Panel discussion on building on an L1 chain
We had the pleasure of hosting William Richter, Marketing Lead at SORAMITSU, Charles Y, Principal Ventures at Alameda Research, and Victor Zhang, CEO of Smart Token Labs, for an informative panel discussion about their experiences building on an L1 chain. Listen to the panel discussion below or read on for our recap!
Note: Some of the text have been edited for grammar and clarity.
Date & Time: April 22nd at 9pm SGT / 10pm KST
Platform: Twitter Spaces
Speakers: William Richter, Marketing Lead at SORAMITSU, Charles Y, Principal Ventures at Alameda Research, and Victor Zhang, CEO of Smart Token Labs
Host: Sofy, Community Manager at Klaytn Foundation
Sofy: Happy TGIF! Welcome to our very first panel discussion via Twitter Spaces. I am Sofy, community manager for Klaytn and it is indeed my pleasure to be your moderator for today’s panel discussion. Thank you so much everyone for taking time to be here.
I am exceptionally excited for today’s panel discussion as we have amazing guests such as William from SORAMITSU, Charles from Alameda Research and Victor from Smart Token Labs. Today’s session will be divided into 2 parts. We will begin with an introduction from the panelists, followed by questions from the community and lastly fire questions. Today’s topic will be about building on a Layer 1. The objective of tonight’s discussion is to allow future builders, developers or projects have a deeper insight on how is it like building on a L1 chain. We will get firsthand insights from our guest speakers as they share their thoughts and experiences.
Let us welcome the gentlemen onboard. Hi everyone!
William: Hello! My name is William Richter and I am the marketing lead at SORAMITSU. I have an MA in Media from the University of Amsterdam. My main areas of interest are metadata and privacy, and I got fully immersed in the blockchain industry at the end of 2020.
SORAMITSU is a global technology company delivering blockchain-based solutions for enterprises, universities, and governments. From the creation of domestic and cross-border payment systems to the development of our own decentralized autonomous economy, our projects and use case studies represent the next generation of fintech.
Charles: Hey, this is Charles. Great to be one of the speakers for today’s panel discussion. I have been in the crypto space since 2017, mostly on the trading side.
Our company based in Hong Kong was acquired by Alameda a few years ago and I’ve been supporting not just on the relationship side of the trading business but also on market-making and on the ventures. Alameda is a leading trading firm set up in 2017. At that time it was led by Sam Bankman-Fried who is now the CEO of FTX. Now, we are under the management of bright minds Caroline Ellison and Sam Trabucco. We are one of the largest market makers in the crypto space, managing multi-billion dollar AUM with various strategies besides market making but also quantitative strategies and yield farming across the on-chain space
Victor: Thank you so much for inviting me. My name is Victor, I’m the CEO of Smart Token Labs. Prior to my ventures into blockchain technology, I was core team of a tech startup that was sold to eBay for US$165m in 2016 and worked for 14 years in international business in APAC.
Smart Token Labs is a Web3 technology company backed by ventures like HashGlobal, Framework, Mechanism, Fenbushi, Mark Cuban and etc. We believe in the big shift to Web3, a fully integrated web and a frictionless market. We understand that to shift towards Web3, mass adoption, ownership and user experience are the key drivers.
For Web3 to provide a 100x better user experience than Web2, wallets and smart tokens are the enabler. We have been building a token centric framework Token Script and a super user agent Alpha Wallet since 2017. AlphaWallet is the most forked EVM mobile wallet, developers love us. TokenScript has been used in 30+ smart token projects including FIFA, UEFA, Ethereum Foundation Devcon, Karma, Door, Music, Art and Nifty Tailor.
Sofy: What is each company’s experience building on a L1 chain?
William: Soramitsu has a lot of experience in building L1 chains. A few examples include hyperledger Iroha, which is a private enterprise-level blockchain for central banks and other enterprise uses. On the public blockchain side, Kagome, a C++ implementation for Polkadot consensus, and Fuhon, which is a C++ implementation of the Filecoin protocol.
If we talk about applications on an L1-chain, the best example we can provide is the infrastructure of the decentralized exchange for the Klaytn chain, which will be open-source and available for all.
It’s safe to say that each project requires a deep knowledge of blockchain technologies in different parts of it.
Charles: Alameda is not exactly a builder in the space but we have been exposed to the majority of L1s. When DiFi was taking off in 2020, farming became a very profitable strategy and that required a lot of dev work when it comes to integrating new wallets, bridges and understanding these mechanisms. As time goes by, it becomes increasingly complex with dependability across different chains. A lot of our ex-colleagues enjoyed this on-chain kind of experience and moved on from Alameda to work on projects such as Solana, Serum and other Solana based projects.
Our relationship with Klaytn is relatively new and we are very happy to be on the government side of things and running the nodes. We are excited to learn more about the ecosystem in particular and the things that we will be building isn’t really applications per se but tools that will help us make good decisions on the trading side whether it’s on-chain trading or any kind of mechanism regarding farming side.
Victor: We have two core projects, AlphaWallet and TokenScript Project, and we are focused on the EVM network. We support the various EVM based network including public chains, Layer 2 solutions and other EVM compatible networks including Klaytn network. For the tokens project, we delivered tokenization projects together with different businesses and mainly built on Ethereum public network and a few of them is on coral permission network. Prior to that, we build on R3 code as well for the financial institution. For example, we deliver the first identity wallet for Earth Recorder, which is then used by several largest financial institutions in the world. In a nutshell, the above is our experience.
Sofy: What are the challenges and difficulties of building on a chain?
William: From a development perspective, it is really important to understand the specifics of the L1 chain. Because dev teams operate on a basic level with fundamental artefacts of chain-like consensus algorithms, network architecture, scalability to scale, etc. With that said, it is not necessary to have deep knowledge of everything to build an application on the chain.
Charles: We are quite active on the venture investment side as well and we are identifying early-stage projects, specifically Layer 1s and I think it depends on the stage the chain is at at the moment. For instance, with something that is compatible like Avex or Fantom, it is easy to get developers from the community since there are sufficient infrastructures for references that can be adapted relatively quickly.
However, there are cases where there are no basic necessities, hence, in creating a trading protocol with liquidations where you need oracles, you need to build the oracle on your own which is what you have to evaluate before you build a specific chain.
For example, this is a problem for the Layer 2s and it is not as simple as being an EVM compatible. Everything has to be built from scratch and hence it burdens the team to build this application. You definitely do not want to allocate all your resources to building infrastructure that was never part of your application to begin with and hence there is this herd mentality where you head in the direction where all the infrastructure is already in place.
Victor: I think Charles has covered almost all bases. To add on, I categorise this into 3 big challenges, two of them are technology-related and one of them is not.
- Missing tools like infra, etherscan
- The network is not stable, eg 2019 xDai
- Economy readiness for the network, and the market cap needs to be sufficient to support DeFi related applications. And for onboarding new users, stable coins have to be in place to support the network.
Sofy: How do you overcome those challenges eventually or are those challenges still ongoing?
Victor: In many cases, those challenges are still ongoing and we will decide not to use that particular Layer 1 network and choose the most suitable network.
Charles: To add on, for a lot of new Layer 1s, it is still a work in progress, and network going down has happened to most chains. When you have billions of dollars on each of these ecosystems, that is very alarming. Be it building something or moving assets there, there is some form of calculated risk. Through experience, you can figure out how much risk to place in these activities. For example, if you spent six months building on Starkware, and then it never takes off, that would be very bad from your perspective but as for now, it is tough to tell what the outcome is going to be hence you see a lot of centralization from these Layer 1s. Ecosystem funds with Avax are probably one of the biggest ones, giving you millions and millions of dollars to bring more users to their ecosystem which helps to balance out the risk.
Sofy: Is having a blockchain development team crucial prior to building on a L1 chain?
William: Having a blockchain development team is definitely crucial, and with every project, the team becomes better and better. If you started to create on an L1-chain, such as Polkadot for example, you will need to have knowledge about parachains, parathreads, governance procedures, how to stake on this L1-chain, and so on. It will be a great advantage to have a team that knows the nuances, but on the other hand, obtaining this knowledge really makes a team a blockchain development team.
If you are an expert in solidity development, you will get more experience and become an expert with knowledge of how to operate on Klaytn or Ethereum, for example. Or if you’re an expert with Rust development, operating on chains like Solana or Polkadot.
It could be an advantage for you as a developer because it is the easiest way to conquer other chains with your Dapp. For example, you could build your Dapp on Klaytn after that you deploy it on Ethereum with a small adaptation. With that said, I would like to send a shoutout to the great team we have at SORAMITSU that is working hard and constantly improving to conquer more chains and more challenges!
Charles: If you look at most of the stakeholders in the crypto ecosystem, having a dev team is always better than not having devs. By devs, it is defined as guys who are competent in solidity or rust or any of these languages. The main reason is with activities happening on the chain, while there are good front ends or APIs that provide useful data, crypto is ever changing and speed is crucial and you can only be at the forefront of it if you have talented developers behind you.
Victor: To build anything, you will need a development team for sure. An experienced team with blockchain knowledge depends on what you are building. For example, if you are building something that involved smart contract development, you will need someone who has experience. Otherwise, existing API services will be sufficient.
Recently, one of our products is gaining good traction, also known as the brain connector. An overview of the brain connector is that it packages all the blockchain, tokens and smart contracts related knowledge and hence the existing website do not need to have the knowledge to these topics. When websites install the NPM package through a normal web developer and connect it with their existing business logic, their websites will become token compatible. In such scenarios, they do not need a blockchain experienced development team but a development team is required.
Sofy: What should project/builders check for before deciding on a chain to build on? Is having a blockchain development team crucial prior to building on a L1 chain?
William: They should be mindful of similarities between the L1-chain’s core functions and your Dapp. For example, if you want to create a metaverse Dapp for the Bitcoin chain, you will face a huge amount of problems and a lack of fans who will use it. You should think more in terms of product management, like running some AB-tests for your hypothesis and trying to come up with a great idea for your decentralised application
Charles: Generally speaking, most crypto ecosystems are very open, there are a lot of resources on discord, telegram groups or forums where you can chat with devs who have been working on that specific ecosystem. This will allow you to have a scope on the pain points and chain to product fit. I think it is super important to reach out to the actual layer one team and figure out what is their vision to find out if it is worth spending your time to help them build an ecosystem.
Victor: While William and Charles have given very good pointers, I think that the most important thing is what you are building. And also for product-chain fit, you have to have a good idea of the market cap of the native currency. Next, if your application needs to work with other types of tokens, it is important to check if the tokens exist on the network. The activeness of the community plays a crucial role as well, it is easier to recruit talented people who understand the network and will continue to support your project.
Sofy: What are the tips that you would like to share with the new builders who are listening in on how to kickstart building on a chain?
William: Be very accurate with the technical decisions you make. If you’re not careful and accurate with your work on an L1 chain, the consequences could be catastrophic. I would also say that all the technical choices made during L1 chain development will have an influence on all future apps on its chain.
Charles: To look at it from a different perspective, in most cases, you are not building on your own, you will have Co-Founders and investors for your project. It is important to make sure you work with the right people. If you look at primary markets now, it is a little bit crazy where allsorts of investors will be throwing money at you leading to unrealistic valuations and that could be very distracting. The first step is to find the right Co-Founders who are not just in it for the money and guys that truly care about the tech. Secondly, be open-minded when you have a conversation with investors. There are many talented teams who went to the wrong direction and this is probably because they were advised incorrectly or they were unlucky or stubborn. There will always be tons of hurdles along the way where you may need to pivot entirely but that is how the start-up ecosystem works especially in crypto where it is very fast-paced.
Victor: The blockchain world is very open, unlike traditional web development. My tip is to try not to counter every single problem by yourself, try not to rebuild any wheels, use existing tools and focus on the core business and development.
Sofy: How do you envision the tools to be better by building on a chain and what are your expectations?
William: That’s a great question with a simple answer, the best tools for building on a chain must correlate with the L1 chain itself.
For example, let’s imagine that you try to create a Web3 service to provide more transparency, traceability and de-anonymity of transactions on Monero or Zcash. It will be ridiculous and the service will not get any support from the community or L1-chain developers, it goes completely against the chain’s principles.
All your apps and tools should have the same foundations, or ideas as the L1 chain you’re building on, I guess in a nutshell, they should be coherent.
Charles: I think in the last 1-2 years, I have been in the environment of a lot of emergence of Layer 1s and different kinds of communities, and we would not know which tools we will be using a year from now, so I would not comment on this.
Victor: I find stable network and stable APIs better and have more options.
Sofy: What is your go-to motivational quote?
William: “It’s not done/written until you do it” by Hunter S. Thompson.
Charles: Nelson Mandela once said, “I never lose. I either win or I learn.” I think it fits very well with crypto because there are no right answers especially when the fundamental ecosystem is not stable and the narrative keeps changing therefore it is about being hungry and trying to improve yourself.
Victor: “Do or do not. There is no try.” If you decide to do something, just do it.
Sofy: What is your personal favourite NFT?
William: Noiriko Soramoto by NOIR, although I also mint my own NFT photos.
Charles: I do not actually own any NFTs, but have you heard of “Ether blocks” (need to check), one of my friends was part of that cult. I thought it is amazing that carton pictures of blocks can hit 7 figures in valuation.
Victor: Recently, one of my favourites is from our operational project, Nifty Tailor Derivative Ape.
Sofy: Does that mean you own BAYC? Wow!
Victor: Yes, but it is not many.
Sofy: Who is your favourite crypto entrepreneur?
William: Dr. Makoto Takemiya, founder of SORAMITSU
Charles: Sam Bankman-Fried is also known as SBF, founder of FTX exchange. He is a believer in the space very early on and I had the pleasure of working with him in the same office in Hong Kong watching his work ethic and his altruistic views are very inspiring.
Victor: Weiwu Zhang, our CTO.
Many thanks to William Richter from SORAMITSU, Charles Y from Alameda Research, and Victor Zhang from Smart Token Labs for taking time out of their busy schedules for our panel discussion! To find out more about Klaytn and join our growing global community, please follow these links below: