Can you talk to us about your personal background and how you got involved with Kyber?
Before Kyber, I was doing research on Ethereum and cryptocurrency in general. So I wrote and created the first smart contract analyzer called Oyente, which is now being used by several blockchain projects including Quantstamp, Augur, and Melon. After that we started working on the first sharding protocol for public blockchains, which inspired the current Zilliqa blockchain. If you haven’t heard of Zilliqa, it is one of the most promising scalable blockchain projects and is based in Singapore.
We then started working on Kyber. At Kyber we are creating a decentralized liquidity network that connects different tokens and applications. The whole idea here is that we want to allow different tokens to be easily and seamlessly usable in other applications, including exchanges, lending protocols, crypto payments, and many more. And any token available on Kyber can be utilized and useable on other applications that have integrated with Kyber.
The first stream of text on Kyber’s website reads “connecting the tokenized world.” Can you explain how projects will interact in the tokenized world being built by Kyber?
So Kyber is working towards a future in which any token can be used anytime, anywhere. So for example, if you hold gold tokens, instead of storing them or trading them on exchanges, we want to enable users to use gold tokens to, for example, buy a t-shirt, play video games, or even contribute to some research or index funds. How we make this happen is by building a decentralized liquidity network that allows any token holders to contribute liquidity to the network, such as token team or market makers. At the same time we can allow other applications to use it. That’s why we have the surrounding network with Kyber in the middle.
For example, if you wanted to buy a t-shirt and your favorite t-shirt store integrates with Kyber, you can buy one with any token that is available on Kyber. That t-shirt store will receive payment in Ether, Dai, or any other stable coin available on Kyber, because Kyber performs that conversion in the background.
Or if you wanted to invest in a decentralized index fund, you can also contribute from any token of your choice and the fund at the same time can rebalance or liquidate the portfolio fund fully on chain because Kyber essentially runs everything on the smart contract, making everything transparent to the fund and also to the users.
Looking at the bigger picture, if we do wake up one day 15–20 years down the road and have these DEXs completely integrated, this has a huge benefit for people. Instead of solely trading against Bitcoin, you can theoretically log onto Kyber and trade any asset that is recorded on the blockchain with one another directly through these liquidity markets.
So we also have our retail product that is KyberSwap that allows users to easily trade and convert from any token to a different token, and the nice thing about KyberSwap is that first of all it runs fully on-chain and that integrates with our Kyber decentralized liquidity network. Secondly, users don’t need to deposit or withdraw because we run everything on the smart contract. Everytime you want to trade or convert your token you only talk to the smart contract and our execution on the smart contract is atomic which means that either the trade happens or you get your funds back and it’s guaranteed by smart contract. So you don’t have to worry if KyberSwap gets hacked, or if Kyber has any problem, your funds are safe.
Speaking of funds being safe, there have been some high profile exchange hacks in recent months. Being able to trade peer-to-peer directly through your wallet and making sure that your keys are safe will be great for users down the road.
I think that keeping and holding user funds is also a headache for not only exchanges but also regulators. I mean to the regulators they just hate headlines, if anything like ‘this exchange in this country got hacked’ or ‘a lot of users got affected’ or ‘millions were stolen’ then the regulators have to react, heighten regulation, or increase more rules to protect users.
Switching over to Kyber… in terms of your roadmap with KyberGo — details were supposed to be released around Q2 of 2018. Can you touch upon that process and what it is like for investors?
KyberGo is another product that we want to introduce to help the current ecosystem. So KyberGo aims to be the best token sale platform for retail contributors. We want to focus on decentralized contribution, enhance liquidity, and provide users a safe environment when it comes to a token sale. So for the token teams, KyberGo can ensure a hassle-free token sale process, allowing the teams to focus on the needs such as community engagement, brand awareness, and other areas that could improve the token sale process.
The problem that we are seeing is many projects don’t want to do a public sale to the retail users because the process is troublesome. First of all they need to create the smart contract, have it audited, build the website, educate the end users, and for the end users it’s not easy. Every token sale will have a different website, a different process. And many of them, you know, have ten or maybe twenty different scams trying to perform phishing attacks on end users, so there are lot of sad stories that have happened as a result. With Kyber, we want to streamline the process and we want to make it easier for the project to distribute the token to a wider audience.
Another cool feature of KyberGo is that the end users can actually contribute from any token of their choice because KyberGo also integrates with our liquidity network so that the conversion can be done instantly and the project can still receiving a contribution in Ether, stablecoins, or any other token of their choice.
So for a newcomer that’s trying to get involved with a token sale, are there any other token sale platforms besides KyberGo to take advantage of similar features at this time?
There are several other token sale platforms that are providing similar services, but I would say that KyberGo is the first fully decentralized and securely on-chain, in the sense that first of all, everything runs on a smart contract and user funds are never in the hands of a third party, including Kyber ourselves. Users send and contribute to the token project directly from their wallet. At no point in the process do we keep the user fund. I think that’s the best part of Kyber and the fact that users can contribute using different tokens is also a good feature.
In terms of mainstream adoption for decentralized exchanges, if you could pick one item of many issues, what would that be to make sure we can have more mainstream consumer adoption?
I think, not only decentralized exchanges, but also other decentralized platforms and applications share the same issues with poor user experience and low liquidity. So at Kyber we believe that liquidity really boils down to usability and how the tokens can be utilized or used in many other different applications and use cases in an instant and seamless manner and with low cost and low friction as well.
Many decentralized applications require their own token from the users, so if you want to use applications like Gnosis and Augur, you have to buy the token from some other place before you can actually use them, so you may have to hold hundreds of different tokens just to use some popular applications. Just thinking about it, on your iPhone app you may have like 50 different applications… are you willing to hold 50 different tokens? I’m not sure, I’m not sure.
So with Kyber we really want to build a future where you don’t need to buy 50 different tokens in order to use 50 different apps. If the dApp integrates with Kyber, it easily accepts different tokens that are available on Kyber and in the process of doing that, they can dramatically expand their user base, by integrating with Kyber and accepting different tokens. Users may hold OmiseGO tokens, or Augur tokens, or Kyber tokens, and the dApp can reach out to all of these users who may not have their tokens.
There is another item on Kyber’s roadmap coming up — Gormos — is that still a secret project/update? Is there any information out there that has been released to the public?
We have been giving a couple of talks here and there about Gormos. The idea with Gormos is to improve the user experience and scalability of the underlying blockchain that we want to run Kyber on top of. The problem that we are seeing is currently there is still long latency in Ethereum. Anytime you send something, you have to wait like 10 to 15 seconds for the transaction to be included in any block, and you have to pay high fees as well, from $1 to $5 or $10 if the blockchain is congested, due to FCoin or CryptoKitties or what not.
Our goal with Gormos is to have a high performance, scalable public blockchain that is still secure and decentralized, so we want to improve the performance without losing all of the existing good properties that the public blockchain offers. With Gormos we use sharding and plasma as an underlying technology so that we can achieve the best of both technologies. But the cost of Gormos is a little bit application specific, meaning that if you want to run your game on Gormos, it will different than running a decentralized chain on Gormos.
So it’s not like the “world computer” like Ethereum or the “internet computer” like DFINITY. Gormos is more like an application specific blockchain, something similar to like ASIC miners. The high level idea is if you want to optimize for any applications, there are certain tricks that you can do through the underlying architecture to fully improve the performance of the blockchain for that particular application.
Switching over from general conversation about Kyber to what is taking shape in the markets: what are your thoughts on the current market conditions? Is this another boom/bust? Are we consolidating assets into more high quality projects?
I certainly think that the market is still in the re-correction process. We had a good run last year, not only for Ether but for bitcoin and other coins. This is actually a good time for other projects to focus on building and shipping the product instead of getting caught up with the market. Now that the market is calmer, people can actually talk more about long term vision and what they really want to do in this space.
I think in general there will be this cycle every year. A lot of new people are coming in and a lot new projects are trying to introduce their own products. I would say that not many of them would stay here for the long term. In five years from now, what other projects will stay in the top 100 on Coinmarketcap? Is it going to be a completely new list of projects? I’m not sure.
As for more recent news about a Bitcoin ETF: that conversation was hot a few days ago, and there was a lot of optimism about the SEC approving the ETF. However, that decision could be pushed to as late as February 2019. It seems like that conversation influenced the market’s direction in recent weeks.
I’m less interested in ETF and SEC approval. There are still several problems that we need to address in this space, and of course custodian solutions are one. I think many people are trying to address it, but there is no standard and people are not talking to each other to create one. Everyone is working on their own solution in their own space, so it’s very hard to come up with some standard for everyone to follow and implement.
In Switzerland, 3 or 4 companies that I talked to at the Crypto Valley Conference are working on their own custodial solution, and surprisingly they don’t even talk to each other. Like, they are working on the same thing — why don’t you guys just talk to each other and create some standard? It’s the same thing in Singapore — everyone is trying to work on custodial solutions and trying to get ahead of hedge funds. And a lot of hedge funds are trying to jump into this space, but they still need this infrastructure in place to participate.
Even for mainstream users, it is really hard for them to get their first bitcoin. These are the problems that we need to address if we want to increase adoption. Coinbase is doing great in allowing users to buy and sell tokens easily from the Coinbase app, though if the hope of cryptocurrency is to “bank the unbanked” there needs to be a better way for people to buy Ether and Bitcoin and to jump into the space faster.
Blockchain’s “killer app”. I’m sure you’ve seen conversation about that online. Everyone is wondering what the killer app will be. Is it here? Is it far, far away in the future? What does it look like in your mind?
I think it’s very hard to find one killer app, and I’m not sure if it’s going to be something for social networks or messaging like Whatsapp or Telegram, or even another decentralized, secure, and private messaging app. But I think it’s not here yet.
Most of the activities in the crypto space are around trading and investing, but we are really looking towards a future where cryptocurrency and other tokens can be used anywhere, in any application, and in any activity in daily life. If that is possible then I don’t think we even need a “killer app”.
In terms of crypto education: Where was it when you first got involved in the space? What has improved since then, and what else still needs to improve?
I got into the space in late 2013 and early 2014. Back then when I was doing my PhD focusing on blockchain research it was pretty hard to find material online. Most of the content was on bitcoin mailing lists and chat channels. Currently, we have a lot of resources, from podcasts, blog posts, and even books — a lot of people are writing books which is great.
This is another point that I really want to talk about. A lot of people focus on bringing more mainstream users to the space, though I think we forget another target audience that we have to bring into the space, which is mainstream developers — the people that are going to build applications that are going to serve the end users directly.
This is why also at Kyber we are focusing on having our documentation clear and having our API’s ready for anyone to integrate with Kyber easily, and I think that many other projects are trying to do so as well. This is extremely important because we’re not sure if our applications are going to become mainstream, or if it’s going to become the “killer app”.
But if we can bring more developers into the space, some of them might become the next Mark Zuckerberg and may build the next Facebook for cryptocurrency. I think that is more important than getting a bitcoin ETF or getting approval from the SEC.
I think now there are many more resources for developers and researchers to learn about the space and get started with cryptocurrencies and blockchain. However, there is a lot of noise as well. A lot of projects are not really blockchain… many of them claim to be cryptocurrency and blockchain. If you look more carefully, you’ll notice that they are actually a few servers.
I’ve seen a few projects that are definitely very questionable. I’m not sure if you’ve come across FOMO3D… it’s a pretty alarming project, but I guess that founders would say otherwise. For anyone unfamiliar, it is very much a scam/Ponzi scheme.
People know that it is controversial and it’s not going to be here for the long term. But at the same time, we are still seeing a huge amount of activity and adoption compared to other legitimate applications. I’m not sure whether this is where we are heading towards. A lot of funny applications have come up in the space and on other public resources for attention.
Are there any podcasts or other resources that you think are worth checking out?
Blog: Vitalik Buterin