Dialogue with XION: Will chain abstraction be the next Mass Adoption?

On August 22, Burnt Banksy, founder of XION, and Cooper of Injective Labs talked about the concept of chain abstraction. Burnt Banksy, founder of XION, was the person who sparked global discussion on NFTs by burning Banksy artworks and casting them into NFTs three years ago. The following is a summary of the text of this Space.

BlockBeats: Welcome, both of you. Please give a brief introduction. What is the background of the team? Why did you think of creating the current XION?

Burnt Banksy:I am Burnt Banksy, the founder of XION. The reason why it is called Burnt Banksy is that three years ago I bought a Banksy painting (famous artist), and then I burned it and cast it into NFT, so this is also the NFT with the highest average price in 2021. I am working on the XION project, trying to break the barriers of complexity so that the project can develop rapidly.

Cooper：I am very lucky and happy to be able to chat with excellent people. I am Cooper, and I work in the business team of Injective Labs. Injective is a Layer1 for building applications on it. We optimize and customize the blockchain stack and build modules that enable developers to seamlessly build different types of tokens.

BlockBeats: The concept of universal abstraction is not so popular yet. The market may be slightly familiar with chain abstraction. How is universal abstraction achieved through meta accounts, signature abstraction, gas abstraction, etc.?

Burnt Banksy：I am very happy to see that the concept of chain abstraction is gaining more and more attention. According to some statistics, this concept has accounted for about 2% of the market share. I hope we can surpass modularization in market share. We believe that in the process of abstract chain development, it is expected to attract the next billion users. In order to achieve this goal, we need to actively reach out to these "potential users". Yes, rather than educating them, we will take the initiative to reach out to users. So we talked about signature abstraction, gas abstraction, account abstraction, and chain abstraction, but these are just general concepts. Our core goal is to allow users to easily access cryptocurrencies without having to know what gas fees are, what accounts are, or the difference between different chains. XION's competitive advantages include the modular design of meta accounts, signature-independent infrastructure, and parameterized fee layers, making blockchain technology accessible and user-friendly while retaining decentralization. XION's mission is to make Web3 available to everyone, anywhere.

Cooper：In the next few years, we will see a lot of good projects and a lot of failed projects, and the differentiation between projects will become greater and greater. Good projects like XION are very different from others. There is a huge difference between a product that can be used by millions of people and a product that no one uses.

I think it is important to have products that can share liquidity and multiple types of financial modules that allow developers to seamlessly develop applications in different ecosystems. If you use any other blockchain, you need to build an application from scratch, which means you have to understand from scratch how to build a clearing law, how to build different forms of order books or automatic market makers (AMAs), etc. Injective provides out-of-the-box white label modules and different forms of shared liquidity modules. With just a few clicks, you can access our blockchain and use our trading modules, oracle modules, and bridge modules to build your own trading platform. You can use ERC20 assets and bridge them in. The transfer speed is very fast, eliminating any possibility of MEV or front-running, and the platform liquidity is also institutional level.

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

Burnt Banksy: One of the great things about XION is that our goal is not to compete with other Layer1s, but to contribute to the common development and success of the entire blockchain industry by attracting new users. In addition, we focus on cooperation, and this concept of chain abstraction allows us to cross ecosystems and connect ecosystems. Instead of competing with other Layer1s and making ourselves isolated islands, we prefer to connect various ecosystems, not competing with other ecosystems for users and developers, but sharing them, allowing each user to share resources between ecosystems. At the same time, we pay great attention to user experience (UX), and abstract interoperability is just connecting ecosystems to give users a better experience. We have been very successful in this regard. Of course, our most successful case is the cooperation with Injective. On the NFT platform Tales of Chain, users can mint NFTs on the website and operate through XION and Injective. Users will feel that the operation is very smooth and they cannot sense which chain they are operating on, let alone that they have operated on two chains. By doing this, our cross-chain accounts are constantly increasing, which makes us very excited. In addition, we have also cooperated with Solana, BNB, AVAX, etc.

Cooper：XION aims to be the leading NFT market in the ecosystem. I agree with Burnt's point that when you interact with any application, you can't tell which chain you are operating on. We at Injectives have also launched many tools to continue to support this, including chain abstraction, cross-chain interoperability and bridging.

BlockBeats：In terms of payment, XION is completely priced in USDC on the entire chain and supports traditional payment methods such as credit cards, which is completely different from the traditional public chain ecosystem. Why is it designed like this? Do you envision XION providing an experience on the blockchain that is almost the same as Web2?

Burnt Banksy：We know our users very well, we know what we want to achieve, and we know that we need to be mainstream. In Web3, the point we often talk about is "ease of use". In order for cryptocurrencies to be widely accepted by users, related products should be easy to use. So we want to design an innovative product that is targeted at specific crypto users. We have to focus on real use cases so that people who don't know much about crypto can see the value of cryptocurrencies. One of the biggest obstacles for people who want to get into crypto is the names of these different tokens, and users need to learn what Solana is, what ETH is, to use applications on these chains. But one thing is that people know the dollar, so we reached a cooperation with Circle a few months ago to use USDC as the main unit of account for all applications. Everything is denominated in US dollars, and you want to buy something, no matter what it is, you can pay for it in US dollars. Users do not need to hold any native tokens, they can pay with any token, it will be converted in the background, or they can use a credit card, which is very commendable.

According to the statistics of our beta version, we have about 3 million active on-chain addresses, more than 40 million transactions, and about 200 projects integrated into the ecosystem. We also work with some excellent partners, such as Uber, The North Face or Sunglass Hut, which also proves the attractiveness and huge potential of our project.

Cooper：In the next year, the stablecoin standard is likely to change, and different projects or institutions will try to gain market share in the stablecoin field. USDT has an issuance volume of about 337 billion US dollars, while USDC has an issuance volume of about 38 billion US dollars. USDT still has an absolute monopoly in the entire industry, and this monopoly is driven by centralized exchanges. Most Asian users or users outside the United States are loyal fans of USDT. In this case, existing companies have many opportunities to gain market share by developing related projects.

So we recently partnered with Mountain Protocol to bring a native yield stablecoin (USDM) to the Injective ecosystem, which is a stablecoin that is pegged 1:1 to the US dollar, and you can redeem USDM just like you would USDC or USDT. They give a 5% yield to the underlying holders. There are already a few thousand users who have bought USDM on Injective and are able to earn yield and then redeem it for USDC or USDT.

From my perspective, the way stablecoins work is utility. But they have to have different forms of utility and be embedded in different applications. So we are working with a lot of issuers and will be listing 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 do a great job in this regard, which is why we are doing this project, where users can see their balances, understand counterparty risk, etc. on Injective.

BlockBeats: What are the advantages of XION in chain abstraction compared to projects like Particle and Everclear?

Burnt Banksy: We work closely with both teams. I think the core charm of chain abstraction lies in its goal narrative. It is not a single solution, and it is impossible to enter this huge market with only one solution. All of us are working hard to improve the user experience, eliminate barriers between asset pools of different chains, and make interactions within the Web3 ecosystem more efficient and user-friendly. There are also transport layers like Axelar. We work closely with a lot of different projects.

I am good friends with many of the core members of these projects and often share their visions with them. We all rely on each other to some extent and work very well together. Overall, the goal is to make the interaction of Web3 products more efficient and user-friendly.

Cooper：I am a big fan of Burnt Banksy and the XION team, and we think XION is really at the forefront of chain abstraction.

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

Burnt Banksy：We've been talking so much about chain abstraction, but I don't see a big difference in user experience. We've talked a lot about user experience today. For an average person or a newcomer to crypto, what's the difference when they use an application related to chain abstraction? Our goal is to make it so that users don't feel that they are interacting with multiple blockchains. That's the ultimate goal.

I think it doesn't matter whether you are on Solana or Avalanche, and you don't need to go to a specific place to interact or even know what these are. We can understand this at a higher level. Let's say I just want to use an application, like Fentech and STEPN. I made some money on Fentech and I want to use it to buy shoes on STEPN and go for a run. You don't need to do 15 different transactions, you don't need to go to different websites, you don't need to bridge, convert, and you don't need to know what a wrapped token is or an unwrapped token, which is all complicated. Our goal is to make every user feel like they are using a Web2 product, where you can move freely around the internet without having to understand the complex technology behind it. Much like people are using Web2 products now, they won't say they are using Web2 products, they just feel like they are using the internet. I think this is also the future of Web3, and maybe there will be Web4 in the future, and we may encounter the same problem again.

My current idea is to take advantage of the advantages of cryptocurrency while removing the complexity of cryptocurrency. The biggest benefit of this approach is usually reflected in social-related scenarios, and also involves some game-related scenarios, all of which are consumer-oriented, because this is the direction that the mass market naturally tends to go. I think the shortcomings of the financial market have been effectively solved by projects like Injective, but there is still a gap in the consumer-oriented field because consumers have a low level of technology or are unwilling to go deep into the technology, and we see the biggest opportunity here.

"Meta accounts" are smart contracts on XION, and they are also able to control smart contracts on their chains. This is how we can achieve such seamless interoperability because we remove the concept of wallets and everything is a smart contract account. We initiate a transaction, which is mirrored on-chain, triggering the smart contract through injective to initiate the 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 on Injective, Solana, or Avalanche, they are actually mirrors of each other. In contrast, everything XION builds on the protocol layer, such as C login, gas fees, transactions, etc., all of these combine to provide the most seamless multi-chain experience. I think we will reach a stage where the concept of multi-chain will not be discussed frequently because it is no longer important. Once we can reach a stage where people just need to understand and use the product, we will succeed.

Cooper: Our product team is focused on developing and integrating a lot of additional tools into the application that will be available to all developers in the Injective ecosystem. I also agree that no application should be too complex for users to use, such as downloading MetaMask, getting transfer funds, etc. In short, the reason we continue to build on these blockchains is to achieve mass adoption, which is the theme of this AMA and discussion. However, to truly achieve this, we must continue to optimize the project, that is, transaction speed, finality, and settlement speed. For example, this week I had to use my brokerage account to transfer funds, and if I wanted it immediately, I had to pay a large fee. However, it is free to transfer funds through ACH within 4-5 business days. I don’t understand why it takes 4-5 days for something like Robin Hood and some other financial products to get my money to me, but Injective can settle funds in less than a second. This is the future of the financial world. People don’t want to wait a day or two or even three days to receive their funds, which makes capital inefficient.

BlockBeats: EarnOS, a native app built on XION, has partnered with top consumer brands like Uber and The North Face. Is this XION’s way to achieve mass adoption? How do these partnerships work specifically?

Burnt Banksy:What we’ve come to realize is that there’s a cult of solution supremacy in the industry, and a lot of times we use crypto for the sake of using it. You can see a lot of huge partnerships and multi-million dollar contracts in 2021 that basically just say, “Let’s try to do something with crypto,” and add crypto elements to something that was not originally related to crypto. I think this is a fundamentally wrong approach as an industry.

As an infrastructure provider, our role is to provide the tools for products to reach the masses, but the problem these products face right now is that they can’t reach the real people. This is also something we need to solve. For example, if Uber comes directly to XION, we need to provide help from the brand's perspective, provide practical solutions, and explore what factors are hindering the mass adoption of products. Therefore, once these Web3 products have the tools to reach brands like Uber, they can start to provide actual value to brands like Uber, rather than just staying in the solution mindset.

The EARNOS team is made up of former Uber employees, so this isn't particularly difficult for them. The only thing standing in their way is that they can't really reach Uber's real users. Will these users download MetaMask or go to Coinbase to open an account? No, that's not something that ordinary people would do.

BlockBeats: What differences does XION hope to achieve in its ecosystem compared to other ecosystems? What type of ecosystem do you most want to see develop on XION?

Burnt Banksy:I think the industry has been struggling to attract users and developers. But as the infrastructure improves, it makes it harder to solve the "chicken and egg" problem. There are no users because there are no products; there are no products because there are no users. A catalytic event is needed to break this situation.

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

This also raises the question, when can we strip away some of the cryptocurrency elements and see where the value and advantages of abstraction are? I think we are in a very good position. Ecosystems are working together and attracting users. It is a good starting point. Every time we meet with any partner, we will gain something. No one party has an advantage over the other. Every project in this industry benefits from more users and from having actual products. Take Injective as an example. We have been working with them for a long time. It is extremely exciting to work with such an excellent project and find real use cases that can be implemented.

BlockBeats: XION's testnet has been open for several months. Can you tell us some of the main data of the testnet so far?

Burnt Banksy:Our testnet has reached over 3 million accounts, with over 42 million transactions, over 20 projects on the testnet, and plans to launch about 200 projects within three months of the mainnet launch. We have launched a large-scale launch on XION with Uber, Baskin Robins, The North Face, Sunglass Hut through chain abstraction, with nearly 200,000 verified users in more than 170 countries in a week. We are also continuing to break the record for creating the most cross-chain accounts, breaking this record twice. I hope the community will pay more attention to our project, there are many exciting things to be released soon.