Reaching 1 BillionUsers in Web3 | KBW2023

[Applause] all right um good afternoon and uh thank you so much for joining us until the last event of uh today's conference so here we have John nahas uh from avals he's the VP of uh Business Development uh please welcome John nahas yeah so um Avalanche uh you know I'm sure everyone knows Avalanche here um but can you explain what Avalanche is and what exactly is the key difference uh with Avalanche and other L1 chains thanks Hogan and uh thank you everyone for being here um it's great to be back in Korea it's my third time in Korea in the past year um so it's always great to be here I was at the last KBW and a couple times in between um so as Hogan mentioned I'm vice president of Business Development for aval laabs aval laabs is the service provider helping to grow the Avalanche ecosystem a Avalanche is a layer one blockchain a new Chain's about 3 years old at this point um we had our main net in September of 2020 um and Avalanche unlike a lot of other uh chains that are monolithic or single chains has a multi-chain architecture so our primary network has three chains we subdivided all the functions that typically run a blockchain into separate ones so we have the xchain where our native token avac is you can mint and burn uh tokens there our pchain is where validation and delegation occurs but also the ability to create subnets which I'll get to in a second and then finally is our C chain that's our evm compatible smart contracts platform um you know runs on the ethereum virtual machine very familiar to many of you that have interacted with avalan on a regular basis the pchain uh which is the platform chain is where validation and delegation occurs but most importantly something that differentiates Avalanche I think from a lot of other chains is the our ability to launch subnets so subnets are either private or permission chains or public permissionless chains um some people call them app chains but I think what we look at is it's more than that it's specific ecosystems and specific infrastructure technology to allow Builders developers Enterprises and institutions to run their own blockchain environments ultimately leading to kind of a network of blockchains that that have composability and interconnect ability between everything in the ecosystem right um so subnets I think subnets are very you know the most important features of avalanche um so what what features of subnets really compel companies and corporates to really choose Avalanche or choose to build on Avalanche so the title of this talk is or this chat right is reaching a billion users and I think subnets are really the key to reaching a billion users the reason I say that is if you're looking at a world in which blockchain technology really proliferates right the way that web 2 affects all of our lives right web 2 is traditionally thought of as the transfer of information peer-to-peer or decentralized transfer of information web 3 really is the decentralized transfer of value right and it should be the foundational base infrastructure layer or technology that everybody Builds on right so traditional blockchains single monolithic blockchains are for the most part Solutions in search of a problem right you have one chain that has nfts and Defi and payments and a million other things all vying for Block space on a single blockchain which really doesn't solve the problem that institutions and corporates and and players that really bring a million 10 million 100 million users on chain can do right because if you're a bank if you're a major Enterprise if you're an institution you're not going to have your transactions or your users transacting alongside an nft trade or a defi trade or something that may or may not be compliant or regulated based on the jurisdiction that you're in so what subnets allow for is for anybody an Enterprise a bank a corporation a asset manager a a game developer an Innovative developer building a brand new primitive or protocol that needs their own blockchain because of speed because of scalability because of fees to deploy their application on a on a infrastructure layer that allows them to build the solution they need to succeed as I said previously right layer one blockchains are a solution in search of a problem these are the parameters these are the confines these are the things that you can use to build your application well if you're application doesn't fit in the infrastructure kind of too bad with blog with with subnets the benefit is you can choose whatever virtual machine you want could be an ethereum virtual machine it could be a move virtual machine it could be a salana virtual machine or based on Rust you could choose whatever virtual machine you want you can choose whatever gas token you want or have no gas token you can choose whatever parameters you want that enable you to build the business or the application that you want while using blockchain technology right that's kind of the key differentiator and I think what's stopped this industry from reaching a 100 million users or a billion users is that crypto people build crypto products for crypto users it's like the same two three million people going in a circle right they jump from chain to chain or they're Maxis and they stay on one chain to really reach 10 million 100 and when I say users I mean people actually doing transactions on chain that doesn't mean someone buying a token on an exchange right Korea is very well known for this right they're the third largest market for crypto trading in the world but there's not that many onchain users Koreans don't do defi they don't do a lot of onchain activities well the barrier of entry into web 3 or on chain activities is pretty high you need a wallet seed phrases everything else nobody yet has built an application that's at scale or mass Market that abstracts away the crypto side of things right that M that uses blockchain as the infrastructure or the the background layer to allow a new type of application to launch right um the previous speaker who was sitting in this chair was saying you haven't seen adoption on our L2 yet because the the killer apps are coming or we haven't deployed the killer apps yet I would argue that there is still not a single killer app in crypto I think there's a lot of cool stuff there's a lot of innovative stuff there's a lot of the same things that we use on a daily basis being done on chain maybe faster cheaper better but there still has not been a killer app for web 3 a killer app means it has 10 million 15 20 50 million users that doesn't exist exist right like I think at the height of the bull market there's maybe I think studies show 3 to 4 million people maybe it's not that many people that we're really catering to on a daily basis because most people aren't using the technology in the background for for the use cases that really allow it to succeed so when you look at corporates they want stable gas they want to know that an illicit actor isn't running a validator or doing transactions on chain that might be kyc AML at the wallet level if you're an asset manager or a bank or or an an issuer you need to know that the Securities laws or the local laws of the jurisdiction in which you are issuing a token is built in not just at the token level but at the chain level so you have to look at the different jurisdictions the different businesses different use cases and build applications or products that fit the use case you need but also the geography in which you're building it and to my knowledge a solution does not exist for that except for subnets yet um you said John you said um there are there's an absence of killer applications and you know as an investor we see a lot of uh these applications building on Avalanche or other blockchain lay ones but what what in your opinion what is the uh you know roadblock that's stopping all these applications from building um you know new Mass adoption and the in the space so I think there's a couple things right I mean you're an investor right how many how many dexes have launched right since since Unis swap how many variations of Unis swap have come up how many same project same application with a little tweak or little Improvement have launched over and over and over again like nobody's thinking outside the box really to build something new and Innovative right so if you look at web 2 everyone was online what really blew up web 2 was social media social media in general was the killer app that made the internet or web 2 go viral right or get everybody from all of us to our parents to even our grandparents online right so when you say oh are you online like I would say that the killer apps that will come will be will be like what you know you used to say to your mom oh are you online the next iteration will be are you on chain right but we have we're not there yet cuz no one's built anything that just happens to use crypto or use blockchain in the back end the the analogy I like to say is you know AWS is so well known for being the cloud compute right that runs that a majority of applications on the Internet run on right AWS gcp Azure whatever you want to call it right well when you log into Netflix it doesn't say Netflix powered by AWS right it just works and it's built on AWS and that's all that matters but crypto people love to do it right any application powered by Avalanche powered by whoever sometimes powered by a chain that works or doesn't work so there's always this need to put the tech first right even there's a great application on Avalanche called nft tixs they're doing fantastic stuff with nft ticketing but their name literally is nft ticks like nobody you puts the like and they'll even admit to you we did it because we want to differentiate ourselves but we're probably going to Rebrand because nobody puts the name of the technology you use in the title right like it's not uh Cloud Netflix right it's not it's it's just Netflix like so we need to stop we need to stop focusing on the tech or the chain and focus on the use cases that the chains or blockchain enable you to do right and and I think it's because this industry is still that young right we so many people have heard of crypto on blockchain now because of the internet because of the ability for information to proliferate right when the internet went live it didn't have the internet to promote itself right well I have a friend um blockchain has had the internet and social media to promote it right so more people are familiar with it and know about it but not that many people use it right they just know about tokens and mostly it's Bitcoin or ethereum or maybe even Dogecoin right but we don't we we still focus on the little things because we're still so early as an industry I think there's a lot of tribalism which I think hurts the industry it made sense in the early days for people to be tribal and to argue over my chain is faster by 8/10 of a millisecond and look I I still do it because I'm promoting a technology so I'm going to talk about these things but when you look on crypto Twitter and you look at most of the crypto press you know they highlight the most technical things they still speak technical language first not Solutions language first this technology the point of it is to enable solutions to enable Innovation it doesn't serve itself so I think we need to get away from that I think you know it's kind of cliche to say this but but we we are kind of Our Own Worst Enemy right because all we do is talk amongst ourselves about topics that we know about amongst each other rather than than growing the use cases and John since you um oversee all six vertical of Business Development under avab um you know what are some projects or Partnerships that you see uh that has already adopted Avalanche or that are in the process of adopting Avalanche that you see uh most excitement from so yeah you you mentioned that I oversee the the vertical so the way we've broken out I've broken out the the business development team in avalanche is six verticals and it's starts from the more traditional side all the to the most web three Crypton native side right so on the most traditional side you have institutional and capital markets that's Banks asset managers tokenization you know you're Mo the most incumbent traditional players second you have enterprise Enterprise meaning uh businesses get established businesses getting into web 3 in the middle sits wallets and exchanges that's kind of self-explanatory um but also a lot of innovation happens there because that's most people's entry into web 3 is the wallet uh and then nfts of course um game def5 um what's the most exciting I mean you know we've had tremendous Innovation on the D5 front on Avalanche really proud of all the stuff that's been happening there I think you've seen that's where we started right because that's where the original user base was um so you had the the ethereum blue chips like a sushi curve and and the like come on board but most you know Trader Joe's a great decks on Avalanche um GMX is on there I think what you see now is a lot of new protocols coming online we had one for a while called platypus that was a stable swap single-sided stable swap uh really excited about a project called Cavalry that's coming out they have a a project called multi swap um which I think is really going to open the door to a new way to trade tokens in general but tokens could be crypto tokens stables and all kinds of assets in the future which I think is exciting uh on the flip side you know on our institutional and capital markets at the other end of spectrum you know we've done tokenization for major asset managers like KKR and I think what's really exciting for us is most recently we announced a project called uh Evergreen so Evergreen is is a specific type of subnet built for institutional players and we launched a subnet called Spruce and on that you have major traditional I mean incumbent asset managers like Wellington Tio price um Wisdom Tree and Cumberland and those are just the initial guys who came on board and we've got a lot more coming that I can't talk about yet but in a couple months I think we'll be excited to see what's happening there and this is really a Sandbox for a lot of established people that you would not normally think would be dabbling in crypto actually getting into crypto and web 3 because they finally have a Sandbox or chain or an area that fits the Regulatory and compliance needs so F effect trades interest rate swaps whatever derivatives whatever it may be they can now do in a compliant manner which I think the market has been missing up until this point so just on that side on the finance side right you have the Innovation happening on one end of the crypt native Spectrum with Defi and on the flip side you have Innovation that's happening on the institutional most traditional side and at both of those are at opposite ends of each each Spectrum but at their most extremes they meet right because defi Innovation kind of inspires the traditional players to to move forward because they kind of have to right uh their customers want it their users want it their depositors want it they want to see new assets and new asset types and classes so you see that connection there and then everything in between kind of becomes becomes additive to that so on the Enterprise side we're really proud of the partnership we have here in Korea with SK Planet so SK Planet recently launched their own subnet UPN upin uh it has its own wallet and they're going to start to bring their applications on chain too like okay cash bag which is one of the largest uh loyalty and rewards programs in Korea as well as many other things they have coming um on the Enterprise side the next couple months are going to be very exciting for us so I would tell everyone to stay tuned uh loyalty and rewards of course also matter right so without getting into specific names and details I think you've seen the rise of loyalty and rewards being onchain as an addtive benefit because it gives people that value that they've earned or that they've acred by purchasing things or actions or membership or loyalty that value can now be potentially deposited into a pool it could be traded against it could be borrowed against you can maybe stake these tokens to get a discount or a special benefit etc etc then you tie that in with onchain um identity and onchain personas with nfts right and nfts can represent your onchain persona in life and maybe abstract away your your identity in that regard and then game gaming I mean we have AAA games like trapnel and um gonzilla Coming online this year those are tens of millions of dollars uh backed uh games that use web 3 as a bonus right I think what we saw with the initial Rush of gamei was these were tokens and and G and systems that were really just trading mechanisms and masquerading as a game they weren't really games games first and foremost should be fun they should be something you play not something you trade all day that's not a game that's trading right so I think you've seen now the rise of of quality game studios particularly most importantly in Korea they're at the Forefront of this building fantastic games that have a token or an nft component on top as a benefit where you can earn points rewards skins trade them lend them borrow them you know use defi protocols and Primitives in your in an in-game economy and open that up and what gets really exciting for us is where you start to see that layer of all these different applications work together right so maybe a loyalty and Rewards app is something that you can trade on a D5 protocol where you can lend lend an asset that you own in a game to someone else and then economies within themselves start to build on top of each other and connect with other economies and snowball into a larger networking Network effect that till today I think has been a little bit lacking yeah we we um going back to the question about hurdles and obstacles uh I think we talked about you know user experience and how it's you know hard to on board web 2 users onto the web 3 space um and like you mentioned one of the verticals that avab is focusing on is financial institutions so in terms of financial institutions what are some obstacles and um you know hurdles that they're facing in web3 adoption and what's what what is Avalanche doing to kind of support those uh you know support those institutions to overcome those yeah so on the financial side it's very simple these are the most if not the most regulated entities in the world right you meet with sou South Korean uh Regulators right they'll tell you regardless of what asset manager doesn't matter how how how strong they are right whether it's shinhan or M you go to the US you talk to JP Morgan or city or anybody these guys have set rules they have regulations that they have to follow period you break the rules you go to jail right this isn't like oops I I I left left something off a tax return this is you break the law you go to jail or in the case of US Banks you just get a big fine and you move on the average person goes to jail you need to be able to enforce these rules Crypton things don't have rules right the whole idea is you innovate and you figure it out as you go well you know I mentioned this this recently with with our Evergreen program and Spruce in particular right Spruce in particular was first created as a blockchain with in put from those four institutions that I mentioned Wellington tro uh Cumberland and Wisdom Tree because their Chief compliance officers or their head of compliance or their you know the people that they report to their Regulators said we can't do this action we need to do it this way this needs to be able to report we need proper reporting on who's in the who's accessing the the network we need reporting on who's doing the transactions we need we need reports on the transactions that are being done we need XYZ we need to be able to audit one two 3 we need to be able to have real-time settlement all these things right up until the subnet solution what you had and you had this with a Arc right a Arc was their institutional borrow lenting but a Arc was kyc and AML and regulated at the application layer which meant someone had to manually still go through and white label a wallet and say Yes Hogan you can come and transact on this thing well with subnets you're white your your wallet becomes white labeled and then whether it's you or your associate or someone else in your firm can transact in there but everybody you're transacting with on the Chain level has also been vetted and cleared so it's you know when people say oh institutional defi that doesn't make sense because it's kind of an oxymoron institutional and def5 but what it means is that every single person let's say in this room represents a financial institution you can all get whitelisted as an institution to go onchain and do transactions you can provide liquidity I could borrow I could do a trade with you we can all do transactions on chain not knowing who the counterparty is we are all in a collective pool it's decentralized because I don't know who who my counterparty is right and it all I know is that every participant is been cleared and vetted and follows the proper protocols in order to be able to do that trade and there's levels right so there's like one level that says you can do a swap another level you can do derivatives another level you can do interest rate swaps it's so on and so forth depending on the level in which you qualify under the criterias for each one of those actions that are set forth by the regulator that you operate in and um since we're in you know KBW you know I'd like to talk about Korea and and how Avalanche views the Korean market um so you know what first of all what what brings you to Korea and the Avalanche team you you said that there's around 20 people from aval laabs um in Korea right now for KBW so what how do you guys see the Korean market and why are you guys spending so much time effort and money into the Korean market and the Business Development here so you know I came to KBW last year I knew it was going to be a big deal and I came and I I was very just impressed I was impressed by how technologically savvy everybody is we all know how technologically forward Korea is but really people here get it and they get it what I mean by that is they get it at a more fundamental level you know there aren't that many web three or onchain users in Korea but Koreans are techsavvy they know technology they Embrace technology they use technology in every part of their everyday life so it makes sense that an innovation that's going to come out in the web 3 space could come out of Korea and the mo the people most likely to use those new Innovations will be in Korea so after the last KBW we made a cogn cognizant effort to expand the reach of the BD team instead of by hiring more people on B but instead to hire local teams so the first team that we hired outside of the core team at all the labs was our Korea team and we hired a head of Korea Justin who's here to to add to Olivia who's who's also been in Korea since main net went live on day one uh we have a community manager in in Korea and Eugene and we're looking to add more people as well in in Korea so we're really proud of the team that we have in Korea and all the hard work that they've been doing um it makes sense right and then the the success of Korea has led to us expanding in in Japan second and now India third and we're going to continue to do that but the Korea team really sets an example for how to do things um and hon honestly I've been to meetings today all day and and and this is my third time like I said in a year and just really interested in the Innovation that you see the adoption that you see and Korean Regulators have set a lot more clear standards for what should and should not be done than even in the United States to be frank right so you're going to see more adoption more Innovation happening in Asia primarily in Korea more so than anywhere else in the world because when the rule when you know what the rules are you can work within them and we don't have that really in the US and among the six verticals obviously that you know [Music] avalabetta among the six verticals I thought you were going to ask me which one's my favorite it's like asking which one's it's like asking a parent which one which child is your favorite I have two kids and I have no favorites um look they're all equally exciting um but I if I had to pick one I would say gaming I mean Korea is just a juggernaut when it comes to gaming on the global stage not just in Asia um the the the the Innovation that happens in gaming the the level of Technology the players in technology here are fantastic and they really get the nuances of how to add features to a game to make the game better right when I when you talk to other people that are game developers and web 3 gaming it's like all about web 3 first and then the game second nobody cares right Gamers particularly Studies have shown don't care about crypto as much they they're turned off by it because they think it's a gimmick I think uh creating game studios care about the game first of course the experience as well and then anything they do on the web 3 side is just an add additive benefit or an extra level of benefit that helps the G overall game experience so uh I I think you're going to see a lot more Innovation coming out of the gaming side here I think there's a more captive audience and user base um more so than you know as much as I love institutions and Banks there's not that many users there right um and frankly we need web 3 as a whole not just Avalanche needs to see a mass adoption event we need to see scale and gamers are a great place to really test the technology not just Avalanche not just subnets but all chains in general I think for the most part most chains talk in abstract terms and theoretical uh metrics it's it's it'll be nice to see real testing of the technology for all chains and see who can live up to the claims that they that they make uh and see what's going to deliver the technology layer for the next billion users all right um I guess that's a wrap um thank you so much for your time uh in the audience and thank you thank thank you John for um explaining Avalanche subnets and your uh you know uh initiative in the blockchain space thank you [Music] oh