 When we want to build VAP3, our goal is that users in control of their data, they control their money and assets. This is Ilya Polosukhin, he's the co-founder of NIR, a layer one blockchain protocol that aims to build the foundation of a new internet by addressing Ethereum's limitations. We need easy programmability, we need kind of composability that is natural to the applications. And so I don't see the current Ethereum evolutions targeting any of those goals. NIR protocol was among last year's fastest growing crypto projects. The value of its native token, NIR, increased by over a thousand percent in 2021. But what are the fundamentals behind NIR's impressive growth? And how does it plan to stand out in the increasingly fierce layer one competition? Find out in our latest Cointelegraph interview. You in a blog post said that back in 2018 you were just starting working on the NIR protocol and at that time a blockchain was expensive, difficult to use and not very scalable. It lacked the foundation for mass adoption. So what progress have been made? What have changed since then? Yeah, I think I would say as a space we've done a lot of work to advance that status. I mean, NIR along with a few other blockchains have definitely pushed the limit on what you can do with scalability, what you can do with capacity of the network such that a lot more people can participate and work with it. And obviously at NIR we've been focused a lot on how to reduce barriers to entry. How do we make users easier to onboard? From our side, we see the barrier to entry as well on developer side, right? Like learning new language, learning new paradigms, complex, it takes time. And so kind of reducing that barrier to entry through common programming languages like JavaScript and Rust and there are other folks in the industry have been doing that as well has been also tremendous because it allows to inject more developers and we see that through the growth of the developer space in general. But still, don't you think that it's still a bit far from being considered mainstream and talking about mass adoption? Because I personally know no one who has been regularly using the apps in their everyday routine. So from that perspective, what is the problem still there? Yeah, so I would say we have a foundation, but yeah, we still need to build the actual building. One problem is if even when you want to build a kind of more consumer focused app, you're facing this kind of high risk around regulatory right now with blockchain. And that obviously trumps a lot of the innovation and ability for people to execute. To progress forward, we need like more clear regulations, more clear paths for founders and users as well to actually come in and do these platforms. My expectation is that throughout this year, we'll see a lot of this changing and a lot of apps actually hitting like million users who are actually like a dapp underneath or using part of the app is actually using blockchain, but not the full app, right? Like we all see this kind of more mixed versions of things. There's millions of users. Back in December, you said in a tweet that the current defined for structure is not mature enough to handle the next 10x, 100x growth, both in assets and users. So what should be done to address this scalability problem? DeFi applications, they are all designed at kind of, I would say a lower gear use cases, right? Like AMM, if you're constantly using AMM, right? You're just creating lots of arbitrage, right? That's why the stock markets are not using kind of automatic market makers. They are a stock market. There's a market. There's order books. There's lots of trading going on. And so we need to kind of go into like level above that and build like both financial infrastructure, right? That's kind of viable. We need the experience to also rival custodians, a kind of financially viable only for a subset of players in the market, right? So like what is the versions of this for kind of market here? What is the Robinhood, right? Version of this as well. And at the same time, there's like treasury management, there is, you know, derivatives. There's all these instruments that exist in traditional markets that are right now only just kind of starting to get together in DeFi. And some of them like security around, you know, like all of the financial instruments in traditional market have an active security model, right? It's not kind of passive, oh, my seed phrase, you're over stolen and all the money gone. Like that never happens. Like there's an active security thread. There's, you know, machine learning models that analyzes, you know, multiple double checks on outlier behavior. Like there's all those instruments that we're not using right now in crypto to actually create both kind of security as well as compliance, as well as just like better user experience. And so that's what I see kind of when I say infrastructure is like a whole, I would say layer of financial instruments that are missing. It's a whole layer of kind of security and user experience pieces that are missing. And then access to kind of more broad access to things like custody and or like, or mixed custody options, right, where you, you know, you know that your money will not be stolen because there's a custodian who is holding them. But at the same time, the custodian cannot steal your money either, right? Like that kind of models we need to build in the ecosystem. And then we can kind of see growth in assets and growth in users beyond this. Right. So you just need to create these security systems in a decentralized way so that they emulate those ones that are already in place in traditional finance. Yeah. Yeah. But like this is one of the pieces. So like this is like kind of a layered cake of pieces that we need to grow in a way to get to the same level. And then we can kind of continue scaling the usage of these platforms. Yeah. So basically security and again, and then other component is compliance, as far as I understand you mentioned. Compliance is a big part and kind of more, I would say, traditional instruments like derivatives, you know, like ability to do kind of diversification, treasure management, you know, hedging, all this stuff, right? Like how do you, you know, right now you need to manually click, like if you want to hedge your like position in some form, you need to manually click to claim and stake to like maybe buy some other token, all this stuff, right? That's not usually how you do things in more traditional instruments. Like the power is you can do all those things yourself, which maybe in traditional markets you wouldn't even be able to because you need a hundred million under management to even have access to those instruments, right? But the thing is like we don't have those instruments if you do have a hundred million, right? So that's kind of the mix right now. So you said that the Web 3 is not about a single killer app, but it's more about a composition of apps. So can you expand on this thought and explain what you meant by that? For sure, yeah. So this is kind of, I mean, people always like go and look for a killer app, right, for everything. And so from my perspective, because of the inversion of model, right? Like when we want to build Web 3, our goal is that users in control of their data, they control their money and assets, they, you know, are able to govern these platforms, which means there is no need for to build like a, you know, everything fulfilling like a platform, right? Like you don't need to build a Facebook that will have all the apps inside it, everything inside it to have access to this data, right? It's an inverse model, right? Similar to Google. Google is like packing more and more things into itself. And so it's an inverse model where the users are users of the platform, but they can go into any app, right? Very easily. And so it's the same as like there's no killer website, you know, Google just shows you all like websites you need, kind of similar model. Google inverts the, you know, before people would go to a specific website and would use it and they would remember it, but then Google came and now you don't need to remember a specific website. You just find the app or website you need right now and Google always finds this information. But the more interesting thing what the website provides is this ability to compose things, right? Let's say we, that Instagram example I mentioned that Instagram itself is a powerful platform. It has a lot of users, but it doesn't allow people to build on top of it. It doesn't allow to build, you know, for example, I've heard multiple people trying to build some kind of brand to influence your marketplace, right? The ability for brands and influencers to connect, to create some kind of campaigns around that, you know, cloud models, all those things that you would imagine around something like Instagram where you have influencers, where you have content, where you have kind of this propagation. But if we look at web three, I mentioned your mentor is the same experience, but it's an open platform. Now the NFTs they mint are show up in other markets. The mentors themselves, the influencers themselves are now accessible in all the other marketplaces. You can build easily a marketplace where, for example, somebody can reach out to this influencer, but even more so, the influencers themselves can turn their account into a DAO. This is actually one of the pretty unique features of NIR because accounts and contracts are the same. You can actually turn your account into like a more complex model over time. And so you can turn your account into a DAO, issue a token, and let brands, for example, buys this token to, for example, influence or promote some of the products they're doing. So you can create like more, like you can turn your personal brand into a business. You can turn business into a personal brand. You can like do all those things. And it's all mullible and kind of changing, which is what, you know, the power is. And we see this in EFI specifically, because yes, I mean, obviously exchange is probably a quote unquote killer app of finance, but like it's not just exchange, right? There's so many other components that are working all together. The money is flowing. There's a lot of experimentation and things that are happening. And this is because the money are actually not inside this application, not inside some brokerage, not inside some bank. They're on the user's account, and they are able to kind of interact with any app using these assets kind of going through. And so that's kind of, for me, that's what web series is, is this idea of kind of infant composability and that owned by the user because the data is on their side. Yeah, that's very fascinating. So the bottom line is having this core, which is the user that is the owner of all his own data. And then the user can freely interact with this multitude of different apps and experiences without having to rely on one specific of them. It's more of a kind of horizontal sort of system. Yeah, and you don't need to wait like, oh, will Instagram add this feature or not? Like some developer will build this feature as a separate app, and you can use it, right? Things like that. You can easily flow between things kind of versus your locked in this platform and waiting until the developers of that platform do something. And so that's why it's going to be like a lot more kind of fractured in some way. But then at the same time, it's all linked together. We haven't heard much about killer apps anymore for the last, I mean, personally, I haven't heard about that kind of concept for a while. And probably it's because everyone is realizing that that's not the point that I've been hearing much more about, yeah, like the importance of composability, and the possibility to build a universe, a completely new internet that cannot rely on a killer app, because a killer app is by itself some sort of centralized. Near protocol has been considered the third fastest growing community for developers currently in the crypto space. So what do you think is the main factor that is attracting so many developers to come to your platform? Yeah, so I mentioned kind of our focus on developer experience and user experience is probably one of the key attractors. And common web languages like JavaScript that we support, we also support Rust, which is the most loved language in developer community. And then we also like more languages are coming, there's more like specific languages, but like all of this can can compound to the same platform and interact with itself. And then on the other side, the user experience that they can build, right, this onboarding experiences which hide blockchain is, you know, provided tremendous kind of asset for developers, especially the web developers who are coming who are like, okay, I want to learn that three, but you know, I've been building web applications, I know exactly how users should go to the flow. And you know, that three experiences all broken. So we actually, you know, be focusing on making that experience really straightforward. And then we've been doing a lot just kind of like scale scale up through 1000 deals and now original hubs is this idea of like, it cannot be, you know, a foundation or some developer companies, it's all about community, right. And so we have a really powerful community that's kind of like around the world is actually educating, you know, bringing people having meetups, participating events and actually like teaching people about near and teaching people like how easy to build for developers side as well as just like being able to kind of attract the new people into this ecosystem. And then the final component I want to mention is we announced $800 million in funding. And so all this is that as well kind of attracts developers because there's a lot to build. And so that that part is like, you know, funding development of core components that then other people can build on top their own companies and projects have been very powerful as well. So I would say, you know, ease of building ease of use for their users, education community and funding. Okay. And now I would like maybe you to compare us, compare the near near protocol with one of the other fastest growing protocols layer one protocols that we saw in 2021, which is Solana. What is the main point of differentiation or maybe a competitive advantage that you would see in a protocol like near protocol if compared to Solana, for example? For sure. Yeah. So there are kind of three pieces of differentiation from that that were like our core value proposition in the first place. First of all, it's the skill ability. The way we approach skill ability is by sharding the processing, right? And this is the idea that, you know, Google, Facebook, all those companies, web companies, they don't process everything on one machine. They, you know, shard processing, they have users, you know, accessing different computers at all times. And so that's a natural way to how we scale beyond what one computer can do. And pretty much all the non sharded blockchain including Solana are approaching it as let's just put a bigger machine or optimize how we process things. But it's still limited by capacity of what single machine can do. And obviously, like Solana goes out at it with like, hey, you know, let's build a better hardware that is able to process more transactions and let optimize how we use this hardware, which gives them a pretty good kind of, I would say, space to fill. But our approach is we actually can continue scaling number of computers that processing things in parallel, right? So an increased number of shards over time to continue scaling and, you know, reach and be able to handle the billion or more users. And the second thing is this the simplicity of usage and development allows you to have a single single, like a private key that's used for me for one time, it allows you to kind of create this like link experiences where you can sign a transaction like a user can sign a transaction I mean their front end without needing to go to a wallet every time, right? So for gaming, for example, it's instrumental to not needing to go every action that you do in a game to go and sign a wallet, right? And so we can actually grant the access to the app for specific set of actions once and then the app can sign transactions that we have for this set of actions, right? So this is all kind of unique of enablers that you know, your ecosystem does. And then on the other side, like the common languages, so Solana does support Rust, but their programming model is more similar to kind of how you program hardware, right? You need to understand blocks of memory, you need to kind of preload a lot of like you need to lay out and preload existing things near is more like building a web service, you have a key value store and you're writing your logic and that access is key value store. So it's very similar in conceptually to people who are building web services, who are building kind of existing microservices architectures. And so which there's a lot more people like that than people building hardware. And so that that I would say like kind of three main kind of differentiators. Joy Krug, the Co-Chief Investment Officer at Pantera Capital, believes that Ethereum's competitors such as NIR are unlikely to threaten its dominance in the crypto market. So on the contrary, he believes that assuming Ethereum will complete its transition to a proof-of-stake system, eventually all these competitors that are springing up will eventually rely on Ethereum as a base. So what do you think about this vision? Yeah, so from my perspective Ethereum is not a competitor kind of Ethereum. In many ways, we know we're learning from them. We've been building on top of some of the ideas that that community came up. And in general kind of Ethereum is more of a community for me than like a specific piece of technology. But at the same time, kind of our vision is like very clear, right? We want to achieve, you know, this web 3 was billions of users. And like to do that, we need kind of the things that are outlined. We need simplicity of users. We need easy programmability. We need kind of composability that is, you know, natural to the applications. And so I don't see the current Ethereum evolutions targeting any of those goals, right? They are solving their issues they have that the community wants to address. And that's great. But at the same time, we see kind of the coexistence here and us continue to evolve into the vision that are outlined, right? The ability to bring those billions of users to give them applications that are really cross-linked and power it. And at the same time, we are kind of have a bridge that connects to Ethereum. Like it's a generic, you know, fully secure bridge. This rainbow bridge is the only, as far as I know, the only likeline bridge that connects to Ethereum right now, which is like as secure as it possibly can be without doing full verification of both chains. And so kind of that allows not just to send tokens around, but it actually allows to read the state of each chain from the other chain. So you can actually pass any generic messages between them and execute contracts and do things like that. So like over time, there will be a lot more kind of cross-chain applications as well. If that's what users kind of expect. Okay, you said something interesting earlier. You said that the Ethereum community is not focused that much on creating this vision of interoperability and composability that is at the core of the near protocols mission. Am I understanding it correctly? So I would say like the current, currently as I understand it, the Ethereum community, right, the parts I see, people are focused on, you know, financial people are focused on kind of assets on creating kind of value and Ethereum being a settlement player, right? And that's a pretty kind of heavy focus on that. And, you know, at least the previous year of switching from building a sharded Ethereum to building a data shards and roll-up, right? Like roll-ups naturally will kind of create less composability and create more kind of sub-spaces in which things are happening. But they're obviously useful for specific like financial use cases and specific other use cases as well. So, but obviously they create like some separation versus, you know, nearest vision by doing sharding, by actually scaling up the kind of composable structure, we allow to have a lot more applications running kind of closely with each other, with the same account model, with the same financial models as well. So I would say like the kind of divisions, at least again, this is the vision that's been communicated through the roll-ups, through the kind of this roll-up centric vision have been diverging. Okay, and now final question. I would like to ask you regarding the latest funding round that you closed not long ago. You closed $150 million funding round not long ago. So how are you going to deploy those funds in the course of 2022? Yeah, so the funding in general is all kind of being allocated to accelerate the adoption of website. That's our mission and that's what we're doing. And so this is by, you know, funding and kind of developing the community, the global community raising awareness of near and then funding this projects and kind of an ecosystem in general, right? We have, you know, kind of grants, grants program that being kind of funding projects in the ecosystem and kind of accelerating their development. And then, you know, through the community, we're also kind of powering a lot of it. Awesome. Thanks a lot, Ilya, for coming on our show. Thank you. Thank you for inviting.