Cecilia Hsueh Discusses Blockchain Modularity: Takeaways from Morph's CEO at Hack Seasons Brussels

Hack Seasons Brussels The highly anticipated event is just around the corner, and we’re eager to highlight the extraordinary speakers. This time, we’ll focus on Cecilia Hsueh Cecilia, co-founder and CEO of Morph, will elaborate on the significance of decentralized sequencers in enhancing blockchain security. She will also shed light on how responsive validity-proof technology is pivotal for optimizing layer two state verification, alongside the advantages of Morph’s modular architecture. Additionally, she will underscore the necessity for consumer-oriented blockchain applications and how Morph plans to drive mass adoption while addressing regulatory concerns. 

Can you elaborate on your journey into the world of Web3? How did it all begin for you? What was your initial project?

I first stepped into the crypto arena in 2019. Back then, I was both an investor and a co-founder of a centralized exchange named Phemex. Essentially, I operated that exchange for three years, overseeing its entire operation. 

Back then, an unforgettable experience for me was witnessing the true potential of cryptocurrency. Our platform launched just three months prior, and in that short span, growth was astounding. It was like every month saw a doubling of revenue and profits.

Do you believe that the industry continues to progress at an extraordinary pace?

Absolutely, I still maintain that view. In 2019, we had a relatively low number of retail users engaging in this field. Although our direct exchange saw a significant trading volume, the number of users remained modest. Fast forward to today, with more regulations in place for centralized exchanges, trust in these platforms has grown, allowing a wave of everyday retail investors—those not originally involved with crypto—to join the fray. While the pace is still impressive, I think the trend has taken on a new shape.

Can you clarify the function of decentralized sequencers and their significance for security and system resilience?

This concept has been on our radar for quite a while. Our technology team, with several members hailing from various blockchain backgrounds—including key figures from the Cosmos project—has always envisioned the necessity for decentralized sequencers. Decentralization is fundamental to the very essence of blockchain and EVM layer 2 architectures. Yet, irony lies in the fact that many layer 2 solutions still rely on centralized sequencers, which contradicts the principle of decentralization.

The primary advantage of decentralized sequencers is the resolution of single points of failure. There have been instances recently where reliance on a solitary sequencer resulted in the collapse of the entire chain—an outcome no one wishes to experience.

With decentralized sequencers, even if one fails, others remain operational. This setup addresses concerns related to miner extractable value (MEV) and potential manipulation of trading orders, as the transparency afforded by multiple sequencers mitigates such risks.

We proudly claim to be the pioneers in launching a decentralized sequencer on our testnet. Currently, we have seven sequencers in action and are planning to expand this number to about 12.

In what ways does responsive validity-proof technology enhance the verification process of layer two states?

Our approach is akin to a hybrid of Optimistic and Zero-Knowledge rollups. We chose to find a balance because we believe in the value of both technologies. In the end, our goal is to transition fully to Zero-Knowledge rollups. Currently, however, we see that Zero-Knowledge technology hasn’t yet reached a mature stage, and the associated costs remain quite high.

Our system is designed to transition smoothly to pure ZK rollups when the technology evolves and expenses decrease. For now, we still need to handle fraud proofs in the Optimistic rollup scenario, but for those instances where challenges arise, we utilize a ZK proof, effectively reducing the challenge timeline from 7 days to just 1 day or less. This adjustment also leads to lower transaction costs, as we only need to record transactions when a dispute occurs, making it significantly more cost-effective than a traditional ZK rollup.

What benefits does Morph’s modular architecture bring to both end-users and developers?

Modularity is certainly the direction things are headed. At Morph, we embrace a modular architectural framework. This design principle offers developers greater flexibility and security, allowing them to adapt their infrastructure as needed.

On Morph’s layer 2 solution, we are leveraging Ethereum’s data availability layer due to its unparalleled decentralization and security features. We regard Ethereum as the leader in providing a secure data availability infrastructure.

However, we’ve also observed a growing demand from projects seeking to prioritize cost-effectiveness for their users. This has led us to include a layer 3 in our plans for Q4, which will utilize an external data availability layer to reduce expenses. Layer 3 is tailored for projects that prioritize low costs, while layer 2 maintains a focus on security for those that prioritize safety.

You've mentioned that you're primarily using OP-Rollups rather than ZK-Rollups. Are there alternative ways you are addressing gas fees and enhancing scalability for both users and developers?

Post EIP-4844, we’ve experienced significant cost reductions, dropping by 80-90%, resulting in much more manageable fees now. When it comes to transactions per second (TPS), I don’t think this is our primary focus. Many blockchains are obsessed with achieving higher TPS rates, but in reality, it’s not a pressing need for most. For instance, a speed of 1,000 TPS—who really benefits from that? The majority of applications can effectively operate with just 200 TPS, which is our target.

The key lies not in simply racing toward ultra-high speeds but rather in understanding what specific applications will utilize your chain and what their requirements are—be it speed, lower costs, etc. Begin building the ecosystem first and then fine-tune the technology according to their needs, rather than just creating unrefined technology that lacks users.

Have you encountered any obstacles while working on building the ecosystem and navigating regulatory challenges?

Yes, we’ve certainly faced challenges on the ecosystem front, particularly since Morph is dedicated to developing a consumer-focused blockchain—an approach that is somewhat unique in the current landscape. The primary hurdle is that when we look to the market, a staggering 90% of developers are engaged in DeFi, GameFi, NFTs, meme coins, and now AI projects, while very few target consumer applications. This is because the crypto market remains relatively small, predominantly inhabited by crypto-savvy individuals who find DeFi easier to grasp and often more lucrative.

Another factor is the high level of education needed for typical retail users of consumer application tools, which surpasses that of other crypto sectors. We must educate potential users about Web3, emphasizing its advantages over traditional Web2 applications. Thus, the challenges we face stem not from a lack of consumer app developers but rather from the time required to educate end users. Fortunately, we don’t currently see significant technical obstacles, given the expertise of our team.

Could you share some long-term goals you have in mind and your vision for the future of Morph?

Our overarching goal is to facilitate the integration of blockchain technology into the everyday lives of the average person, thereby achieving genuine mass adoption. At present, what is often referred to as mass adoption is primarily confined to the realm of investments—people are drawn to the speculative value rather than recognizing tangible benefits from blockchain in their daily activities. Many of my acquaintances question the necessity of cryptocurrency and decentralization, as the true purpose remains elusive to them.

This situation mirrors the landscape in the layer 2 space—while scalability discussions permeate the conversation, one must ask why scalability even matters when user engagement is still low. If we limit our focus to this minimal crypto audience, the demand for TPS will likely never exceed 200 for most applications due to the lack of real usage.

This insight drove us to initiate this project. We identified a gap in the layer 2 offerings where the emphasis remains on technical specifics without a supportive ecosystem or an active user base.

One of Morph's key strengths lies in our solid user base of 30 million, all of whom are somewhat familiar with cryptocurrency, as they are registered wallet and exchange users. Yet, they are actively searching for opportunities beyond DeFi, GameFi, and other digital applications, as they struggle to find consumer-targeted apps available.

Conversely, many developers deploy on various chains yet struggle to connect with go-to-market support or access end users. During events, they often find themselves speaking only to industry insiders rather than their actual retail target audience, as avenues for reaching them remain unclear.

Morph specializes in bridging these two entities—retail users eager to find valuable on-chain applications and builders in search of users. We aim to craft an entire ecosystem at the intersection, employing layer 2 technology as the foundation.

As a speaker at the anticipated Hack Seasons Brussels, what goals and plans do you have for this event?

For us, participating in events is all about increasing our visibility. We strive to build our brand reputation and extend our reach across diverse markets. Having engaged in numerous events throughout North America and Asia, we are now gearing up to present at Brussels, targeting the entire European audience.

Brussels offers an ideal venue because many blockchain initiatives are predominantly focused on US markets, while Morph looks beyond the US borders. We've attracted interest from top US VCs such as Dragonfly and Pantera, who are confident in our ability to tap into markets outside of the US. While many leading blockchain projects revolve around US-centric strategies, they often lack the insights needed to venture internationally.

Cecilia Hsueh Discusses Blockchain Modularity: Insights from Morph's CEO at Hack Seasons Brussels - Metaverse Post

In her conversation, Cecilia Hsueh, the CEO of Morph, delves into topics such as decentralized sequencers, adaptive validity-proof technology, modular frameworks, consumer applications in blockchain, as well as Morph's approach towards widespread acceptance and navigating regulatory hurdles.

Cecilia Hsueh on Blockchain Modularity: Insights from Morph's CEO at Hack Seasons Brussels