ETHIndia 2022 Review: India Becoming the Powerhouse of Web3 Infrastructure
The world’s largest blockchain hackathon with more than 2,000 participants
Disclosure: This article is co-authored by Jongho Daniel Park, Research Analyst at Hashed and Deep Gandhi, Investment Analyst at Hashed Emergent. Hashed has established, maintained, and enforced strict internal policies and procedures designed to identify and effectively manage conflicts of interest related to its investment activities. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Furthermore, references to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services.
ETHIndia 2022 Overview
India Blockchain Week was huge this year. It took place in Bangalore, starting from the end of November for a few days. Hashed and Hashed Emergent members have held and experienced various events in Bangalore during this period, feeling the heat of the Indian crypto market.
ETHIndia was at the heart of this entire week. ETHIndia has set a record as the largest event in the history of Ethereum hackathons held so far. Over 2K attendees from more than 300 cities gathered for the event. It incorporated a variety of events, hackathons, workshops, conferences, and community events, all aimed at fostering young talents in the blockchain space.
The hackathon received over 21K applications and resulted in the submission of 450+ projects covering a range of problems in the Web3 ecosystem. We could see projects working on wallet improvements, crypto payments, ZKP solutions, NFT utilities, social products, etc. 44% of the builders at the hackathon were new to Web3, indicating a growing interest in this technology among young people, especially college students. For Hashed, it was meaningful to have Edward Tan (cpt n3mo), our associate, as a hackathon judge.
In this article, we are going to check out the current hackathon trend that we were able to see through ETHIndia. Since it was a giant event, it will be worth checking insights to know where the industry is headed for. So let’s delve in!
1. Wallet Trends
1.1. Account Abstraction (AA) tops with 10+ projects
Wallet wars are getting more intense. Now it also became a big craze for hackathon devs. It isn’t an exaggeration to say that wallets were the most outshined agenda for this hackathon. A group of teams utilized Account Abstraction (AA) to showcase ingenious solutions for self-custody, keeping up with the current circumstances.
So, what is AA? AA is a feature that has been under discussion for quite some time in the Ethereum community since 2016. The idea behind AA is simple: unifying the two types of Ethereum accounts: Externally Owned Accounts (EOA) and Contract Accounts (CA). We now need private keys to make changes on EOAs, whereas CAs run by code. Yet, with AA, all accounts on Ethereum would be able to act like smart contracts. It would open up a wide range of creative use cases in the future.
One of the primary benefits will be the improvement of key management experience. AA opens up infinite use cases for existing accounts. The multi-signature and social recovery features will be available. This means they will allow you to use multiple private keys for authorization and recover them through trusted third-party guardians.
The batch transaction is another powerful upside AA brings. It entitles numerous procedures in a single transaction. It could be valid when you buy multiple NFTs. And it could also form a seamless experience in blockchain games, allowing users to make more than one transaction within a predefined set of rules.
AA also could enable users to set personalized security policies for their accounts. For instance, users could set limits on the amount that can be sent from a particular device or even require additional devices or authentication methods for larger transactions. Further, AA could qualify for more efficient signature algorithms, such as Schnorr or BLS. They also make it possible to bring post-quantum safe algorithms like Lamport or Winternitz.
AA will benefit Ethereum Rollups such as StarkNet and zkSync before being rolled out on the Ethereum Mainnet. Visa recently made a great example for L2 integration, building an auto payment solution using AA on Starknet with Argent wallet. AA integration is not there yet on Ethereum Mainnet, but it is likely to be deployed in the future since we have so much incentive to do it.
Currently, there are some issues with AA. There’s still a lack of development on the EIP-4337 proposal, and it seems tricky to migrate users from EOA-based wallets to AA-based wallets. Despite these challenges, the implementation of AA has the potential to bring significant advancements in various aspects mentioned above.
So time to move down to more definite projects. Banana Smart Wallet employs AA to create 2FA for hot wallets. They help users to guarantee their funds stay secure even if they lose their private keys. Firewallet leverages AA to have multiple accounts with distinct roles in the same wallet. You can set restrictions like the transfer amount of ETH, the whitelist of contracts, etc for each of them. Panda Wallet built a seamless UX where you can designate guardians for wallet recovery, and Web3One Wallet similarly leveraged AA to build a cross-chain multi-sig wallet.
Some projects brought the pertinent infrastructure for AA. Jiffy-scan is a transaction explorer for AA wallets, and AASnap is a tool to blend AA with ease to execute AA-compliant programs.
1.2. A surge of post-conventional wallets kicks in
ETHIndia was also a showcase for other experimentations on wallets. Before we get into details, it would be better to clarify the current state of the wallet sector.
Custodial solutions have come under scrutiny in recent years due to security breaches that have resulted in the loss of funds. As a result, many individuals and organizations are turning to non-custodial wallets to secure their assets. These types of wallets offer users more control over their private keys and aim to remove the single point of failure.
Smart contract wallets and Multi-Party Computation (MPC) wallets are the most noted inventions within the category. Smart contract wallets authorize users to supervise their funds, sign in with web3, and interact with dApps. You can program those wallets with various features, such as spending limits and transaction automation. Multi-sig wallets, a type of smart contract wallet, mandate multiple signatures to execute a transaction, adding a layer of security and helping to prevent fraudulent transactions.
However, smart contract wallets have some drawbacks. They come with an initial cost to create, as they are smart contracts on the blockchain. They are not compatible with non-EVM chains either. They require a separate EOA wallet to pay gas fees, which can add overhead and complexity for users. They position themselves as ‘second-class citizens’ in the ecosystem.
MPC wallets, on the other hand, divide private keys into several pieces, known as ‘shares.’ Then the shares are distributed among different parties. For a transaction to be signed, you need a certain number of shares to reconstruct the private key. It makes it difficult for an attacker to steal the private key, providing a higher level of security. MPC wallets are innately cross-chain products, as they do not depend on smart contracts.
On the other hand, off-chain accountability is a concern for MPC wallets because of centralized failures. Furthermore, they have compatibility issues with most conventional wallets. Plus, they also do not work with hardware wallets like Ledger or Trezor.
In summary, post-conventional wallets offer users a higher level of control and security over their assets, but they also come with challenges and limitations. But as the industry continues to evolve, we will likely see further evolutions of non-custodial wallets and new approaches to key management and asset protection.
As discussed earlier, AA-based smart contract wallets are a very secure and programmable solution. However, as explained above it will take more time to become mainstream on the Ethereum Mainnet. In the meantime, MPC is a viable alternative. Both these solutions are likely to be complementary to each other long term.
Some projects leveraged MPC or similar tech to solve wallet recovery as well. TrueResQ uses MPC to divide your private key into three shares. Then users can distribute the shares to a service provider such as Google login, a decentralized network, and their device. Superior Social Wallet uses SSS (Shamir’s Secret Sharing) tech to enable wallet recovery. SSS is a similar set of tech that divides wallets into several shares.
1.3. Maybe we don’t need to blame the MetaMask UX anymore?
The movement of the industry leader is also noteworthy within the Wallet War. MetaMask is also participating in the game through MetaMask Flask. MetaMask Flask enables devs to have their own set of customization with a forked version of the wallet. At ETHIndia, we could find many teams leveraging this function.
MetaMask Snaps is the first feature of Flask that allows anyone to extend the capabilities of MetaMask. Snap widely unlocks opportunities to leverage MetaMask. Snap now supports different blockchain protocols. And you can add new APIs to MetaMask, or modify existing functionality using internal APIs. But, we still have a long way to go since this feature has just started to scratch the surface. Additionally, it does not support popular JS libraries like Axios now.
So let’s go through some real projects from the hackathon. SSS: Secure Semantic Snap and Metaguard are wallet extensions that provide relevant security information before the transaction. SSS demystifies code by giving a natural language prompt using GPT-3. Polysnap helps you invoke and run WASM wrappers securely inside the Metamask Wallet. Push Snap’s browser extension sends notifications from their subscribed channels directly into MetaMask.
The use cases of Snaps do not end here. SnapLoad enables users to upload files which are then stored on IPFS-Filecoin using their MetaMask wallet. Cosmotic built a demo to leverage snaps to leverage the functionalities of MetaMask in the Cosmos ecosystem while Metamask users can access Cosmos dApps.
2. Infra Trends
2.1. India Stack brings regional characteristics of India
Payment was the most regional element of this hackathon due to the characteristics of India. India has a unique system called India Stack, which has opened up a new era in the last decade. It is a pack of open APIs and digital public goods that aims to unlock the economic primitives of identity, data, and payments at scale.
The payment layer was the one with the most ideas in this hackathon. It is one of three layers of India Stack that brought a swift and interoperable payment experience to all. India’s payment rail was somewhat cumbersome before the advent of Unified Payments Interface (UPI) architecture, which is at the core of the payment layer. However, UPI seamlessly bridged the payment experience with standard API specs.
In this hackathon, projects like ChainPe released a product that permits users to pay any UPI ID with cryptocurrency in the extension of fiat transactions. There were projects like UPCI and DPI seeking to comprise the advantages of UPI for crypto payments.
The Identity Layer is the other consequential element of India Stack. It accompanies the AADHAAR system, a unique 12-digit identification number. Indian government authority issues AADHAAR to citizens of India and foreign nationals who have spent a certain amount of time in the country. It has been the biggest biometric ID system in the world till now. We could find projects like ZK KYC, which enables verification through AADHAAR cards, employing ZKP technology.
India Stack is a crucial element of ETHIndia, as it provides a framework for using Ethereum and other blockchains within India’s unique digital infrastructure. By leveraging the power of the layers at scale, developers could probe new and clever ways to use blockchain technology in India and beyond.
However, not all payment-related projects were limited to India Stack. There were other notable solutions in the hackathon as well. Autopay enables recurring payments. Investment dApps or even subscriptions could benefit from this service. Depay allows you to pay through your phone number using Polygon ID, and another team brought LensPay as a part of the renowned social layer ecosystem.
2.2. Safety, Safety, Safety
As blockchain is a technology that glorifies the sovereignty of value and data, security must stay at the core. However, we still witness a series of security holes across different cases nowadays. Hacks and exploits often come with a new scheme every time, which makes it extremely difficult to prevent before the launch.
Moreover, even unwritten rules that seemed unlikely to break down continuously failed recently. These accidents are accelerating distrust and skepticism across the industry quite fast. Security has now become a first principle more significant than ever.
That reasoned enough why ETHIndia had a ton of infrastructure-level solutions to the current seriousness of the case. We could notice projects materializing solvents to the ongoing trust and security issues. Proof of Trust was the ETHIndia finalist that targets to implement Proof-of-Reserve with liabilities augmentation.
Other projects focus on fields across code checks, tradable contracts management, and etc, helping to ensure the security and integrity of the entire ecosystem. Web3Rescue falls into this basket. It helps users recover funds from hacked wallets. ETHGuard provides real-time security monitoring for VSCode, and SafeGuard offers a range of tools and services to help users secure their cryptocurrency assets. Persona bot-wallet detection* helps you identify bots to help dApps engage with real web3 users.
Overall, staying SAFU is essential for anyone working with blockchain technology. By generating ingenious solutions to the abiding hardships of hacking and security breaches, the finalists at ETHIndia demonstrated that a more secure and safe ecosystem is needed.
3. ZK Trends
3.1. Identity sovereignty leads the ZK agenda
ZK has been a buzzword for a long time in the world of crypto, especially these days. It is because ZK embraces all issues of privacy and scalability, which are the hottest topics in blockchain nowadays. Until now, the development of ZK has been sluggish, but now it is gradually being materialized.
In this hackathon, many projects put more weight on privacy than scalability. ZKPs allow individuals to verify their identity and reputation without revealing personal information. So it is efficient for membership and governance in decentralized communities and organizations while preserving anonymity. Quite a clear and essential feature, with a complex tech sitting behind it.
In this hackathon, several exciting projects employed ZK tech. Knowallet is one of them. It is a ZK-based identification layer that prioritizes end-user consent and anonymity. It allows individuals to protect their personal information while still being able to interact with online services. Another project utilizing ZKPs is hideme.lol. They allow for greater control over personal information and improve privacy.
We were able to find more vertical solutions in this area. MeData showed a potential for a health computing engine that utilizes ZKPs to ensure the privacy and security of sensitive medical information. Kleio is an interesting ZKP-based project in the dApp discovery sector. It is an on-chain discovery protocol based on an individual’s browsing history, entitling users to search and discover new content while maintaining control over their data.
Overall, ZKP-based projects demonstrate the potential for greater sovereignty and privacy in the digital world. And little by little we started to witness that these technologies are applicable in practice. By leveraging the power of ZKPs, individuals can take control of their identity and reputation, and interact with online services and communities more securely and privately.
3.2. Transformation of the internet-based organization by ZK
Blockchain widely targets unlocking the opportunities of internet-based communities and organizations. However, we have seen a clear hindrance to utilizing such attempts with perfection. The ZKPs can bootstrap virtual organizations by adding a set of key features as a fundamental. ZK tech brings the potential to revolutionize recruitment and employment experience by enhancing privacy and security.
Here are a few notable projects using ZKPs to improve the system. ZKJob is a fully anonymous video-based LinkedIn powered by web3 that allows job seekers to submit their PR videos to maximize their appeal. It includes a built-in meeting app for communication with potential employers. ZK Lancers is a decentralized freelancing platform that enables transparency by ZK tech. They connect clients and freelancers based on a conceivable reputation system.
Moving on to the contribution and compensation part. SigmaZK is a project that utilizes ZKPs to provide a Proof-of-Work (not the one behind Bitcoin’s operation) system more privately. We were able to find some payroll solutions as well. zkPayroll is a privacy-preserved payroll management and payment system on the blockchain. It benefits employers by helping them manage their employees’ salaries and benefits more securely. Tsunami is a protocol for private token streaming at a per-second rate that uses ZKPs to protect the privacy of both the stream and its participants.
Altogether, these projects demonstrate the potential for ZKPs to improve the talent acquisition and management flow by providing secure and private solutions for each part of the process.
4. NFT Trends
4.1. The Dominant Narrative: Clean UX & NFT-as-a-Productive Asset
The concept of a clean UX is becoming increasingly vital in the NFT world. As user onboarding becomes the key to market growth, there are a lot of attempts to abstract away the technical details and provide users with a simple and intuitive interface. The onboarding flow looks similar to traditional applications, especially for consumer-facing techs and dApps. However, in the world of crypto, the value of decentralization must be maintained, making its use more complicated.
UX improvement is very much related to the wallet part examined earlier. Products such as Web3Auth already provide timely social login. The single sign-on (SSO) system is another representative example in this bucket. It allows users to log in with their existing accounts rather than creating new ones. As a result of these efforts, the hurdles to dApp access are gradually lowering.
Another trend in the industry is the integration of on-ramps and off-ramps directly into the applications. It allows users to buy and sell NFTs using fiat and users don’t have to worry about setting up a separate account on an exchange. Since many NFT users are often newcomers to the ecosystem, this is becoming the key to UX.
In addition to these developments, there were also projects focused on using NFTs as a productive asset. The utility of NFTs has been a constant topic of discussion, expanding the use of an NFT out of a collectible or trading item. (You can find more examples in this article written by Edward Tan.)
For example, NFT lending platforms like Uzumeta and ZaPP allow users to earn additional revenue from their idle NFTs by lending them out to other users. Similarly, a project like MetaBorrow explored new models for gaming guilds in a similar manner. The product enabled the user to borrow or lend in-game NFT assets by the staking mechanism. OwnAd targets to create advertisement space on your own NFTs.
4.2. Rethinking the practical use of NFT
In the previous part, we peeked at cases for better utilization of existing collectible NFTs and gaming NFTs. However, there has been a recent movement to apply NFTs to other areas. It is a way to use NFT as a ticket for offline events or a catalyst for customer loyalty. These options have come up continuously, but were particularly prominent in this hackathon.
IRL events itself became a vital part of the crypto world. However, we are still dependent on the laborious and inconvenient process. NFT would be a key tech for this problem, and we could see some teams showcasing event management and ticketing experiences through different ways. EventX and Nftfy brought super-app products for the IRL events. TickEth devised a solution tokenizing all the tickets to prevent scalping activities.
NFT is also quickly becoming a popular medium for brands to reward customer loyalty and increase engagement. Starbucks is the best-known example. They are currently in a beta-test phase for a rewards program using NFTs. Odysseys, the loyalty program, offers users discounts, and digital experiences as rewards. While it’s currently unclear how many users are part of the beta test, Starbucks has reported a bullish response from participants.
From ETHIndia, one such project, Beyond Club, operated NFTs to offer exclusive rewards, access to events, and other perks to loyal customers.
Altogether, the use of NFTs for tickets, loyalty programs, and customer engagement shows the bright side of the mass use cases. NFT makes authentication easier in offline events. And the unique and one-of-a-kind nature of NFTs makes them highly coveted by collectors and enthusiasts, making them an effective way to reward and engage with loyal customers.
4.3. Cases of Dynamic NFT start to appear
dNFT, or dynamic NFT, is said to be the next step in the evolution of NFTs. Dynamic NFT is almost a brand-new feature, but examples are gradually accumulating. We were able to ensure that possibility again through this hackathon. While traditional NFTs are static and unique digital objects existing on a blockchain, dNFTs can adapt and change in response to external events and data. Smart contracts govern these changes.
dNFTs are currently built on Ethereum using the ERC-1155 token standard, and similar tokens are in the development phase on other blockchains. The metadata of a dNFT can be updated based on external data through an oracle or an on-chain event, or based on time, price, or location-based events. The changes to a dNFT’s metadata can unlock hidden traits or even enhance the image of the NFT.
dNFTs fit a variety of use cases, such as real-world asset tokenization, progression-based video games, blockchain-based sports leagues, and so on. We could also find some projects already utilizing dNFTs in the ETHIndia hackathon.
PredictNow is a prediction market around sports tournaments using dNFTs. There was also a cross-chain gaming platform leveraging dNFT called MultiMon. Web3TV showcased a subscription membership platform, adopting dNFT to reward early subscribers. In the meantime, Crown Collectibles launched a loyalty program with dNFT features, targeting to be a powerful advertisement stack.
In summary, the introduction of dNFTs adds a new level of flexibility and adaptability to the world of NFTs. We look forward to the development opening up even more prospects for their use in various industries.
5. Social Trends
5.1. Social projects remain strong as mainstream
Web3 social networks use blockchain technology to create an alternative experience to centralized platforms. They aim to address issues such as data breaches, manipulation of public opinion, spreading false information, and so on.
The open social stack is a set of protocols that foster the creation of decentralized socials. There are still problems to solve, such as the storage of dynamic data in a decentralized manner, a dominant open social graph, and digital identity. Incentive design is not ready and decentralized socials are indeed limited due to the poor user experience as of today.
However, one thing is to be sure: the decentralized social network has been a growing trend over the whole year in hackathons. It is a clear tendency that social media needs open-source content moderation algorithms going forward. There were lots of devs working to leave a mark in this area, building the applications atop the infrastructure. Given that the increasing trend of hackathon-winning projects preceded the market reaction of DeFi and NFTs, the information deserves attention.
We can break down the decentralized social ecosystem into several key components: data infrastructure, identity, social graph, credentials, and applications.
Data infrastructure projects provide the underlying infrastructure for decentralized social media platforms. Meanwhile, identity projects help users establish and prove their online identities. Social graph projects like Lens Protocol and CyberConnect* encourage users to connect and assemble relationships. Credential projects allow users to earn and display credentials or achievements. Finally, content application projects like Lenster and Degenscore supply tangible platforms for users to create and share content.
To mention the awarded projects, it is inevitable to have a more thorough intro to Lens Protocol. Lens has been particularly booming in the blockchain-enabled social media space, with the applications winning countless awards. The social graph powers the features of social media using NFTs. User profiles, followers, posts, comments, shares, and likes are all represented by NFTs on the platform, and the users own them.
The Lens ecosystem includes a variety of social applications, including Lenster (a Twitter-like app) and LensTube (a YouTube-like app). And that number is growing through hackathons. Even according to Messari, usage of the Lens Protocol has tended to increase around each hackathon. It is not an exaggeration to say Lens was the top beneficiary of Ethereum-hosted hackathons in the second half of 2022.
Some interesting projects built during ETH India were the TikTok-like app LensTok. We also could find projects like CreatorsLane which allows you to invest in creators you like. Lens Dashboard was trying to add value to the ecosystem with a better management system.
Of course, there were projects out of the Lens ecosystem as well. The most stand-out projects were in the freedom of speech area. Liria and Da CRJ are the projects targeted to serve censorship-resistant journalism.
Conclusion
We have gone through the hottest topics we could find from ETHIndia. It is not easy to evaluate many things with just one hackathon. And since we haven’t seen all the projects, what we’ve compiled may not be all. (Click the link to view all projects.)
Overall, ETH India event was meaningful for Hashed. First, the scale of enthusiasts and heat of the Indian crypto market was inconceivable. In particular, since the event was a developer-first event, it was a great opportunity to sense that more development activities will take place in India in the future.
Second, it was an opportunity to correct the potential of India’s software industry. India was referred to as the powerhouse of outsourcing represented by SI business till now. However, we saw the chance for India to become a powerhouse in Web3 infrastructure.
Finally, we gained confidence in the initiative of actively investing in India’s Web3 market with the establishment of the Hashed Emergent. India’s young population has a clear advantage in both demand and supply of blockchain technology. In addition, blockchain is expected to be one of the key foundations in India, where advanced infrastructure has just begun. On the other hand, we have imagined that India’s Web3 industry, which is strong in infrastructure, could create a complementary synergy with Korea’s Web3 industry, which is strong in content and IP-based applications such as games and entertainment.
What is Hashed Emergent?
- Hashed Emergent is an Indian and emerging market focused early stage VC founded by Hashed in late 2021, based in Singapore, Bangalore, and Dubai. Hashed Emergent has formed an initial fund in Singapore and invested in more than 20 early startups using blockchain technology.
Further reads
- [1.1] Account Abstraction Panel (Devcon Bogotá)
- [1.2] Seedless Self-Custody: On MPC and Smart Contract Wallets (1kx)
- [1.3] Access cutting-edge innovation and features (MetaMask)
- [2.1] Add Crypto to IndiaStack (Balaji Srinivasan)
- [3.1] The ZK Everything Report (Messari)
- [4.2] Starbucks opens up its web3 loyalty program and NFT community to first beta testers (Techcrunch)
- [4.3] What Is a Dynamic NFT (dNFT)? (Chainlink)
- [5.1] Web3 Social: A booming space with an identity crisis (Substack Fundamental Insights)
* Hashed & Hashed EM portfolio companies
Special thanks to Simon Kim, Tak Lee, Edward Hong, Wooster Han, Shubham Jain, and Sharanya Sahai for reviewing this post.
