Author: Xin Yan, Co-founder and CEO of Sign
In a few months, Sign will be four years old. Time flies; we have grown from a simple hackathon idea into a team with multiple business lines, with revenue and financing both exceeding tens of millions. We have witnessed our own changes and growth along with the industry. In this process, we burned millions of dollars iterating products in search of PMF (macro-wise, venture capital funds have also invested billions to find PMF for crypto). Today, I mainly want to write about the changes and views we have personally experienced.
Around 2018, when I entered the crypto space, the crypto community was very Cypherpunk, enjoying learning cryptography, blockchain consensus algorithms, performance of different virtual machines, and so on. At that time, we believed that the main reason crypto did not have large-scale applications was due to insufficient infrastructure. Later, around 2021, we had many fast and cheap public chains available, and the main narrative of the industry shifted to the Web3 revolution. Web3 is a new generation of the internet, where we aim to reconstruct the entire network on the blockchain (our first application EthSign also started based on this idea). This idea itself is radical and straightforward, as we use blockchain standards (public and private keys) to rebuild all applications, transforming many SaaS into protocols while providing free and reliable services for global users.
However, in reality, the popularization of Web3 has not been as fast as we imagined. Personally experiencing it, the friends around me outside the circle have not continuously onboarded Web3 in recent years. For startups in this field, the best outcome is to find loyal users within a small group (currently, the main users of EthSign come from Indonesia, Turkey, and Nigeria, where the adoption rate of electronic signatures is low but crypto-friendly), and many have already given up on their ideals and were acquired by Web2 companies.
The popularization of Web3 and Crypto has not been as smooth as expected, and I believe there are the following reasons:
1. No new functionalities or user experiences have been offered. Most Web3 products try to replicate the functions of Web2 competitors while emphasizing security and privacy. However, the reality is that most users are not that concerned about data privacy, or they do not trust laws and regulations.
2. The most fundamental data in the entire industry, the number of wallets, has not grown exponentially, limiting the network effects of the entire Web3. Although both email and crypto wallets are anonymous electronic identities, users still tend to prefer the former because it is more familiar to everyone.
Web3 requires users to take responsibility for everything from the start (they must remember and keep confidential 24 words) without providing a user experience that is ten times better than existing applications, new functionalities, or sustained substantial economic incentives, which inevitably scares off novice users who are just getting on board.
Mnemonic: If you show it to someone else, you will lose everything!
3. Compliance. Essentially, the capabilities provided by Web3 are ahead of the existing systems and find it difficult to gain regulatory support. For example, we all know the value of peer-to-peer transfers worldwide, but this easily achievable functionality does not align with the current mainstream anti-money laundering frameworks, making crypto payments difficult to integrate into mainstream applications.
Since our attempts to hard sell / FOMO the entire world to onboard Web3 have failed, we should choose a more conservative and gentle approach, wrapping Web3 into different concepts that are simple and easy products. The most successful examples this year share this commonality:
1. Bitcoin ETF. It is by no means the vision of Satoshi Nakamoto himself, but it has effectively brought Bitcoin into mainstream society. The controversies surrounding this remind me of the issues with adapting excellent literary works into films; there are always people who say that the film adaptation loses the spirit of the original, but objectively speaking, adaptations lower the threshold and allow a more mainstream audience to access the original. The Bitcoin ETF has relieved traditional capital of custodial responsibilities and investment category restrictions, truly bringing Bitcoin into the mainstream.
2. TON. TON is the native blockchain of the Telegram ecosystem and is an important part of Telegram's goal to become a global Superapp. Telegram's users are dispersed across different countries, and the cost of establishing cooperation with all banks through WeChat Pay or PayPal far exceeds the cost of operating a blockchain. As long as Telegram users can onboard TON, peer-to-peer transfers can be easily realized. However, the ecological project that first achieved the goal of large-scale onboarding users is neither DeFi nor NFT, but an application with only one button, Notcoin.
Notcoin has only one huge button
Notcoin is an application that requires no documentation or introduction. In the early stages, users only needed to tap their fingers to receive Notcoin airdrops in their wallets (Notcoin transformed into a traffic distribution platform after TGE, directing traffic to other ecosystem projects). Notcoin opened up the point-and-click currency track, bringing tens of millions of users into Web3 with minimal user education, allowing them to have interest-bearing USD stablecoin accounts.
TokenTable is honored to serve the majority of TON ecosystem projects, helping them distribute tokens to users, and it has also provided us with our main source of income this year. The success of TON is the most successful mass onboarding in the history of crypto, with twenty million addresses created in three months, but it may not have received sufficient coverage in the US-centered crypto world because most users come from Eastern Europe, the Middle East, and Africa.
3. Pump.fun. Pump.fun might be the fastest company in the world to generate a hundred million dollars in revenue. It allows anyone to quickly and easily create a memecoin and prevents early rug pulls. This platform has brought memecoins from the margins to the mainstream, making memecoins a new means for users to participate in predicting changes in mainstream events or capture various traffic values. I do not have data, but many of my friends who have just entered crypto started their journey by purchasing memecoins on Pump.fun.
In the past year, I feel that the opinions of friends around me have split into two distinct factions, or rather, escaped to the two ends of the IQ curve. The faction with an IQ of 150 remains dedicated to discussing how to build the infrastructure for mass applications faster and cheaper, while the other faction has given up on doing anything, believing that any product, even a webpage, is redundant, and the only meaningful thing is CA.
We proudly and boldly sit at the midpoint, packaging new technologies into simple products, striving to connect more closely with the real world to gain funding and traffic. I believe the industry has moved past the era of sales concepts; the vast majority of people already understand crypto, but they lack blockbuster applications to get them onboard. We are in the time window for mass onboarding; the infrastructure is already in place, and it will resemble the application era of the internet, where entrepreneurs need to find the right angles to attract and retain users.
The realization of this understanding has been painful. Earlier this year, we launched Sign Protocol, an omni-chain attestation system. But as you might ask, what is attestation? This is a technical concept that takes us five minutes to explain. We want to establish standards for proving and verifying data on-chain, but most of our time is spent explaining the technical concepts. Therefore, in the second half of the year, we began promoting applications based on Sign Protocol, such as the on-chain verifiable ID system we created for Sierra Leone and ZuThailand, and the TokenTable that distributes and unlocks tokens for users, which in turn promoted the popularity of Sign Protocol. We learned a lesson that seems laughably simple in web2: sell functionality/experience/service, not technology/standards.
Sign Protocol's npm download volume: We did not promote it in the second half of the year, but the data remains good.
We are not a team satisfied with just creating a demo to validate feasibility; we hope to genuinely drive our product to be used by tens of millions of users and change their views on crypto. We will aggressively collaborate with the traditional world (which isn't as traditional as they seem) to seek to bring already digitized information and trust to the desolate world of blockchains. Although cyberspace is independent, it is not isolated from the real world. In the past few years, we have witnessed the development bottlenecks of purely on-chain native projects because there is not enough data, information, and applications on-chain. For example, on-chain lending, which cannot use users' credit systems in the real world, always requires users to pledge excessively and cannot continue to develop.
In the future, we will focus on mass onboarding, using the latest technologies (mainly zk) to enable more users to easily use crypto and enjoy its convenience. Our new products will address the most fundamental issues: identity and trust.