Fireside Chat with Matthias Broner, ZKsync, and Kartik Talwar, ETHGlobal I Pragma San Francisco 2024

[Music] next up I want to start off with our Fireside series we're going to have three Fireside Chats and we're going to kick things off by talking about what it means to grow your protocol there's been a lot of things that we've seen in the space launch grow become big introduce new ideas and uh we're going to go into the inside story of kind of how some of these things grew to where they are now and things that worked for them and things that didn't and how they chose to focus on different things so the first far side chat that we have is going to be Matias Matias from zyn he's the head of growth and we are going to cover a lot of what they have seen since they've launched and how they're focusing on getting more people to be in the space so please give him a big round of applause thank you everybody thanks carthic it's great to be here or I'm excited to have you so a lot of people have heard of zync but what I want to start off with is ask you how do you tell others about what ziky is and uh what have you been up to over the last year yeah know that's a great question um I think a lot of it comes down to the audience and thankfully this audience already knows what ethereum is for the most part so that usually speed UPS the explanation But ultimately ZK sync is a layer two for scaling ethereum um with the goal of reaching Mass adoption our emphasis is on this the ZK which is zero knowledge technology which is um not necessarily a new form of cryptography but being able to apply it and use it um for applications for projects that you're building is novel um and what it really affords is that you know traditionally rollups have been optimistic which you know require some kind of a social consensus or trust um and zero knowledge relies on mathematics um again historically it's been a little bit too expensive to use that scale but in the last year or so we've seen a massive decrease in cost not just for zero knowledge but across all of ethereum l2s which is helping us power some really interesting real world usage of ethereum at scale nice are there any um stats you can share about what's uh been out there and um how do you kind of measure your growth yeah uh a lot of the growth comes in a few different ways but we've been shifting how we look at um public metrics it's it's very easy to get caught up in battles of tvl and TPS and all these traditional metrics but really what we're looking for is what we would consider quality metrics so quality builders quality wallets um and those get a bit more nuanced and detailed and you know maybe difficult to find the exact metric subjective land yeah there's a little bit of subjective uh angles there but I think again the the the key here is that there's some public facing metrics that are extremely important but some are vanity and so what we're really trying to decipher is what is the actual usage underneath um but you know when it when you're looking at metrics like transactions per second you know we have some of the highest uh if not the highest tested publicly for l2s let alone ZK l2s and and then same thing when you're looking at like active wallets active addresses you know we're we're well north of 500,000 so it puts us in the ranks of you know top five inactivity so even with these more maybe vanity focused metrics we're still seeing a lot of really exciting growth especially coming out of launch where you know For Better or Worse a lot of people will activate on a chain wait for launch and disappear so we're kind of in the ShakeOut of that launch and we're still seeing a lot of really strong Positive Growth that's awesome um you have a big focus on latam and uh the thing I want to kind of understand is why is that region important to you and uh what made you have a dedicated focus on on that market yeah no that's a great question and that that answer comes twofold one part is my personal story and the other part is you know the opportunity and so for my personal story my family's originally from Argentina um my parents were both from there my dad actually had to flee in the 70s due to a military coup so it was very intense they had to you know get away from Argentina go to Venezuela which at the time was a Haven now bizarrely people are fleeing Venezuela to go to Argentina but I guess from there you know they went to the US in search of working in technology um Etc and then you know I've been working in Tech my whole life I grew up in Minnesota actually made it out West uh to work in startups and through that Journey now working in blockchain uh there was this opportunity to work with Argentina once again so it's kind of this full circle of you know my family having to leave you know getting to the US going into Tech and now back to Argentina which is you know for my personal story very you know fulfilling full circle um but on the you know technology and the area of opportunity um when you look at the usage in Latin America it is very different from the rest of the world and one the main areas I'm comparing to is for instance Europe uh Western Europe's predominantly and the United States a lot of usage and there's a lot of charts that show this but is kind of tied to the price of Bitcoin more people start using crypto when Bitcoin goes up when the Bitcoin price goes down less people use it um what you're seeing in Latin America is this departure where bitcoin price can go up or down but the usage is steadily scaling north um and a big reason for this is economic factors mistrust in institutions government financial institutions but also just a need uh for these people to interact with uh different assets for instance Argentina where we spend a lot of time there's a limitation from the government to only be able to buy 200 USD every month right and so per person per person in the country so if you're trying to if you're in a country where you have 200% of your inflation you can only get 200 USD per month from your salary you know you're subjected to a lot of uh downward pressure from the market so crypto's offered a Haven especially stable coins for a lot of people to find ways to shelter uh and hedge against inflation but also then opens the doors to other crypto usage finding ways to earn yield finding ways to invest in stocks finding ways to do things that maybe aren't uh fully enabled in a region it's not that these things are illegal by any means it's just that it's a different mechanism that allows them to access this technology mostly curious about this are are people actually spending Bitcoin directly uh which means they're open to transaction fee losses there or is it spending Bitcoin through other facilitated means but they're not getting into the actual downside of Auto transaction costs yeah good question from the the reports from like chainalysis for instance which has really incredible uh Global and regional growth reports uh you're seeing that a massive percentage of usage in these countries is stable coins so a lot of that the major predominant usage is usdt historically has the lowest fees um and so again people are just using it as a daily means so they're transferring peer-to-peer or you know doing remittances from country to Country um and so that's kind of a lot of this adoption that you're seeing and again this is more day-to-day usage I have this uh sometimes when I'll do a presentation off slides where I'll do the day in the life of a power user in Argentina there could be 15 touch points in one day maybe that's a really active day but it's not an exaggeration that over a given month someone will interact with all these 15 different mechanisms whether it's you know sending or sending cryptocurrency peer-to-peer maybe using something like a lemon cash where you can convert your paycheck from pesos to US dollar digitally and then use a credit card to to pen spend per transaction so you're seeing a lot of very uh I guess just distinct usage patterns in what you see in the United States and now you're seeing a lot more acceptance of crypto at different point of sale um it's not fully a Bitcoin region where you land in Argentina and you're going to be able to spend Bitcoin everywhere but you are starting to see a lot more adoption of stable coin specifically and that's opening the door into some of these other currencies to be used that's awesome um and maybe I do want to go a bit deeper into this but maybe um this is something I also don't know what exactly is kind of the what are some stats on the the user base right now like in just in terms of the the people there is this millions of people who are actively doing this thing is it growing is it a young group that is kind of emerging how do you kind of quantify how big this is great question yeah statistics from both lemon report and chain analysis show about 40 million people across Latin America so um in total there's 6 50 million citizens so it's still a fairly decent percentage um still more than Canada still more than Canada and if you do look at uh some of the Nuance data for instance again I'm spending a lot of emphasis on Argentina because it's where we're seeing a lot of opportunity and it's sort of becoming the crypto Capital that's its its aim at the moment um four out of 10 people that open an app a crypto app anywhere in Latin America are doing so from Argentina so you're seeing a lot of adoption across the different countries there's predominantly most adoption in Argent gentina Brazil Mexico and Venezuela a range of different factors they all have their their different perspectives but some of the similarities um are around inflation or potentially remittances you kind of see those as some of the two main factors that are driving this sort of day-to-day adoption but again it is pervasive but it's not that you land and now it's a crypto land there's still hubs of it you know you see more of it in buen Otis than you would see in the provinces um in Venezuela you're starting to see a lot of usage um especially for remittances and transfers so again different ways to track this Behavior but it's it's been you know top of the charts for chain analysis report for the last three four years now and latam keeps growing and growing in market share when you look at Global adoption wow um so as somebody thinks about building anywhere from a consumer app to even a a service for merchants for Argentina what are their odds of being successful if they're not local and not can do you do you think about different first mover advantages do you care about the context matter or is it purely about utility and the value of the service you're getting no I think that's a really great question I think with any regionally uh focused technology it always pays dividends to have locals helping build that solution now does the entire team need to be from a specific region not necessarily um but you will intimately understand a problem more deeply if you've actually lived with it I think that's fair with any technology but you do see people who have no experience in a region or in a market go and build something successful um I think when thinking about first mover though it is a ripe opportunity for people to build really valuable technology we just had a popup City Alf part of this cresy Mento movement where we spent an entire month uh with over 2,000 people Founders Builders hackers devs the thing that amazed me there is that there was a lot of volatility in the market we were there for 30 days with all people that know crypto there was barely ever any mention of price everyone was there focused on building and building pretty good metric pretty good metric and building real can I say real they're building real and it's actually valuable because I mean a lot of time we've all been in this space whether you've been here six months or six years or longer we're all hoping and waiting for blockchain to really solve problems and so far we've created more problems and we've done a lot of Casino activity and we've done some really cool stuff too don't get me wrong but it just feels like what we had promised and you know what we set our eyes on 5 years ago we're not that much closer to really rebuilding everything on blockchain now technology is cheaper uh you know there's more pervasive connections it's safer it's getting safer every day it's still a lot of exploits but you know for us to really you know for me to feel fulfilled in this market in this world that we're spending a lot of effort a lot of weekends a lot of nights a lot of travel to be a part of you know you do want to see these things that are adding value and helping people and so I think that's one thing that I really not only I noticed but my our entire executive team CEO president everyone came down to Argentina was there for a week meeting with Founders meeting with Builders talking to them and they were blown away they go to conferences all over the world and Blown Away by these people solving real problems and so you know if we have any takeaway of what's going on down there is they're actually finding ways to use this to help and that's a I mean that's the the most the best version of a technology actually becoming uh built into a a daily day-to-day behavior of any any person um maybe just to clarify when we're talking about all these things just now is it mostly just payments like are we just purely talking about paying for things and if I want to buy something from a store or send money to somebody or does it extend more than just uh peer-to-peer payments great question I think payments is you know the main use case of blockchain it's the it's the you take value you you're able to transfer it it's simple it's direct it's understandable and plus we all use money basically every day so it's very easy on rep but no I would say we actually have a lot of really interesting use cases that are inlight coming up in the region that are Maybe either have little or nothing to do with payments and some examples uh we're working very closely with the government of butis uh we've been working with them for over a year on helping them launch a sovereign self- Sovereign digital identity uh this is the first government in the world to release a fully decentralized ZK backed self- Sovereign ID uh what that means is governments today they own your data they all have it they choose not to let you use it unless they maybe give you this government issued card that they can track when you use um and so the government when ocius is saying we understand the benefits of zero knowledge technology of blockchain of decentralization are the ethos of our citizens is aligned with this technology which is self- sovereignty distrust in the government itself and so they've been building and are issuing credentials to Citizens so that they can use their driver's license marriage certificates birth certificates in any way they choose without oversite from the government they obtain these credentials own them on their device so they can interact with Digital Services more safely securely they never pass any pii because all they're really doing is uh showing a proof and it's a zero knowledge proof the info is you know hosted somewhere securely and encrypted so all that's public on chain is an indecipherable string of numbers and so they're giving more security more scalability of their infrastructure at a lower cost to their citizens and this is happening right now it's actually there's some really big announcements coming next week so I'll have you all keep your eyes open but we're very very excited about the work that's been going on there and also very you know very happy that a government is willing to relinquish control most digital identities that you see are absolutely tracking every single action that a constituent is doing which is you know Often by Design so to see a government take the opposite approach and more or less relinquish control is really exciting what's been the reaction from uh the locals there on using it and actually getting others to use the identity as proof yeah so most of them don't even know it's on blockchain it's not actually an important feature to my great Uncle he just needs to go do his government task and it's much easier now because he doesn't have to go to an office do it from his home maybe he has to call his his nephew to make sure he scaned the QR code right click the button but it's very simple flow and so for for the grand majority of the population they just have new features in their government uh account and they have these accesses now for those that are a bit more Savvy and they want to understand how is this possible why is this better they're able to understand that it's zero knowledge technology we get a lot of really positive reaction from the crypto Community both locally in Argentina but also globally to see that wow government's actually using blockchain and using it in a way that is novel from from a Global Perspective and also completely non-financial so again we're having this really impactful use case that's going to reach millions of users uh that has zero Financial motivation or incentives the motivation for the government is actually just cheaper and easier and faster for them to issue it increases or expands the safety they already have and then for Citizens today they get to do all their tasks much more simply convience it's convenience and then there will be more things added on for instance in the future now you can prove someone is from a country you can prove that is the person behind the device and you can prove that they have a certain citizenship now that's really compelling for a government because okay now I can give you maybe voting rights because I know it's you and I've checked all the boxes I need cryptographically and then you could have vote audited votes on the other side if you're a private Enterprise I can prove that the person that's coming to this app or is an actual human and not a bot or someone from another part of the world so I can give them an added benefit for interacting that's a pretty good world I want to live in that's awesome um I do want to tie this back to kind of Zeki syn here so um we kind of talked about what the opportunities you talked about one of the identity projects that're coming out but what is it meant to actually get this off the ground and growing this and uh kind know where does zekas sing coming into this mix and how do you kind of think about supporting that region yeah I think it's been extremely compelling for us as an organization to see the value and impact of builders in Lam but also globally right my focus is more on Lam so that's why we're honing in but to be able to see people building real technology that wasn't possible for is super exciting on the one hand on the other side you know the big vision for ZK sync is actually what we what we call the elastic chain it is this kind of chain of chains shared liquidity uh seamless interop which makes it so that applications can deploy on ZK sync era the LT that's public and then at some point when they graduate maybe they reach a certain level of you know transactions or users and they want to have their own hosted chain they can spin out and be completely interoperable with everything that they've had before so the elastic chain Vision gives you this kind of you know future state where the more aligned with the app chain thesis where you can have all of these independent chains that are fine-tuned for their specific use case a bank might want something in a validum mode for more privacy or even this you know this cork ID digital identity to be gdpr compliant you need to have your own chain so you can have a request for deletion if things that aren't standard in public blockchains and so that vision of growing you know almost treating our main L2 as an accelerator and Launchpad to be able to launch your own chain is super compelling and really does open up a lot of really interesting use cases when you see how you know an ID chain can interact with the gaming chain can interact with the banking chain can interact with the etc etc but in terms of um kind of strategies that you know have worked on getting people excited about it whether it's people building on top or users using those products like what kind of have you noticed that Works what doesn't work um and um what are kind of some actionable advice that we can give to the audience on this yeah no that's great I I think it it boils down into a couple of sides one um as much as we all care about the tech and we know that the tech is matter it matters and is important no one really cares about the tech right and it's a it's an unfortunate truth that your Tech can be superior in XYZ ways but ultimately it's also about like what are people able to create build and get to Market with and so you know from being successful in in growing uh a layer two it is also about how do you actually get mind share how do you get developers excited about building for them to build something that adds value and then that's going to entice other people to continue to build so again it's all about the builders it's all about them creating meaningful technology and US supporting them whether it's from Dev resources or other ways that you can help projects get off the ground um but ultimately it doesn't matter if your TPS is slightly better or if your implementation or how your sequencer functions is you know Superior it really is about what are other people also doing in your network and what do I get as a benefit for a builder joining in to that party right there's if all of these l2s for now are somewhat fragmented from each other I want to be where the the most hype is happening and so that's a continuous challenge um we're now kind of in this uh governance era where everything is now decentralized and people are able to vote on proposals and this makes it more exciting for the community to also decide the incentive programs that they want to be a part of that they want to build for and so I think now it's really a big phase of how do you activate Community how do how does that Community ensure that de developers have a super strong mind share and voice in shaping the future of the protocol and then making sure that they're building for true end users right we all have this promise of the next billion users on chain but we need to actually get them there and I think that's where we're putting in a lot of efforts of how do we really go mainstream with technology how do we help the builders that are on our chain from Day Zero get the maximum benefit of that awesome um I think that's it's a really good point to uh to kind of stop and it's a really good takeaway so I want to thank you for uh taking the time and uh sharing us with sharing us the insights of all what you've done to get people to use more crypto in Lam so thank you so much please give tus a massive Round of Applause thank you everybody really appreciate it [Music]