NEAR Protocol's Erik Trautman at the Decentralized Web Summit 2019 talking about Usability, Scalability and Real Business Models for blockchains.

1. www.nearprotocol.com
January 2019
Next Generation Blockchains:
Usability, Scalability and Real Business Models
Erik Trautman
Head of Operations @ NEAR Protocol

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“
“I want to develop on a platform that is
great for my users, is easy to use and
allows me to actually make money on
my app.”

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Where we are today
We haven’t crossed the first chasm to early adopters and we’re in
the #shutupandbuidl phase of the market
Today?

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But what should we be #buidling???

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About Me
I’m Erik Trautman and I run operations at NEAR
Protocol, a scalable developer-friendly blockchain on
a mission to bring the technology to a billion people.
I also care deeply about creating great products,
educating people and building rich ecosystems.
My background is in markets, open-source software
development, startups and education. And general
nerdery.

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About YOU
● A JavaScript developer who is curious about
getting into the next wave of blockchains.
● A DApp developer building on an existing chain
but deeply aware of the problems with current
systems.
● An entrepreneur with a business to build trying
to figure out when the tech will be good enough
to build a “real” business.
● A product person who wants to understand
your toolkit.
● An enthusiastic observer of the industry trying
to spot upcoming trends.

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Blockchain primitives (aka “what it gives you for free”)
1. Identity: Everyone gets an account
which gives them a bucket of stuff to
hold onto, sort of like a safety deposit
box that lives on the chain.
2. Transactions: The idea of
transferring tangible and intangible
goods is fundamental to blockchains.
3. Cryptography: Chains only exist
because of cryptography and they
expose it to anyone’s use.

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Blockchain IDENTITY primitives
Everything on the chain gets assigned to an account.
1. Accounts: Accounts can represent a person,
company, app or even a thing (eg refrigerator).
2. Ownership: That account has total control of its
money, its digital goods and its data (which can
represent real-world things like identification)
3. Login/Reputation: Every account’s transaction
history gives it reputation which you can tap into.
In today’s web, developers have to custom code
these.

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Blockchain TRANSACTION primitives
Everything on the chain gets assigned to an
account.
1. Direct: Anything can transfer directly
between accounts without a central
authority (allowing peer-to-peer
marketplaces or transfers)
2. Instant: Financial and digital-good
transactions have near-instant finality.
3. Micro: Negligible fees make high
frequency and/or small amounts okay.
4. Conditional: It’s easy to add logic like
escrow.

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Blockchain CRYPTOGRAPHY primitives
Cryptographic primitives give anyone easy
ability to:
1. Verify Activity: Did you do a specific
thing or have specific data on a specific
date? Eg supply chains, ad activity,
transfers.
2. Verify Process Integrity: Is this “random”
algorithm actually fair?
3. Privacy: Hide who did the activity or what
was the decision
This is because it’s easy for anyone to use
their account’s private key to “sign”
transactions or data.

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Despite the upside, today’s platforms leave us basically stuck

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Blockchain Supply and Demand
We have problems on both sides of the
ecosystem:
DEMAND: What problems need to be solved
so people actually want to use this?
SUPPLY: If those problems can be solved,
what do we need from the platform to
deliver on that promise?

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Problems of DEMAND
Developer Experience:
1. Stop making us learn new languages and paradigms
2. Stop making us use 6 different tools from 6 different teams.
3. Stop making us learn using out-of-date blog posts
End-User Experience:
1. Stop requiring users to touch gas!
2. Stop requiring up-front signups!
Business Models:
1. It’s very painful to Implement existing models (eg SAAS)
2. Token-based business models (ICOs) are dumb/illegal

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Solutions for DEMAND
Developer Experience:
1. Let developers use the languages they know like TypeScript
2. Strong and high quality tooling with some unity
3. A strong, diverse and engaged community
End-User Experience:
1. Hide transaction fees by making them free while holding
tokens.
2. Make it easy to have “delayed onboarding” via acct transfer.
3. Make it easy for devs to handle gas on behalf of users.
Business Models:
1. Make permissioning for subscription payment simple
2. Let developers get rebated for the fees they generate.

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Supply is all about SCALABILITY. Why? Let’s start with a question:
What does it take to generate a
BILLION dollars of value on the
blockchain?
That’s not even much! The Internet generates $4 TRILLION per
year.
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Problems of SUPPLY

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Let’s say 10% of the value generated will go towards platform costs.
The Apple App Store takes 30%. So our blockchain will get $100M per
year in revenue.
To earn $100M, we need to generate approximately 100 billion
transactions per year at $0.001 per Tx cost. Ethereum is today $0.003.
That’s 3,171 average tps.
Ethereum can do 14. EOS can do 3000.
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Problems of SUPPLY

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We obviously need a safety margin to prevent congestion so
practically (and Ethereum is a decent example of this) we want 3-5x
greater-than-average capacity to handle swings.
So we ACTUALLY need a capacity of 10,000tps just to generate a
measly $1B of value for our users. And that’s literally just 0.025% of
the actual Internet today.
No platforms today with actual decentralization can come close to
that.
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Problems of SUPPLY

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The only viable approach is
scaling on the blockchain layer
that increases linearly with
network size. Most
approaches today only scale
in a constant or time-bounded
(Moore’s Law) fashion.
This is why sharding is such an
important advance… it actually
scales linearly and infinitely.
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Solutions of SUPPLY

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Lots of the next-generation chains are focusing heavily on tackling
one side or the other.
For example, many are very tech-heavy teams tackling
supply-side scaling.
Others are user-oriented teams tackling demand-side UX.
None are focusing on business models that make developers
money.
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That’s where the ball is going.

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You know the problems.
You see the types of solutions we need.
You know that lots of people are focusing on certain aspects.
...so you should have what you need to get in the game.
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Stay in the loop

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To stay informed along the way, check out our work at NEAR
Protocol.
We’re tackling the supply side with sharding and the demand side
by implementing all of the solutions previously mentioned,
including helping developers make money.
You can learn more at https://nearprotocol.com, including being
able to play with our TestNet.
We have great blog posts at http://medium.com/nearprotocol and
a great community on discord at http://near.ai/discord
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Stay in the loop

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Thank you!
erik@nearprotocol.com