The Path to 100m Users - TOKEN2049 Singapore 2023

hello hello all right Mike is working how's everyone doing all right if you're watching this remotely I'll tell you it is hot in Singapore and there are a lot of people here for F1 it's exciting um and I'm excited to be here today so um quick question to the audience and who was following the market or working in web 3 back in 2018 show of hands okay we got a few people um so there was a lot of hype a lot of talk about the the promise of blockchain but we only had about 10 000 daily active users using ethereum every day okay it was uh it was primarily developers people who were playing around who were getting in actually using protocols it was really hard to do okay um so we've we've uh we've gone to a point now where we have on a good day maybe 10 million users across every single blockchain um that'd be a huge day all right and I'm not not counting uh people that are getting on exchanges and trading tokens I'm talking about real utility of a blockchain um so I'm going to talk today about the path to 100 million and then obviously we want to get beyond that to hundreds of millions and billions of users but we've got to start somewhere all right um so why aren't there 100 million daily active users today okay well the reality is that we've got an issue with user experience economics and shared security and I speak by the way from a lot of experience here at scale scale is a scalability blockchain I'm I'm the uh CEO and co-founder of skill Labs uh the core team behind the scale Network about a year and a half ago we had less than a million transactions on chain and less than a million dollars in gas fees saved fast forward to now we have uh over 150 or roughly 150 million unchain transactions in that period of time and almost two billion dollars in gas fees saved so we've come a lot of way a long ways and so I'm speaking today out of our learning lessons and I think these are pieces that the industry needs to really uh engage with to move the ball forward so why is this difficult well the challenge is real security and user experience are diametrically opposed to make something very secure it also makes it more difficult to access okay if you want it to be really easy to access well it's going to be less secure naturally okay and then you throw in decentralization as a third pillar it adds a new Dynamic that's even more challenging okay so ux and security are at odds with each other who here is familiar with the Maslow hierarchy of needs okay all right for those of you not familiar um it's a this is a very famous study and premise that you can't worry about your higher order needs self-actualization self-esteem love if you don't have you know food and shelter okay I would also argue that there is a blockchain hierarchy of needs or web3 hierarchy of needs so I wrote a post about this a while ago if you're interested go check it out um but when you when you looked at the conversations researchers had in 2018 2017 it was all about security and decentralization and we are just yet scratching the performance level okay but it was all there uh security and decentralization and as that got the Sable Foundation we started researching and building and innovating on performance and we're finally there now we have this element where there's societal acceptance and getting crypto products into the hands of normal users not just defy digits and now that we're there we need to really nail the accessibility piece okay and so the smartest Minds I see many of the smartest minds are going from base level security and decentralization thinking about accessibility so how do we make web 3 more accessible um I believe there are three pillars authentication and identity wallets custody and ramps and protocol level improvements number one um there's not a one-size-fits all and I think we often get pulled into these camps where we feel like when it comes to authentication and identity you have to be entirely decentralized or entirely centralized the reality is that the world needs both and so by enabling traditional authentication methods through Facebook Gmail different oauth techniques we can let more people access blockchain well well not needing having these people need to have an identity be just a Xerox address the same time I think it's really critical to maintain accessibility for crypto native users people that want to log in with metamask that want to plug in through Ledger and so these are not mutually exclusive goals and I think the best projects of today are recognizing this and and attacking the market with the idea of being seamless in mind and still being able to attract you know the early adopters okay also account recovery is important you want to have different methods again that's not mutually exclusive centralization versus decentralization next piece would be wallets custody and ramps so uh Hey we've got to make it easier for people to store their assets easier for them to retrieve them recover them we need to have multiple types of custody Solutions um it's it's critical for applications that want to scale to not solely rely on metamask Ledger different uh custodial wallet Solutions however again not mutually exclusive both these worlds can co-exist Ramps are also very critical um uh you know letting a user be able to go directly from Fiat to crypto in a seamless fashion through scaling platforms as opposed to just the ethereum mainnet is is crucial last thing I want to say is beware of uh Omnibus storage models this is where you have an nft that's minted it just sits in one wallet nothing ever happens with it and then you just have a web 2 application and then people just use a product like oh look at the nft I own well they don't really own it um so they're now by the way I'll say that's a good place to start but I've seen a lot of projects start with Omnibus models then start deploying more account Centric models with both custodial non-custodial options but I think as an industry we can't abandon our first principles of blockchain why are we using web3 why are we using nfts and we need to keep that in mind okay economics economics matter a lot if you had to take a 10 Taxi uh and you had to pay a 10 fee on top of that you would not be very happy right same things with true with an on-chain transaction all right so um I want to talk about this uh a Transformer a transformational premise of chain fees as opposed to gas fees scale for example leverages chain fees so developers can pay for space and capacity and that pays validators as opposed to paying for transactions now there are transaction subsidy models and traditional infrastructure where you can use a relayer but the unit economics are still not phenomenal uh when you have chain fees the unit economics actually scale to being able to address hundreds of millions of users and you know billions of transactions okay imagine if Amazon charged every single ping to the server something uh back to the end user you wouldn't work you're paying for space you're paying for utility even if you don't use all of it okay so I want to address quickly pooled security models and shared security models this is a Hot Topic in the infrastructure world right now um and so most blockchains are one database at the end of the day it's a database and that database has only a certain finite capacity of throughput when more is going through that database than it can handle more is going through that pipe than it can handle you need to have some sort of gating mechanism that gating mechanism are fees gas fees um and so if you want to move to the front of the line you can pay more well imagine if you weren't capacity to constrain constrained so in the world of scale as an example there are many many chains all working together and skills built on ethereum and these numerous chains are able to increase capacity while being able to keep those surge fees lower or non-existent at the user level Okay so when you look at app chain models this is another more advanced topic but security if you see the security in the layer one blockchain there's one database one set of validators or one set of Miners and one blockchain okay app chains often have many small app chains and many small security pools what that means is the security is weaker if there's less participants in that section all right now the goal is to have many of multi-chain models or modular models or app chain models this have many unique smaller chains but one shared or pulled security set okay so this is for example how scale function scale also shares security with ethereum so do other protocols this is a new topic if you're following blockchain infrastructure do some research on shared Security in the case of scale there's a stake in the scale Network that goes on the ethereum main net so the ethereum main net validation secures the scale Network out of root foundational level so um but then at the end of the day these chains are running with one unified validator set for scale but these validated this validator set has these bifurcated groups and so what you end up getting is you don't share security uh you share security but you don't share performance okay when you share performance when you share capacity then bad things can happen um now uh one of the issues with having smaller security sets are collusion and different types of attacks and so pool models leverage kind of this herd Dynamic where you have many many validator operators and using lots of fancy mathematics and cryptography being able to pull them into these sets together and rotate them and what you're trying to do is you're trying to make small groups that are powerful but they're a piece of a larger group that are strong okay small groups are agile and fast the bigger group is secure and has very strong defense so this model not only does it add a lot of capacity but it lets you be really fast so Dartmouth Dartmouth blockchain did an independent research and they looked at scale Solana polygon Avalanche um near and some others and they looked at transactions per second in a real world environment not marketing numbers and they looked at time to finality how fast does that block actually settle well because scale has all of these blockchains and it has a very fast consensus and and a different type of evm that's very fast it scored higher than all these other chains and the total throughput there's 20 chains right now is 20 times 397 not 1 times 397. so this model um we're kind of the early adopters here we started doing this in 2018 and it's really exciting to see this model become accepted and people recognize that you can get greater performance without fragmenting security okay um a few last pieces so zero knowledge proofs add a lot of security with and with the goal of having a small footprint and having uh still relatively small fees so scale is that is is launching something called levitation protocol that will allow zero knowledge proofs to plug into every skill chain but then you know you say well hey but now there are fees well these are configurable fees so let's say I'm a developer I'm making a game and I have these really expensive nfts but then I also have all these on-chain transactions well I could set up the system automatically so that when a user mints that nft it uses a zero knowledge proof because and then it publishes that back to the ethereum mainnet making it even more secure at a greater cost and then this gameplay these all these other actions that you want on chain can keep happening in a gastry model um and so these these things could co-exist so this is one example but if you look at traditional enterprise software today it's very sophisticated there's a lot of configurability there's a lot of I'd say efficiencies already gained and blockchain is catching up all right so I'm going to leave you with some good news um in the last minute I have so from a builder perspective right there's different perspectives there's a perspective of I'm watching the markets I'm watching the macro news and it's cold out there right but from a builder perspective I spend every day working with developers and I will tell you the time is now for growth and adoption there are so many good teams that are learning these lessons putting them into action and like I said there's been over 150 million transactions and over 1 million unique active Wallets on scale in the last year so we're seeing that in our ecosystem and other people are seeing growth as well but the growth is happening the building's happening and so people know that ux is important they're Hybrid models at play and there are many uh infrastructure scaling solutions that are up and running and my feeling is this type of building is happening and this type of building and this type of growth will be what propels us into the next stage okay now there's obviously macro things that need to come together but it's going to be real utility and real execution and the good news is it's happening now so um hopefully this was informative I think all of you for for listening I'll be around if you want to talk later and it's been my pleasure bye