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Regulation Brings Clarity to Web3 Market, Developers, and Companies, Says Ava Labs CBO
Regulation Brings Clarity to Web3 Market, Developers, and Companies, Says Ava Labs CBO
Terence Zimwara
By Terence Zimwara
Sun Oct 13 0:30:42 EST 2024
The Web3 industry has yet to fully enter the mainstream, according to John Nahas, chief business officer (CBO) of Ava Labs. He argues that general-purpose Layer 1 blockchains, whose primary focus is marketing their tokens, dominate the space and lack sufficient innovation. This, Nahas contends, hinders the industryâs full potential.
Blockchain Success Hinges on Curious, Motivated Teams
The Ava Labs executive believes purpose-built blockchains, or application chains (app chains), offer a solution. In fact, in his written responses to Bitcoin.com News, Nahas suggests that mass adoption of Web3 hinges on the deployment and success of these specialized blockchains.
Beyond solving specific problems, both general and purpose-built blockchainsâ success depend heavily on the teams behind them. Nahas said a team of curious and highly motivated individuals will likely increase a protocolâs chances of thriving.
Regarding regulation, Nahas acknowledges there is a perception of its negative impact on Web3. However, he argues that clear regulations provide certainty for markets, developers, and companies operating in the space hence it is not entirely a bad thing for the industry. Elsewhere in his responses, the Ava Labs executive explores how regulators and governments can oversee Web without stifling innovation.
Below are Nahasâ answers to all the questions sent.
Bitcoin.com News (BCN): The decentralized blockchain industry has evolved in phases. Bitcoinâs initial era focused on âalternative money,â while Ethereum emphasized smart contracts and decentralized applications (dapps). Today, Web3 development and third-generation decentralized solutions are at the forefront. However, the industry has not fully entered the mainstream. As a long-time observer, what do you see as missing or hindering the blockchain industryâs full potential?
John Nahas (JN): The current problem with the Web3 space is the constant proliferation of the general-purpose Layer 1 blockchain. Their primary product is their token, and they seek to lure developers and users to their slightly better technology. There are constant incremental improvements at the blockchain layer, which is more blockspace, but thereâs not enough innovation.
The solution to this problem, and what has been missing, is the rise of purpose-built blockchains (or application chains). The future will be multi-chain, however, a plethora of general-purpose chains does not solve the unique needs of projects building across a variety of sectors, from banking to gaming to AI to consumer. Purpose-built chains âwhich are an asset, jurisdiction, compliance, and use case specific âare needed to scale the numerous use cases. This will lead to mass adoption. No single chain can absorb all the potential demand, and weâve seen that general-purpose chains alone have failed to deliver a solution the market needs to expand.
BCN: General-purpose and purpose-built blockchains have both found success, but purpose-built chains are currently gaining significant attention. Can you explain the difference between the two and what problems they address that general-purpose blockchains cannot?
JN: General purpose blockchains provide âslightâ improvements over existing Layer 1 chains, but they do not meet the demand of all the use cases, businesses, and scale that is needed to make blockchains go mainstream.
However, purpose-built chains (previously called application-specific, or app chains) are where the industry is inevitably going. Purpose-built chains can accommodate specific uses, manage fees, use specific virtual machines (VMs), have their own gas token (or no gas token), and are customizable to the particular requirements of the business, asset, jurisdiction, and developer. They are needed solutions to fix technical bottlenecks, whereas general purpose chains (and their excess) are oftentimes solutions in search of a problem.
BCN: As the blockchain industry continues to evolve, participants will increasingly form partnerships to enhance the user experience or leverage each otherâs strengths. Can you briefly explain the essential elements for effective partnerships among blockchain projects, and highlight some common reasons for failed partnerships?
JN: Most failed projects had an outsized focus on the headline and the name recognition and association that came with it. They made news but did not solve a problem. We saw this for a couple of years, where a company or a builder would have a great idea and then say âput on blockchainâ like it was a special ingredient or an automatic bonus. The blockchain element should facilitate the use case, and be the technology that allows for a product or asset to succeed, not the highlight.
Effective partnerships are built around three key components: technology, team, and incentives. If a team is building a successful product, they should look for the best technology to facilitate that product â that is the foundational decision. After the tech, the team you work with is as important, if not more important, than the tech. People like working with people they like, and if there is a good relationship that is built on trust and clear goals, then the likelihood of success is much higher. If these two tenets are there, then the incentive (financial or support) is easy since both sides have a shared goal of winning. However, we often see teams in this space chase the incentive first, which is the wrong priority.
BCN: Many analysts believe blockchain projects are only as strong as their teams. As a seasoned blockchain industry veteran involved in multiple projects and teams, what are the essential qualities to seek when building a team? What factors contribute to a successful blockchain development team that can drive ecosystem growth and broader adoption of blockchain projects?
JN: Two things stand out the most â curiosity and hustle. These are the soft skills that often cannot be learned on the job. Technical, operational, and informational skills can be learned but these two characteristics are always top of mind for me.
If someone is curious, they will seek out what they donât know. They will set a goal, and find out what is needed to achieve it. They are constantly thinking and making connections and finding solutions.
But curiosity alone is not enough; if someone is only curious they can just daydream all day. If they hustle, they will take action on their curiosity and achieve that goal. They will reach out to partners, they will work cross-functionally to solve problems and find solutions to quench their curiosity.
BCN: Regulation and government policies have influenced the blockchain industry. While many industry participants see regulatory interventions as hindering growth, some aspects may have been beneficial. Can you highlight any regulatory instances that you believe have positively impacted the blockchain industry?
JN: There used to be a misguided belief that regulation is bad, and bad regulation is worse. However, weâve seen that regulation, even if incremental, gives certainty. Markets, developers, and companies need certainty to operate. Regulation gives that, and can be improved upon and worked on.
MiCa has been a positive example of a good first step. There should be improvements, and as regulators learn more and the industry engages with them, then it will adapt and then hopefully regulators will be more supportive of growth.
BCN: Avalanche is one of the Web3 forerunners and has established itself as one of the prominent blockchain protocols. Could you briefly tell us the core values of the Avalanche blockchain, as well as some of the most innovative projects and use cases being built on Avalanche?
JN: Avalanche stands out for its near-instant finality and its ability to scale horizontally by allowing anyone to deploy their own purpose-built chain, an Avalanche L1. Additionally, we work very closely with our ecosystem projects as trusted partners and advisors, and provide support where needed to connect teams and, ideas, and be their advocates.
The list of projects on Avalanche is long, from innovative DEXes like Trader Joe to infrastructure providers like GoGoPool. Additionally, weâve seen great adoption of Avalanche L1s with Rymedi, a life sciences platform, Off The Grid, an AAA game, and numerous institutional use cases such as Intain, Re and enterprise partners such as SK Planetâs UPTN nation-wide loyalty program in South Korea.
BCN: From a wider perspective, what are the most impactful contributions of Avalanche to the blockchain industry?
JN: I believe the Avalanche Consensus, which allows for infinite validators and decentralization coupled with its near-instant finality provides the needed infrastructure to grow the blockchain ecosystem across all asset classes and, industries, and allows for truly innovative use cases and applications to be developed by expanding the ability to launch a dedicated blockchain that is with interoperability with the larger ecosystem. As Web2 allowed for the free flow of information, Avalanche is bringing about the free flow of value, which is the promise of Web3.
BCN: Considering the setbacks regulation has caused, including stifling innovation by discouraging new blockchain prospects, how would you advise the government and its agencies to manage policies that concern the blockchain industry without causing unnecessary damage and limitations?
JN: I would urge regulators to take a look at the innovative and good projects being built and to champion them as good actors and positive advancements in the space. We should be highlighting the good use cases, the innovative solutions, and the problems that the technology is solving.
