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The Future of Verifiability: Exploring ZK coprocessors | Guest: @CMT_Digital Head of Research @Aryonchain | Host: @narb_s
Recorded: March 28, 2025 Duration: 0:30:07Space Recording
Short Summary
In a recent episode of Devontel, Arian Shakelyan from CMT Digital delves into the transformative potential of zero knowledge technology in blockchain, discussing its applications in privacy, scalability, and partnerships that are shaping the future of decentralized finance.
Full Transcription
GMGM, welcome to what's going to be another great episode of Devontel. So if you didn't know,
Devontel is a 30-minute podcast held every week, allowing founders, hackers, and anyone in between
to come on the show and give an explanation of the product. So today I'm ecstatic to welcome
Ariane Shakelyan, who's head of research at CMT Digital. If you didn't know, CMT Digital is a
leading global venture capital firm focused on
early stage investments that accelerate the adoption of blockchain technology. So if you
stick around for today's episode, you'll see Arian give us an engaging talk exploring zero
knowledge coprocessors, zero knowledge in general, and their role in the future of verifiability.
All right, let's get going.
GMGM, welcome to the show, Arian.
A pleasure to have you on.
Thank you for having me.
Yeah, my pleasure.
My pleasure.
Yeah, so we're going to have a really great, engaging today all about zero knowledge and zero knowledge co-processors.
This is a big, big topic in the Web3 space, as we know, but I'm pretty sure there is quite a bit of applications beyond just Web3.
And really keen to hear the insights that you have here for us today.
But before we get into that, let's let's dive in a little bit uh and learn more about yourself uh so would you like to give a brief intro uh just for folks who aren't familiar
yeah for sure um my name is arian i i've uh been with cmt for about four years i uh work as the
head of research here and as an investor um i was born in Iran, moved to the UK when I was around four,
grew up in the UK and I came to the United States for university back in 2016, studied mathematics
and economics at Columbia and joined CMT when I graduated. Just got my visa so looks like i'll be in the united states for at least the immediate future
and uh yeah i'm excited for the opportunities that this country provides awesome man uh
congratulations uh i'm sure uh the visa process um i've heard is never an easy one
um so again through that um that's amazing uh i guess uh before we get into the nitty-gritty
of zero knowledge uh you're telling me a great um your background story basically of how you
got into tech and how you found yourself at cmt um would you like to share that uh i i thought
it was a really great story yeah for sure i sure. I mean, I was always very interested in technology.
I think it started when I was a kid.
In the UK, we've got these things called car boot sales.
It's kind of like a yard sale where a bunch of cars will drive into a field and pop the trunk and sell various household items from their bag.
I was really into computers.
And so I would go to these car boot sales and find old computers that could be pieced together and sold.
And that's how I first got into technology, was really just understanding how computers worked.
Obviously, computers have come a long way since then.
Back then, I was actually purchasing like individual networking cards, audio cards.
All of that is now kind of integrated in the motherboard.
So when I finished high school, I started working at Accenture.
Accenture runs a program called the Horizon Scheme,
where they let a few gap year students work as normal business analysts.
So I was drawn to Accenture because of its focus on technology and the actual implementation side of the solution um that's where i first got exposed
to blockchain technology and uh yeah i found it really interesting started diving in and uh went
from there awesome and i guess um is there a particular uh thing with blockchain technology that kind of hooked you?
I know for a lot of folks, their first dive into it is reading the Bitcoin white paper
and kind of getting hooked from that.
Was there a particular thing that you researched or learned about
that really hooked you into the tech?
Of course, the Bitcoin white paper was hugely influential
for kind of my interest in the space. I read the Bitcoin white paper before hugely uh influential for kind of my interest in in the space um i read
the bitcoin white paper before i joined accenture what about my accenture experience really interested
me in the technology was i was exposed to a lot of inefficiencies that exist within the modern world
especially the consulting world especially technology that exists within
enterprises. And the automation abilities of blockchain technology in handling some of those
processes was really interesting to me. So that's kind of the angle from which I approached it.
How can we use blockchain technology to automate a lot of these inefficiencies away
and create a better system
than exists today oh yeah yeah yeah definitely uh that is uh that is a great way to get hooked
uh and uh you mentioned your head of research at cmt digital uh could you perhaps just give us a
high level overview of um the types of different things that CMT Digital invests in and more about your role?
Yeah, for sure. So I'll tell you a little bit about CMT Digital as an organization as well.
So CMT Digital really exists as the blockchain investment subsidiary of the CMT Group.
And the CMT Group is a proprietary trading firm based here in Chicago that's been around since 1997.
The firm was actually established around the genesis of electronic trading.
And founders, Scott and Yarn, came out of Chicago Research and Trading.
They saw the opportunities in the electronic markets and kind of set up the firm to engage in those markets. CMT Digital was established in 2013 to start engaging in
the blockchain and digital asset space. Primarily at the beginning, it was from a regulatory and
policy perspective. We observed the Silk Road auction and were wondering about the ramifications of the US Marshall
Service selling something like Bitcoin, an asset that I don't think many people understood
at that time.
And so we joined the Blockchain Association, made initial investments in 2015.
The crypto trading desk was spun up full time in 2017 and the first venture fund was launched
in 2018. I joined around the second fund in 2021,
and yeah, we're on our fourth fund right now.
For my role, you know, head of research role
is really a bit of a hybrid of an investor
and a researcher role, especially at a venture capital firm.
You're looking at the research side
to really inform the research side to
really inform the investing strategies to a degree. So being able to dive into the research
and develop theses about what verticals in the market we expect disruption in,
or how that disruption is going to look, I think informs our investing strategy. And I think that's something that we experienced with ZK as well.
For example, we had a thesis about limited use of ZK for computation.
And that's how we ultimately arrived at investing in Lagrange at the pre-seed
level. So, yeah, it's definitely something where the research informs the investing
and vice versa. Interesting. Interesting. And I guess, could you take us through a day in the
life of your role? Like you wake up in the morning, like what's the first thing you do?
Just like scour the web for the latest research papers? Well, I think it's a mixture.
So we're obviously seeing deal flow,
but the deal flow also informs,
I guess, where people are spending time.
And through that,
we can see if there are areas
that we think are underdeveloped.
And that is probably where
the research will be focused.
This is also especially prevalent in
times of quiet market activity. If there's low deal flow volumes, for example, it gives me an opportunity to really dive into the research aspect and build out the theses further to
anticipate builders returning. And so a typical day in the life is I tend to get to the office around 7.30, 8.00 a.m.,
log on.
We go through the deals that we're seeing and if there are any research projects going
on at the time, we'll be able to explore them as well.
One that I'm currently working on is around the tragedy of the commons
and how crypto networks and blockchain incentives specifically can
alleviate some of the misalignments of incentives that occur
as a result of the tragedy of the commons.
So depending on the amount of deal flow we're getting,
we can allocate more or less time to the research activities.
Interesting, interesting. we're getting we can allocate more or less time to the research activities interesting interesting yeah uh i've always been curious to to learn what a typical day in the
the vc world is so thank you for enlightening us on that um and obviously uh zero knowledge
is something um you're passionate about it's the topic of our talk today.
So let's get into that.
So for people that have never heard of zero knowledge before,
could you just give us a brief rundown of what it is and why we should care about it?
Yeah.
Zero knowledge is really a mathematical concept,
and it's prevalent in cryptography, which is a branch of mathematics.
It's a technique where one party can prove to another some statement is true or false without revealing any information about that statement beyond the validity of the statement itself. So in blockchain, it's often used to prove
computations happened correctly or by a specific spec without actually exposing the underlying data.
And this is a recent discovery, right, that this type of thing is possible um and i believe the the biggest
application at least that i've seen um has been in the in the web3 space but is there any other
field that's um adopting zero knowledge i mean zero knowledge i think has been prevalent in
computer systems for a long time it's actually not necessarily unique to crypto at all.
It's just within crypto, there are applications of it that I think become very useful because of
the nature of crypto systems and the transparent nature of crypto systems specifically.
But zero knowledge has been a technique used in cryptography for a long time,
especially when it comes to secret sharing and establishing the grounds for a communication, for example.
Gotcha, gotcha.
And obviously, privacy and verification are also important aspects that zero knowledge provides.
are also important aspects that zero knowledge provides like what do you think um they're so
important for um the different types of tech that we're seeing today and perhaps the tech that we'll
see in the future um how do you see all the kind of like coming along yeah i think zK is really important because it allows you to decouple trust from transparency.
So instead of having to reveal all of your data to prove something like your credit score or your age, your identity even, you can just prove the result. And so as we move towards a world with increasing surveillance and data exploitation,
for verification, ZK brings that math-based trust that allows you to scale as those systems
scale and evolve and change and verify the correctness associated with your data without actually re-executing computations
or revealing privacy private data and so there's kind of two aspects it's huge for scaling blockchains improving off-chain computations and it's also great for preserving privacy of
data that's sensitive especially in a environment where everything
is transparent and verifiable yeah indeed indeed and uh just to shift gears just a little bit
uh from blockchain like what about artificial intelligence um we see a lot of data pumping these models and training them. And sometimes, well, most of the time, it's just like open data that's on the web that
scrapes, that they scrape and they train on.
Have you seen any developments in basically verifying the output an AI model might produce
or any interesting developments in the AI space related
to ZK? Yeah, I think AI is definitely a branch of ZK. We've got ZKML, so Zero Knowledge Machine
Learning, and portfolio company Lagrange is actually working on a ZKML library as well. So there's the ZK EVM side, so projects like Scroll, Polygon, ZK EVM, ZK Sync,
they're bringing ZK to Ethereum-compatible smart contracts.
That's one kind of branch.
We've got ZKML, so zero-knowledge machine learning,
where we're seeing early, early examples of proving model inference in zero-knowledge.
This verifies that the AI model made a
decision fairly without revealing kind of the model or the data inputs. And I would say there's
also another branch that's like recursive proofs and proof aggregation. And this is also where
LaGrange kind of operates. Innovations here talk about drastically reducing cost
and allowing computation proofs being composable
and kind of aggregating these proofs to save on computation costs.
And this is key for scaling.
So ZKML, I think, is exciting for just showcasing the ability for ZK
to quickly be able to solve problems
across industries as a result of its inherent properties, regardless of its use case.
Interesting. Interesting. And I guess the topic of today's show is exploring ZK coprocessors.
Could you explain what that is and why you think that's important? today's show is exploring ZK coprocessors.
Could you explain what that is and why you think that's
important?
Yeah, so ZK coprocessors are like outsourced verifiable
compute.
So instead of having all of the computation on chain, which
is very expensive, sometimes not even feasible given the
computation size, you send it off-chain to a ZK coprocessor. This is some computation that can
occur off-chain, but a succinct proof is then provided that the result is valid, that the
computation occurred in some fashion. And why do I think this is important?
Well, one of the things that's really exciting about ZK
is it's becoming programmable.
It's moving from this research phase
into this real developer tooling phase.
And so using ZK co-processes in your stack, I think,
allows you to unlock things like scalability, for sure,
but then private and verifiable compute
to unlock private voting, verifiable off-chain inference,
cross-chain asset bridges with no trust assumptions.
Everything that could be thought of as a verifiable oracle
but for processes like compute can then
exist in a scalable and economically viable way today as kind of like verifiable oracles.
Interesting. So ZK as an oracle, essentially. Yeah, never would have thought I'd connect those two, but that's an interesting way to look at it.
And I guess, would you say that cool processors are in themselves like a specialized set of hardware to be able to run that level of computation? So we know like when we run AI models,
you need a pretty beefy computer with lots of RAM and GPU.
Is there a specialized hardware that's necessary to run
the zero-knowledge cool processors as well?
I don't know if it necessarily needs
to be specialized hardware.
Of course, people are working on hardware acceleration
for kind of making compute more efficient on the hardware.
Copress is not hardware per se, but more like verifiable compute modules.
Typically, they're software systems that could be accelerated
by that hardware acceleration,
but it's about the circuit that's created that verifies the computation that's actually occurring.
So the coprocessor piece is really software, but they can be accelerated by specialized hardware.
And we are seeing companies building in the specialized hardware space
yeah i'm sure i'm sure they are and um like in your mind do you see like how do you see
um these co-processors playing the into the future of verifiability i know there's lots
of applications but is there something in particular that you're quite keen on seeing being developed?
I think it's about the notion of changing how we think about trust in computation.
You no longer then need to rerun or trust the machine. There's no trust between the machine
and the protocol. It's really that trust is obtained by verifying the proof
and the proof's validity. And so it can help supercharge modular blockchains,
things like settlement and execution layers, make them more compatible with a wider array
of use cases as a result. It can enable regulated privacy. So we love privacy in this space,
but we also have to be compliant in this space.
And so that has been a historically difficult bridge
to cross.
How do you merge those two?
It's kind of like an oxymoron.
But with this technology, it does really
enable regulated privacy.
You can just follow the rules without showing the data.
And, yeah, I think the AI specifically, ZKML,
does make AI and blockchains interoperable in that trustless,
scaleless way and scalable way.
And if you think about the role of blockchain within AI,
If you think about the role of blockchain within AI, the incentive alignment abilities of blockchains
can be quite useful for AI and it really requires that link of being able to not only verify the
processes of AI but then trust it to ensure that you can actually align the incentives and then
create an incentive model that is not broken as a result of
broken inputs right yeah and i i personally think that's also going to be quite important
um going forward um especially like this this year in particular and the around the end of last year
you really saw um this merging of crypto or blockchains and AI really
starting to take off with like the ELISA agent stuff. Of course, like not everything is going
to be automated meme coin reply guy bots, of course. But I think like going forward, there's going to be lots of interesting applications
that kind of come out of this merge.
And obviously you being in venture capital
and CMT having quite the big portfolio,
I'm sure there's quite a bit of companies
that you've had your eye on
or do have inside your portfolio.
Lagrange being one that you've had your eye on or do have inside your portfolio.
Lagrange being one that you mentioned. Are there any other ones that are doing interesting work in the ZK space or maybe the blockchain and AI space?
Yeah, I mean, I think there's a lot of companies in the space that are interesting and increasingly so more and more companies are finding a need for ZK in their stack.
so more and more companies are finding a need for ZK in their stack. I am quite excited about ZKTLS,
so companies like Reclaim and Opacity are working on using the transport layer in internet protocols
today, like TLS, transport layer security, to prove data that exists in this backlog of Web2 data lakes. And so all of your information related to
your university, where you went to school, your employment, your credit, all of that is
obtainable via internet protocols. You can log into your bank account, for example. But
using ZKTLS to actually prove the inputs
to the page that you're seeing,
you can then verify some information is true
without actually revealing that information.
And I think that's powerful for similar to AI,
onboarding data and making that composable with blockchains,
therefore allowing blockchains to shine
where they're really best,
which is that incentive alignment piece,
using data that is then verifiable and known to be accurate.
Yeah, yeah, definitely.
And I think another interesting, like on that topic
and application of this would be,
have you heard of the,
have you heard of Clear before? The heard of a clear before the the airport terminals
that like scan yeah oh you remember yeah yeah oh there you go you know you know the you know the
whole deal uh i feel that like something like that would benefit a lot from uh zk just because of um
like the the amount of information that you have to give. And then there would be also interesting applications of that where you could
also technically use that for like sign or checking into your hotel as well,
or checking into a cruise just because like all of that is kind of housed in
one central identity proving platform.
And you don't technically have to prove,
you don't have to provide them all your information
if you're using ZK, something like ZKTLS
or some other zero knowledge application.
Yeah.
One example that I think is relevant today
is the 23andMe database.
So the database is going up for sale.
A judge ruled that it can be sold as part of the bankruptcy proceedings.
I don't know if you saw, but say the blockchain, SEI, is submitting a bid.
Now, what's interesting is a blockchain company is uniquely positioned to buy the database, make it all zero knowledge,
give people who are within that database access to their credentials, and then build a system for
identity as a result of having access to that data without ever compromising the security
or privacy of that database itself. And so it alleviates the privacy concerns of the users
whilst also giving them access to an identity proof
that they can then use in blockchain systems.
Just a question of whether or not they can win the bid.
Yeah, that would be an interesting development interesting development if if they do end up
winning that bid and uh yeah i mean 23andme has quite the large database and it's like
going to the right hands i think it's very important for all the people that gave up their data, basically get their DNA test.
But yeah, I guess on that front, as we're nearing time, just want to pick your brain a little bit
as you're right on the bleeding edge, researching all the different types of innovations of Web3 and AI, zero knowledge.
Are there any trends that you can speak on that you've seen are developing
or you're quite interested in yourself starting to come up?
Well, you know, I think a lot of the past few years
have been spent, especially in the blockchain space,
developing infrastructure.
And, you know, I don't think we'll ever be fully finished developing infrastructure,
but at least the rate at which infrastructure is being made and applications are being made,
I think should be changing soon. I think we've hit an inflection point where the infrastructure is quite robust broadly.
And tools like ZKTLS especially and recursive proofs especially can enable some types of consumer applications that we couldn't before. And so I am quite excited about seeing consumer applications
using blockchain technology and the suite of tools
like ZKTLS that accompany it.
And so I think it's a matter of seeing where blockchain
can actually disrupt.
Where does that self-ownership and incentive alignment piece
within a broader network actually disrupt
incumbents. And I think applications of that are pretty interesting. Obviously, identity data
are a pretty low-hanging fruit. But as we see the TradFi and DeFi world merge, I'm excited to see
what sort of consumer applications come out of that as a result yeah yeah likewise
the biggest thing at least from the blockchain standpoint as we've it's been quite quite the
theme ever since i've come into the web3 space is just like making something that's usable or
like making something that's usable or not making it obvious that what you're using is like
blockchain enabled or zk enabled basically abstracting that all that fancy stuff to the
back and just making usable apps for for people to use and i i think that's where blockchain's
promise really lies like yeah we can't beat2.UX by just copying it,
because the blockchain stack looks fundamentally different.
But there are applications or places where the blockchain stack is going to be better than the Web2 stack.
And I think things like privacy without compromise on using ZK is a great example of that.
Being able to prove that you're over 18 without revealing your actual birthday.
You know, healthcare, share that you've taken a COVID test, for example, without sharing
that personal medical data.
There's a lot of things that are very much harder to do in the Web2 world than the Web3
world, assuming the Web3 world is able to battle test
and adopt the technology to the point
where it's accepted by users as being trustable.
And I think there is a little bit of not education,
but kind of getting used to using mathematical proofs.
You know, we use a lot of cryptographic elements
in our everyday lives when we're logging
into web portals or whatever. I think it's going to be a similar sort of adoption curve where we
just need to get used to the verifiability and trust that comes from ZK systems broadly.
Well said, well said. And yeah, that brings us to time. Yeah, this was a wonderful, wonderful talk, Arian. Thank you so much for taking the time out of your day to come on the show today.
Thank you so much for having me. able to claim your attendance badge for watching us live today.
So if you're into collectibles,
definitely check out BitBadges.
You can claim your collectible for watching us live today.
And with that, I just want to wish everybody
a very happy Friday, happy weekend, wherever you may be.
And we will catch you here next week
for another great episode of Devontel.
All right, all. Cheers.
