Sunday,14 July 2024

Zilliqa's Conn and Kumar: "DeFi has not fulfilled its promise to help the underbanked"

5 min read

Interviewed By Neeti Aggarwal

Amrit Kumar, president and chief scientific officer of Zilliqa, and Michael Conn, CEO of Zilliqa Capital, share their perspectives on current challenges and opportunities in decentralised finance (DeFi), how they are building the technology and ecosystem, as well as their plans for investment in Asia-centric projects in the region.

The following key points were discussed:

In this discussion, Amrit Kumar shared that Zilliqa is focused on solving two key problems in blockchain: scalability and improvement of smart contracts security. He also talked about their platform and the areas that still require further improvement. Kumar added, “We are looking into interoperability because we believe that there are going to be projects and builders who would not be dogmatic about which platform they build on”

Michael Conn revealed that Zilliqa capital aims to support various solutions in decentralised finance particularly focused on unbanked and underbanked in Asia. He said, “We want to create a counterbalance to the wealth or the funding concentration that's coming out of Silicon Valley.”

The following is the edited transcript of the interview:

Neeti Aggarwal (NA): Today we have Amrit Kumar, co-founder, president and chief scientific officer at Zilliqa. He is also the co-chief investment officer of Zilliqa Capital. Zilliqa is a public blockchain launched in 2017 that focuses on decentralised finance and has over 60 developer projects across 20 countries in its ecosystem. Also with me is Michael Conn, chief executive officer and co-chief investment officer at Zilliqa Capital. Michael is co-founder and former chief executive officer (CEO) of Ether Capital and his career spans traditional financial services and digital asset space with senior leadership positions in AllianceBernstein, Societe Generale, Trust Company of the West, Asia Vest Partners, and Quail Creek Ventures. 

Zilliqa recently launched Zilliqa Capital as the central business and investment hub for its platform that will invest in decentralised finance projects. Amrit and Michael, thank you for joining us today. Tell us a bit more about Zilliqa. What are the key problems that you're looking to solve for your blockchain platform, and what differentiates you from other blockchain platforms in the industry such as Ethereum?

Amrit Kumar (AK): When we started Zilliqa, we were looking at the space from two specific problems. One was scalability. We had seen Bitcoin and Ethereum gaining some traction in the community in the space. The moment we saw that there were people using these platforms, we started to see scaling problems. The underlying platform was not able to handle the transaction load coming from the users. That was very apparent within the moment the first application on Ethereum went live in the initial coin offering (ICO) phase, or even the Cryptokitties, the gaming app that went live. Ethereum was basically getting blocked because of the load that was coming from the user base. That was one problem we solved, the scalability part. We wanted to make sure that the platform can sustain a decent number of volumes that could come from users. 

The second problem was when Ethereum became popular through its smart contract features. A lot of people started to build smart contracts that could handle, host, or hold a substantial amount of money or digital assets. Some of the contracts were holding hundreds and millions of dollars’ worth of assets. All of these were happening in the public networks. People started to see opportunities to attack those systems. In many cases, $60 million or even $100 million worth of assets were stolen, hacked, or frozen in those contracts. We felt that this problem needed to be solved because you can't just wait and watch until somehow the system become secure on its own. We have to take proactive initiatives to improve that aspect. We decided to develop our smart contract language for people to build so that when a developer writes a contract and when a user uses those contracts, they then will have peace of mind that their contract and money will stay safe. These were two problems that we wanted to solve: scalability and smart contracts safety. That’s exactly how Zilliqa started. We wanted to solve those problems through Zilliqa.

NA: How do you differentiate with other blockchain platforms such as Ethereum? 

AK: If you look at Ethereum today, it processes around 10-20 transactions per second. We’ll give you a benchmark of how it stands compared to traditional systems, like Visa, which is often used as a benchmark. Visa can process around 5,000-8,000 transactions pretty easily on a regular day. It shows that there's an order of magnitude in difference between what traditional or classical systems, or financial systems require in terms of throughput and capacity and what blockchains like Ethereum provide today. On the other hand, we did tests on the Zilliqa platform. We were able to show that it could process around 2,000 transactions per second. The reason why it works is because of sharding, where instead of asking the entire network to process every single transaction, you divide that network into smaller components so that each component can process transactions parallel to the other components. It's like creating departments within a company and each department handles a certain number of transactions or requests. That's one idea that I think a lot of other chains, including Ethereum, are probably now trying to implement, this idea of sharding to scale. For smart contract safety, Ethereum is still very heavily around Solidity, which is the preferred language of choice. The fact that Solidity is kind of similar to Javascript, the language which is most used in web development, is also in a way, the most hated aspect of Solidity because people don't like coding Javascript because it feels very insecure. It's not a language that is designed to guarantee safety to your contracts and funds. From that angle, we developed a language called Scilla, which is designed with safety in mind. Some of the contracts today are vulnerable or these simply cannot be written in the language that they have designed. It prevents some of the attacks and vulnerabilities exactly at the language level. 

Michael Conn (MC): There is a very high throughput and high safety-driven protocol that's complementary to Ethereum and many others out there, especially when you look at the low transaction fees that we have. This also creates an environment that's quite ripe for DeFi-focused applications, which is one of the reasons why we're one of the leading proponents of the Singapore-dollar stablecoin, which behind us in our partner Xfers, has become the third most-utilised globally behind the digital stablecoin dollars and digital stablecoin euro. Singapore is a small country but packs a mighty punch and a lot of that has to do with Zilliqa, with Scilla, and our community.

NA: I want to understand a bit more about Zilliqa Capital. Moving from a pure technology company to an investment arm that is looking to invest into these DeFi projects and also looking to invest into these blockchain projects. What brought about this change? Why the shift towards investment arm from pure technology? And what is the key objective of this company?

MC: We've used Zilliqa Capital as complementary to things we've already been doing within Zilliqa. One of the benefits that we saw as we were building Zilliqa, specifically with Amrit and the other co-founders, was the opportunity to help grow starting entrepreneurs. They created something called ZILHive, which is a small acceleration seeding platform within Zilliqa. ZILHive is currently in its ninth cohort of investing and if you look at the different types of businesses we've invested in, we've seen tremendous results. There are businesses that have been growing in tandem with that and have delivered investment results six times, 10 times or greater than that. Certain companies that we've helped grow in and around Zilliqa such as Unstoppable Domains, Switchio, XanPool, or Mintable often had follow-on investments from notable investors such as Tim Draper, Mark Cuban, or Three Arrows, etc. We don't view this as a step away but something that's certainly complementary. But one of the things we did notice through ZILHive is that a lot of these businesses, once these grew past their initial phases, needed to go somewhere else for their series A, B, C, D, etc. type of investments. We saw an opportunity to create a large pool of capital that would be really put to work in both the early stages of helping ZILHive extend its dollars to invest alongside them for those acceleration seeding deals, but at the same time to help these companies grow as these need to get additional capital to go through series A, B, C, and beyond. 

Zilliqa Capital is formed specifically as an investment holding company that is complementary to Zilliqa. We take the companies we invest in and we hold it on our balance sheet. The value derived from that partnership between us and the companies we invest in benefits the community of folks that invest around Zilliqa Capital. We would then yield to them 65% of our profits. That being said, Zilliqa Capital has really been formed to help fill a gap here in the Association of Southeast Asian Nations (ASEAN) and India, specifically. If you look at the region, 60%-70% of these countries have underbanked or unbanked populations. When you look at the benefits that Zilliqa can fill in terms of gaps, it falls into these categories, that high throughput capability, that low transaction fee ability. It allows for payments, remittances, lending, insurance, and investment type of business investments. Beyond that, we also see opportunities in non-fungible token (NFT) gaming, as well as traditional picks and shovels that have infrastructure businesses. If you look at the board of directors that we've assembled around Zilliqa Capital, aside from myself and Amrit, we have people that really crossed the regions of Asia, Europe, and the US as well. We make sure that we have good access to the best deals anywhere. 

NA: How are you funding this? What kind of current corpus are you looking at? And where do you get these funds from? What’s also your current corpus and what are you looking at, say, in a year's time?  How much have you invested? 

Helping the unbanked population

MC: At Zilliqa Capital, we're looking at all options to raise funds to bring continuous sustainable investments to the ecosystem and beyond. To date, the majority of the investments we've been making have been off the balance sheet of Zilliqa proper but Zilliqa Capital is looking at all options when we're in the process of raising funds.

I'd say in a year's time, we'd certainly be looking to put to work between $200 million and above. That's certainly in line with what we're looking to do.

AK: We said initially when we started this ZILHive programme, we’ll set aside around $5 million worth of assets to invest and we have almost consumed that $5 million straightaway, over the last three years.

If we look at the promise of blockchains and DeFi, one of the biggest promises was around helping the unbanked population, people who don't have access to financial services, let's say in India, Thailand, or Indonesia. The vision was to be able to give them access to those services. Unfortunately, if you look around and see all the DeFi products and services that are available today, the number of people who come from emerging markets and are involved in those services is no more than 10%. That's kind of the disconnect, which means that there is an opportunity for us to still go through and make sure that these emerging markets, these products and services, which are around blockchains can have an impact in these emerging markets. This is exactly the kind of what Zilliqa Capital is targeting. 

NA: DeFi is quite broad in perspective, there are a whole stream of projects around it in varied aspects. Are you focusing on certain specific areas where you see a greater likelihood of faster mainstream adoption of blockchain services? Are there some areas where you're focusing on?

MC: If you look across the space, areas such as payments, remittances, lending, insurance, or investment are most interesting to us. If you look at the broader marketplace, remittances globally in 2018 were around $700 billion. Fees for transferring money across the borders can exceed 20% and sometimes take up to five days. If you could see just a small 5% savings in that, you're talking about $16 billion in savings. If you look at the region, ASEAN, India etc., there are significant remittances in and around the region. If we could find some kind of real-world solution that fills that gap, that would be amazing. But really, the way we're looking at it is we're not looking for one solution, we're looking to put a significant amount of capital to help bring about solutions in all of these areas and to Amrit’s point, to really help the unbanked and underbanked that are currently really underserved. 

NA: The specific areas and distributed ledger technology (DLT), the adoption of blockchain in Asia, which areas do you find are closest to mainstream adoption? 

AK: If you think about this region in particular and generally speaking, for any financial service, one of the first things that you have to think about is having a payment method. Because no matter what you build, you can imagine all sorts of advanced derivative products, mortgages, insurance, and all sorts of things, there is a basic thing that you need to build first and that's the payment part. It makes sure that people like you and me, or people who are living in remote villages have an easy access to payments. That’s very powerful. If you take a look at Indonesia, you have people who are sitting in remote villages and getting access to banks, which are in cities, and it is very complicated for them. That's one of the reasons why a lot of these economies are still very cash based. One method and one problem that some of the startups in that region is trying to do is to be to bridge that gap. That's exactly why a stablecoin could come into the picture because stablecoins are digital assets that are backed by either Fiat or other volatile assets. But then the holding of a stablecoin doesn't require you to have security like a custodian. You can easily create a safe wallet and you will be able to store these into a stablecoin wallet. That example is one key that we have to start with. Once you have the stablecoin, once you have a payment method, then you can build all sorts of things like building a mortgage. In these countries, it's very hard today. Imagine asking for a micro loan in countries like Indonesia, India, and Bangladesh, it's very difficult. But if you are able to build a system, a peer-to-peer lending infrastructure that allows people, let's say for me, if I have excess dollar, I could lend my money to a remote farmer in Bangladesh or Indonesia. That's going to be very powerful. These are examples of payment. You can imagine payments having a lending platform to be able to borrow loans easily at very small amounts. You can imagine insurance products that are backed by peer-to-peer systems. These are things that are very specific to these markets that may or may not exist in other markets.

NA: You mentioned that you've got about 60 developer projects on your platform from about 20 countries. How close are these to production and mainstream adoption in the industry? Or are these still at the developing stage?

AK: Many of these projects are actually live. We have been working with a company called Xfers, which is licensed by the Monetary Authority of Singapore (MAS), the regulatory body in Singapore. The idea with Xfers was to be able to issue a Singapore-dollar-backed stablecoin. Stablecoin is basically a tokenised dollar. If you look at all the tokenised assets today, across all currencies, the United States dollar (USD), because it's a global reserve currency, is the highest. The number of USDs is obviously in billions. The second is euros for obvious reasons. The third one, surprisingly, is Singapore dollars. One of the reasons why the number of Singapore dollars that have been issued today in tokenised form is around 30 million is because of the community that's using this. Today there's a large community of users in Singapore using Zilliqa’s infrastructure. We're using these stablecoins to do all sorts of things, especially participating in DeFi activities and DeFi products in the blockchain ecosystem. That's one example of how one of the products are being used today. The other example is around HG Exchange (HGX), which is a securities exchange approved by MAS, which allows people to trade in private equities or commodities. Very recently, we tokenised private casks of whisky that we could buy from Scotland and these are tokenised, on top of Zilliqa. Instead of buying the whole cask, you can now buy a liter or two liters of a bottle of whisky from the tokenised assets. But again, you can imagine extending this to all sorts of things, for example, tokenised real estate. Today, you could invest and buy a part of a building and not buy a whole building, or buy a small part of the apartment or the whole apartment. These are things that are already happening and people are already using some of these services in the existing system that we have.

NA: How are you building your ecosystem? What are the initiatives that you are undertaking to grow your ecosystem? 

AK: Things need to be built up in phases. We start with stablecoin, once you have a stablecoin, you imagine building more assets. Once you have more assets, tokenised shares, tokenised real estate, you need a platform where people can trade these. You need a marketplace for them to trade. Once you have those, then you need to build something like an asset management tool. You have to be able to give people access to products that allows them to say, ‘I can see my portfolio , where my money is going, and how my money's being spent.’ Then you can imagine all sorts of complex, as blockchain-backed asset managers, basically. You don't want people to manage your assets. You can even have contracts managing your assets. You define what sort of assets you would like to invest in. It will define how much risk you're willing to take and then the contracts based on different parameters decides which one would fit the best for you. Then you can see in a transparent manner where your money is going, instead of sending your funds to an asset manager in the traditional world, where you have close to zero. If you have very little visibility on how much and how your money is being spent in all sorts of things, now you can see funds moving from your wallet to other assets, other players and products, you can literally see how your money is making more money for you. These are the kind of things that get developed in a Lego manner, right? You start with a piece, you put another piece together and then you build pieces around that basic piece. That's kind of how things are being structured today. 

NA: I want to get a sense of the growth that you're seeing in your system, not just in terms of the developer projects, but also in terms of the transactions that are running through your platform. Can you share the KPIs and show the growth?

AK: If you look at the numbers today, every second, the platform processes around $500 worth of transactions. It tells you the economic activity and this is something that has grown rapidly in the last year or so. I don't have the exact numbers of what we had in 2019, but I'm very confident that at least 10 times in the last year or so. That gives you the nature of how active the platform is. But if you look at the total number of transactions that have grown rapidly in the last year or so, let's say around 2018, it took roughly speaking three months for the network to receive one million transactions from people. Today, in a month's time, you're seeing the same transaction. It takes a month for the network to receive one million transactions to process. Roughly speaking, it has tripled the time as sort of 1/3 for the last year or so. We launched a staking program that allows people to put their ZILs to work by securing the network and providing services. I've seen around $900 million worth of assets, in the staking, already deployed, and being used. I mentioned about stablecoin XSGD. When we launched a year ago, the number of tokens that were launched was less than a million. Today, it's over 20 million. It shows you how the network has been growing in a rapid expansion rate. The number of people, number of users using those platforms is growing at a rapid rate as well. 

NA: What's your revenue model here? And what kind of revenue growth you are seeing in your platform?

AK: One revenue model is around investments. We see potential projects that come to a platform. We're interested in building good projects so we invest in these. Second, we participate in some of those products ourselves. We have a platform that allows people to trade assets so we provide liquidity to those assets and through those by providing liquidity beyond money. We also did a fundraise back in 2017-2018 that gave us initial funding to survive. Now we are at a stage where we are generating quite a bit of revenue per quarter in the last year or so. That's something that's quite positive but yes, again, this is exactly why we feel that Zilliqa Capital is something that’s going to be very important because we are now seeing – not just within Zilliqa, but even around Zilliqa – opportunities where people are building cool projects and interesting applications that consumers would like to use. In order to grow that ecosystem and that one may benefit from that opportunity, Zilliqa Capital will come in and say, ‘Look, here's a good project that we want to build to serve this population’. Here are the tickets that go to these projects and then obviously make money through those investments.

MC: There's also an ability right now for Zilliqa proper to generate revenues directly through working with projects to help it through bespoke solutions, to help it get up and to scale. That's another way that Zilliqa is also benefiting from growing its ecosystem. But certainly, from a complementary perspective with Zilliqa Capital, we certainly would make money from our investments, from revenue sharing, profit sharing, as well as equity holdings, as well as token investments and other opportunities that bring both current yield and kind of longer tail value. The main thing about Zilliqa Capital is we're certainly focused on Zilliqa’s specific businesses, but at the same time, we can be chain agnostic because we do see opportunities on Ethereum or on other chains as well. If we can get these into our wheelhouse of investments, we can help encourage them to move towards Zilliqa and then take things from Zilliqa and help bring them to other chains and even today. We have ZIL chain to polychain network, we have ZIL to Binance, we have bill to Ethereum that's in play in terms of bridge so we feel there's going to be a lot of these kinds of cross-chain functionality. We want to make sure we have a seat at the table.

NA: Is Zilliqa financially sustainable right now? You're also looking at funding a substantial amount, about $200 million, through Zilliqa Capital.Are you looking to raise more funds to fund those projects? And are you also looking to raise funds to finance Zilliqa as a platform? What are the mechanics here?

MC: Zilliqa, the protocol, is certainly financially sustainable on its own. It's growing by leaps and bounds. The token ecosphere around Zilliqa, the ZIL, grew 1,700% last year, that's compared to 400% for Ethereum, 300% for Bitcoin. From a transaction perspective, basically any metric you look at Zilliqa the protocol is growing tremendously, globally. We continue to put funds to work through ZILHive and that is coming off of the Zilliqa balance sheet. But Zilliqa Capital is outside of that and so the funds that Zilliqa Capital will be using are being raised by Zilliqa Capital, specifically.

The impact of sharding

NA: Regarding challenges that we're seeing in blockchain. Amrit mentioned earlier about sharding as a technology, how you are improving the scalability and also Scilla, to which you're improving the security. Continuing from that, what is the current transaction per second that you're able to achieve using sharding as a technology? Even Ethereum is exploring sharding. How are you differentiating the two? How are you differentiating your technology in the sharding space?

AK: In terms of numbers, Ethereum is around 10-15 transactions per second. The impact of this scalability definitely shows up in terms of transaction fees. Today, or at least yesterday, it was quite possible that if you made a transaction of $15, it might be paying $20 as guest fee for the network to process the transaction, which just doesn't make sense, right? On the Zilliqa side, we can process around 2,000 transactions per second, which is in order of magnitude, higher than what Ethereum and existing platforms do today. If you transact on Ethereum, you pay around $10 for even a simple transfer of ether. While if you transfer those on token on the Zilliqa chain, it will cost you one-tenth of a penny, or even less than that. So that gives you a sense of how scalable and how usable the platform is. In terms of the actual technology that's been used, there are some differences. One is that we are very pragmatic because we are building things from scratch. We know that we can take all sorts of risk that we wanted to build while Ethereum is something that has been running for ages. It's like you have a building set up and it’s ready and you're trying to fix the foundation. It becomes very tough to fix those things. That's the reason why Ethereum Foundation, when it started to work on sharding, has a phased approach to building things. It has at least four or five phases and only when it reaches around phase four that you'd be able to see actual sharding come into practice. Currently, Ethereum is at phase zero. The second problem is very challenging. Once you have built your platform, once all sorts of things already running, it becomes very challenging to make sure that those platforms can be backward compatible once the sharding gets implemented. That's a huge challenge for Ethereum. I'm looking forward to what comes out from the Ethereum Foundation, but it's something that's really difficult. It's not an easy thing to do.

MC: This has been going on since I founded Ether Capital back in 2017-2018. Sharding was supposed to be the silver bullet that was right around the corner back then. Here we are, almost three years later and it’s still in process. That certainly helps to drive traffic towards Zilliqa and it is really competitive advantage for us in what we're trying to do.

Problems and solutions in blockchain adoption

NA: Blockchain as a technology has passed through various phases. There was once a lot of hype around it, then there was a measured skepticism, and then there was a growing momentum. Now what are the biggest challenges in blockchain adoption in the industry today? Besides sharding as a technology, how are you looking to solve it? Interoperability is a very big challenge because  we've got thousands of blockchain platforms and these are not interoperable with each other. How do you solve these kinds of challenges that come in blockchain space?

AK: Obviously, one is around scalability. To get a sense of how big this problem is today, just look at Ethereum, we have around 114 million addresses.Today, the number of people actually using DeFi is in tens of thousands, which gives you a sense that there is a large number of people who holds assets, this extends to Bitcoin as well. It's not a specific material. It's a large number of people who hold assets but they're not involved in any of these DeFi activities, who probably have no use on any of the decentralised applications (dapps) that are out there. That's a shocking statement because it looks like less than 1% of people are even involved in using any dapps clearly shows that even with these small number of users, you already are hitting scalability issues. Imagine if you actually achieve a point where 50% of the old addresses of people who hold assets actually start using those dapps, that's going to be a catastrophic situation, from a platform perspective. 

I also mentioned about this emerging market. Less than 10% of people from the emerging market are using some of these DeFi products. That's one challenge that is around, making sure that the platform is scalable, making sure that you can attract the crowd who wants to use this platform. Number two is if you look at the platform, how capital efficient is that from the real world? Let's say you want to get a mortgage or want to get a loan for your apartment, you don't put 500% collateral to borrow that loan. While in the case of DeFi, because of the way the system is, the credit system doesn't require you to know your customer (KYC), you are actually required for every dollar that you take to put $5 as collateral. That makes the whole system very inefficient. The third point is around key management. Today, in order for you to actually get hold of any ether, any asset, it's quite painful as a user base, from a user's perspective. You first have to go and download a wallet and figure out how to manage your private key and public key. Once you have figured that out, then you will have to go to Binance or other platforms to buy some of those assets. That's quite painful from a user’s experience perspective. That's one of the reasons why we still have a long way to go to be able to establish ourselves. I'm talking about blockchain in general, to start a blockchain as a platform where people can easily use all these services.

MC: Aside from the usability constraints and certainly when you have people to table; the way I like to look at it is if you look at the trajectory of Bitcoin. It started at $1 and it goes up and down, but the overall trajectory is up. That is pretty much akin to the development of the broader blockchain and digital asset space. When I entered this marketplace around 2016, it was still very nascent and there weren't really too many real applications, things you can use to do cross border transfers, ready to do payments or anything. Slowly, step by step, you've had institutions step into the business. The difference between now and 2018, is you now have tremendous institutional interest globally at the table. You have central bank digital currencies (CBDCs), country-denominated digital currencies coming to market or in the pipeline, whether that's in Europe, US, or in China. You have real banks, BNY Mellon Fidelity Bank, etc., that have custody solutions that they're putting to work. Globally, you have real asset management companies, BlackRock, JP Morgan, etc., putting capital to work in this space. Slowly you’re seeing the economy pick up from an institutional perspective, you see economies coming into it from a governmental perspective. This is giving a lot more confidence to the retail potential investor into other institutions as well. It’s still early days in terms of the percentage of capital that's being allocated into this space or being put to work in a space. But it feels like it's the foundation of something much greater. When you look at the US specifically, you have a lot of these companies now being given banking charters, which three years ago would have been unheard of. What you'll ultimately see is a lot of these governments put in place, a real true regulatory sandbox to define the rules for people to play in. Then once you have that, the sky's the limit. 

AK: What we're seeing today is that there is this gap that is closing every day. For example, traditional banks are now allowing people to custody, they're asked for assets in the banks, at the same time, some of the pure DeFi projects are applying for licences. There are people who – for example, Aave Protocol, which is one of the popular lending platforms on Ethereum – have now applied for a licence in the UK to be able to offer certain services to these users. You see that this convergence is getting closer and closer. Revolut, for example, is one of the challenger banks in the UK and outside the UK. They offer to buy bitcoin, Ethereum or some of the other assets directly within the app. In a way, this is something that traditional and older banks would not have there a few years ago, but now they're openly offering their consumers and their clients access to those assets. This bridge is closing in from both sides, or both from the traditional financial landscape, they are coming closer towards accepting how these assets should be held and controlled and given to the clients. At the same time, purists of blockchain are also exploring the ideas of how we can get licences and be able to provide services in a legally, compliant way. 

NA: Are you seeing a specific trend or difference between Asia and India, ASEAN, Asia-Pacific (APAC)as a region versus the rest of the globe, in terms of DeFi developments or decentralised finance development?  Amrit touched upon financial inclusion as one area, but other than that, are you seeing anything specific that stands out?

MC: We're seeing global growth and creation happening everywhere. The main difference you see is the availability of capital. Traditionally, you see significant amounts of capital coming out of Silicon Valley in the US and a lot of US-centric projects or European-centric projects that are growing and it's a lot more difficult for someone building in Asia, or in India to get that kind of attention. That's certainly one reason why we want to create Zilliqa Capital, to create a counterbalance to the wealth concentration or the funding concentration that's coming out of Silicon Valley. But I think there's a number of projects that are being built in the region that have grown quite tremendously.

AK: The problems that you see today in those regions, in APAC, are very different from the problems that you'd see in the Western world. Those problems mean that you need to build very specific products and services to tailor to those requirements and needs. Those who are building those things, they are definitely being successful.

But the problem is that today, those people are building these products often, and you have to seek funding from outside, because it's very difficult for them to get funding locally sometimes. That’s what happens while you're reaching and pitching out to Silicon Valley venture capitals (VCs), your idea sort of dries out, you lose traction, you lose momentum, then obviously, sometimes you just drop off. The idea behind Zilliqa Capital was to set up and cover that region and bridge the gap between active investments going on in Silicon Valley and the investments or the products coming out of India, Malaysia, Indonesia, and the Philippines. There’s quite a lot of activities coming out of these countries and it's just about bridging that gap, by providing them with ready to go capital that they can put to use and make sure that they can grow using that capital.

NA: Tell me about your future roadmap, in the next 12 months or so both for Zilliqa Capital and Zilliqa. 

MC: From a Zilliqa Capital perspective, our intention right now is to look at all options to raise funds so we can bring continuous sustainable investments to the Zilliqa ecosystem and beyond. That's what we're kind of laser beam focused on right now over the next number of months. Then once that target is hit, then we will immediately move to putting that capital to work through investments.

AK: On Zilliqa’s platform, you can imagine once you start a platform, there are all sorts of thing that you have to cater to. You have to cater and think about how to improve that platform. Because as a software, it never stops. You have to keep improving the platform. The two key areas in which we would like to improve the platform aspect, one, is making sure that the throughput goes up. We have to optimise what we have built so that the network can process more and more transactions per second. We have to reduce the latency so the time it takes for the transaction to be processed by the network should go down as well. These are the two main areas in which we want to improve on for our platform We also want to make sure that because we define and design a new language, we have to make sure that the developer tools are ready for people to use. 

In terms of building the ecosystem, that's the bigger thing. We have developed, with the help of our partners, a stablecoin that caters to the Singaporean mass. We are also looking into issuing Indonesian Rupiah back stablecoin with the help of our partners. We are looking into interoperability because we believe that these are going to be projects and they are going to be builders who would not be dogmatic about which platform they build on. But they will be open about seeking the consumers. If they see that there is a platform out there where there are a hundred million users or a million users and I would like to attract those users to use my product. We are also building sort of interoperability projects where people building on Ethereum would be able to move some of the assets or even the entire application on top of Zilliqa, be able to provide that to the consumers on the Zilliqa platform. We have decks that we have already built that allow people to create fungible assets. We also have an NFT market, a place called Mintable that allows people to tokenise or digitise their artwork, like a painting. It could be all sorts of things. We are also improving some of the features that people are requesting from a digital ‘auction house’. There are a lot of what is being done on building the different pieces that are needed for ecosystem to prosper. That's kind of what will happen in the next year or so.

NA: I want to thank you Amrit and Michael for joining us and giving a good perspective on two developments that we're seeing in ASEAN, both with regards to blockchain development as well as how you are trying to solve these various challenges of scalability, interoperability that are existing in blockchain industry today. Thank you so much for your time.

Keywords: DeFi, Sharding, Blockchain, Ethereum, ICO, Cryptokitties, Solidity, Javascript, Scilla, Zilhive, Mintable, Switchio, Xanpool, Nft, DLT, Hgx, Zil, Binance, Dapps, Aave Protocol, Decentralised Finance
Institutions: Zilliqa Capital, Ether Capital, AllianceBernstein, Societe Generale, Trust Company Of The West, AsiaVest Partners, Quail Creek Ventures, Xfers, MAS
Country: India, Bangladesh, Malaysia, The Philippines, Scotland
People : Amrit Kumar, Michael Conn, Neeti Aggarwal, Tim Draper, Mark Cuban
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