Writing: Sunny and David, TechFlow
Zerion: Evgeny Yurteav
Preface
Zerion is one of the most outstanding Web3 self-custody wallets at present, and needs no further introduction. It helps users easily manage their crypto assets, DeFi positions, and NFTs, and browse various decentralized applications (dApps) on various Ethereum Virtual Machine (EVM) chains.
In the world of currency, whether it is fiat or cryptocurrency, the importance of wallets is self-evident. After the DeFi Summer of 2019, Zerion stood out in the field of crypto wallets and became a well-known brand in both the East and the West. From the UI/UX design on mobile and web platforms to the layout of features, it is evident that the Zerion team has put a lot of thought and effort into the wallet tool. Building a consumer software product that can stand the test of time and user experience is no easy task, as it greatly tests the founders' understanding and vision of the industry: a significant part of the objective presentation of a product is an abstract mapping of the founders' thoughts.
Recently, DeepChain had the privilege of inviting Zerion's CEO, Evgeny Yurteav, for an in-depth conversation on wallet-related topics and industry development trends.
In previous interviews, we also found that Zerion's development was not without its challenges. Before the DeFi Summer, the team also faced a standstill and layoffs due to burning through early-stage financing. As the saying goes, "A strong fort has flowing water, and a strong army," as long as the core team and product are solid, hardships are only temporary, and this is an encouragement for many projects currently in the bear market stage.
In the discussion with Evgeny (Evg), we approached from three perspectives: 1. Zerion's founding story and team spirit, 2. Evolution of Web3 wallets, 3. Observing current industry hot topics (account abstraction, Layer2s, Privacy, and SocialFi) and how they influence each other, hoping to provide some inspiration for those of us in the bear market stage.
Chapter One: Zerion's Founding Story and Team Spirit
Evg started to get involved in cryptocurrency in 2014. At that time, the release of the Ethereum Whitepaper made him realize that the limitation of blockchain being only applicable to finance had been broken, and the innovation of smart contracts could open up a new era of decentralized internet. At that time, Evg was still a college student. In 2016, Evg and his like-minded college friends Vadim (Zerion COO) and Alex (Zerion CTO) participated in many crypto hackathons and started an entrepreneurial project of a B2B smart contract SaaS platform. After Evg went to California, USA for further studies, the three of them worked remotely. The project didn't evolve into Zerion until 2018.
When asked how Zerion balances the distributed remote work of a 40-person team, Evg gave the following answer:
"One of our values is autonomous individuals. The act of using a self-custody wallet embodies a deeper meaning. This meaning refers to people taking responsibility for their own lives, as well as their finances, just like in a self-custody wallet. This value of self-management is very important."
The essence of self-custody products can also be applied to team management. An excellent entrepreneurial team has the ability to self-manage. When thinking about self-management in the context of individuals, Evg also applied this thinking to designing self-custody wallets, deeply creating products from the user's perspective.
Perhaps to many outsiders, Zerion seems to be a relatively conservative company, taking a very traditional approach in its market strategy, such as to this day, Zerion has not created revenue or attracted more users through token issuance. In Evg's view, spending time thinking about the product iteration path to adapt to user needs is more important than quickly taking action to create emotional value.
"I believe that at every stage and in everything, we need to maintain cautious thinking throughout the process. I think this really helps to deal with all the worst-case scenarios. So, if you are really blinded by the bull market, thinking that everything will always be like this, that is the only factor that could ruin you or your company."
Evg believes that thinking clearly before executing, whether in product design, when to raise funds, or adjusting operating costs, is very important. Even in the early stages of fundraising, carefully selecting investors, especially lead investors, is also crucial. This mindset also applies to employee recruitment.
It is worth noting that each member of Zerion's team is capable of taking on significant responsibilities. Above self-management and thoughtful thinking, the team spirit and style are very prominent. Therefore, we are also very curious about its company management style. At only 27 years old, he has already been considered one of the future 30 unicorns by Insider magazine. So, what secrets does he have as a CEO?
"I emphasize teamwork, deep understanding of the market, and each team member becoming a professional in their field, and through feedback channels, gathering these opinions to collectively build a product that is fairer and better than the competition."
Evg is also very humble about this, and he believes that his style of doing things is not innovative, essentially a balance of giving and taking: obtaining external information, thinking about it, and then creating value for the world. Zerion is not the first company to realize this.
Reading, understanding the basic reasons for industry and surrounding events, and teamwork are some of the methods Evg uses as a CEO, and he is still learning how to manage remote teams more efficiently and adapt to the rapidly changing dynamics of the crypto industry.
"I just want to achieve a certain level of understanding in a certain field or skill, perhaps reaching 80% understanding. Then, I am ready to delegate the task to someone who can do it better. But at least I still have a certain understanding. This allows me to maintain a structural understanding of something, and even help in some cross-team communication or certain people's decisions. Sometimes other team members lack a more horizontal understanding of the company."
Chapter Two: Evolution of Web3 Wallet Products
After five years of development, from Pre-seed to today's Series B stage, Zerion's product has evolved from a parallel DeFi interaction interface to the vertical field of non-custodial wallets. As the product becomes more refined, it is inevitable to ask how Zerion, as a wallet company, achieves decentralization and ensures the high security of the wallet. Regarding the competition's release of Layer 2, how does Zerion view it?
For how a wallet company achieves decentralization, Evg has two very clear product ideas:
Non-custodial wallets (decentralized);
Blockchain interfaces that can be verified on-chain (user experience);
Non-custodial wallets need no further explanation. Compared to custodial wallets of centralized exchanges, non-custodial wallets represent decentralized finance, which is the essence of blockchain cryptography. As for the second point, what does "can be verified on-chain" mean? Evg points out:
"Most people even associate Etherscan with the actual state of the blockchain, rather than just viewing it as an access interface."
In fact, for consumers, it is very difficult to see in real time what is happening on the blockchain, so Zerion and Etherscan, to a certain extent, empathize with each other, providing consumers with a readable real-time DeFi interface through efficient backend data mining, labeling, and processing. It is this additional UI/UX design and market-oriented feature layout that can enable more people to use DeFi. So, if you ask a data company how to decentralize, the answer can only be:
"While pursuing decentralization, we also need to balance the usability of the user experience, because only by having users can we continue to grow."
Because decentralized data storage is not the task of a wallet company, naturally there are decentralized data storage companies to solve this. Until there are efficient and secure solutions for blockchain scalability, providing usable and efficient DeFi interfaces currently requires compromising decentralization to improve the user experience.
"We know that some blockchain systems have some problems in terms of scalability. Until recently, they have become more scalable and applicable to a wider range of tasks."
So, is Layer2 an effective solution for decentralized interfaces? Regarding deBank's Layer2 deployment, Evg believes that this is more like establishing a social layer on top of Layer1.
And at the application level of wallets:
"For wallets like Metamask, this will indeed be biased. If they choose to support zk-rollup, they are likely to choose their own solution, and if the solution is built through consensus, it will cause problems for users. Therefore, from a commercial perspective, this may be detrimental to end consumers."
From the perspective of wallet projects, Layer2 can provide a better profit model for wallet service providers, but from the consumer's perspective, it loses the neutral value of the wallet.
"I don't think wallets need to move towards having their own scaling solution (L2) like having their own. L2 can exist independently of wallets. This is the ideal situation, but according to recent trends, maybe this won't happen, and each project will launch its own L2 and move all transaction activities to its own L2."
So, is Layer2 a way for wallet companies to issue tokens?
Evg indicates that Zerion's current profit model is nothing more than:
C-end transaction fees for dex on a per-use basis;
B-end API fees;
Additionally, Evg believes that a subscription model is not suitable for Web3.
"Perhaps having its own blockchain is a way forward for tokenizing wallets, but the two are still independent of each other."
Metamask is currently also inclined to move to Linea. However, Evg states that there is currently no successful token economic model at the wallet level that can support wallet tokenization.
"For wallets, the future direction is not yet clear, as there is currently no successful token model in the wallet field. Additionally, the scalability of the technology is not sufficient to migrate most of our on-chain operations, and making them protocolized is even more difficult."
As for the future development, only time will tell.
Regarding wallet security, Evg also mentioned that in the future, Zerion will not only add a separate security notice on the landing page, but will also open-source some of the code related to key management.
"Zerion's key handling is based on the Trust Key Management Library, which has been around for a long time. It is an open-source standard shared in the field."
Zerion is relatively conservative in the execution of its core products. On top of improving the C-end products, user experience is the top priority. Zerion is cautious about any changes related to user experience, approaching problems from the user's perspective.
Chapter Three: The Interweaving of Four Major Industry Trends
If you have attended various events this year, you may have noticed Evg appearing at various venues, such as Eth Denver in the spring, EdCon in Montenegro in early summer, and ETHcc in Paris in the summer. Perhaps in the next conference in the fall, you may also catch a glimpse of him at the venue. Like you, Evg also wants to understand what is currently happening in the crypto industry, and what new technologies and trends are emerging. Under the subdued bear market, it seems that the development direction of the market has become very clear at the Ethereum community conferences: account abstraction, zk scalability (Layer2), and privacy protection. On-chain social (SocialFi) also seems to be a major trend, although it is not yet clear in terms of user adoption.
For these four different directions, Evg has different reflections.
On-Chain Identity and Social (SocialFi)
Evg believes that many of the current on-chain social applications, such as Lens Protocol and Farcaster, are early on-chain experiments. However, in order to achieve true social application adoption and compete with Twitter, there must be some innovations that we have not yet seen in the market, because unlike Web2, on-chain social carries financial attributes.
"I think it's just a matter of time, but we need technology to mature a bit, and most importantly, we need a flood of social users."
Although on-chain social has not yet seen effective Go-to-Market, the on-chain identity (DID) that supports on-chain social is currently in full swing.
"I have great confidence in the concept of on-chain identity. I think ultimately we will definitely move in this direction. I am very excited about the future because we no longer need Facebook or Google as our identity managers, which is currently the reality."
In the on-chain identity race, ENS currently holds the largest market share, and Zerion's Dynamic NFT Avatar ('DNA') decentralized identity ranks second.
"We have seen how identity is formed around_ public keys, essentially associated with ENS__ (Ethereum Name Service), so it becomes the user's name. Then, the personal avatar (PFP) can be associated with the same public key. So, users can gradually shape their identity, and it is not only associated with a specific blockchain._"
Unlike Web2 social platforms, having decentralized on-chain identity does not simply mean that you can tweet from a Public Key identity, but it records all your on-chain footprints in an encrypted form, and a person's on-chain footprint is much larger than the statements made on social platforms.
"I think the future of identity will move in this direction. The current challenge is how to merge different identity fragments, such as account abstraction wallets on different blockchains, onto the same address?"
Privacy
In the author's view, a unified on-chain identity application must be supported by mature privacy. Similar to Web2, a portion of the market value created by a user's on-chain footprint should be returned to the user. However, this is difficult to standardize without mature privacy.
Evg believes that the current market demand for privacy from users is not very strong, as the scale of on-chain data is currently relatively small. Most of the current demand for privacy comes from those who are anti-government and anti-institutional, and is still not mainstream. More people are entering Web3 out of curiosity about decentralized finance technology rather than absolute privacy (true anonymity).
However, Evg believes that the connection between privacy and on-chain identity is a very interesting perspective. But he believes that before industry standards mature:
"First, I think we need to establish better identity verification methods throughout the entire blockchain ecosystem and the Web3 world, whether in the wallet or other identity management aspects."
"Then, we rely on these wallet providers to provide more privacy protection, such as privacy addresses mentioned by Vitalik in a blog post, and more recently, a post about different smart accounts controlled by a single account, but in reality, they are not linked on-chain, only the user's wallet knows which addresses are connected to each other."
"I think this is the first step towards a more private system."
"A good analogy is in the example of Bitcoin, where users need to view each unspent transaction output (UTXO), and users can parse out which ones belong to them. So, in this case, the only one who can parse the content belonging to a specific wallet will be the wallet provider, the software that can locally store all the necessary knowledge."
Most users are concerned not about true anonymity (non-transparent on-chain footprint) but about a certain level of transaction privacy. So, to some extent, this is also a service that wallet companies need to provide to users. Different wallet companies will also compete in providing privacy services.
"In terms of product form, I believe Zerion should have a privacy account feature in the future, so you can deploy a smart account controlled by you, but it will not be associated with the other wallets you own. We will help you manage this separate private entity. "
Account Abstraction
What exactly is a smart contract wallet/account abstraction? Evg has a straightforward and understandable explanation and his personal understanding:
"The abstract part is just the** private keys** and key pairs."
"These** smart accounts are actually just smart contracts compatible with some standard**, and all transactions sent from these types of wallets will be called user operations."
"Account abstraction_ will form a separate pool, processed by other__ relayers, and executed on behalf of the user. Since these new accounts are smart contracts_, users can enjoy all the benefits of upgrading them, which means users can improve them, and even add new features, such as transaction fee payment, token payment, social recovery, or any module you can imagine, such as buying Ethereum every few weeks or any logic you want to add, can ultimately be attached to the user's smart account."
"The key is standardization."
However, Evg believes that the barrier to large-scale use of smart wallets for both wallets and users is the high cost.
First, deploying them on-chain, let alone on every chain, is costly. In comparison, EOA does not need to be deployed, and every chain comes with an EOA wallet by default.
Second, the transaction cost of smart wallets is 3 to 5 times higher than that of EOA. Ultimately, it is the consumer who has to bear this cost.
Deploying smart contract wallets on Layer2 is more cost-effective. However, Evg still shows a hesitant attitude towards the current application status of smart wallets, but the current intuition is that in the future, Layer2 will standardize smart contract wallets:
"It does make more sense to abstract everything on Ethereum. However, the reality may not be so. Frankly, Layer2 may become the long-term solution adopted by Ethereum. But maybe that's okay. Perhaps Ethereum no longer cares about this issue, or perhaps Ethereum will only be a collection of all the Layer2 solutions connected to it in the future."
Zero-Knowledge Proofs and Layer 2
It is believed that zero-knowledge proofs provide technical support for blockchain scalability. The three points mentioned above, on-chain social, privacy, and smart contract wallets, all seem to be inseparable from Layer2. Only the maturity of infrastructure can drive the potential of more on-chain applications. However, the security of Layer2 is still a question mark.
Evg mentioned that he is very enthusiastic about practicing on-chain applications to test the market's response. In the on-chain identity race, Zerion will bind users with 'DNA', and the current success is something the team is very proud of. As for Layer2 and smart contract wallets, Evg ultimately shows a positive attitude and indicates that a smart wallet experience version will be released in the near future.
Afterword: Outlook on Staking
When asked if he saw other interesting industry innovations at the conference, Evg mentioned "Staking," and he believes that "Staking" will be the first industry-level financial driver, as it will provide more product possibilities for DeFi, allowing the industry to earn stable returns, not just fluctuating investment returns based on transaction volume.
Evg speculates that having more liquidity and staked tokens will help the entire ecosystem and companies earn more money in this area. For example, without bridging, you can allow more people to transfer tokens to your platform, such as if you operate a decentralized finance (DeFi) or social network and require people to stake tokens on Ethereum, and then release these tokens on your Layer2 network. Therefore, all the tokens that were previously in this bridge, you can start using them to generate income. So it's a bit like a small bank, but a decentralized bank. And the more attractive your use case, the more money you can earn. So it opens up a profit opportunity for non-transaction-related applications.
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