#Mainnet2021 NYC —“Polkadot: Bridging Crypto to the Real World, One Chain At a Time.” Nodle’s Session Video & Summary

One of the highlights for us at Messari’s #Mainnet2021 Conference in NYC Sept 20–22 was of course Nodle’s Sponsored Session: “Polkadot Bridging Crypto to the Real World, One Chain at a Time” with esteemed guest panelists:

Here’s an in-depth summary:

Camila asked the panelists to each explain what Polkadot is and how it’s bringing crypto and blockchain technology to the mainstream.

Ken began by discussing his views on the history of blockchain technology compared to the internet.

“The protocols of the internet were well established — if not perfect, very far along — before companies were built on these protocols. With the blockchain, we went the other way. We started with Bitcoin which was both an application and a protocol. To put that in context, imagine if someone came up with the idea for email, at a time where there was no internet. They would have had to build the internet and email simultaneously…”

He went on to describe how this origin story has shaped the way blockchain has developed. For the first time ever, it was more profitable to create protocols than it was to create applications. Soon after the inception of blockchain, there were small teams building protocols that each had major disadvantages. Many teams were creating a multitude of protocols but there was no way for them to interact with one another. This was where the need for Polkadot emerged.

Polkadot is the solution for this lack of interoperability between protocols.

Ken gave an extremely insightful example of this when he said:

“Imagine a world where there were two internets, instead of just one, and Paypal was built on one, eBay was built on the other, and they couldn’t talk to each other. Then is it quite likely either of those companies would have become as big as they did.”

He went on to say that this is the current state of blockchain technology and Polkadot was created for precisely this purpose.

Dan then took this opportunity to describe how complex the current ecosystem is and how it would take a substantial amount of time to explain the intricacies of Polkadot. He said

“At its very core, Polkadot connects chains together. The other thing it does is secures blockchains.”

He explained that there is a variety of Layer 1 solutions currently, but they chose Polkadot to build on top of because of the security it offers, which allows them to focus on building their blockchain and applications instead of worrying about security threats. He went on to say that this is bolstered by Substrate, the blockchain development tool created by Parity Technologies, which allows blockchains to be customized at the blockchain level. They are using this to optimize Acala for use with DeFi.

Jay then opened with some words about Nodle. Nodle is a massive wireless network that allows any user in the world with a smartphone to mine their coin, Nodle Cash. He explained that having this app and software ecosystem is extremely powerful because of the variety of potential use cases as well as the inclusive design of the blockchain. They built this ecosystem in a very traditional manner; it took months of hard work and lots of capital upfront to build. But now the advantage of this is that they are completely composable with other dapps. Any developer can take the Nodle network and build on top of it, allowing Nodle Cash to be used in their new application as well as the ability to mine within that application. They are already building partnerships with Acala and they are in talks with KILT Protocol, a smart city project, to bring some of their functionality to the KILT protocol.

Ken then took some time to describe how early he believes cryptocurrency still is.

“There are hundreds, maybe thousands, of blockchains today. Projects like Ethereum have thousands of applications but probably less than 5,000 applications being built on them. It is extremely likely that within 10 or 15 or 20 years that there will be millions of applications built on top of blockchains. Given that 5,000 are built already, there is no such thing as a moat. There’s no such thing as liquidity because we are so early on in this process.”

He went on to say that given how few applications are currently built, it’s likely that we are in the first inning of the long-term game of where blockchain will end up. Transactions will someday be in the millions of transactions per second instead of the single-digit numbers that are currently being facilitated on some of the biggest blockchains.

Camila challenged him on this point, questioning if Ethereum’s moat could really be small given their current head-start in terms of liquidity and adoption by developers. Ken admitted that Ethereum has done a variety of things well, but he reminded her that just a year ago Ethereum was thought to have an insurmountable lead, but we are already seeing other platforms make real dents in their NFT moat.

“It reminds me of 1996–1998, when AOL had such a monopoly on the portal market. The entire internet was really AOL central. Within one year of having competitors, and within two or three more years it was dead.”

He clarified that this was not his prediction but that the moat for Ethereum is not as robust as many believe it to be.

Dan was then asked to elaborate more on his current work with Acala. He started by describing Polkadot as a “Layer 0” blockchain, meaning that it is a chain that connects other Layer 1 chains. The customization of the Polkadot ecosystem has allowed them to build multiple products into their own blockchain. The first, their decentralized stablecoin, the Acala dollar, is similar to DAI from MakerDAO which they expect will become the premier stablecoin for all Polkadot chains. The second is a DOT staking product which will give a liquid token in exchange for each staked DOT so that users can continue to gain staking yields while also using this token as collateral for a loan or other potential DeFi use-cases. The third product is a decentralized exchange that can be compared to Uniswap v2 from the Ethereum ecosystem. He went on to explain that this is all compatible with Ethereum through an EVM so they will be able to onboard users from the Ethereum ecosystem.

Ken spoke up and described Substrate as a “Trojan Horse” for the Polkadot ecosystem. Developers want to focus on building their own applications, not on building out their own blockchain. Substrate has taken much of the complication out of this and allowed developers to have a turn-key blockchain building solution. This also allows them to test an application idea exponentially faster than on a blockchain like Ethereum. He believes that this will entice more traditional companies to begin testing applications on blockchains and likely staying with Polkadot if the test goes well.

Camila shifted the conversation, questioning Dan about how ambitious the Acala protocol’s vision is. She described it as “basically all of the biggest applications on Ethereum but in one protocol.” She wondered if the speed advantage in Polkadot had enabled them to take on so many different use cases for one protocol. He agreed that that was a large part of it. They had looked at many other blockchains to build on top of, but the modularity and customization of Polkadot won them over.

He said that the advantage of being able to plug into the liquidity of the other protocols on the Polkadot network instead of having to build up the liquidity themselves would be invaluable for them moving forward. Dan also commented that a major advantage of building on Polkadot is the ability to upgrade the protocol without forking the chain.

Polkadot has upgraded the chain 25 times since launch and it’s only been launched for around a year, each one of these updates would have been of the scale that would require Ethereum to potentially fork the network.

Jay agreed that for Nodle, the advantage of building on Polkadot is not so much about speed as about the flexibility of adding upgrades. Ken said that in his view one of the major advantages of creating applications on Polkadot is backwards compatibility with all. He said due to this, “the speed at which change can happen is likely to be orders of magnitude faster than in other environments.”

Camila then asked the panel if the speed of upgrades without a fork is actually a risk to Polkadot? She wondered if this could endanger the consensus of the blockchain or increase the risk of a malicious takeover.

Jay believes there is enough protection built into the protocol to avoid these risks. He sees Polkadot as more stable than other alternatives in this regard. For Nodle, they had originally been built on Stellar, but Stellar did not have the functionality that they needed. When they chose to migrate from Stellar, they looked at all other potential options. He said it was very clear from early on that Polkadot was the right choice in terms of balancing security, decentralization, governance, and throughput. He clarified that there are lots of risks that need to be considered with any blockchain solutions, but in his opinion, Polkadot handles these risks the best. Dan agreed with Jay’s assessment and said that one of the lead developers on his team had said that even if there was a bug on one individual chain on Polkadot, it would not be able to affect the main chain on Polkadot or any of the other parachains.

Camila then shifted gears and asked Jay to describe more about Nodle. Jay said that Nodle is building the largest wireless network in the world.

“Wireless in the sense of the way that Verizon and AT&T build wireless networks, but they do person-to-person voice calls and stream HD videos to your phone. Nodle wants to connect all the things that can’t be connected today.”

He referenced the idea of the internet of things and its goal to connect 50–100 billion electronic devices. But he said there’s a much larger universe of things that we would all benefit from if they were connected to the internet and the power of software. He then listed a variety of items,

“shipping pallets, packages, coke cans, tools, just adding those is a trillion objects a year.”

Jay said that they had developed a way to connect all these items to the internet at a substantially lower cost than traditional methods available today.

When they had begun thinking about how to solve this problem, they developed an elegant solution that would work to connect trillions of devices, but the question from investors was how do you handle privacy and security? These were two major problems that had been unsolved by other potential alternatives. They realized that the only way to truly solve these issues was through the blockchain. There was no way a centralized solution could have the scalability and security required. This led them to build on Polkadot and has now allowed them to offer a way for enterprises, customers, governments, and anyone else who wants to communicate with trillions of remote objects to do so. They can run software on them, configure them, allow them to communicate with each other, and build massive sensor networks for them. In Jay’s own words,

“Nodle can unlock an immense amount of economic and societal value.”

Ken added on to this noting that the way telecommunications networks are built today requires expensive equipment and infrastructure that cannot support connecting trillions of devices due to the cost. He explained Nodle’s mission by saying,

“you can imagine a pallet full of low-cost items that has one single Bluetooth sensor or a truck with a single Bluetooth sensor and as it drives by your car, and you happen to have the Nodle app on your phone, the car can read that Bluetooth sensor and the manufacturer, or the trucker can then identify where its anonymous numbered Bluetooth sensor is. And they’re probably one of a handful of people who they’ve given permission to decode that and so all of a sudden the ability to find objects in real time or in near real time with one directional transmission enables us to build businesses that are fundamentally different or more accurate than exist today with our existing networks.”

He then elaborated on this point by bringing up the exciting potential that Nodle offers for retail and commercial packages. When you order a package and are waiting for it, you currently see “in transit” or “in process” and maybe some information about what distribution center it came from. “With a simple platform and a wireless mesh network you can literally know exactly where that package is at that very moment.”

Jay expanded on this by saying that right now almost every electronic device can have some form of radio connected to it. The technology is expanding to the point where the cost of that Bluetooth radio is falling dramatically and soon you’ll be able to get one of these for $0.25. At that price point, suddenly everything can be attached to a network. Ken believes that this will forever change the purchasing and shipping industry.

We’re moving toward a future where a shipment can reach its destination, be verified on the blockchain, and the payment for that shipment can be sent through a smart contract instantly.

This not only changes things from a payment perspective but even changes the types of jobs that will be required to facilitate these transactions. The speed and efficiency will be an order of magnitude higher than it currently is today.

Camila retorted that this sounded very sci-fi and futuristic. She questioned how far off into the future this was and was curious as to what some of the nearer-term benefits were.

Jay Goldberg describes how anyone could be empowered to own their own network of weather stations.

Jay gave another example saying that anyone can buy a cheap weather sensor, and go out and deploy millions of temperature or humidity gauges and then through that build a massive, granular weather network.

This can then be taken a step further through other protocols and have the ownership fractionalized. This then creates a distributed, DeFi weather station. Something like this would not only have commercial uses inaccurate weather forecasting but could also help with environmental monitoring to fight climate change and global warming.

A traditional system like this would cost billions of dollars and be very centralized compared to being built on Nodle.

Ken noted that this would materially change climate and crop insurance. He said that the speed at which these changes will be able to be deployed will be much faster than the internet precisely because of the infrastructure already built out by the internet.

He returned to Camila’s original assertion that these changes sounded sci-fi and futuristic and said “I’ll bet you what I described is happening in 36 months or less at some kind of test scale… I believe it will be happening at scale within five years so sci-fi is getting pulled closer and closer.” He attributed the speed to which this adoption could happen to protocols like Polkadot and the technology they have enabled.

Dan continued on this train of thought by echoing something Gavin Wood had said in his interview with Ryan Selkis earlier that morning.

“For crypto to get a billion users, and DeFi specifically, it has to not feel or look like crypto.” “Crypto is very hard to use, my parents would not be using Polkadot.js.”

This evoked roaring laughter from the crowd of Polkadot supporters. He continued, “We need user interfaces and applications that are easy to use and feel like using Venmo or a bank.” He went on to describe their relationship with a fintech company, Current. This company had started in crypto on Ripple and tried to answer the question, how do we get millions of people into crypto?

The answer they found was not to build in crypto and instead build in fintech. They built a savings account application and have already onboarded three million users from the US. They came to Acala asking how to integrate with their protocol to bring DeFi yield to their users without them needing to have an understanding of crypto. This led to a partnership that they believe will result in a savings product that will have a 3.5% interest instead of the industry-standard 0.5%. What will actually be happening in the background is these dollars will flow out of Current to Acala, then be converted to the Acala stablecoin, be sent into a yield product that they are building on Acala, then be converted back into USD and distributed to the users. This will result in a savings interest rate that is 6x higher than what a non-crypto user could receive. They are hoping to have this launched within the next six months.

Ken quipped that efforts like that will be the gateway to the first billion users. He continued by saying that many participants in the crypto market forget about potential users from third-world countries who have no access to bank accounts or loans. For these users, the product does not have to be perfect, it just needs to be functional.

Camila wrapped things up and asked for any questions from the audience. One of the most interesting questions posed by the audience was, how does the Polkadot ecosystem incentivize developers to build on it?

Dan responded that the biggest incentive to build on top of Polkadot is the technology. He reiterated that the speed and customization at the blockchain level are the true competitive advantages over other platforms. Jay echoed those sentiments, saying that Nodle’s Chief Blockchain Officer, Eliott Teissonniere, found Polkadot to be a superior platform from a purely technical standpoint.

Ken took the question in a different direction and stated that the blockchains that will truly succeed need both commercial sensibilities and technical excellence. He followed up by saying “Things like better product, better UX, better access to the talent for support and help are going to become critical differentiators.” He also believes that it may not necessarily be the best technology that wins but rather a great technology with excellent commercial sensibilities. He stated that this has been the case in a variety of industries and it’s likely this will repeat within the blockchain industry.

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