The Next Phase of Crypto Will be The Age of dApps

Ishan Pandey: Hi Sam, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind Subquery?

Sam Zou: SubQuery is built by the team at OnFinality, a leading blockchain infrastructure platform for the Polkadot ecosystem. We’ve been working closely with teams from around the Polkadot since early 2020 to provide them with infrastructure support.

While talking to teams last year, we kept hearing teams repeat the same problems around data management and processing that was getting in the way of them building applications on their new test networks. With inspiration from other data players in this space and with a web3 foundation grant to kick start this, we began building SubQuery in December 2020.

We quickly launched the first version of the SubQuery SDK in January 2021 and since then, we’ve been busy improving our SDK, scaling our managed service, and growing our community.

The best part of this story is that at every stage, we build SubQuery in partnerships with our customers. From the first day, we made sure to solve our customer’s problems and achieve product-market fit for SubQuery, that’s why today we have hundreds of projects being built by our community on our hosted service

Ishan Pandey: Please tell us a little bit about the Subquery protocol and how does the blockchain protocol framework work?

Sam Zou: Today, SubQuery is already open source and in use. Customers can use our centralised hosted service or they can run their own node locally.

The next big task ahead of us is to take our existing open-source solution and adapt it to a decentralised and tokenised network. In the SubQuery Network, anyone can participate in the ecosystem and reward for doing so.

We expect that this will massively increase the protocols uptime, provide better redundancy, and increase performance by driving down latency. We envision that applications will be able to use GraphQL to query any store of data (as defined by the SubQuery Project) from Indexers around the network. You won’t have to be technical. We have delegators that can be handsomely rewarded for supporting the right indexer!

We believe that it’s better to start with a centralised solution and then move to a decentralised one. We believe that you can more easily find a product market fit with a centralised solution first. You can ensure that you are building the right thing for customers first before wasting a huge amount of effort building a decentralised solution that nobody needs.

Ishan Pandey: Can you tell us a little bit about Polkadot and what are the advantages of building on the Polkadot Substrate? As compared to Ethereum, Solana, Terra and Cardano?

Sam Zou: The core premise of Polkadot is to create a thriving community of developers, users, and businesses that will tap into its multichain interoperability. Apart from performance, scalability, and governance improvements that Polkadot has pioneered, I think the most important aspect is how Polkadot acts as a layer-0 chain. Polkadot provides a core language, communication protocol, common block time, and governance framework that foster a community of parachains (blockchains in their own right that connect to Polkadot).

Building on Polkadot means building in one of the friendliest blockchain communities out there, where everyone knows a lot about their own domain but freely shares knowledge around the community. Where you can easily work with any other project because the foundational interoperability protocols are already baked in. There’s reasons why many developers have followed the co-founder of Ethereum here.

We stand by the idea that a community of blockchains, working together to improve the crypto space, is the future and we also believe Polkadot will be a leading player in that initiative. But with the growth of Polkadot and the introduction of parachains, data has become more complex to access. The personalization of data to individual blockchains creates the need for a service that can rapidly grab data to be used for all teams and apps on other ecosystems. SubQuery aims to be that service.

Ishan Pandey: What are your views on the rising gas fees on Ethereum? Further, what problems are projects and users facing due to it?

Sam Zou: We made a very deliberate choice not to build on Ethereum several years ago as it was clear that the structure was not conducive to high-throughput at low transaction costs. Of course, we are now seeing many scaling solutions being built to address this and Ethereum also attempting to address the issues directly. But in a way, the inability of Ethereum to adapt and make the required changes to mitigate these rising gas costs are a symptom of good governance controls. Software is constantly involved, and a blockchain protocol should be no different.

In a way, working on Polkadot, which is essentially feeless, means that we can experiment much more with micropayments and other transactions that would be prohibitively costly on Ethereum. We’re constantly looking for ways to improve our utility token’s economic model to take advantage of this.

Ishan Pandey: What are your views on regulating DeFi? Further, what are your views on SEC stopping Coinbase’s lending program?

Sam Zou: DeFi was and is the logical first step for blockchain, it’s been by far the most application of the technology so far and innovation will only continue.

We welcome regulations that provide clarity to how companies can operate around the world, but we are concerned for any reactionary legislation or regulation that results in a “sledgehammer” style approach to the industry. We think it’s troubling for consumer protection reasons that a regulated and completely legal entity like Coinbase cannot provide similar services that many other unregulated and more shady operations provide.

Ishan Pandey: Bitcoin has broken the previous all-time high and reached a new milestone of $67,000 approximately, drawing worldwide attention to the cryptocurrency market. This came after it was listed as an exchange-traded fund (ETF) in the United States. What will be the overall impact of this sudden boom on the global economy?

Sam Zou: I think we are in uncharted waters somewhat, so it’s hard to predict what might occur in the short-to-medium term. Obviously, asset prices are elevated around the world and crypto is a beneficiary of the monetary easing policies, but how the central banks respond and what impact the latest COVID variant may have on economic recovery efforts is going to be something to watch. Clearly, during this cycle, we have seen crypto becoming a more credible asset and people are starting to understand its impact on technology, rather than just a financial instrument. When you look at that perspective and with a longer time frame, we are incredibly bullish.

Ishan Pandey: What role has the pandemic played in allowing traders to profit from cryptocurrency investments? Also, what do you think the post-covid-19 scenario would look like for the blockchain ecosystem?

Sam Zou: Personally, I’m not much of a trader so I can’t speak for the degens out there. I have a long-term horizon for my own portfolio and allocate to projects that I believe have a fundamental role in our decentralised future and stake their tokens.

Personally, I can say that one positive thing that has come out of the pandemic has been that it allowed us to be very efficient in our fund-raising process. As we are based in New Zealand, we didn’t need to travel around the world for several meetings - it was concluded completely via Zoom, allowing us to keep building our project.

Another aspect of the pandemic is that while the lockdowns made it tough for us to recruit people overseas to immigrate to New Zealand, it allowed us to secure talent locally that were looking to get into new industries such as crypto plus hire others remotely.

Ishan Pandey: What advice would you give to entrepreneurs building their community from the ground up on Polkadot, Solana and Ethereum on how to bring users into their community and on marketing?

Sam Zou: One of the hallmarks of crypto is how community-driven, or in some cases even meme-driven, various ecosystems are. Entrepreneurs coming into the space need to understand this and get their hands dirty by being deeply involved within their chosen niche.

We were involved in the very early stages of Polkadot and built relationships with leaders across the ecosystem at various hackathons and events. In fact, some of our team were in the first-ever Polkadot hackathon. We understand how important it is to build relationships in this world. Your reputation is something that money can’t buy and can be lost with a single bad action.

In our case, we are quite fortunate that our project is infrastructure. The advantage here is that as we are building a fundamental part of the fabric of Polkadot we can talk to any team to provide our services. One of our key approaches with the community is that everything we announce is real. This is not common in crypto. By ‘real’, I mean that we only announce partnerships when we are actually engaged in something with another team, not just hype.

This type of approach has generated perhaps slower growth in some ways with our community but more authenticity and we are starting to see momentum and interest in us because of this style. I think entrepreneurs can be easily swayed by what others are doing and lose sight of the fact that if you want to build a brand or reputation that lasts, you need to do things the right way.

Ishan Pandey: According to you, what future trends are we going to see in the blockchain industry?

Sam Zou: I think the next phase of crypto will be the age of dApps. We will start to see user-friendly applications be developed in crypto that will take advantage of all the chains, protocols, and smart contracts that have been built. These applications will become more user-friendly, and will be marketed towards making it easier for those who are just entering crypto to participate in our ecosystem.

I think we’ll enter a golden period when apps are so good and the experience is so seamless that people don’t even know that the application they are using on their phone or browser is built on blockchain. We are building SubQuery with the specific goal to power the data within the next-generation of decentralized applications.