Bringing Real-World Use Cases Onchain - TOKEN2049 Dubai 2025

Thank you so much for joining us out here. I'm Diana, one of the partners at 1KX. We are a global crypto venture firm backing some of the best founders in the space and Alex uh inventor of ZKSync is certainly an excellent example of that. We've been backing him since seed. um ZKSync have been pioneering not only research and development in zero knowledge technology um but importantly and what we're going to dive into here today the application of this technology um so to kick things off Alex I'd love if we start with a bigger picture how have you seen adoption shifting in in the last 12 months why are we at this inflection point um thank you the introduction Thank you everyone for for joining us today.

Um I think there have been two big unlocks uh over the last like year, two years um that are coming from different angles. The one is purely technological. The uh uh infrastructure is now I think around a year ago started to become mature enough for applications to be really built in a way that matches the expectations of the mainstream users. uh and and we see this manifesting in in a lot of different ways uh from the scalability perspective, from the UX perspective and from overall maturity of infrastructure like things are reliant uh resilient, you know, the uptime is high, everything just works. You have a lot of different pieces of infrastructure like indexers, price feeds, etc.

, etc., all coming together in a really nice way. This has been one lock. But the other one I think which is obvious to to everyone here is the shift in the political landscape in the world starting with the US uh since the last elections. uh it just finally possible.

It became legal for real businesses, for financial institutions, for uh fintex, for uh uh asset managers, but also for web two companies to move into the crypto space without any stigma, without any risks uh associated with it. And we see this happening and we I believe that the uh there is work underway in the US on the legislation side. We'll likely see the stable coin legislation being adopted by this summer. We'll see something like Fit 21 evolution being be passed this summer and it will become a very clear sandbox regulatory environment where the startups can really innovate and like the this promise of crypto of building the internet of value will finally became reality where everything that touches value will will come on chain one way or another. I'm really excited for this one.

It's definitely exciting and one of the areas where we're most excited about and I think where we're going to definitely see this convergence and the incoming of of web 2 is consumer. We're seeing a lot of activity and interest in particular across gaming and social. Um, I'd love if you could expand or give us some examples of how consumer builders are leveraging your technology, not only the cryptonative, but as well from sort of web 2 gaming um, and traditional consumer. I I think at this point we're seeing mostly hybrid uh, applications like not purely cryptonative, not purely web 2. Um specifically in ZK sync ecosystem we have a couple of really really nice examples uh of uh this happening.

The one is the abstract chain. Uh you're probably all familiar with the uh abstract uh ecosystem uh um introduced by or like invented by the inventors of Paji Penguins uh the masters of culture like they are bringing the crypto culture outside of the crypto world with the real world um uh you know bringing the the pudges into Walmarts and and kind of expanding the culture and making it very very easy from the user experience perspective to come and join and start um participating in in in their ecosystem for people without any prior crypto experience. So you don't have to own uh you don't have to like bother with the legacy crypto wallets. You can just loging in with your email. Uh they're using underneath the ZK sync uh smart contract infrastructure for the smart accounts, the native account abstraction and everything just one click away.

everything just works. Uh, another really interesting example is the lens uh, ecosystem with the lens chain migrating to ZK sync from uh, Polygon uh, earlier this year with the full migration of the state of the history of all the events of all the uh, um, assets that people had. Uh this is something that enables true ownership of your social account and I'm really really excited for Lens like I I think this it has the potential to become the kind of the Instagram of uh of web 3 uh with not only full um self-custodial kind of like proper rights to your intellectual property to to to the creative assets that that that you produce. use uh but also that serves as this transition to the crypto world with the adoption of the go stable coin going through the roof in in the recent uh weeks uh after the launch. Uh so we have like pure consumer applications uh we have uh uh social we have gaming ecosystem with multiple different chains in in the Zikis elastic network going after gaming.

We have abstract uh chain uh with their kind of consumer platform, the app store model um doing really well on the um like on the overall crypto mind share. Uh we have something really interesting brewing with the Exola ZK chain launching. Exola is the um I think the largest gaming payment providers in the world kind of stripe for for payments. They're serving 1 billion users and they have uh already tens of millions signing the terms and conditions for for this kind of new extension of uh of Exola with the chain allowing the game developers to launch their ecosystems and make the ownership of items in the games, ownership of of of different uh gaming flow, revenue flows go on chain and become um you know hard reality of web 3. really really excited for this.

Uh and they there are other gaming ecosystems like uh Candy there are uh yeah like really really many examples of of this going uh I I can go on and on. That's great. Um, so one aspect that I wanted to dive into and I think that that where we've always seen that there was potentially a lot of promise for ZK technology and honestly it's an area we've been trying to crack across both consumer as well as traditional financial services for I I would say over 20 years now is digital identity. So I was very excited to see that that you guys have a live project up and would love uh if you could share more about how your technology can be leveraged for digital identity use cases. Uh I I can the one example I can think of immediately is uh Cork ID which is a project from Argentina uh now integrated into the national identity system of the city of Buenosirus with a my buenosirus application.

Um what they do is they issue credentials by the state authorized uh authorities for state issued uh things like birth certificates um uh your your citizen ID uh driving licenses and so on as an NFT on the sync era and they have uh I think close to a million participants already uh actively using the system which is very interesting because it it gives you something that you own independent of the state. You can always recover. You you you can get access to your wallet backed up in the way you want and you can always just just get it back when when you need it uh without having to go to, you know, the uh the authority office. Uh and the interesting thing about this is uh you're only putting the the hash of your of this NFT. So the the the data stays with you on your application and you can share it with the officials when you're driving, you want to show your driving license.

Uh you don't put all of this data on chain. What we do is we verify the ownership on chain and then you can always prove that it's valid, it's not been revoked, it's still up to date. Uh but without having to provide the full uh full data disclosure to to the world. you are both in control of the ownership and of the data that you're sharing. I think this is one p like they are expanding further beyond Buenosares to Argentina nationwide and then going in in further Latam countries.

Uh I really think this is how the future of identity will work like both state issued and also private versions of identity. Um, yeah. Yeah, I really agree on that and certainly the identity use case is something that will be a huge unlock for financial services and something we've been trying to crack there. Overall, I would say that in terms of moving onchain and the the benefits that's going to provide, the financial services industry is certainly where we're going to see the the most uh happening and and the most benefits. Of course, uh it's also a very slowmoving industry, but what's been really impressive is that we've actually been seeing quite a lot of activity um with CKYNC and and institutions moving there.

We've got some of the world's largest asset managers, Deutsch Bank, UBS. I love if you could share why they're choosing to to build on your technology. There's a lot of options out there and and what exactly those use cases look like. Sure, happy to share this. And this is a uh topic I'm really really excited about.

This is where I believe Ziki Sync has uh made the some of the largest progress in all of crypto with onboarding of uh the Deutsche Bank who are launching a chain uh it's going mainet I think within within a couple of weeks from now. um the uh pilot with UBS. So like the two some of the largest banks in the world are are building on Zikysync. Um but also with the uh uh real world assets directly on DKYNC era chain like ERA has is the second largest RWA chain in the world just after Ethereum. If you go to RWA.

xyz XYZ. This is a really nice uh they have a really nice dashboard displaying this uh with um a lot of that is tokenized debt by uh uh private like private debt tokenization uh done by tradable by by other asset providers. uh but what what where the there is a true product market fit like what what what what's kind of like different now that was not possible before um the ZK scaling kicked in and why in part in part because of regulation but like on the technological front and product front why we have not seen uh much adoption of the uh uh blockchain technologies by financial institutions was the fact that they needed to combine several conflicting requirements irements that that were not really working with purely public chain technologies. So they needed to have a very strict compliance uh related controls of the chains with the full permissioning on who can go on chain like what types of transactions are authorized, what types of contracts are authorized and you cannot do it on the public chain. You need to to to to kind of like have a private chain system for this.

But the private chain system and there's been many pilots starting with hyperledger fabric they were quite big and then cord and you know a bunch of other uh other providers some of them are actually working underneath in like with in closed banking systems for managing liquidity between different um subsidiaries of the same bank but they could not talk to each other. It was really really hard to come up with a system that multiple banks are comfortable using together simultaneously because that would mean that they have to disclose all of their transactions to the other uh participants in the system and they have to do all the compliance jointly because it's like if it's a single system that everyone is using then everyone has to agree on the procedures and there's like 100 worked for banks in consortium environments and trying to get them to align on different underlying technologies. I can't emp emphasize this point enough. So what is possible now with ZK sync is the reality of private validiums like ZK power chains that are fully private that are fully controlled by the bank. They are uh privacy preserving the banks don't have to disclose the data to the world.

they can keep it completely on their servers and and have full control. Uh but these chains are settling on Ethereum as a single source of consensus of the state and they can talk to each other. We now have the private interoperability between these uh systems uh that where we can just send assets directly from one chain to another and not just like it's not limited to sending the assets. You can have private composible like private um atomic composibility in transactions that happen between the chains because they are all running the same zk provers underneath and same system contracts. They don't have to see what's happening on the other chain in order to be able to trust that chain.

they can just rely that on the fact that the the execution environment is exactly the same and it's going to be enforced by zero knowledge proof math and Ethereum as the ultimate settlement layer. So they can send a transaction that will do a atomic swap and then send the results back all happening within the bounds of the private systems without going to any like intermediary uh like custom shared intermediary. So like 100% of transactions are fully private. 100% of uh balances accounts are private and yet they have this interoperability with between other private systems but also with the public systems. they can now afford to custody the the customer's assets not on the public chain but within the boundaries of their private chain which allows for example swaps of like ether, stable coins, other cryptonative assets between their customers directly in the system without the disclosing the the transactions to the world which matches like meets their requirements for compliance and meets their requirements for control and and the services that they can provide for the customers and we like we see a massive interest in this topic from the financial institutions from the asset managers from uh uh the fintex in the world and this is like I believe this is going to be the next explosive application of crypto transcending the the like pure den world of uh of the cryptonative circle.

So if you were to say what needs to happen next for this to be the the major unlock where we're really going to see this influx of of applications of usability, it's with this interoperability interoperability going fully live on on the one hand which is a matter of several like months from from now and the regulation on the other hand. So in in the US the uh I think it was like two weeks ago that the banks were finally allowed to touch the crypto assets for the first time and there there are a couple of other missing pieces of of this puzzle that are currently being in the processing in in in the uh uh law making in the US and the US is trend center for for for the world like once US appro approves something everyone else follows with with a very short uh time lead. Uh so those two things are going to happen this year that will lead to basically to to the next era of financial institutions on web. Great. Well, we're really looking forward to that.

Thank you everyone. Thank you, Alex. Thank you all for listening.