There’s no Web3 future without chain abstraction

Transcript

[Music] Hi everyone. Uh my name is James. I'm the founder and the CEO of DFG. So DFG is a 10 years old crypto investment firm. Uh we invest into all kind of layer one protocols, ecosystem as well as you know crypto equity project as well. Uh so today my topic is about chain abstractions. Uh the title sounds a little bit crazy but this is what I believe is there won't be any web street future without CH abstractions.

So first let's take a look at how internet works. uh we can see from the from the graph uh before 2000s actually in the time period between 1980 to 2000 there doesn't have much growth of the internet at all and after 2000 we can see uh the real massive adoption of the internet and you know nowadays everyone is using internet what's really make the difference here is you know if we compare to the you know technology we have in 1990 and the tech technology we have right now. Um in 1990 the internet is only used by a bunch of academics a bunch of you know uh researchers. It's

not really widely used by the peoples and uh in the past 30 years we have made great improvement on all different five aspect on the internet. For example, on the user interface, we have uh browsers, apps. Right now, on the content and data management, we have web uh CDNs. On the navigations, we have domains, uh DNS and a data transfer and network protocols. We have TCP IP also. We have uh new kind of network infrastructure for example like 5Gs. Overall speaking all these kind of change and the you know uh improvement we make on the internet you

know brings us the massive adoption of the internet. So going back a little bit so actually I think what I believe the crypto right now is kind of like the stage we have in 2000. So we are about to enter into a massive adoption state of crypto if we do everything right. This is the how crypto I want to you know uh do a little bit like a history you know revealing about the crypto space. uh we have bitcoin burst in 2009 we have a bunch of air coins burst afterwards we have uh I think one important milestone is this existent of

a soon back to 2015 there's a bunch of new also layer one protocols uh you know birth after the birth of a in the past few years you know some of the cryptocurrency doing well some of cryptocurrency doing not well they even died but over speaking we we believe we are about to enter into a multi-chain you know uh world in the crypto space but on a user perspective this is very very hard to handle. So how could a newcomers into the crypto space to own this cryptocurrency to own the cryptocurrency this guy want? This is going to be a challenge. So what they will choose first is a very clear and obvious solution. Centralized exchange

you know it's very easy to use. You can deposit fund into the centralized exchange. You can withdraw the crypto into centralized exchange. You can actually trading one central uh one cryptos to another crypto in the centralized exchange. you have I think very easy access uh good kind of functionalities and kind of good user experience in the centralized exchange is centralized exchange is actually the first version of the chain abstractions right but is that reliable enough for people to use and whether that's the ultimate solution for industry you know I don't think so you know there's a few risk uh we will have when we use a centralized exchange One clear and

obvious risk is you know basically you are custody your money to a third party. Whether that third party is reliable to kind of handling your money is a problem. You know we can see from the very beginning you know from the existence of the centralized exchange to nowadays almost every year you got all lot of centralized chain get hacks right some of the centraliz can recover the fund and return the money back to you some of cannot so that creating risk for you you are giving the your tokens your asset your cryptos to a centralized party to custody although it's easy to use but whether you want to take take that risk is a big problem for you.

Also, I think more importantly kind of centralized secure is to some certain degrees uh is contradict to the core value or core cases of the cryptos. I think there are probably two core value core of cryptos. If we take a look at the birth of the you know cryptocurrency the first is people should custody their own asset. You know in a traditional world we usually give our money to the banks to the brokers to custody our asset there but one of the core value of cryptos you know you own your own asset you own your own money this is important. The second is you know we want some kind of asset with a consensus

we all agree on instead of of one centralized you know uh institution or even one single person can decide what the asset will be in the future. So I think the centralized exchange do you solve the second problem because no matter what you trade on the central exchange for example you buy a you still own Ethereum on that exchange. So the second point is not a problem but the first one we are still going to deposit our asset our fund to the third party. So this I don't think that's the ultimate solution. So when we take a look at the web three CS and web three values or crypto C crypto values I think there are five whether that that's

decentralization permissionless transparency trustes you know incentive alignment and the others I think that's all linear to the things I want to discuss and also the the the the topic talked before centralized exchange is not automate solution self custody is actually the solution for uh I want to quote a famous saying by by our portfolio ledger not your keys actually not your tokens. So this is important and we firmly believe with more people understand or like uh value the the core things of the cryptos then we will see the growth of centralized custody you

know more in the future and I firmly believe there will be more onchain activities as well and I think in the next three to five years we can potentially see the DAX trading volume exceed the sex trading volumes. at that time. But that gave us another questions. How would the users especially newcomer to cryptos to do self custody? It's extremely hard. It's not easy to use. It's going to be a tough job for us to solve. So that's how chain objection come into place. CH abraction actually help drive mass adoption by enable the self custody and solve the you know interverted cross blockchain ecosystem

we have as I explained before we have a mod world I think it soon is doing a very very good job right now but there are still other protocols if we only check the you know check about the TV datas I just checked the data by the way this morning we see probably over all the network combined we have $112 billion TVL and certain really dominant market have $63 billion TVL it's more than 50%. But my point is if you take a look at the entire you know crypto space they are more than 40% TVL elsewhere and these kind of liquidities are just you

know being deposited by different protocols. So and this kind of protocol are more like the isolated island and how to solve the problem is really the key here. So fragmentations actually cause frictions and more importantly degraded the user experience. This is very very important and let's take a look how you know we have if we don't have transaction it probably spending me at least five to 10 minutes to expand this graph to a newcomer to the cryptos and how would you do that so this is going to be extremely hard and no users will kind of have the patience to listen to that instead they may just use

central exchange to to uh to to do they are like uh uh since they want in the crypto space to trade or to do custody. So we have to improve this. So what chain abstraction do is going to make blockchain technology invisible to the end user. So instead of the users developer trying to solve the problems we need to have uh the middleware and protocol infrastructure to handle these crosschain complexities to solve the problem.

So how the how we solve the problem then we have the ch abstraction stake whether that's on permission layer solver layer or settlement layer we have all great text st which will do great improvement which will change things. So this is how it looks like. So instead of having the user or developers to do all these kind of crazy activity may spending half hour to do that we have a very very simple solutions. We just need to create a wallet generate private keys found away USDC and swap it for whatever token you want and it will be simple and straightforward. But you know we have to

let the middleware and infrastructure do the do the difficult poke and thus our users will have a very very good and their you know experience then they will do self custody and putting their activity on train. So this is how you know uh why ch obstruction is important to our industry and some people may ask you know you mention about a certain TV a really dominant market why would you why would I need this and is that a big enough market but when I check the data of the crosschain activity I'm pretty shocked I mean the number is even bigger than I thought for the last month's you uh crosschain uh

volume is actually $60 billion. It's a crazy amount of asset has been due on the crosschain last month and I think we have also see the growth of the Chris crossian activities. So if we annualize that $60 billion is $700 billion a year. So it could easily cross a trillion dollar if we see the growth of the trust activity. So it's a not not a small market anymore. It's a big market. We have to kind of uh value this.

So and what is the uh chain obstructions you know people are think whether that's ready or not you talk a lot about ideas whether any people is building it. Here's all the project are really working on it. I mean for sure some of them actually DFG portfolios that we have near working very well on the permission layer. We have unis swap ax working very well on the so uh silver layer. We have layer zero wormholes axel working very well on the settlement layer. They're all kind of like project actually already noticed the important of ch obstruction people are just working on it.

So the conclusion I think this is straightforward what I believe ch objection is going to be one of the most important infrastructure in the web three since the birth of the blockchain and cryptos. So what we do as I as I as I share from the beginning what we do is we do investment we do supporting group founders good teams building good technology and good products. So what we want to say is like we are here to kind of invest into good project. So if you have any ideas product about CH abstraction, we are happy to talk to the

talk to the investment and partner partnership after this presentations. Okay, finally a final conclusion. Now I think it's the right time to on boarding the next billion users for real. Thank you very much. [Applause] [Music] So long.