Jan 22, 2024

Morph co-founder and COO Azeem Khan joins CoinDesk TV to discuss the main problem the layer 2 consumer blockchain is trying to solve, what sets Morph apart from other rivals and where the future of consumer-centric blockchain solutions could be headed in the next year.

Video transcript

The protocol is presented by the Stellar Community Fund Accelerate your Web Three project with stellar funding. All right, our first guest is a venture partner at Foresight Ventures and former head of impact at Bitcoin, who is now at a lay to consumer Blockchain. Welcome Azim Khan. Thank you so much, Emma. All right. So this is exclusive news. You're now a co-founder and chief operating officer at M and just looking at this big picture, what do you think is the main problem M is going to be trying to solve? I think when I look at what's going on in the layer to landscape and when I look at what's going on in the crypto landscape as a whole, it's something a lot of people have been saying for a long time, which is that we are not making products for people outside of our space and that there's uh there's this weird thing where people want to build products only for people within it while at the same time saying that we need to on board the next billion users. And we're very much so of the thought process that we can't mature this industry until we make products easier for people to use. And so a big focus of ours is going to be while we need to have technology be an important and good aspect of what we're doing. We need it to be such that we're actually making it easier to onboard users and not just competing on or comparing how good our technology is versus our competitors. Well, I think that's a, that's a great uh thought process to get the ball rolling and, and just give us a sense right now and our viewers what sets more apart from other layer tools like base or optimism and you kind of signaled that, but if you could elaborate more and give us more color around that. Yeah, absolutely. And so what's, what's interesting about what we're doing? And when you're trying to launch a layer two is that being able to bootstrap initial liquidity on board and user transactions and TB O and all those things is a really important part of being able to create a builder ecosystem. I hope for builders who would want to actually come on to your chain and Coinbase and base have done an exceptional job at this because they're able to funnel users into base space has great branding. They've done a great job of being able to on board users. So I would say in a similar way, it works that way. Uh We announced this, I believe about a month to a month and a half ago. But our precede investor who's been working very closely with us is bit, get bit gets one of the largest exchanges in the world. I mean, Lionel Messi is the face of the exchange and you know, Messi is the biggest soccer player in the world football player. And so for us in a similar capacity, we're in a good place to be able to bootstrap initial liquidity in terms of using Fitts Exchange, which has tens of millions of users and then the Pickett Wallet, which has also over 10 million users as well to be able to generate those initial transactions in TV O and on boarding users that we're going to need. And then after that, I'm actually very excited about doing an ecosystem building strategy through lessons that I learned from my time at Bitcoin. And so that's something that, you know, we haven't talked about publicly yet. But my time at Bitcoin and helping oversee all of our products and offerings including the grants program and being, being one of the faces of one of the most arguably notable grants programs in the Web Three Ecosystem. I was very fortunate and there were many lessons from that. And one of the biggest lessons that I learned is that many of these builders and founders are looking for much more than simply capital because if you're a good builder, getting access to capital is not that difficult. There are many chains that are offering grants programs. It's almost a foregone conclusion that the grants program is a necessary component of anyone launching a chain. And for us, we want to be able to use the vertical integration of the bit Gett ecosystem having foresight ventures and foresight X which is their incubator, which is generously allocated $10 million already towards projects that we will be building on Morph having access to the exchange. So many of the pieces of ecosystem that bit gett has will be ones that we are going to be in a position to utilize as our partners. And so in terms of what helps set us apart from current people in the landscape, I would say like having this like very broad larger idea and really looking at what we can to build the most founder friendly pipeline. That's, that's quite a lot of muscle. You just talked about what did you learn in the beta stage? Honestly, in the beta stage, it's just been a lot of building that we're we're looking to do like and this is a more technical side of things, but you know, there's been a lot of talk of ZKEVM, but then there's also been a lot of talk around optimistic roll ups. This is a custom tech stack with an optimistic ZK roll up. We've often been seeing that, you know, there are centralized sequencers everywhere where we look and we're looking to roll out with the decentralized sequencer to start. And so the difficulties around not just deciding to use, you know, uh a roll up as a service idea and build branding on top of it, but instead try to use technology in various ways to build what we feel would be the best safest and most secure product that we can then roll out. So a lot of it has been, you know, testing as we've been going through figuring out launching test Net beta and looking towards Main Net for later this year. Yeah, that decentralized part that you're talking about the decentralized sequence. So that's going to be interesting to see how it pans out. Why. Why do you think that Zika technology is so important to the future of layer tools because you said everyone's talking about it. But I just want to get your thinking that the safety and security that comes with doing so has been one that people have spoken about and we discussed quite regularly at my role at Bitcoin. I was very fortunate to be in a position where I was speaking with organizations like, you know, Morgan Stanley and Standard Chartered and SBB and Stripe. And a lot of these large players and all of the heads of crypto at these institutions are, are all interested in ZK technology. Uh just from, from the perspective of being able to provide that, that security that especially they're going to need. And you know, the earliest iterations of what you need to do on layer twos is to set up decentralized finance. And I think last year in 2023 we saw over $600 million worth of hacks, right? And so thinking about ways that we're gonna be looking at security in all aspects is something that's very important to us. Yeah. No, you know, I just want to come back to what you said earlier about decentralized sequence. So, and, and Mo's website also talks about it, it says it's a decentralized sequencer design and led to approach addresses Blockchain, scalability and, and security. You've talked about that. But can you just, you know, perhaps just elaborate a little bit on that and say, how is it that that particular aspect uh makes it more secure for consumers or consumer applications? Just give us a sense of that. So being able to work on the fraud proof side of things, it's gonna be an important side for us that centralized sequencer is the part where I also think is an important aspect because as much as we'll say, like, you know, where layer twos are decentralized networks, having centralized sequencers attached to them where, you know, and there are a lot of people, I I take no shots at any of the, the L twos that have done centralized sequencers to date the technology is one where we're having to evolve towards the place that it's possible and very fortunate to have had organizations that have been doing this in this way and are looking to do progressive decentralization, candidly, I'm sure that there there already are in the thinking stages going to be difficulties around making sure that we have the decentralized sequence or governance done, right? And how we're supposed to go about doing it to make sure that there is security because the reasons for starting with centralization is that you want to make sure that you do it the right way and you progressively be decentralized. Our idea of decentralized to beginning like to begin with is what you know, people have been like. This sounds revolutionary, but that also sounds scary. And you know, the ZK side of things, you know, it makes some of the transactions at least currently a little bit more expensive perhaps. But you know, one of the places that I'm very excited to explore outside of defi where of course security matters. A ton is decentralized science. And you know, if you think about wanting to do fractionalized IP or going back to trad five, if you want to do tokenized securities, uh tokenized equities or real world assets on chain, you wanna have some of these things embedded so that it's ok if the transaction is a little bit more expensive as long as you know, it's a little bit more secure as well. So given what you just said, the consumer centric Blockchain solutions that we're trying to think about. Um do you see uh the future shaping up like you just said? Or could it be in a different way in what sense can you realistically speaking? Where do you see it go when you talk real solutions, realistically seeing realistically speaking? I think that we'll be in a position where the, the Blockchain is abstracted away by the best builders and, and that's where it needs to be ended. I know that there are people who find that to be like almost an offensive statement, but I don't know how email works, but email works fine for me. You know, my mother doesn't know how chat GP T works, but she uses chat GP T on a daily basis. You know, the iphones, you know, two year olds can use an ipad. And so my vision for where this space needs to go is that when people talk about building fintech apps in the future, it's just something that everyone already understands. Of course, you would build it on a Blockchain. It just makes more sense as opposed to a centralized architecture with, you know, uh databases that are, are centralized and can be shut down. And the reasons why distributed ledger technology is better and they don't need to know it, but it should just be understood. Got it. OK. I want to step away from more for just a bit and talk about funding a little bit recent Crunch based data notes that web three start up funding fell drastically. In 2023 slumping 74% year to year. However, the report also does not as often these reports to that funding is still down across the board. So it's not just, you know, in the space with your role at foresight, ventures, what sectors, you know, have been allocated or are you allocating capital to this year? You know, honestly, it was an interesting prior year where it was funding was down across the board for everything. And the funny conversation has been with all of the V CS that I know is that a lot of them have dry powder in terms of capital to invest that has been pre allocated for as the bull run arrives. And what's sort of funny is that many of them are admitting that as soon as the bull run comes back, all of the crazy deals that we had been seeing happening where we looked and we're like, why are going to happen again? It's just like the sentiment is starting to change. Uh Even the last couple of months has been one where tokens for everything are sort of up across the board. And even if the ETF has, you know, under, under performed compared to what people say that with the A I hype ongoing, we just taken away a lot of the funding. Mhm Yeah, I would say so. Absolutely. And I'd say that the intersection of, of A I and Web three would and I wouldn't even be able to speak to it as well. But people are talking about the idea of like intents and so finding A I and Web three in a way that's going to be combined this year is actually one that I think will actually be a place where a lot of investment is going to occur. But across the board, I would say, you know, there is no layer two, that's one yet, you know, there's a a layer two war, so to speak going on and there are new layer two is launching, there are still new alt layer ones that are launching. And so we're not in a place yet that it's understood who the established players will be. Everyone thought Solana was dead. Solana is not dead, you know, Solana is very not dead. We're gonna be, we're gonna be talking about that today. Yeah, for sure. OK. Yeah, sorry. No, no, it's just like it's a, it's a very open ended in terms of where I think, you know, capital is gonna end up being distributed to in terms of in terms of verticals within the space. Got it. Uh The World Economic Forum just talked about that a lot. Uh in Davos and a number of people were, were speaking about how there could be a marriage of Blockchain and E I and a lot of dancing around that later this this year. I want to talk to you about another role that you perform. Uh you wear many hats. Uh You also work as a UNICEF crypto fund consultant that Crypto Fund we know launched back in 2019, it is the first Cryptocurrency denominated financing vehicle within the United Nations. There are a lot of geopolitical situations ongoing in the world right now. How do you think crypto is being used for good according to. So, you know, they, they're an amazing team. I very, very recently on boarded. I was fortunate enough to work with them in 2022 for a Bitcoin Grants round that we did with that team. And throughout last year, I was finding different ways to help the team out. And so I thought, you know, why don't we help make this something that would be a more formalized thing? We, you know, we've been working together and I'd love to be able to use the fact that I'm fully crypto native in supporting some of the amazing initiatives that, that you're all working on. And so first and foremost, you know, at the moment, they're able to or we are able to uh custody Bitcoin and Ethereum and, you know, being able to continue to do that and raising capital for the crypto fund that they have to be able to invest in projects that are doing amazing things. It's like the first and largest focus. But there are other things that, you know, there, there are constant conversations around humanitarian ways that we would be able to use Blockchain in better ways. It's just when the year the United Nations everything needs to go through additional red tape and it is not like launching, uh, an MVP when you're a start up. But there are what's, what's really nice is being able to be in the rooms, helping educate and being around. Those are educated about exactly these things because, you know, a big part of why I, I feel it's so important to do. This is because we on the crypto native side, I find tend to complain that people in large organizations or NGO S or nonprofits are not taking these things seriously. But unless we get into the room and can really explain why you should take it seriously. We're not in a position to be allowed to complain. Well, that's a, that's a noble talk to end this discussion on uh Azim. I, I completely concur with what you're saying. Thank you very much for being with us, Azim. Thank you so much for having me. And you can also check out the protocol newsletter at coindesk.com/newsletters.

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