Interview: Sunny, TechFlow
Guest: Dan Reecer, COO of Wormhole Foundation
"Our history is deeply rooted in crypto-native and hackathon culture, and we maintain that ethos by prioritizing the principles of decentralization, security, and open source."
— Dan Reecer, Chief Operating Officer, Wormhole Foundation
Uniswap released a major cross-chain bridge test report last year, in which Wormhole and Axeler Network stood out from the top six cross-chain bridges in the entire network and became the underlying governance facilities worthy of Uniswap's trust. Who are the other cross-chain facility providers - LayerZero, Celer, Debridge and Multichain, are all leading cross-chain providers in the industry.
Why Wormhole and Axeler become decentralized cross-chain experts recognized by Uniswap?
How does Uniswap’s governance information bridge various blockchain networks?
Is LayerZero a Web2 company?
TechFlow invited Dan Reecer, COO of Wormhole Foundation, to answer the above questions for us. What’s more interesting is that Wormhole is different from other Web3 projects. It is a “headless organization” without a founder to lead the investment. So under such an organization:
What is the organizational structure of Wormhole? Is it similar to the Web3 trio: DAO, foundation, and labs for engineers?
Under such an organizational structure, how did Dan formulate operational strategies and operate Wormhole into such a successful project today?
Dan has extensive operational and marketing experience in the traditional pharmaceutical industry. In his opinion, what are the differences between a centralized and decentralized organization in terms of operational direction and tool usage?
Why does Wormhole set up a gateway specifically for the Cosmos ecosystem? What are Dan’s insights on Polkadot and the Cosmos ecosystem?
At the same time, I would like to thank the friends in the Wormhole Chinese community for asking some questions about some of the user experience issues that Wormhole is currently facing:
What is the progress of Wormhole’s ZK engineering team?
Low mobility problem using wormhole transmission to L2, and how to solve it?
Speed Determinants of Cross-Chain Transactions Using Wormholes
Below is the full conversation with Dan, which I hope will clear up some of your confusion.
*Note: Wormhole and wormhole will be used interchangeably in this article.
History: From Solana Hackathon, Jump Crypto, to Wormhole
TechFlow: Today is my first interview with a deep infrastructure project like Wormhole. I listened to the advice of others and made the question specific. For my initial question, can you briefly introduce the history of the Wormhole Foundation?
Dan Reecer：
The origin of the Wormhole project is interesting, it was born out of a hackathon about three years ago. We originally conceived it at the Solana hackathon, and the main goal was to bridge the gap between Solana and Ethereum.
The project started as a small team at a hackathon, but has since gained widespread recognition and attention and has grown into a major undertaking. Jump Crypto played a key role in incorporating Wormhole into its framework and incubating the project.
Over time, Wormhole's cross-chain scope has continued to expand to cover about 30 different blockchain networks. Currently, the people originally associated with Jump Crypto and Wormhole have transitioned, and the project is now managed entirely by a team of people outside the Jump team. In recent years, multiple entities have emerged to contribute to the development of Wormhole.
The Wormhole Foundation, which is based in the Cayman Islands and has about 15 employees, provides grants to various organizations that support Wormhole.
xLabs operates from Argentina and manages the relayer infrastructure and is one of the guardians and validators of the network.
Wormhole Labs, the third core contributing organization, is 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 yet been officially announced. These teams are focused on developing Wormhole ZK, including light clients and bridges. In addition, multiple 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 that ethos by prioritizing decentralization, security, and open source principles.
This commitment to decentralization and open source sets us apart from some of our competitors who choose a centralized and closed-source approach.
Despite the challenges, we firmly believe that proper decentralization and openness as an infrastructure layer are critical to ensuring security and scalability as we continue to grow.
Operation of a headless decentralized organization
TechFlow: Can you share the organizational structure of Wormhole (i.e. usually divided into DAO, foundation, and laboratory)?
Dan Reecer：
The DAO has not yet been launched. We plan to implement both the DAO and the on-chain treasury at the same time. What makes this project unique is that we lack founders in the traditional sense. Although a guy named Hendrick was involved early on, he is no longer part of the project. This is now a founderless project. There are about 12 people in a leadership group spread across different teams who work extensively and lead efforts in product development, engineering design, and business development. The physical setup is clearly decentralized.
TechFlow: I’m interested in Wormhole’s operational strategy given the competition it faces and its leadership in a space with numerous messaging protocols and ongoing hackathons.
Given your background in business management and your clear expertise in Web2 marketing strategy and operations, how did you navigate operations in a decentralized, leaderless organization like Wormhole?
Can you share your personal approach and highlight the difference between Web2 and Web3 operations?
Dan Reecer：
This is a great question, and the work dynamics are very different right now. As mentioned before, we work with about five or six teams on a regular basis, which results in a dynamic environment that is different from the traditional structure of having a fixed hierarchy of managers assigning tasks. The coordination style is similar to that of a work group, usually individuals from different teams come together to work on a specific project or startup. This involves active participation through calls, Slack channels, and similar platforms.
Another aspect worth noting is the importance of goal setting, which is not as prevalent in the cryptocurrency space compared to traditional companies. Based on my experience working at Eli Lilly, the company places a lot of emphasis on defining annual and quarterly goals as well as individual goals. My corporate background gives me a deep understanding of established companies that have been operating for more than 200 years, so integrating these practices into a decentralized ecosystem presents challenges.
However, utilizing a system like OKRs (Objectives and Key Results) so that everyone has the same quarterly goals can be both challenging and rewarding.
The experience of the business has proven to be invaluable in implementing a coordinated strategy. This includes working with leaders from different teams to define strategy, set goals, motivate team members and celebrate achievements.
This is in stark contrast to the specific hierarchical systems in business, with the emphasis on individual coordination and decentralized structures being the main differences.
TechFlow: I understand the challenges of handling user event operations, tracking an evolving technology stack, and keeping up with market trends, especially in the rapidly evolving cryptocurrency space. Considering recent developments such as BTC ETFs and cryptocurrency regulations, how do you balance these operational aspects within the Wormhole Foundation?
Dan Reecer：
Yes, you are talking about the various project management tools we use in our internal technology stack, such as Notion and Slack.
Over time, I have discovered the most effective communication tools, and Slack is the obvious choice. Although not decentralized, its efficiency exceeds other decentralized tools. While some teams (such as Polkadot) prioritize decentralization and choose decentralized tools, this approach may be less efficient, especially when it comes to mobile functionality. Given Slack's superior performance, we rely on it for our communication needs.
It’s critical to ensure everyone is on the same page. For tracking product documentation and strategy documents, we use Notion to organize information in a way that’s easy to access and track.
Project management was another key aspect, and we used ClickUp for this.
Getting everyone on the same project management tool and using it consistently is critical to keeping projects on track. To that end, we have a dedicated project manager who oversees all projects, conducts weekly status checks, and ensures that project launches and other milestones are met.
This approach forms the basis of our operating strategy.
Wormhole's four products
TechFlow: Wormhole consists of several product lines. Can you briefly introduce each product and explain its functions?
Dan Reecer：
Wormhole Messaging is an indispensable and major product in our ecosystem. The industry usually classifies it as a bridge, but it is actually a message transmission protocol, based on which bridges such as AllBridge, Mayan and Portal can be built.
Information Protocol
However, it must be pointed out that Wormhole functions as a messaging protocol. Currently, there are about 10 bridges built on the Wormhole protocol. Underneath it is a messaging layer that can transfer 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, leveraging the protocol to broadcast governance decisions across chains. They use Ethereum as the parent chain, with about 15 to 20 units deployed on other chains. When a governance decision is made on Ethereum, Wormhole messaging propagates that decision to all connected chains.
Another case involves Pyth, the second largest oracle after Chainlink. Pyth’s entire oracle network relies on Wormhole messaging to broadcast price feeds to about 40 different chains from its Solana Fork base.
At a higher level, wormhole information transmission is the basic platform for various applications.
Digging deeper into the technology, information is verified through the Guardian Network — a network of 19 validators responsible for verifying the authenticity and quality of each piece of information.
After verification, 13 of the 19 validators must agree on the validity of the information before it can be forwarded to the destination chain. This provides us with more technical information about wormhole information transmission, making it a basic infrastructure for building various applications.
Wormhole Gateway
The Wormhole Gateway you mentioned is a blockchain we developed for a dual purpose.
First, it enhances the security capabilities of the entire wormhole network.
Secondly, its main function is to serve as a gateway in and out of the Cosmos ecosystem.
Integrating new blockchains into Wormhole is challenging because one of the 19 guardians is required to run a full blockchain node every night.
Wormhole Gateway solves this problem by allowing any new Cosmos chain to seamlessly connect to the Wormhole network via an IBC connection, enabling good scaling specifically within the Cosmos ecosystem.
A wormhole gateway is a component of a wider wormhole network, distinct from the power of the entire wormhole.
Another significant difference is that compared to Axelar Network, their entire bridge network is built on a Cosmos-based chain.
Wormhole connection
About Wormhole Connect, it is described as an in-app widget that solves a historical challenge faced by applications like AAVE. Traditionally, users’ bridged funds were transferred to external bridges, resulting in user loss and reduced returns. To overcome this problem, Wormhole enables developers to embed a bridge in their applications with only three lines of code. Users can seamlessly bridge funds within the application without leaving the application.
Wormhole Query
Finally, Wormhole Queries was recently launched three weeks ago. This innovative product functions similarly to oracles, but for on-chain data. While Chainlink and Pyth are oracles that bring off-chain data to the blockchain, Wormhole Queries introduces a new primitive for DeFi. It allows other blockchains to efficiently and cheaply query data on different blockchains. The product has already received a lot of demand, with over a hundred applications expressing interest in the first few weeks.
Multiple ecosystems: Cosmos, Ethereum, Solana
TechFlow: I guess you guys need to deal with various networks like Ethereum, Cosmos, Solana, and Polkadot. You worked in the Polkadot ecosystem before, and now you see Wormhole’s connection with Cosmos. Can you share the difference between Cosmos and Polkadot? As far as I know, there is a bullish sentiment towards Cosmos in the 2024 forecast. Can you explain the reason? Or more precisely, can you explain why Wormhole wants to build a Gateway specifically for Cosmos?
Dan Reecer：
Yes, we developed Wormhole Gateway for Cosmos because the Cosmos ecosystem is very active. Notable teams such as Osmosis have recently launched, demonstrating significant developments, such as the team behind the WBTC chain. Launching Wormhole Gateway enables us to seamlessly scale in this ecosystem without incurring additional infrastructure costs when adding new chains - a concept similar to router chains.
Similar concepts have been implemented in the Polkadot ecosystem, with the Moonbeam and Acala teams independently building routers that facilitate information in and out of their chains and connect with any other chain in the Polkadot ecosystem. This approach is beneficial to both parties, increasing network traffic on both sides and improving our scalability in the Polkadot ecosystem.
Looking back at my four or so years in the Polkadot ecosystem, there have been some shortcomings in business development and marketing. The emphasis on engineering has overshadowed the need for effective marketing and sales efforts.
Cosmos, on the other hand, has made great strides in these areas, has been around longer, and has undergone changes in leadership that have led to its recent growth.
As a member of the Wormhole team, I find it advantageous to be in a central and neutral position, allowing us to observe and participate in various ecosystems. Currently, Solana and Ethereum are the most active, with Ethereum being a secondary solution and Cosmos a close third. The recent developments in the ecosystem are evident on Wormhole Scan, which provides an in-depth visualization of token flows between networks.
Wormhole Scan's Snapshot of Cross Chain Volume
Wormhole is uniquely positioned to witness trends firsthand. Notably, Ethereum transfers are primarily going to Solana and Sui. Starting with Solana, our initial goal was to connect Solana and Ethereum, and this foundation has contributed significantly to our growth within the most active ecosystem in the industry.
Competitors: LayerZero is a Web2 company in the Web3 space
TechFlow: Regarding bridge competitors in the industry, I remember in your podcast with Crypto Coin Show, you briefly mentioned LayerZero, emphasizing that their centralization is similar to Web2 companies, not Web3 companies. Can you elaborate on the reasoning behind this view?
Dan Reecer:
One notable piece of data is the Uniswap Bridge Evaluation Report. Recognizing the complexity of the community voting on bridge selection, the Uniswap Foundation commissioned a group of impartial third-party researchers with deep technical expertise.
Over a period of several months, they studied six different cross-chain protocols, including Wormhole, Axeler Network, and LayerZero. The report focuses on decentralization and security, with Wormhole becoming the most acclaimed protocol due to its decentralization achieved through the operation of 19 guardians and open source code.
Another protocol, Axeler Network, has also been approved for use by Uniswap, demonstrating its open source and decentralized nature.
However, the other four bridges were denied the opportunity to cooperate with Uniswap governance unless substantial changes were made.
A major reason for LayerZero’s rejection was its operational structure: it is controlled by a centralized two-to-two multi-signature, which poses potential risks such as transaction censorship and fund theft.
In contrast, both Wormhole and Axeler Network prioritize decentralization and open source principles. The report also highlights a major flaw in LayerZero - its closed source code, similar to large companies such as Twitter, Google and Apple.
In an industry where decentralization and open source are crucial, reliance on closed-source approaches raises concerns about transparency and security.
Therefore, the Uniswap Bridge Evaluation Committee has reservations about LayerZero, believing that it is a dangerous choice for users due to its lack of transparency and decentralized operation.
Three questions from the Wormhole Chinese Community
TechFlow: According to current information, Wormhole will integrate ZK technology in 2024 to achieve completely trustless transmission between major networks. What is the current progress in this regard?
Dan Reecer: We are going to be making those announcements very soon, and I am working on it today. Several engineering teams have received funding to focus on zero knowledge (ZK). We will be announcing a key hardware partner who will be working with us to enhance the hardware to support ZK technology. In addition, we are moving forward with a plan where the ZK bridge will utilize light clients. Our Ethereum light client is almost complete, and light clients for various other chains will be announced later.
This development will allow us to launch several completely trustless corridors between chains.
We are actively developing light clients for Wantong, Sui, and several other chains, with the goal of achieving challenging but significant industry impact. These are ongoing plans, and there will be a lot of new information released about ZK in the next two weeks.
TechFlow: Wormhole assets lack liquidity on different second-layer solutions, resulting in a poor user experience. How does Wormhole intend to solve this problem, and will the liquidity layer improve this situation?
Dan Reecer：
That's a great question, and my answer would actually be to emphasize the liquidity layer. We are currently building that 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 is designed 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 ether transfers and native wrapped ether transfers between the six top Ethereum mainnets and second-layer chains, including Optimism and Arbitrum.
This development marks a significant improvement in the user experience for those transferring assets between these chains. Going forward, our goal is to expand the liquidity layer to include essentially any asset that has native liquidity on both sides. Our goal is to reduce reliance on token wrappers as much as possible.
While some assets, like Ethereum and Solana, have immutable contracts that prevent burns, we plan to launch products that involve both burns and mints. For assets like WBTC or USDC, burns and mints are possible. However, for Ethereum, wrapping will always be required to transfer it to another chain. Nonetheless, our overall strategy is to prioritize native transfers and incorporate burn and mint transfers where feasible.
TechFlow: In your discussion about transactions and cross-chain zones, what factors would influence the timing or duration of such transactions?
Dan Reecer：
Transaction speed depends on the finality of the originating chain. For example, second layer solution Polygon can experience 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 the development of a "Fast Transfer" product. This feature aims to speed up fund transfers by giving users near-instant transfers by having counterparties take on finality risk. Users who choose Fast Transfer will pay a small fee for the fast service.
Finally, I wanted to share an update on the Wormhole messaging campaign. If you go to wormhole.com/stats and scroll down to the second chart, you'll see that today we passed the 900 million message milestone, which is a significant industry record. We expect to hit 1 billion messages in the next month or two. This statistic is an insightful assessment of the widespread usage of our platform. For community members and readers interested in more statistics, the Wormhole Scanning page provides more telling data.
Over 900M messages were transmitted by Wormhole messaging protocol
More reading:
Epicenter Podcast with an early Wormhole developer
Wormhole's technical evolution and stack