Max Lomu - What Winning Ecosystems Do

Hello everyone. Thank you for being here. I appreciate it's the last uh talk of the day. So I appreciate your time. Um I would like to share with you a little bit of lessons that I learned about ecosystems in this in web3 space.

Right? there is a lot of chains, um, protocols, apps that are working to grow their own ecosystem and and it's interesting to see what they're doing in order to try to succeed. Um, two words about myself. I've been in crypto since 2017. Uh, I spent my last four years working for an interoperability protocol called Everclear, previously connect.

We scaled it to over 1 billion at the at the height. And then recently uh I've been collaborating very tightly with the arbitrum DAO in particular. So uh the Arbitum DAO I'm one of the delegates for the for the DAO itself but I also um provide grants to builders. So if you're building something cool after the talk uh feel free to come and we can explore what we can do together. Uh basically working with an interoperability protocol and now you know the grant ecosystem.

It was very um like I had a lot of opportunities to to see what different chains what different platforms were doing and and I would like to share a little bit of the learnings. Uh I think the most important part is that all these protocols all the all the chains today they they want to act as a platform but they haven't really managed to to get to the escape velocity where the innovation autonomously happen um on ch like from from the outside um they always try to act as the those public neutral goods and that doesn't that simply doesn't work. I was talking with one of the uh sponsors uh downstairs before and I was asking them okay so this sounds fantastic right the magic framework and and platforms so what what can you actually build and I said yeah you can build uh whatever you want and I don't think that is viable today anymore as an approach and you know if you if you want to win right you might want to look at some specific elements uh you know like getting adoption uh right getting a sustainable revenue revenue income from from what you're doing. Um, right, winning is still a very like cloudy, very like a blurred element in in in web 3. Uh, but there are some some things that we can take from the different ecosystems to learn what they're doing and what what they want to achieve.

So, I want to actually start from a a step back on looking at uh some tech platforms, some other tech projects that exist in the world. Um you know we we think in web 3 we always have to invent the wheel every time but there are a lot of things that we can learn from existing uh from other projects of course. Uh the first one is is Microsoft, right? Microsoft, you know, was born with a with a vision of of being an operative system, right? A a a platforms for other apps, but they actually built the first app themselves, right?

Office was the first kind of party app uh on on on Microsoft and that kind of justified other people coming in. Um and the same thing happened to uh Apple for example, right? They built the first apps on the iPhone, right? They built a camera app, they built the iMessage, the notes and then kind of justified other other people coming and building on top of it. So the the concept here is yes you want to be a platforms but you you always want to have oh maybe what has brought platforms to succeed was actually kickstarting the innovation kickstarting the use cases on your on your platform itself because that's what unlocks other people to come in.

At the same time, the risk that that you have when you build something is that you end up monopolizing the innovation. So this is something that Binance did. For example, they they started with a very opinionated approach and they said, "Hey, we're going to build this this this this piece this primitive and this app and all the focus is going to be on that." And so what what happened afterwards what happened is that they first grew immensely, right? they they had you know a huge start thanks to Binance of course but then there was not enough innovation happening from outsiders because there was no like it was not perceived as a neutral platform anymore and then people were were saying okay I might go somewhere else when I might get actual support because I'm coming as a not as an insider and so you have to find the balance between the two um and so what is a strategy that the majority of platforms and ecosystems are using Today they are building what I define as as pipelines.

So pipelines are a series of concatenations of tools and uh um and protocols and maybe apps themselves that help either builders to come and build new stuff or users to have a better experience. So then builders come and they can provide a better experience to the users themselves. All of these should always fall under the vision of the of your ecosystem. But it's it's critical to think in terms of okay what pipeline can I build to empower either my builders or my users at the end of the day. And so let's look a little bit at um you know what type of pipelines that you can build uh right there are pipelines that focus on the product side others instead of focus on the marketing side.

So, how do you actually bring your apps in front of users? And as we will see, they are becoming more and more important as the technology becomes more commoditized. Um, yeah, these are some of the examples. I'm going to to go through some some uh um use cases and some uh uh some of the projects that I find interesting. If you have questions, uh if you have a different opinion, feel free to stop me.

But let's get a start. Uh let's start from payments. uh payments is one of the you know early basic use cases for crypto. Uh and they actually come you know they can be segmented into various steps that are necessary to enable you know fluid payments and and efficient payments onto onto your onto your ecosystem. You might look at how to on board people right the easiest way to onboard people.

They might look at how what's the best way for for those people that you on board uh to manage the risk to manage your assets and uh and ultimately to spend the tokens spend the assets that you have brought them on they brought them on onto your ecosystem. Um one example in this in this type of pipeline that I really appreciate in these days is what is Nosis is doing. The Nosis team looked at their state of their Nosis chain and said, "Okay, we roughly have 300,000 validators on the Nosis chain. So, it's a very decentralized chains. We are relatively fast and super cheap.

What can we do?" Okay, let's actually build a full payment pipeline so that any project that comes on on Nosis, any user that comes on noises is able to spend their money in the most efficient and secure way, combining all the different Lego blocks that were they were building. And so they partnered with Monerium to enable fast onramp for euros for example. Uh they they started having they started buying companies like HQ which allows corporates and and businesses to manage their assets on chain. uh they built um you know other they built and spin off some specific pieces that they wanted to have in their payment system like hey um swaps you know with with cow swap without any uh basically being me resistant uh the safe wallet which is one of the most used wallets today and then ultimately nosis pay with their cards that kind of like channels all these pipelines into the end state.

Um and this is another interesting thing because what they did with safe right they they managed to spin it off as a very neutral product. Um and that's what that's what became actually what enabled them to became a very big success. So safe is not exclusive to the Nosis ecosystem even if it was owned initially by the Nosis team but it actually partnered with other players like warcoin like poly market and now with 43 million deployments they have the highest market share among the uh smart contract uh smart smart wallets let's say in the space um so a lessons learned here could be like hey you know what I building what I what I do for my pipelines doesn't have to be exclusive for my eosystem system, but if I can export it, I can actually bring in back more value into what I'm trying to do. Um, another typical like pipeline that ecosystems and chains and projects look at is the DeFi one. Defi ultimately is the ability to give a price to something and that something can be a native asset like Ethereum.

It can be a real world asset like a house or a tibial. Uh, it can be data, right? It can be pure data that have value. uh it can be synthetic so the a manipulation or the forecast of some some other assets and and taking that taking that that type of asset pricing it and then allow people to either speculate or edge right this is the very basic definition of of DeFi and within this like all the different ecosystem are trying to specialize and and trying to bring in uh a unique angle into um into ultimately a a a a flow that can attract attention and money to the users. This is an example from mode.

Uh mode used to be a generalized layer of two uh built on the optack and now they kind of like pivoted into an app chain. And so what they said is they said okay you know DeFi is is very general topic let's specialize onto the convergence between AI and DeFi and uh and let's build a tool for users to trade on new onto new type of data onto new type of stuff that is not possible today. So they first built a predictive data model um using bit using bit tensors from from toao u that allows basically to do predictions onto yeah right now is native assets like bitcoin ethereum but they're going to extend it onto any type of assets and they built a terminal themselves where you can actually interact with these agents uh asking very specific questions like hey this guy has a 100 million ETH long with 25 leverage what's the probability of liquidation So you know this this this overall engine allows people to do new type of things and then um they they they let them execute them using a a per engines that um which is basically a white label version of the orderly network. So they they kind of built these different pieces uh to allow what their vision is and um and what they want to enable on in terms of experience on their platform. Um, interoperability is another typical one, right?

Every chain looks at how do we on board or every every app looks at how do we on board users the easiest way possible. And so they need all these different pieces in place in order to um yeah to have the smoother experience for somebody who has just bumped into your app or into your chain to actually use it, right? You want to bring liquidity there as soon as possible. you want to allow a users to deposit or do an action there as soon as possible. And so uh all the all the different chains look at at the various stages at these different pieces um to to facilitate this type of experience.

And so optimism for example um optimism has said okay we we will pro provide a very opinionated kind of flow for the chains and the applications that are built into our ecosystem. first providing a messaging transport layer which is what they call the super chain. Uh then we were with they partnered with across which was one of the top bridges to provide fast transfers across the different apps across the different chains and apps. Uh and they also lending liquidity to the different solvers. So when you open when you start a new chain you have liquidity and then you can immediately execute like you can immediately onboard users into their apps.

And this is a kind of a pipeline that you want ecosystems to have with your app, right? I I I'm launching a new chain and I go to optimism and optimism tells me, hey, you know what? On day one, you can have this immediate pipeline as a service that kind of flows into into your into your ultimate app and on boarding your users. Um we we started to see a little bit what type of pipelines uh you know how how how what the different approaches to build the pipelines right you can you can decide to build ones like Nosis normally does or invest like Coinbase can do for example u or simply attract right if you have enough mode uh to be able to you know inspire other builders to come and use the same kind of liquidity or assets or unique advantage that you have. Um that's an ideal case scenario and I think that's what hyperlquin is doing very well right now.

Hyperliquid exploded with their uh per protocol and now they they built their own layer one and so they are you know encouraging people to come to their to their platforms to the ecosystem by giving them the idea they can share the same liquidity and share share the same users and order flow that they have or right ultimately you can combine partner use other solutions to create the the flow that you and the experience that you want to have. All right, another couple of um examples and then yeah, I'll jump into what we're doing at Arbitum. Um because I think it's a it's it's a you know it's follows this type of philosophy. um Solana Solana I think they're doing great things in terms of pipeline they right they are seeing they're doing experiments that you know would allow them to ultimately have users um on board in the in the most in the most easy in the most easy possible or the seamless way possible either by a mobile experience with Phantom right their wallet which I think it was critical to the success of Solana with their Solana phone directly. Uh they started this attestation service where you can you can KYC at a Solana level.

Uh they're bringing stocks on chain, right? They're bringing the payment card, right? All these experiments that Solana is doing is ultimate to create this very easy flow of money for everybody that builds on Solana. Um this is another example in the Solana ecosystem, right? Phantom uh started with a simple wallet and now they are evolving into other type of products as they are following basically the money looking at they're looking at uh what the users are doing and they're saying okay you know this is where they spend the most money from let's actually integrate that into our core flow so they can make more money out of it.

Um culture culture is another great pipeline to consider when you're building an ecosystem. culture uh basically embodies a little bit how you present how you approach other players. Um and then it can be really um composed into different elements. I think a project that is doing particularly well is abstract if you heard about them. It's a layer of two.

They are uh encouraging streamers instead of like they know they were launching a new a new chain and they said okay you know this the market is very crowded. How do we differentiate ourself? How do we convince people to come and build on abstract? And how do we convince users to come and and use the apps on abstract? And so what they did they they called a hundreds of of streamers and they said now you know you we incentivize you to stream about the applications that we built and we'll build a whole again pipeline around the smooth onboarding and the smooth interactions to hook you up into our ecosystem.

So what you can do basically you launch an app on abstract people start streaming about your application. So they start showcasing what they can do. Uh users that they found about it are onboarded by uh privy which is a one-click wallet. Um and then within the within the streaming itself you can tip you can chat with other people right you're immediately hooked into the ecosystem by this onboarding um onboarding pipeline. Uh last one I think it's it's Coinbase.

Uh right, Coinbase is is doing a lot of fantastic things. I think they're very strategic about their pipeline building, right? They they are they the money machine, the cash cow is Coinbase, but now they're trying to channel more towards base as they see that as the future of where the market is going. And so everything that they've done so far was basically a way to um increase the the attention and the usage that B gets while leveraging the existing product that Coinbase has built so far. So for example they have a very tight partnership with the forecaster and so they they have this easy onramp method by their sex right that's that's their primary primary use case right now.

So they they onboard by their centralized exchange into their own wallet and their wallet and they can now promote a feed of um messages coming from Farcasters. They bought Spindle which is an ads and contest um platform. So they can also show ads if they want and know once they you know once they kind of like hooked you into this social network uh or net of social actually social interactions they will push you towards using apps on um on base itself. uh they're doing something similar with the com with the development platforms is the agent toolkit right they are literally building all these streams looking for to basically ease the onboarding and building of apps on their applications or on their platforms and it's working great um sometimes things don't always go right blast was a was a case where you know they built they actually built a very interesting pipeline because they the different components that you know you would think would make it successful like a default yield system where any any stable coin deposited there was acrewing interest a mobile app you know they have connections with the big NFD platforms uh they had early social projects and yet they didn't succeed um I mean the project is in decline because probably they they focused on right the token price the token farming very early and for too long and they didn't manage to retain users after the air drop. So um last couple of bits about um the what we're doing at arbitrum what we you know we are we have analyzed this type of dynamics and we're now building pipelines for builders themselves.

So what we want to tell them a new builder that comes in is hey you have a great idea you can come through all this funnel through this funnel and get the support that you need at the different stages um so it's it's easier for you to s succeed because when an app succeed obviously arbitrum also succeeds and so this is the ultimate goal of the of the DAO uh that supports the ecosystem um so we support you to through the different phases right whether you come with an idea, I need a team, whether you need some feedback from the market, whether you need some early fundings, that's what the grant program does, or whether you need you need distribution, right? Every every chain, every platforms ultimately moves from being a simple tech provider, which is which becomes commoditized on the long term, towards a distribution provider. As we saw with Abstract, as we saw with Base and Coinbase, the the ultimate differentiator, the ultimate advantage that the platforms can provide is the distribution part. Um, and so what I I think the ultimate pipeline is for this type of layer of tools and maybe you know some of the of the protocols that exist today in web 3 is to actually become is to bring a pipeline that brings you into the real world, right? It's not it doesn't stay in an abstract like Ponzi self self recurring scheme but it ultimately goes to where people are where businesses are and so this is what we are trying to build.

We are supporting projects that actually get in the hands of people and businesses in the real world. This is one of the examples that I like the most. This is called dual mint. Uh dual mint basically allows you to it's a project that is built on arbitrum allows you to uh invest into local businesses that have recurring recurring revenue coming in like um yeah laundry washing machines uh arcade games uh now they're doing AC um AC installations into into in Hong Kong for now. But the idea is that we can we help those businesses actually getting boots on the ground right where the the DAO and other these ecosystems have people across the world and we can help those businesses come on chain.

Local cache is is another good example. They bring data from businesses on chain using zero knowledge proofs and with that data um they allow municipalities to provide under collateralized loans. So a a business can say hey this is my financial health basically I want to expand and build a new and you know build a new room and so uh this is how I prove that I'm actually making money and then the municipality can look at it you know in a transparent way and say hey okay I will I will lend you the money uh because I want to invest into this local economy and with the same concept now we are looking at you know what type of farmers what type of data can farmers can bring onchain for example and how can government based on that data provide loans for specific um you know areas. Um and you know with that it's it's very easy to expand to expand this pipeline or expand their pipelines into the different businesses that that might need these type of use cases. Um the the last example that I want to bring is uh the arbitverse.

So it's a series of events that are itinerarant across the world where people can come and play the games that are built on top of arbitrum. So you basically have you know now here have a test ground for your game where we bring you the users you know you build the game and then we bring you the users across the world to play and uh and start u start basically on being on board and onchain. Um yeah that was it. Uh I think that you know if you have to remember three things from this talk um the first is you know and you're building ecosystem and you're building a platforms the first one is you should build tools that help people that want to build with you succeed right whether it's users whether it's um it's actual builders and developers. You can do that either by investing or building or attracting or or partnering with something that exists already.

And uh ultimately right the the goal of I think the whole movement but ideally of your ecosystem should build to be to bring real impact to people and so crypto city is the idea that we can onboard users and businesses by this pipeline is something that is still being explored and uh to get excited about. Thank you. If you have questions

oh don't worry you went over five minutes ago. I I know I'm not even

I see why you're last of the day. You have a lot to say. So, do we have any questions from the audience here today?

Everybody's so silent today. They're so scared. So, do you try to get a lot of people over to arbitrum from cross train chain over to Arbitum to be able to have more in there.

Yes. So, the the goal the primary goal is to have builders on arbitr because users come when there are builders. If there are more users then arbitron makes more money as a chain and so they can reinvest more money into these pipelines. Um and so we we have marketing like users directed marketing but the DAO specifically now focuses on bringing in more builders and people that want to build new type of stuff.

Yeah.

So when you get people over are you more interested in the amount of transaction or amount of volume going through?

Um good question. I I don't think there is one north metric. It depends a lot on the type of things they're building. Arbitum is very big on DeFi. Uh so TVL in that case is very big like how much money has been put into vaults.

But now we're looking at you know AI and gaming and so in that case it's more about yeah the number of transactions that you do uh on chain once you're on boarded.

Yeah actually was personal question because I've worked with a few projects that always can use something fun and I know one that is going to be a gambling project that is actually lastm minute transactions into a timer on the blockchain. Okay,

that could make volume amount of transactions but not the big volume but the transactions themselves.

Exactly. That would be interesting to chat with.

We can always set it up.

Do we have any questions that is coming up?

So I see we having everybody wants to go take a drink today. I think that's also why I gave you five minutes more like you have the things to say but I have a few people that might want to talk with you.

Thank you so much.

Thank you Max. Everybody a hand for Max. Oh there we go. They're waking up down the back end. And is there a plan or in the road map of arbitrum to get the transactions also cheaper in like the next year or something like that?

there is a plan or or are you waiting for just happen or or how it's going that

yeah so arbitrum is a layer two right it's uh it's actually actually settles on Ethereum so I think the overall ethereum ecosystem has planned to make the transactions as cheap as possible and um right now a transaction arbitum costs half a cent on average so it's it's already in a in a decent kind of like scale but I think it will become another order of magnitude cheaper as soon as Ethereum uh becomes cheaper, right? Which is supposed to happen with the next upgrade. Um and for sure within this year um and then yes, Arbitum is continuously like the offchain lab teams which is the team that is building actually arbitum with R&D and engineering is constantly like shifting shipping innovation in this sense to make it as cheap as possible. Um, it will never become I think because of the uh security level that Albbitum has, it will never become as cheap as other as other chains. But what what the Albert ecosystem does is that you can spin up your own chain if you want, right?

If you want to rely on different trust assumptions that are a little bit less secure, you can be extremely cheap and so you can provide um transactions that are basically free for your users. So you can sponsor them and um and so this is kind of the direction that that I see going. things will become cheaper in the overall ecosystem for sure in the overall Ethereum ecosystem and it's already half a cent so it's already pretty decent. Um but then if you want extremely cheap for gaming use case for example, people will end up spinning up their own chains and uh and then provide like a a frame like a transactions for you know one oneth of a cent maybe. So similar to Salana.