XION Asia Pacific Lead Conversation: Will Chain Abstraction be the next Mass Adoption?

On August 22, during the Dystopia Dialogues, XION's Asia Pacific Lead Burnt Unagi (Yihao Wei) and Cooper from Injective Labs discussed abstract chain concepts. XION's founder, Burnt Banksy, was also the key figure three years ago when he sparked global NFT discussions by burning a Banksy art piece and turning it into an NFT. Below is the transcript of this Space event.

BlockBeats: Welcome, both of you. Could you please start with a brief introduction? What is your team's background? Why did you decide to create XION?

Burnt Unagi: I'm Burnt Unagi, XION's Asia Pacific Lead. Our founder, Burnt Banksy, got his name because three years ago he bought a Banksy painting (a famous artist), then burned it to mint it as an NFT, which became the highest-priced NFT of 2021. We are working on the XION project to break down barriers to complexity and enable rapid project development.

Cooper: It's a great pleasure and honor to have this conversation with talented individuals. I'm Cooper, working in the business team at Injective Labs. Injective is a Layer1 designed to host applications. We have optimized and customized the blockchain stack, built modules to allow developers to seamlessly create various types of tokens.

BlockBeats: The concept of general abstraction is not yet widely known. In the market, people are more familiar with chain abstraction. How is general abstraction achieved through concepts like meta accounts, signature abstraction, gas abstraction, and so on?

Burnt Unagi: It's great to see the increasing attention to chain abstraction. Based on some statistics, this concept now holds about 2% of the market share. We hope to surpass modularization in market share. We believe that in the development of abstract chains, we can attract the next billion users. To achieve this goal, we need to actively engage with these "potential users." Yes, rather than educating them, we will proactively engage with users. Therefore, we discussed signature abstraction, Gas abstraction, account abstraction, and chain abstraction, but these are all broad concepts. Our core goal is to allow users to interact with cryptocurrency easily through chain abstraction without needing to understand Gas fees, account details, or the differences between various chains. XION's competitive advantages include modular design of meta accounts, signature-agnostic infrastructure, and parameterized fee layers, making blockchain technology accessible and user-friendly while maintaining decentralization. XION's mission is to make Web3 available to everyone, anytime, anywhere.

Cooper: In the years to come, we will see many high-quality projects as well as many failed projects, with increasing differentiation between them. Quality projects like XION stand out from the rest, where the stark contrast between a product used by millions and one used by none is evident.

I believe that products offering shared liquidity and diverse financial modules are crucial. These modules empower developers to seamlessly build applications across different ecosystems. When using any other blockchain, you would need to start from scratch to build an application, meaning you would have to understand how to build a settlement rule, different forms of order books, or an Automated Market Maker (AMM) from scratch. Injective offers out-of-the-box white-label modules and various forms of shared liquidity modules. With just a few clicks, you can access our blockchain, use our trading module, oracle module, and bridging module to build your trading platform. You can bring in ERC20 assets and bridge them. The transfer speed is fast, eliminating any possibility of MEV or frontrunning, and the platform's liquidity is institutional-grade.

BlockBeats: One of the most interesting aspects of XION's chain abstraction is abstracted interoperability. How has XION addressed this challenge, and what progress has been made so far?

Burnt Unagi: Regarding XION, a great aspect is that our goal is not to compete with other Layer1s but to contribute to the overall development and success of the entire blockchain industry by attracting new users. Additionally, we focus on collaborations. This concept of chain abstraction allows us to span ecosystems and interconnect them. Instead of competing with other Layer1s and isolating ourselves, we prefer to connect different ecosystems, not to compete for users and developers with other ecosystems but to share them, enabling each user to share resources across ecosystems. At the same time, we emphasize user experience (UX), and abstracted interoperability is only about connecting ecosystems to provide users with a better experience. We have been very successful in this regard. Of course, our most successful case is our collaboration with Injective. On the NFT platform Tales of Chain, users can mint NFTs on the website, perform actions through XION and Injective, experience seamless operations, not even realizing which chain they are operating on, let alone feeling that they are operating on two chains. By doing this, our cross-chain accounts continue to grow, which excites us greatly. Furthermore, we have engaged in more collaborations with Solana, BNB, AVAX, and others.

Cooper: XION aims to become the leading NFT marketplace in the ecosystem. I fully agree with Burnt's point that when you interact with any application, you shouldn't perceive which chain you are operating on. We at Injectives have also introduced many tools to continue supporting this, including chain abstraction, as well as aspects of cross-chain interoperability and bridging.

BlockBeats: In terms of payments, XION is fully priced in USDC across the entire chain and supports traditional payment methods such as credit cards, which is completely different from the traditional public chain ecosystem. Why was this designed this way? Are you envisioning XION to provide a near-identical experience to Web2 on the blockchain?

Burnt Unagi: We understand users very well, know what goals they want to achieve, and understand that we need to become mainstream. In Web3, one of the points we often talk about is "ease of use." To make cryptocurrency widely accepted by users, related products should be easy to use. So we wanted to design an innovative product targeted at specific crypto users. We must focus on practical use cases to enable those unfamiliar with crypto to see the value of cryptocurrency. For people looking to enter the crypto space, one of the biggest obstacles they face is the names of these different tokens. Users need to learn what Solana is, what ETH is, to use applications on these chains. However, one thing people know is the US dollar, so a few months ago, we partnered with Circle to make USDC the primary unit of account for all applications. Everything is priced in dollars, and you can pay for anything in dollars. Users don't need to hold any native tokens; they can pay with any token, which will be converted in the background, or they can use a credit card, which is very commendable.

According to the statistics of our test version, we have approximately 3 million active on-chain addresses, over 40 million transactions, and the ecosystem has integrated around 200 projects. We have also partnered with some outstanding partners, such as Uber, The North Face, or Sunglass Hut, which proves the attractiveness and enormous potential of our project.

Cooper: In the next year, the stablecoin standard may undergo changes, with different projects or institutions attempting to gain market share in the stablecoin space. USDT has a circulation supply of around $337 billion, while USDC has a circulation supply of approximately $38 billion. USDT still maintains absolute dominance in the industry, largely driven by centralized exchanges, and most users in Asia or outside of the US are loyal fans of USDT. In this situation, existing companies have many opportunities to gain market share by developing related projects.

So we recently partnered with Mountain Protocol to bring the native yield stablecoin (USDM) into the Injective ecosystem, which is a stablecoin pegged to the dollar at a 1:1 ratio, and you can swap USDM just like you would swap USDC or USDT. They offer a 5% yield to base holders. There are already thousands of users buying USDM on Injective and earning yield, then converting it to USDC or USDT.

From my perspective, stablecoins operate practically. But they must have different forms of utility and be embedded in different applications. So we are partnering with many issuers and will be launching different stablecoins in the coming weeks. We are big fans of Circle. I think transparency is the most needed thing in this industry, and Circle and USDC excel at this, which is why we are doing this project. On Injective, users can see balances, understand counterparty risk, and more.

BlockBeats: Compared to projects like Particle and Everclear, what advantages does XION have in terms of chain abstraction?

Burnt Unagi: We work closely with both of those teams. I think the core allure of chain abstraction is its narrative goal. It's not a one-size-fits-all solution, and entering this vast market with just one solution is impossible. We are all working towards improving user experience, breaking down barriers between asset pools on different chains, and making interactions within the Web3 ecosystem more efficient and user-friendly. There are also transport layers like Axelar. We collaborate closely with many different projects.

Many core members of these projects are good friends of mine, and we often share visions with each other. We all, to some extent, rely on each other and work together very well. Overall, the goal is to make interactions of Web3 products more efficient and user-friendly.

Cooper: I am a loyal fan of Burnt Banksy and the XION team, and we believe that XION is indeed at the forefront in the field of chain abstraction.

BlockBeats: Can you provide an example of a transaction scenario? For instance, under XION's chain abstraction, how is the trading experience different? For example, I understand that the exchange between SOL and AVAX can be done without considering cross-chain issues and on-chain pools, is that right? What are some things that currently cannot be achieved that can be achieved through this method?

Burnt Unagi: We've been discussing so much about chain abstraction, but I haven't seen a big difference in terms of user experience. We also talked a lot about user experience today. For an average person or a crypto newbie, what kind of difference would they feel when using an app related to chain abstraction? Our goal is to make users feel like they are not interacting with multiple blockchains, that's the ultimate goal.

I think whether you are on Solana or Avalanche, it doesn't matter, you don't need to go to a specific place to interact, you don't even need to know what they are. We can understand this at a higher level. Let's say I just want to use an app, like Fentech and STEPN. I earned some money on Fentech, want to use that money to buy shoes on STEPN, and then go for a run. You don't need to do 15 different transactions, visit different websites, bridge, swap, or know what wrapped or unwrapped tokens are, it's all very complex. Our goal is to make every user feel like they are using a Web2 product, where you can freely navigate the internet, without needing to understand the underlying complex technology. Just like how people are using Web2 products now, they wouldn't say they are using a Web2 product, they just feel like they are using the internet. I think this is also the future of Web3, maybe there will be a Web4 in the future, and we might encounter the same issues again.

My current idea is to leverage the advantages of cryptocurrency while removing the complexity of cryptocurrency. The biggest benefit of this approach is usually seen in social-related scenarios, as well as some gaming-related scenarios, all consumer-facing, as that's the natural direction of the mass market. I believe the flaws in the financial market have already been effectively addressed by projects like Injective, but there is still a gap in the consumer-facing space, as consumers have lower technological proficiency or are unwilling to delve deep into technology, and that's where we see the biggest opportunity.

The "Meta-Accounts" are smart contracts on XION that can also control smart contracts on their chain. This is how we are able to achieve such seamless interoperability because we've removed the concept of wallets; everything is a smart contract account. We initiate a transaction, that transaction mirrors on the chain, triggering a smart contract through Injective to initiate an action.

So essentially, you can think of this as cloning between different accounts on different blockchains. These cloned accounts can communicate with each other, whether it's on Injective, Solana, or Avalanche, they are actually mirrors of each other. In contrast, everything built on the protocol layer by XION, such as C logins, gas fees, transactions, all these combined, provide the most seamless multi-chain experience. I believe we will reach a stage where the concept of multi-chain won't be frequently discussed because it will no longer be significant. Once we reach a stage where people only need to understand and use the product, that's a success.

Cooper: Our product team is focused on development, integrating many additional tools into the application that all developers in the Injective ecosystem can use. I also agree that no matter the application, it should not feel complex or difficult to use for users, such as downloading MetaMask, getting transfer funds, etc. Overall, the reason we continue to build on these blockchains is for mass adoption, which is also the theme of this AMA and discussion.

However, to truly achieve this, we must continuously optimize the project, namely transaction speed, finality, and settlement speed. For example, this week I had to transfer funds using my brokerage account, and if I wanted an immediate transfer, I had to pay a significant fee. However, ACH transfers can settle in 4 to 5 business days for free. This is something I don't understand—why platforms like Robinhood and some other financial products take 4 to 5 days to give me my money, while on Injective, funds can settle in less than a second. This is indeed the future of the financial world. People do not want to wait one or two days or even three days to receive funds, as it would reduce capital efficiency.

BlockBeats: A native app built on XION, EarnOS, has partnered with top consumer brands like Uber and The North Face. Is this the method through which XION achieves mass adoption? How do these partnerships work specifically?

Burnt Unagi: What we have gradually realized is that there is a zealous pursuit of solutionism in the industry, often merely for the sake of using cryptocurrency. You can see that in 2021, there were many large-scale partnership projects and multimillion-dollar contracts that essentially just said, "Let's try doing something with cryptocurrency," forcefully adding cryptographic elements to something unrelated to cryptocurrency. I believe that as an industry, this is a fundamentally wrong approach.

As an infrastructure provider, our role is to provide tools for products to reach the masses, but now these products face the issue of being unable to reach real people. This is also what we need to address. For example, when Uber directly approached XION, we need to take the brand's perspective to provide assistance, offer practical solutions, and delve into what factors are hindering mass adoption of the product. Therefore, once these Web3 products have the tools to engage with brands like Uber, they can start providing real value to brands like Uber, rather than just sticking to a solutionist mindset.

The team members of EARNOS are all former Uber employees, so this is not particularly difficult for them. The only thing standing in their way is that they cannot truly reach Uber's real users. Would these users go download MetaMask or open an account on Coinbase? I don't think so, that's not something an average person would do.

BlockBeats: Compared to other ecosystems, what differences does XION hope to achieve in its ecosystem? What kind of ecosystem development do you most hope to see on XION?

Burnt Unagi: I think this industry has always been working hard to attract users and developers. But with the improvement of infrastructure, solving the "chicken-and-egg" problem has become more difficult. No users because no product; no product because no users. A catalytic event is needed to break this situation.

We believe that the potential market size of the entire industry is equivalent to the scale of MetaMask or Phantom, and we need to surpass this. The penetration rate of the Internet is the same as that of cryptocurrency, but the Internet requires a lot of hardware investment, which is very unfavorable for cryptocurrency, especially for builders in this industry, it is even more unacceptable. However, having said that, I think in a very short time, we have already built an ecosystem of over 200 projects, even some novel concepts that can bring real value to users, I am very happy.

This also raises a question, when can we strip away some elements of cryptocurrency and see where the abstracted value and advantages really lie? I think we are in a very good position, with ecosystems collaborating with each other, attracting users is a good starting point, and each time we meet any partner, we gain something, no one has an advantage over the other. Every project in this industry benefits from more users and from having actual products in place. Take Injective for example, we have been collaborating with them for a long time, being able to work with such an outstanding project and find real-world use cases is extremely exciting.

BlockBeats: XION's testnet has been open for several months, can you share some key data about the current testnet?

Burnt Unagi: Our testnet has reached over 3 million accounts, with a transaction volume exceeding 42 million, over 20 projects on the testnet, and plans to onboard approximately 200 projects within three months of the mainnet launch. Through chain abstraction, we have conducted large-scale releases on XION with Uber, Baskin Robins, The North Face, Sunglass Hut, passing nearly 200,000 verified users in a week, covering over 170 countries. We are also continuously breaking the record for creating the most cross-chain accounts, having broken this record twice. We hope the community pays more attention to our project, as there are many exciting developments coming soon.

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