 Welcome everyone and if you're wondering what session you were in we are here to talk about hybrid networks and interoperability between private permission networks and public chains I'm Shyam Nagarajan and I'm an executive partner with IBM and I focus on web 3 and sustainability and have been in the space for the last six seven years Really excited about this particular topic of hybrid networks IBM's engagement with Hyperledge has been really big Since the inception and now we're starting to see different patterns emerge in the market and This is part of that session to talk about those patterns. I want to Introduce Meda and as well as Dano, I'm gonna have them introduce themselves and we'll get started Thanks, Shyam Meda Parlikar. I'm the CTO and one of the co-founders of Casper labs and we're the team behind the public Casper protocol Which is a public decentralized permissionless protocol purpose built for the enterprise and Yeah, I'm really excited to be here to talk about hybrid networks So we're learning a lot too from enterprise about their desire to tap a little bit into public networks My name is Diano Farron. I'm a principal software engineer at Hedera Networks and I kind of wear two different public network cats one I'm working on the Hedera Network Doing a lot of work on a smart contract system right now and the other network hack that I wear is Ethereum main net I'm one of the maintainers on Hyperledger Basu That also makes me an Ethereum core developer I call into the to the calls on occasion when they're more talking about the EVM stuff And I've been involved in the Basu project since it came on board at Hyperledger I'm also currently on the TSC serving as vice chair Thank you very much Dana and Mayda this session is a birds-of-feather session So while we have individual points of view we welcome Audience if they have a point of view or if you have questions clarification feel free to Bring them up and we'll we'll have address them as we go along Okay, so hybrid networks Here's my view and definition of hybrid networks the concept of a hybrid network is when One blockchain network crosses over either in terms of interconnectivity or interoperability into another network and There may or may not be reciprocation from the other network, but they are Interconnected or interoperable is what I term as hybrid network Why are we seeing these who is why is there a necessity for them, right? And this morning you had Rob Rob Palatnik and as well as Chris from Fujitsu stand up and Say they're developing several applications that are in the space of financial services institutional asset management insurance great But these networks don't operate operate in isolation There comes a point where it has done what it was designed to do But it needs to grow it needs to have that extensibility to take proofs or assets from one network Into another network. Why would you do that? Especially why would you take it into a public network is maybe there's a need for monetization and liquidity? maybe there's a need for Access to a bigger ecosystem, so you don't have the the burden of building a huge consortia, so when you consider all these facts that bring About the right operation of the hybrid networks. It actually seems very natural in terms of evolution Are you giving up something with respect to? Going from a permission on a private world into a public world. Yeah, there's a little little bit of a Privacy and security that you do give up so which comes back to the question of what are you going to take into the public world? How are you what information are you exchanging and is that something that you can allow it to be? if the network gets the public network does get compromised you'd be okay with having that as a proof not as a Compromising your permission network, so these are all the questions that has to be addressed very carefully and these Hybrid networks has to be architecting the right way, so there are more use cases that I'm happy to talk, but I do want dano and may there's perspective on what they think about this and then we'll get into those details Thanks From my perspective, I think that Permissioned networks and private networks have definitely have a place in enterprise that goes without saying Enterprises really really want privacy around their data. They want to maintain competitive advantage They don't they're not yet ready to collaborate on public networks, right? We the time is not yet now they also need Oftentimes, you know bespoke networks that are tailored for a specific core piece of functionality capability and better throughput and performance and public networks can give them but by the same token if they are working with Customers or if they are servicing a customer facing industry They will need to Provide greater trust than a permissioned network can provide right a private network a private permission network doesn't actually have the same level of trust as a decentralized public network and so something as simple as just shipping a block hash to a public network and getting back a Merkle proof that can demonstrate that your blocks haven't been tampered with because the hashes have remained immutable Will be important in establishing customer trust so what's an excellent example of this for example? Let's say supply chain right you need to keep your supply chain data private for security reasons those transports the the trucks the shipping you know information cannot go on a public network But if you're transporting food, let's say for example for a large restaurant chain and you have a problem with a meat supplier consumers will want to know Provably that you haven't gone back and munged your data right that we can prove that this data has you know That the source of this meat is in fact from this supplier and you can expose that as you wish Right, but you can also more importantly prove that we haven't gone back and tampered with the data later on when the stakes are High and so this is a really excellent Utilization actually of the public protocol because the amount of computation of the cost the gas costs for that are very very low And it's not like you have to send every block over to the main net You could send every hundred blocks or every 50 blocks right and that will still give you the this the benefits of the security from the Public protocol on that permission to private chain So from my perspective on hybrid networks I reflect on the part where I'm you know I've got a foot both in the public network community with Ethereum main net and a lot of the other stuff and in the Private network community, which is a lot of the enterprise Interests in in blockchains and one of the the big the big developing themes that's growing in the public Network community is the notion of a modular blockchain On a modular blockchains where you take certain aspects of it and you split it up And you mix imagine like Legos and the layers are like execution layer settlement layer data availability layer Consensus layer and you can take those pieces you can put it together One example that I see of this already is what's what's called layer to an Ethereum where they've written a separate set of an EVM type blockchain But they don't have a consensus layer of their own they rely on the Ethereum level one now These are both public networks for both of them So I wouldn't really call them a hybrid network because it's public public There's not too much hybrid about it But that's an example of how you might take these Lego pieces and stack them together in different ways One way that that Hedera has that does this public private type mix up Where you can take one one layer and use it in a private a public is we have a pluggable HCS consensus layer for hyperledger fabric We can take the services of the orderer and we can map that onto a Hedera Consensus topic so you would use the Hedera Consensus engine to put your order or hashes in and let that public piece handle all the ordering and the distribution and data Availability issues for you so then your your fabric network wouldn't need to maintain an orderer across However, many different organizations you have one trusted one and that's not a public network and it's hashes So there's no privacy coming out then you take that information in your private network So you take these Legos and stack them together and so the hybrid is when some pieces are in the public and some are in private So that's a bit of my perspective You know, why don't we start with you guys a little bit on? Business use cases and application and now we got some examples that you want to bring up One of the things we're hearing a lot about is Customers that are running hyperledger instances are really interested in tokenizing the assets So they are tracking assets on hyperledger instances and want to get exposure to liquidity So what they're wanting to do is bridge those assets Over to a public network and then issue a token which is an asset-backed token like an asset real asset-backed stablecoin Right, so you're seeing this in a lot of the the C-fi and large banking institutions that are looking to gain liquidity and Now that they're getting transparency thanks to their blockchain instances They can now take advantage of these bigger markets Using the public trust of a decentralized protocol So this is one use case we're absolutely seeing we're also hearing a lot about Brands wanting to bridge NFTs over, you know So they're creating these NFTs that are collectibles and their customers want to be able to bridge these over to open C and Ethereum for example or other public networks so they can tap into that larger web 3 community And you know get value but then also try to bring some of that web 3 community into their brands right into their Ecosystem and so we're seeing a good amount of traction there as well particular use cases Probably one of the biggest use cases I think has already been gone over is the ability to to get your public record out there and to get the state proof From a public route into private data Because one of the things in these in these hybrid chains You don't want to put your public data Even if encrypted in a public network because once it's out it's out It just takes leaking a private key and people can figure it out But when you put your hashes in there and you put like a mercury or some other structure that you can prove into it And have you know, you know 32 32 bytes can hide a whole lot And can prove a whole lot if you structure it properly So a lot of these use cases out there would need to make sure that they can minimize The amount of data they put on these public networks and that's valuable because some of these posting on public networks can get quite expensive Especially when you're talking about stuff like, you know, Ethereum mainnet when it's legendarily very volatile gas costs and big such So I'm gonna I'm gonna present three use cases that I'm currently working at and The first one made a Casper labs and IBM work together is around patent intellectual property and patent tokenization This is a this is a startup called IPV and They're based in Switzerland and North America. They actually Brought the information from all the patent offices into a single registry and can do analytics and Used hyperledger fabric to actually create ownership Providence information on the patents so then they can provide irrefutable Pew proof to their clients when they come to appeal for unique Patents that they are filing and make analytics predictions on the possibility of this being breached in other markets and so on so For that was phase one what they quickly realized and I'm gonna have made a talk about this a little bit more is Because they had access and are already Established a network a private permission network with with all the right parties inside it for Authenticity and provenance of all these patents now they could create NFTs All of these patents that can then be used in public network for tradability for licensing for loyalty And the lifecycle tracking of the patent with the patent offices This is a huge huge innovation in the world of patents if you think about it any Organization if you're part of a startup or even a large enterprise you file patents all the time, but only I think about 20% of your patents that you find is actually being used within your organization rest is either sitting on shelf or gets expired and you're continuously paying and this Idea of tokenization allows you to open up this asset Which is an illiquid asset that's sitting on your balance sheet to be able to trade our License and make it monetizable in the market. So a very cool Use case and may there maybe you want to talk about this as well Yeah, definitely. It's a hybrid implementation the Negotiation of the terms of sale of a patent Within IP we's infrastructure happens on hyper ledger because they needed the privacy channel So it's only a two-party, you know negotiation that happens with the terms of the sale are negotiated and agreed upon But then when the NFT is minted it's minted on the public Casper network with the patent ID Identified and the ownership is tracked on the main net Now interesting thing is we are a negotiation we are engaging with IP we for phase 2 and this is where things get really Interesting is they are coming up with patent bundles So now if you can imagine Let's just take the cell phone vertical as an example. So if you can imagine Samsung call a Qualcomm Nokia Will all have patents that are related Given a certain vertical or value proposition and they'll each patent some portion of the technology in the each own those patents Now individually those patents may not be terribly valuable But if you could bundle them together the sum is far far greater than the sum of the parts And so what they're now going to do is create these NFT bundles of Patents that can now be sold together and then when the NFT is sold And the royalties are automatically distributed because that's all encoded within the contract So you'll be able to take this NFT bundle Negotiate the terms of sale and hyper ledger But then the royalties and everything are all tracked by a smart contract and then the NFT is Transferred in its ownership with all the patents bundled into it on the public Casper protocol So this is an excellent use case of this public private hybrid that we've talked about where you get the best of both technologies so the next one that I got is Actually in the world of ESG and sustainability as You all know corporates today have to have some form of share order reporting on sustainability and frankly I think organization that doesn't have a well-established net zero goal. They get ranked in terms of marketability in them in the market, so This is more true in Europe than in some of the other parts in North America. It's purely about complaints But organizations are proactively putting in plans to track the sustainability goals and move towards a net zero or net positive structure Now the issue is I will tell you as ESG investors I don't know if you own ESG investments, but ESG investors Struggle to hold the invested companies accountable to the KPIs. They actually originally commit to before the investments and Obviously as a as a Investee or the other company in which that you get invested do not want to share Too much information about their metrics all the time to the investors they do it on a quote on a I think it's a yearly basis is their term right now and By the time that information gets transferred to the investors. It's too late. They can't make any decisions They have to still continue with the investments even though the ethos was was something different so what we are seeing is Their organizations are starting to track their internal sustainability metrics on private permission protocols like hyperledger fabric and are Then looking at ways to report to the market that they are either meeting the metrics or not meeting the metrics with under a few you know Indisputable proof of their metrics being held in a private permission Network and this is where we are doing some work with the hardware network right now on With some companies on establishing this for recyclability and as well as You know responsible sourcing initiatives on the likes so again the public world Knows that you are still you know it has proof of where your metrics are all the time It doesn't have the details of what exactly those metrics are But the private permission world has auditability at any point to show that they are Computed and they are on track or off track to that so interesting concepts starting to see a lot of traction in the market Interests from organizations. This is in both the sites the financial services community is very interested in this but also the individual companies themselves and how they're tracking their sustainable initiatives as Very Adapting this quickly the last pattern that I'll tell you actually it's not a pattern. It's a real customer I can't tell you the names because that's how our world is In the world of CBDC right central China Bank digital currency We see a need for private permissioned way of managing What they call as asset ledger across different wholesale banks and the central bank and that being occurred on a Private permission world in a you know It could be fabric be you know Casper there are all these world where there is control There is permission and there is access, but only for the parties that are already trusted and can be good when the Bridget into the the the retail CBDC world which has needs to have a level of decentralization and and And You know an atomization especially with the cash aspect You know a big issue with the central bank digital currency is that when I hold central bank Digital dollar or digital euro. I don't want the central bank to know What I'm going and purchasing on and doing analytics on it and coming back to Stop me from doing my way of living So there is a need for a certain level of Wall between What is visible and what's not visible and this is just pilots that's going on in different countries Where they're looking at the interoperability between the public and the permission chains So just some some thoughts to think about Real applications. I think the world is here If you ask me five years ago, I would say the world is just private permission public has got is to involve with primarily cryptocurrencies But now the world is changing. You see I'm here, but to other representatives from the public world. So We the hybrid networks is here So as I was hearing you talk about your use cases is just some all very serious very important But I think a growing use case that's going to start showing up that is not quite as as relevant as the sg Is is the world of online gaming in ES and AAA games You could one of the things you can do with a hybrid ledger is you can keep the ledger public But you can change some of the rules of the ledger that might fit some of the needs of your games For example, if you keep all your game pieces on the ethereum network on main net You can't place rules such as if you violate our terms of service and stream some Some stuff on twitch that we can't associate ourselves with you can't take back their game pieces, you know That's a very common thing that people like to do and so so games that you don't want have total ownership to be important They'll stay on a theory of main net, but those won't be all the games that are going to want to use blockchain There's going to be companies who are okay with that sort of an approach So you would use a hybrid block chaining you would keep the data on a roll-up that gives you the privileges if if if your user winds up on a no-fac list you could probably Repossess them some of their game pieces if they do The things that that might not be compatible with the way you want to one run your run your game system So that's some of the the advantages of going to a hybrid network is you can enforce some of these rules that Regulation might require of you that you could not do on a public network because there's you know on on a theory of main net If you don't have the keys your assets just don't get transferred so that's that's simultaneously advantage and restriction based on whether you're a public or a Permissioned type situation. I think we are getting yeah, please look, there is also history behind how to start it, but What enterprises want is to negotiate with other parties on permission networks. They don't want to do that on the public network If you can create a side ledger on a public public network and you can do it that way. Yeah, of course this is Because this is the heart this is where we started we started with the hyper ledger fabric and doing it as a permission system And then eventually decided we were going to tokenized as assets in a public network and that's how we built the bridge That's it If you want to do this as a side chain and do it primarily between the parties that are involved and eventually put the proof Into the public network tokenize on the main net. That's why that's perfectly acceptable hybrid situation as well Everyone can read the ledger, but only certain nodes can write so essentially becomes a public network But only the writers are permission You can also set up like this So if you manage to have a ledger that is off-skated you can distribute essentially to everyone But only the block who can assemble the blocks are permission So so you can create an economy directly on fabric. I don't disagree and that's completely possible The two key drivers that I think is important one is liquidity Right. I think the key reason why you would want to go to a public ledger is to have some form of Monetization and from the liquidity form the second one is a bigger ecosystem axis and I I will tell you in my seven years of building consortia, they are really difficult governance and managing them is Enormous task and you saw here how many companies or many consortia's torpedo done So I believe this is a new pattern that can jump through that hoop of having to form a consortia and get everyone to agree on There are patterns by using public networks to have concrete proof and In working the same same exact end goal that you need So I'm gonna have the the public network advocates talk about it So with respect to the Casper network the governance is held by the public validators and Casper labs sits as an advisor We don't run nodes in the network from my perspective as a technologist and Developing a protocol in a platform we provide I believe the platform and the technology needs to provide the capabilities To the participants and users of the network to govern the network And so what that means is we empower the persons that are holding the stake in the Casper network to vote on Chain or vote on governance issues and allow themselves to be heard We provide capabilities for enterprises to govern their Integrations on the Casper network they can upgrade their contracts. They can revoke their contracts They can even recover and revoke keys if they wish to do that because we provide the capabilities in the technology itself So an enterprise can really govern Their own implementation of Casper and even on main net right so We felt that that was really important. So an example a hard fork is a great example God forbid there's a hard fork on Casper network and now in a lot of other protocols You'll see two copies of your contracts in Casper We provide tooling that the the company can decide to kill the contracts They can kill both contracts on both forks or they can choose to say we're going on this side of the fork And we're going to kill the other one, right? So I look at it from providing the capabilities versus actually getting in there and doing the governance So we allow the companies to do perform their own governance around how the public chain how they interact with the public chain Gas fees right that was the other question. Yeah, so we have some innovations that are coming out as part of Casper 2.0 We will be offering contracts that can stake the network and contracts that can pay for their own execution There is a novel gas fee mechanism that will be coming at the end of Q1 Can't talk too much about it just yet because it's it's just coming out of research now But it will stabilize gas fees and main net So for gas fees on Hedera our fees are fixed to Fiat We have a exchange rate on chain that will move the cost in H bar to what the fixed fee is So if it's going to cost you a tenth of a cent to do a transfer It's always going to cost you that converted amount within a day's fluctuation There's some fluctuation But I think that that gets to a higher point is that when you integrate with your public network You need to do your homework and be prepared for what you find on the public network If you figure out what's most important to you and find a network that fits your needs not everyone needs to be on a theory of Mainnet You know, maybe maybe avalanche is right for you Maybe a polka dot or a cosmosm chains before proof for you Maybe Hedera is the right place for you, but when you're looking at these these Lego pieces to put together Just like building any other system You need to do your homework and see what you can control and what you can't control and if you can't control it Make sure you're okay with the range it operates within and if you don't want to spend 500 bucks to deploy a smart contract Maybe you need to wait until Sunday morning to post your contracts on a theory And governors that's right. That's another important part Hedera it's a public network, but it's not a permission list right now There's 23 different council members right now that they govern the ruling of Hedera right now Kind of like the visa network and they're separate and you know, they're big names. You'd recognize I'm totally blanking out. What are some of the ones I should list Brett Google IBM Boeing Those are you know, those are the those are the types of companies that are the putting representatives on this board To to to control the fees to control the technologies and just recently we turned on To update the software you need to get like two-thirds of them to sign a message before we can update the software on the network So there is there's you know, if governance of a network is important to you And you don't like the Wild West of Ethereum main net There is there's really controlled stuff like like Hedera out there that'll probably suit your needs All right. I know we are a little past our time I'm gonna do a quick wrap up and we are open for questions. We can talk offline here as well net net is Hybrid networks are a reality. They're already happening in the market right now whether you like it or not There are projects like the cactus and as well as the Viva project which Incidentally are going to be merged together and is now called cacti That offers you the capability to interoperate between hybrid between networks private permission and as well as the public Networks, so there are instances of where real adoption is going to grow I encourage you as you are designing your your systems to consider the long-term growth of your network when making decisions on technology as well, so Just things to keep in mind and have an open mind to adopt this in your organization. Thank you very much Thanks, everyone. We're doing a demo of the cactus weaver in integration With hyper ledger and Casper. I think tomorrow right Sean. Yeah tomorrow at 4.55. So if you want to come check out the demo I'm not sure where it's gonna be. They'll probably announce the room It's at 1235. Oh, we'll forget that. I didn't know what I was talking about 1235 tomorrow. I guess So while we're plugging sessions I have a session next on integrating the EVM into hyper ledger not hyper ledger Hedera integrating the hyper ledger basic EVM and will go to be and then I'm sitting on another security fireside chat Right after that and let me see what room. That's why I got my phone out So I can figure out what rooms I have to go to the eco-sem room. Is that this room or is that the room next door? So I'll be I'll be back here in a couple hours, so Thank you everyone You