one specific on the gambling side as well.
John Shutt
So UMA is really good for prediction markets. So Pollymarket is a really popular polygon based prediction market that has like sports betting, it has like prediction markets, around politics around world events, that kind of thing. With these kinds of markets, you don’t want to limit yourself to what you can anticipate in advance, you want to create markets around. So if you’re only doing sports okay, and maybe you have like a data feed that you can ingest from somewhere that’s continually pushing like scores or like who won the game or whatever. But if you want to have an open ended that you want to be able to create markets on anything, an Optimistic Oracle is way better because you can just ask the question, anybody can go and verify what the answer is and anybody can post that answer or dispute it if it was wrong. So Pollymarket adopted UMA they wanted to decentralize their process more use UMA to actually resolve all of their markets. So we resolve all their markets now. So you would basically have like a basketball game, you’ll have kind of a question in advance, like you know this game is going to happen, tell us like, who won this game, or like, you know what the score was or whatever it was and once that answer is knowable, people kind of race to propose it because there’s like a $10 reward, I think right now. But with that $10 reward, you’re also posting a bond that you’re going to lose if you are wrong, and that’s, I think it’s $1,500 right now. So it’s easy money, as long as you’re always right. Or at least right, like one out of, you know 150 times or like you’re only wrong like one out of 150 times, because the bonds are like a big disincentive to ever be wrong. So that’s one use case. Another use case, which is very similar is insurance, where right now we have a lot of smart contract hacks. Euler got hacked earlier this week, and we actually have two insurance protocols Sherlock and Cozy, which both use UMA under the hood for resolution, and their integrations are a little bit different too. But they both use UMA as kind of like an ultimate sort of resolution layer and they both paid out markets based on like, was Euler hacked and there’s no way to set up a data for you that says whether something was hacked or not, that’s just something that you can tell, you know like as being you can look at it, if you could predict what the heck would be and predefine it and do a technical check. That means that like, you could probably prevent the hack. So by definition, this is like an unpredictable thing, but also very easy to verify for a human being that knows what they’re looking at. So that’s another really good use case, and we’ve made a strong push on prediction markets and insurance for that reason, and I think we have a call tomorrow with our founder and the founder of Nexus Mutual, they kind of talk through all this kind of stuff, and Nexus Mutual is also digging into their docks, their system is actually fairly similar to resolve disputes about like, whether some insurance should be paid out or not. Nexus has an internal system that looks a lot like an Optimistic Oracle. It’s not really framed that way. But it just kind of seems like the best pattern for you know, open ended question resolution, and UMAs design is to be generalized. So any kind of truth that you’re trying to bring on chain where Nexus is more narrowly focused on here are the markets we’re covering, and here’s our resolution system for these kinds of markets.
Matt Zahab
I assume their resolution system would just be all like internal dialogue like you know, maybe a tape like, almost like a jury, like a classical jury and court kind of thing. Is that what it would look like?
John Shutt
My understanding of it is less like jury in court and more like UMAs dispute resolution process, where it’s all of the Nexus token holders kind of get together and vote on you know what the answer is? I think that’s how it ultimately turns out,
Matt Zahab
I was just gonna say a bunch of pros like I guess a bunch of professional resolution disputers are in a room together and hammered out kind of thing.
John Shutt
I don’t think it’s the case there. I think that there are a lot of different people that hold like the Nexus Mutual tokens, just like there’s a lot of different people that hold the UMA tokens. But if you have a defined methodology of how to arrive at the truth, and how to determine these things, you can reach a shelling point of what the answer is. So you don’t necessarily have to be an expert to resolve these kinds of things, and that’s why UMA is good for like anything that’s publicly verifiable within like reasonable bounds. So it needs to be something that a person who’s like a reasonably intelligent person with access to the internet is able to figure out what happened here.
Matt Zahab
Interesting. So cool. John we got to take a quick break. Gotta give a huge shout out to our sponsor the show that is PrimeXBT who has been sponsoring the pod for a hot minute we appreciate them and love the team are at PrimeXBT. I’ve been using PrimeXBT forever. I love it as they offer a robust trading system for both beginners and professional traders. It doesn’t matter if you’re a rookie or a vet, you can easily design and customize your layouts and widgets to best fit your trading style. PrimeXBT also running an exclusive promotion for listeners of the Cryptonews Podcast after making your first deposit 50% that is 50% of that first deposit will be credited to your account that can be used as bonus to additional open positions. The promo code is CRYPTONEWS50, that is CRYPTONEWS50 to take advantage of this offer and receive 50% of your deposit credited to your trading account. Huge shoutout PrimeXBT now back to the show with John. John, let’s keep buzzin on UMA for a bit. The new updates that you guys did UMA 2.0 why do you in the team put so much emphasis on the DAO aspect like there’s so many different areas where you could utilize the Optimistic Oracle in the whole tech stack of UMA. But even the team continued to really hammer down on DAOs I know when Clayton was on the pod, he absolutely crushed this and I’d love to get your opinion on this as well.
John Shutt
You know, I just think that DAOs have a lot of potential as a way of organizing humans, and it’s mostly untapped. Because you’re stuck in whatever is the easiest to write into code, and that restricts you not only in the design of how the DAO is governed, but who can govern it. You know, if you’re not able to set up Metamask, you don’t really have a way to participate in a DAO and even if you can set up Metamask like, you know even people who are like setting up Metamask and they’re voting, they might not know how to compose transactions, and they might not know what the transactions do, and they can’t deploy the contracts that are going to execute them anyway, and they can’t be like on a multi-sig to evaluate the transactions to make sure that everything is lined up with what DAO voted on. There’s like all of these blockers, and the more human legible you can make it, the more people can get involved. Because even if you build like, the most robust technical validation system, if the technology is locking people out, and they can’t use it, it really limits what the DAO can actually accomplish, and you would look at a large number of use cases where it’s like okay, like you know, some kind of corporation or cooperative like this non technical thing, like keep this away from the Blockchain entirely, because people aren’t able to interact with it and understand what’s going on, they can’t defend themselves in the system, they might like lose a bunch of money, not understand why they might not participate, they might not know that they’re like supposed to participate or how they might get tricked into participating wrongly, there’s just all kinds of downsides. So UMA strength in being able to verify these things, based on human readable rules, I think is really powerful. I think it has a massive amount of potential, I don’t think it’s really there have been people trying to tackle this, you know Aragon has, is very much into optimistic governance. Kleros has done interesting work in this space. I think Teller also like launched like another thing that’s kind of related to this. But I think at UMA, we really want to explore the edges of this, and I think our work in prediction markets and insurance has also sort of influenced that where you can see it, you can resolve a lot of things that are normally off limits to smart contracts. It’s not just about prices, and I think that over the years, at UMA we’ve realized the flexibility and power of the Optimistic Oracle, I don’t think we really knew that originally, UMA was really kind of focused on financial derivatives, and like on chain finance kind of things, which you can still do with it too. There’s a lot of cool products around that I could, you know talk your ear off about. But we realized also it can like answer any question like you can just ask it a question, and we just like, we kind of launched like a speculative, we call them identifiers, like the set of methodology for determining the answer to a request that comes to the Oracle, and it was just like yes or no query where you just send in a string, and it’s like yes or no, and that kind of became like the basis of prediction market and insurance integrations, and ultimately this optimistic governance integration with oSnap. So there is a lot of power in that. I don’t think we are near the like edges of what we can do with it. So me personally, I’m very much about it and I know other members of the team are like also very much about like other types of products, you can build with UMA too. So it’s not only about DAO governance, we’ve got about like, I think 30 people Across the UMA and Across teams, and Across is actually I think the Across team might be larger than the UMA team right now, and they use UMA to verify that all of the bridge relays are happening correctly, but they’re all about cross chain bridging and cross chain messaging, not even really about DAO governance at all. So I would definitely, like encourage people to think about what else did this does this unlock. It’s not just about the house or prediction markets or insurance, it could be the financial stuff. It could be bridging lending protocols. Yeah, anything that requires external data.
Matt Zahab
The term that you guys coined thing that I absolutely love, and I don’t know why I have a bit of a fetish for like beautiful terms that where you just take crazy complex topics and distill it into something very easy. You guys sort of Ethos as solutions for making on chain transactions based on off chain voting decisions. That’s just so money. It’s so straight to the point who came up with that? Was that a John original? Or did someone else from the team coin that?
John Shutt
That definitely wasn’t me. I’m not sure who came up with that exactly. I think it was probably like refined over a lot of conversation. I’ll just give credit to Clayton, let’s say Clayton did it. But a lot of these things are sort of like team efforts too. I know on my side I always get way out of bounds of like, you know theoretically oSnap can do a lot more than just executing the results of off chain votes, you can write any rules you want in there and the rest of the team tries to like rein me and they’re like, listen to this just like focus here. Because oSnap wants like, yeah try not to like, get out of bounds and like you know, confuse people. It’s the secret feature. Once you like add oSnap to the DAO it’s like alright, you can execute your snapshot votes. What else do you want to do, and it’s already set up now just update your rules, and now you can add some more rules to it. So that’s kind of my secret like agenda here that when people install oSnap, because oSnap is actually very easy to set up. It does like one job extremely well, going through it, I do the demos of it, it takes like five minutes to deploy an oSnap module to a safe and then configure it with a snapshot space and then run through the process of proposing and executing some transactions through snapshot, and it’s all not just human readable. But like, you can just point and click to set it up. You don’t have to go to the command line or know any code or anything. You just go to the Zodiac app in your Gnosis Safe not Gnosis anymore, just safe. Then add the oSnap module through that, take the address of the oSnap module, set up your safe snap plug in configuration on snapshot, and then you’re basically done. After that you can attach any transactions to any snapshot proposal, any snapshot voting system you have, these transactions will now be enforceable, and just make it really easy for beginners and like less technical people to actually do this. So we’re trying to keep it narrowly focused and keep me under control until we get it out there for the snapshot execution part, and then you can start writing your DAO constitutions and enforce them and everything.
Matt Zahab
So when you’re on video calls when you’re on demos with clients, or partners, or just you know friends, and they’re like, alright John thanks so much for help me set this up. You know, are there any other cool things I can do like what’s the first thing that comes to mind? Where you’re like, Oh, I really want to tell you about this crazy shit you can do. But I probably should. There’s got to be some.
John Shutt
Yeah, I mean, examples I give you might have certain contracts that you don’t want the module to be able to call you might want to say like, you can transfer all of the money out instantly in a single transaction like regardless of whether the snapshot vote, said that or not, yeah, not additional guards, and there’s like some more tooling that I’m starting to build around this to where you can sort of like block these things at a technical level to where I think like technical verification is sort of useful in some cases, where it’s like, really easy to filter out like Oh, this is about to send funds zero address, and we don’t want to do that. Or like this is going to like you know, an address that we never want to interact with like here’s like a list of addresses of contracts that we know have been hacked, you know that kind of thing. But one really good one I think is like how you would structure a like human corporation normally, or nonprofit corporations included is people might have a budget, and they’re allowed to spend that budget within certain bounds. You could encode that into rules of like this address, allowed to withdraw like up to $1,000 a month to do stuff until we state otherwise. Or they’re allowed to like make these certain trades, like you’re managing the treasury, you have a voted on treasury management strategy, where it’s like maybe it’s just between ETH and USDC. Like if this is happening you can trade it to ETH. If this is happening, you can trade it to USDC. Or like, you can sell like the DAOs project token for fundraising, but only within these parameters based on these things that are happening in the world. So the DAO could like vote on that it’s authorized, and then anybody can execute it you’re not even relying on like another vote for that. You don’t even necessarily have to rely on some designated manager for that or designated addresses. You could just say like anybody can execute this and claim a reward, and now you’re getting into that autonomous part, like the DAOs will has been formed. You can execute this trade on our DAOs behalf to execute our will and you can claim you know, a $10 reward and it’s kind of like the Pollymarket thing. Like people go and they settle these probably market markets because they can get a $10 reward and that’s kind of through Oracle system. You could set that up for your DAO automate your DAOs operations. It’s like hey we want to rebalance this once a day or something. Whoever gets there first gets $10 or something and once people know that reward is there, they’ll race to you know, basically form a keeper network around your DAO based on the rules that you specified. They can pay themselves, you don’t have to vote to pay them. They don’t have to trust you. Right, exactly. Another thing too, is just like contract agreements between people. You could write out your contract put the funds in a safe as people fulfill elements of the contract that are publicly verifiable. They just go to the safe and they pay themselves.
Matt Zahab
Wow, that’s, I mean, that streamlines a massive tedious process and takes out a lot of the third party stakeholders. Wow, that’s crazy.
John Shutt
Yep. And it’s like, you know it sucks to be a multi-sig signer to like, you know, multi-sig signers you might think would dislike having some of their power taken away. But it’s not fun to be a multi-sig signer.
Matt Zahab
No, I’ve done in the past, and it’s a nightmare. It’s also not fun when you have to sign the within a certain timeframe with people in other parts of the world as you.
John Shutt
Yup.
Matt Zahab
That’s a nightmare fuel. John, this has been an absolute treat. Couple more questions here. You and the team sort of branched out not branched out but a sister product. Perhaps I’m wrong there. My apologies, but a sister product of UMA is Across Protocol. I know you briefly brought it up a world class bridge system. I’d love if you could give me the TLDR on Across.
John Shutt
Yeah, so the way that Across works is you have Ethereum L-1 you have all these L-2 networks are kind of connected with your L-1 Across allows you to more or less instantly bridge funds from any L-2 to any L-2 and L-1 like within this network, and it’s with concentrated liquidity though. So you’re only using the canonical representations of each token, you don’t have wrapped tokens, which is kind of a huge bridge concern for security. You don’t have synthetic bridging tokens and like an AMM mechanism, there’s no AMM which means that it can do really large volume really fast. The basic mechanism is you’re on Arbitron and let’s say you’re trying to move a million USDC to Optimism. Relayer on Optimism sees your deposit to the Across contract on Arbitron them and just gives you a million USDC minus fees on Optimism, and then puts in a bill to the Across Protocol for reimbursement. Essentially, I’m like simplifying it a little bit like in reality, it’s more efficient because there’s a data worker that’s bundling together a whole lot of relayer refunds. But you can basically collect a fee to be a relayer you’re posting you know, kind of a bond with that what you get back every couple of hours, once you realize that terminated be successful, and then you collect like your money back plus a fee, you know whatever you sent plus a fee from the protocol, and you can get that back anywhere you want. So you get refunded on Polygon. So if you’re a really sophisticated actor, which is really cool, you could basically like not only bridge for free, you kind of get paid to bridge because you bridged other people’s assets, and you’re just predicting like where the money’s going next, like where am I gonna like relay next, that’s kind of the game. So it kind of solves that problem of like capital movement that’s pushed off to this incentivize relayer system because you want to get your money, where you’re going to do your next relay like almost immediately once you can. So that’s really cool. All of the liquidity is in like a single concentrated pool on Ethereum L-1. So you’re not exposed to any like L-2 related risks or side chain related risks. It’s all in L-1 and you know, the different L-2 and sidechain pools will get, you know filled up as needed from L-1 and there’s a lot of cool stuff for Across v3, the team recently posted a roadmap I was more involved at kind of like the beginning of Across v1 and the team since then has like made much better versions of Across kind of built around the same concepts. But v3 is going to expand it to other chains using like some ZK Technology to be able to send messages to these other chains that don’t have a native bridge to Ethereum. So like Avalanche, you know BSC those kinds of places where right now that’s been off limits to Across. But ZK messaging actually opens it up, which is kind of interesting to like people think of Optimistic mechanisms and ZK mechanisms as being in competition but they can be really symbiotic, and even for like ZK proofs. I personally think in a lot of cases, you could make the process more efficient by generating the ZK proof off chain, optimistically proposing it on chain, I hope they do the expensive ZK proof on chain if the Optimistic mechanism is disputed. That’s really in the weeds but like I think in most cases, that’s actually better, and like a lot cheaper and I think that the space kind of eventually goes to the like you’ll have you know, your ZK stuff running through Optimistic rails just because it’s a lot easier to just say like, here’s what it is, you know if I’m lying money versus like actually running through the proof on chain, because anybody can go and prove it off chain for not but more easily.
Matt Zahab
Have a lot cheaper and have a lot more efficient. John what an episode couple more quick questions. We got to do the hot take factory. Couple of hot takes from John let them fly only things that you believe in, whereas most other people do not. What do you got for me?
John Shutt
Okay, I think Crypto people are afraid of interacting with the real world because there’s so much regulatory hostility, and it just feels really like difficult, and you can see that with all of the bank regulations, banks getting taken over just because they’re associated with Crypto USDC getting wobbly. But all of what we’re doing is kind of working towards bringing the entire world financial system to run on these Blockchain rails, that’s kind of the ultimate point. So people should still be focusing on that, and I think that the reticence of most Crypto people to even get into that is a competitive advantage to anybody that does dive into that, and I do think that you need things like UMA to be able to deliver off chain information on chain that’s kind of a prerequisite. So you know, if you’re interested in having Crypto really interact with the real world, you know definitely reach out to me, let’s see if like UMA can help with that. I think that is the future it’s still the future. Everybody kind of always thought that people were less scared before the powers that be kind of started fighting back, and before a lot of Crypto people to be fair, you know mess things up pretty badly on their individual projects, which triggered a lot of regulators to get way more hostile than they would be otherwise. But yeah, the future of on chain is bringing in real world stuff, you know it’s like electrification, you know? What can you not use electricity for like who’s not going to have electricity in the long run? Everything’s gonna run on Crypto but the early days that’s going to be hard so go for it.
Matt Zahab
Well said. John what a speech to end give me goosebumps firing me up I love that. You’re an incredible guest man. Really appreciate your time can’t wait for round two before you go can you please let our listeners know where they can find you UMA and Across online and on social.
John Shutt
Yep So uma.xyz is the website for UMA. across.to is the website for Across to go use that it is like the cheapest fastest bridge for especially large transfers so really check it out and then you can find me on Twitter at @jdshutt and if you just search for UMA Protocol or Across Protocol on Twitter I’m assuming you’ll probably find us if not check the website for the canonical link to our Twitter addresses and yeah message me to like on Twitter I work on the integrations team so like I build some of our in house stuff but I also do a lot of our external integration so if you’re interested in doing anything UMA related or Across related definitely ping me and let’s get a conversation going.
Matt Zahab
Love it John thanks again man. Truly a great episode very clean, concise speaker and I love when my guests can distill crazy big topics into very nice bite sized you know, clips for people like who aren’t too technical like myself to consume so appreciate you great episode can’t wait for round two.
John Shutt
All right, thanks for having me.
Matt Zahab Folks what an episode with John Shutt Smart Contract Engineer at UMA and Co-Founder of the Across Protocol. John was dropping knowledge bombs left right and center tons of alpha we’d love to see it hope you guys enjoyed this one. If you did, please do subscribe. To the team love you guys Justas my amazing sound editor appreciate you as always and to the listeners thank you guys so much for everything. Love you all. Keep on growing those bags keep on staying healthy, wealthy, and happy bye for now and we’ll talk soon.
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