# TOKEN2049 - The Missing Middle in Blockchain Industry - Matthew Spoke (Aion)

- Channel: [TOKEN2049](https://streameth.org/token2049)
- Date: 2019-10-09
- Watch: https://streameth.org/watch/yt-U9zKKTrgMv0
- YouTube: https://www.youtube.com/watch?v=U9zKKTrgMv0

## Transcript

all right um my name is Matthew spoke uh I'm in town visiting from Toronto uh where the majority of the Aon foundation's team is uh we're a distributed team kind of around the world with most of our people being in Toronto and Shanghai uh but we're a smart contract platform we've been around since about 2017 I've been in the industry prior to that since early 2014 when I was working pretty heavily in the Enterprise blockchain space around how L institutions were going to start working with this technology uh and at that eventuality when the mainstream world would start paying attention to what we're doing uh I'm not going to talk about the Aon Foundation today I want to talk to you about something else that we're calling the missing middle and organizations like ours the Aon Foundation the etherian foundation and others have been very aggressively working over the last couple of years on solving the challenges of the protocol and the challenges of the protocol have generally been bucketed into a couple of key words that you've probably heard words like scalability and inter operability and performance and transactions per second and and all these things being very very real bottom layer of the stack engineering problems what we found is that with the evolution of a lot of these protocols we haven't seen the mainstream adoption pickup that we all expected and our hypothesis that we're starting to spend more time working on today is that there's still this massive Gap this Gap we're calling the missing middle and so you know it's kind of a interesting coincidence that today if I can get this slide to change I don't know if this is on give me one second there you go oh if you want to follow me on Twitter uh so today is actually the 30th anniversary of the worldwide web so happy birthday to the worldwide web um Tim burners Lee 30 years ago released to the world this idea of what the web would be obviously we all know and understand this pretty well we're all here thinking and talking about this thing we call Web 3.0 um you know it's this massive promise of what the internet could turn into what business models could look like what the economics of working on line might evolve into but what's still been missing is adoption why has this concept of web 3.0 not reached the mainstream audience Beyond speculating on crypto Beyond trading in Bitcoin why have protocols like Aon and ethereum and EOS and ipfs and others not really changed people's lives so we've got these great ideas applications talking about how to change the business models of online advertising applications talking about changing data storage and making it more censorship resistant but still this massive Gap to mainstream adoption um so I'm going to walk you through a couple of reasons of where we are today what's happened in the industry and what I think are still some of the limitations and problems that regular app developers day-to-day app developers and web developers are facing when they try to solve problems in this space um so this is a little bit of kind of a backdrop of where we're at you're probably familiar with some of these numbers we've seen over the course of the last two years about $25 billion come into this industry and we did a quick little analysis and we split split this into two buckets we said about $5 billion of this money came in in what we called efficient Capital coming through traditional Venture Capital firms where due diligence and and scrutiny was put on to the companies that they were investing in but the large majority is over here this inefficient Capital that was the Ico Market that was the speculative traders that kind of flooded in in Mass numbers to pump volumes into coins that they didn't understand the technical merits of but what's been left behind as a result of this trend even though most of these technology have not really reached mainstream capabilities is that we in the process of raising $25 billion collectively have trained some incredible Engineers we've developed some really interesting IP and we've we've started to introduce Concepts to the world but we've left this massive Gap and so the when you look at any Trend in technology they tend to look something like this you go through a couple of stages as you go through technology you start with this concept of experimentation you eventually want to get to scale focus and balance and eventually the industry starts to become Norm we're still down in this bottom left quadrant of this graph and you can see this in the market with pretty simple things as uh David was mentioning in his introduction very very small number of active daps and of those daps very very very few active daily users some of these active daps actually have less than 100 active daily users so massive Gap towards mainstream adoption that just simply hasn't happened if you've been following the story of consensus you've heard of consensus 1.0 and the reorganizing that that large massive company in our industry has to go through because they were simply focusing on experimentation not focusing on commercialization and not focusing on adoption we still today have about 15 to 20 D platforms you look around the room in this kind of Hall you'll see everything from ethereum to Tron to EOS to ontology and others we think the industry is probably going to start to converge down to a smaller number uh and we still have a massive INF fragmented group of exchanges and wallets we haven't yet left this experimentation we all fight amongst ourselves in the industry we all try to figure out who's better than who but the reality is that 99% of the market doesn't know we exist and they don't care about what we're building and that's the big challenge that's facing the industry today if you look at an average app developer that works in the ethereum ecosystem or any of these crypto ecosystems they generally have one characteristic they are enthusiastic about this technology and we'd probably put them into this bucket of early adopters most app developers and software Engineers out there are not driven by philosophy and these types of intrinsic motivations they just want software that works they want software that solves their problems and they want to essentially start to approach these things the way they approach software development in the past with other Frameworks so I'm going to tell you a quick little story to kind of highlight this and we've made up fake names and fake companies but this is a real person that we've spoken to that works for a real company so in this context I call her Alice Alice is a product manager at a company called yum yum we'll say they're a a a growing and fast food delivery company uh massive across the US and they're very interested in in figuring out how to tie a loyalty system into their food delivery service so that they can start to incentivize certain behaviors within their application they stumbled ac across the concept of blockchains and decentralized applications and they wanted to figure out how to approach this so first thing Alice did obviously she came up with an idea she said loyalty points for my food delivery service on the blockchain make sense I'm a normal software company but I think there's a characteristic in this technology that actually allows me to do something slightly different than what I could do without it so they come up with this idea they they kind of talk about it in the office and everybody's on the same page let's go experiment with blockchain technology let's go look at building smart contracts and decentralized applications so the planning starts they hit the Whiteboard they say who do we need to talk to and they go out to the market and this I'm just going to try to highlight some of the gaps that are really really obvious in the market today if you are a non-blockchain company trying to come into this space they go out to the market and they say who can help me down this path let's go find the best and brightest service companies that know how to do blockchain development and they come across 15 or 20 companies that they start to vet and they realize everybody's experience is very very singular focused you've got companies that have built smart contracts for icos that's it they know how to build token contracts they know how to do fundraising they have no idea how to fit into a software development cycle or workflow so she's a little bit left kind of having to figure out well what do I do you know this is a completely new stack it's a completely new technology my team's not familiar with it and I don't find kind of capable expertise in the industry that seems to be able to answer these questions so when they go to build she realizes I don't know anything about solidity I don't know anything about truffle I don't know anything about these new Frameworks and languages so how do I build my new application so she kind of fumbles around and she finds a company and she says let's get building they don't know how to do project management they don't know how to do regular product management they don't know how to fit into regular software Stacks all they know how to do is write solidity code and they don't know what that means to the user experience and they don't know where that fits into my backend application because again I'm yum yum and I'm a real world business and so she struggles with this she has to kind of pair her team with some random team in Eastern Europe that's doing solidity coding and sending her do Soul code files doesn't know what apis to plug into doesn't know any of this stuff and it's obviously a really really painful process for her we've seen a lot of companies kind of fumble and stop here because if you go into the regular software World a dime a dozen you can find great shops that can help you with product development and help you through that cycle in the blockchain industry we're still massively far behind in this cycle but one way or another Alice is determined she gets through her build cycle and she says let's get to testing let's figure out how to prove that what we've built is useful it's stable and all of a sudden people can use it securely they're not going to lose all their money on my platform so she says who knows how to do security testing who out there is the best and brightest in the security World once again she finds this very very narrow and Niche skill set she finds companies that know how to do static code reviews of solidity contracts but don't know how to do penetration testing don't know how to do integration testing and don't know how to do ongoing security monitoring after that application is live so she gets this really really static view of this code base still doesn't quite understand if it's going to break the entire sequence of her business logic and her application and she's left having to deal with this very very limited functionality so there's still a massive Gap in the security and testing place but she gets through it she's still resilient and determined so she kind of makes her way through to launching this test version of their new loyalty points program and she wants to get people on board and then she gets introduced to this thing called metamask and she realizes that customers have to go online they have to download a weird browser plugin to even be able to go to her website and if they don't do that they can't talk to her application on mobile it doesn't exist it doesn't work she can't figure out how to get people to put tokens into her yum yum food delivery app and all of a sudden she's stuck users don't want to download this new feature her beta complet fails so she's starting to figure out oh maybe there's a couple of companies out there working on new forms of mobile sdks maybe there's people working on new types of apis but they're all super super early stage but she kind of fumbles through she finds a couple of crypto users that are willing to go through this painful process of the metamask experience and then she launches her product obviously she's a Silicon Valley in San Francisco company so she pays her Engineers close to $200,000 a year she doesn't want those people auditing or maintaining code for the lifetime of this application so she says who's going to maintain this which companies out there have built professional application Management Services so that once my app goes to production I can have confidence that bug fixes customer support and non- Twitter telegram communication channels exist for my customers to actually interact with again she gets blank stairs back at her from the crypto industry nobody has figured out how to take applications to production use this is a very common story if you're a crypto user today you're familiar with going through a lot of this stuff but you're willing to because you're an early adopter you're enthusiastic and you've probably made some money on crypto the 99% of the world that we want to come into our industry gets stuck right here both on the developer side as well as the the consumer side so what we started focusing on was how do we make this jump how do we make this jump from experimentation to scale what is missing in the industry that we've been calling the missing middle that essentially will open the floodgates of app developers to Simply have tools that work simply have Frameworks and and pieces of infrastructure that they can plug into that don't require them to know how to interact with a protocol directly so one this is going to happen through a much more efficient use of capital into specialized companies companies that don't try to do 11 things they do one thing very very well they become application management service companies or mobile sdks for app developers on iOS or one specific thing node hosting infrastructure so we're going to see Capital getting redirected you find a lot of blockchain companies with too many things on their plate they don't do any of them very well we're also going to start to see the concept this very old school and maybe boring concept from the software world that we call slas software licensing agreements where there are support agreements and people that will actually answer the phone if your application stops working and they can maintain it on an ongoing basis throughout his life cycle um first impressions in the industry are terrible today first person first time somebody downloads a crypto app they usually walk away user experience and first impressions still have a way to go and we're going to see companies that step in and only focus on the ux versions of this and then we're going to see more and more Partnerships into the Legacy software worlds flexibility in the workforce in terms of separating people's focus and not having everybody kind of all in one bucket this is what we call the missing middle and it kind of gets summarized into a couple of very meaningful categories of businesses that we think are diely lacking in the industry today if you're working in one of these boxes you're probably the exception and even if you are we think there's a long way to go to professional some of these products and services so you know without going through the exhaustive list if you're on the left side of this slide you're an app you're an app trying to get to Consumers you're an app trying to get to the mainstream and you keep failing on the basis that you're trying to solve the entire stack and you're trying to solve the entire service and you realize that professional software companies outside of our industry have specialized they buy servers from Amazon web services and they buy security services from other companies and they buy tools from you know jet brains of the world and they don't try to do everything in house we're about to go through this transition where specialization at different layers of the stack is going to start happening and companies that might sound a little bit more narrow and might sound a little bit more boring are going to start slotting themselves into these categories and dominate these categories we've heard time and time again from developers that we work with that they would pay for these types of infrastructures if somebody was offering it to them yet nobody is why because in 2017 and 20 8 you canot do an Ico on these businesses so nobody did nobody built these These are Equity businesses where you charge licensing fees and subscription agreements these are not sexy Ico tokenized models so they just got ignored anything that exists in here today is generally the byproducts of somebody's application development process but it has not been focused or productized and this is where we think 2019 is going to take us is to a significantly more organized and professional middleware stack so that we can get these applications over to the right side of the slide user adoption Enterprise users mainstream consumers which is really where we all want to see the industry go and if you're really interested in the price of crypto this is condition number one condition number one is that the world starts to figure out that this technology matters that it's an operating system for the future of applications but this is only true if we can solve the middleware so with all of our Focus over the last couple of years on building protocols at the Aon Foundation which we continue to do and will continue to do for the next decade this focus on middleware on building tools and infrastructure above the protocols is in dire need of focus so I'll leave you with kind of a couple of final thoughts this is an area where I'm spending a lot more time on a few of my teammates in the audience but we're starting to very actively look at how to invest and put Capital into this category of missing middle companies if you're interested or already working in this space if you think this is something that you kind of that resonates with you in terms of how do we get a normal developer sitting in a normal software company to come into our industry and start building normal software with crypto then we want to talk to you so if you have a chance to come find me after we' love to be a little bit more collaborative the one kind of interesting fact about this type of business which you know will probably blow most people's minds is you don't have to buy in and bet on a single protocol you can B build tooling companies that are applicable across the board that are generic to the industry and that are useful to developers that do not have a particular affiliation for one blockchain protocol or another so with that I'll leave this as kind of my prediction if you if you want to buy into any type of new next Trend blockchain tooling blockchain infrastructure is kind of the thing to watch in 2019 thank you very much