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Decentralised.co
Sanket Shah from Polygon
How do you scale as an employee alongside a network that is on its way to a multi-billion dollar valuation? What does it take to go from being an intern to Head of Strategy at a network that has acquired some of the most talented people in Web3? Sankset Shah may have the answers.
In today’s episode, he joins us to discuss his journey over the years with Polygon Network. Early on, he had joined in a part-time capacity while juggling the needs of a startup and B-School. In his own words, he “focused where the fire was”. That focus had him juggling roles in marketing, BD and strategy. He joins us to explain Polygon’s evolution over the years and what’s next for the network trying to be the trust layer for the internet.
Tune in for a brief on how early-stage employees adapt to the needs of a rapidly growing rocket ship and a good explainer on what’s cooking under the hood at Polygon Network.
Hi, this is the Deco Podcast and I'm your host, saurav. Before we begin, views expressed here are personal opinions. None of this is any kind of advice, let alone financial or legal. It's a conversation about things we find interesting. Today we are joined by Sanket Shah. He is the head of strategy at Polygon and someone who has seen Polygon grow from very, very close quarters at Polygon, and someone who's seen Polygon grow from very, very close quarters. I also have Sid joining in as a host, and Sid knows Sanket since a very, very long time. And, sid, why don't you introduce?
Speaker 2:Sanket here. Sure, I think I've had the pleasure of knowing Sanket for the last five years. Incidentally, he's served a lot of roles at Polygon right Right, from being an investor, then coming on board as an intern and, I think, leading with development, to now leading strategy right. So there are a lot of hats that he's donned and he's been a part of the company even before he came on board as an investor. Right, he was a part of a core group of crypto folks in Mumbai and he's tracked the progress of Polygon and back in the days matic right like ever since. So happy to have him.
Speaker 1:I think there's a lot to unpack sanket sir, I first want to learn about investor before intern thank you so much, uh, sorab, and said for having me here.
Speaker 3:Good, let me try to unpack. Uh, I think sid said a lot of things which I think would probably not make sense. I'll probably start from the queue sort of you gave me. So, as Sid mentioned, like why Journey more started much earlier, more as a Bitcoin miner who is trying to learn about crypto, to kind of running this Bitcoin Mumbai group, because that's where I think the journey for me, ponygon, started. So that's where I got connected to JNT, or well known as JD, and also Sandeep. We used to, like you know, small WhatsApp group and you all used to, you know, talk about crypto and this was this time that Cambrian explosion of crypto in 2016, 2017, actually happened and that's how I think we got all connected and that's how my journey as an investor also started into the crypto world. This is how, initially, when I think jd at first thought about the idea of matic network back in the day, it was a very different idea, and then he had reached out to me because we're part of the same group and, yeah, things kind of didn't pan out the way it was, and I connected him to sandeep and that's how jv and sandeep kind of came together and then, yeah, then the rest is kind of history and that is how I also became one of the first, uh, angel tech.
Speaker 3:Very early when I think mattinger took was, I think back then he was one of the few indian startups that was kind of doing the crypto work more on the infrastructure side, because back then every other infrastructure startup was like you know this, a stanford harvard grad, like was done distributed computing and like really, really good resume, at least on paper. But this was this sort of indian small startup chugging out like this core infrastructure product of cleaning the ethereum. And that's how my journey started as an investor when you're new and yeah, then I kind of helped a few things on the tokenomics side or in the white paper of early days, working with sandeep and yeah. So after that I joined more as an intern where I was kind of doing more, more directed sort of thing, because on a parallel journey reason why this is how the timeline kind of panned out was like I think within a year of FATIC kind of forming itself, I ended up joining a mugby school in 2018.
Speaker 3:This was during the bear market and like, coming from, like you know, an Indian family, like there's always this thing around having a higher education figured out before you.
Speaker 3:Like you know, you start with your life. So, even after, like you know, becoming or investing in crypto and crypto and like figuring out stuff, this was still the path I ended up choosing and, at the same time, I used to kind of like get to part-time with my b-school at polygon, mainly figuring out some of this go-to market on the token army, because that's why I feel like investing during that 2017 cycle and, like with the community, I think I was like able to help and create like some like value addition for some meat back then. Like back then it was a much smaller team and they were still operating out of mumbai, so, yeah, so I think that's how the journey kind of started and this is where I used to work with sid, because sid was back then, full-time with poly1 and that's how I also ended up meeting sid, but that kind of helped give a color on what Sid was trying to explain and like how my journey started with Polygon.
Speaker 1:What was the idea back then, and how did it change along the way?
Speaker 3:So back then I remember the first time JD had pitched me like an idea was back then. Bitcoin arbitrage was a big thing. Like you know, bitcoin was. This was like, really, when Bitcoin shot for like $20,000 for journey. So there was this mispricing across regions and what ended up happening was there was a very good opportunity for someone, like you know, let's say, I buy something in some other exchange outside of India and sell it in India, or I buy, let's say, in Japan and sell it in some Korean exchange. So there was like pretty significant double-digit arbitragerage, even just from bitcoin. But it was very tough to move bitcoin because it was firstly very expensive and it was much slow because this arbitrage opportunity didn't last for like hours.
Speaker 3:So I think what jd's idea was creates all of this cloud exchange where all their exchange can just transfer like bitcoin on this.
Speaker 3:So it's like think of it as like a pseudo layer of where all exchanges can basically translate their bitcoin so that the confirmation can come faster.
Speaker 3:This was my view before, like lightning neto was a thing, or even like the glass bar paper was published. That is how it started and this was the initial idea already pitched and then obviously it revised over time to kind of what became like sort of a layer two, but more for ethereum application, because I think jd and I think he started building out some ethereum application I think dagger was one of the wallet notification app that I think they had built and back then they realized that this is not sustainable and I think the same idea that he was thinking for exchange, like yeah, we should have something for an application here, because the same problem would exist there and end there. I think that is how it was very crude where it started and then slowly it evolved into just scaling in general, first being like figuring out on Ethereum because of the plasma white paper there's a launch, even figuring out the other labels, because back then you know an icon or Qterm and all this.
Speaker 2:Yeah, they're making the near ones a little big thing and they're pretty much hyped because ethereum was still not that established as an ecosystem, so the audio was just a screen for every one of them, but then eventually it ended up like just focusing on ethereum because that grew just big as an ecosystem I think there were a lot of I don't want to say pivots right, but uh, when we started out the scaling atmatic envision to be derived on vitalik's plasma papers right, and I think it shifted to a posp l2 as as we started building that out, right, and eventually the end game for polygon is kind of veered towards zk or a full-fledged zk, evm right like uh, around which the current narrative of the Ag Lair is also being built, right. So, sanket, do you want to talk a little about how these transitions have been enabled, what part of it has to do with the market and what part of it is related to the ongoing research internally within the team?
Speaker 3:Yeah, I think, okay, I think let me maybe, you know, take a step in this. Probably, probably what started as this idea of scaling ethereum right and the whole idea, I would say one of the things over that whole journey was because of the way it started the distributors to kind of even raise like small capital initially. A lot of things are very frugal, that's like it was probably not a very I think at one point I remember the burn rate was like at best, like just uh, for forty thousand dollars per month, which for a crypto company back then were like the spending crazy, was like pretty insane in just how the team was run right. So pragmatism was one of the things that always was there and I think that understanding of capital market because I think, as a crypto, how that understanding those capital markets is also pretty important because of the way crypto as a, as a is an ecosystem is. So I think those things are one of the two key pillars of how you know whatever has happened in the journey, as sid mentioned, probably not pivot, it's just more pragmatism towards how the markets have been responding like initially, when you know bitcoin was a thing like the idea was just to scale like every other near one, but then slowly it kind of just moved towards just scaling ethereum, mainly because of how the market changed. So there was always this flexibility of how things that we want same with the way plasma.
Speaker 3:Initially plasma was pretty high, we started using it and people, I think, gave a good feedback around it. I think people thought like it would work, and there was this whole, I think, plasma research group and few other things where a lot of bright-minded folks like started researching around like what plasma can or cannot do. But eventually, I think, when it came to the developer usage right, there was always this friction where you had to write your own predicate and it was not very easy. Like if you're writing something in solidity, it was not just easy like a like you can just port it over from what their existing app is. On ethereum, on plus one network, you had to do a lot of custom predicate work, which was not something that any developer was willing to do. We tried out with few folks and then it didn't work out and even that sizzled out.
Speaker 3:And then there was this pragmatism where okay's like, okay, let's see what is being adopted, and that is where the Polygon POS chain in its current form is what kind of started, as it was a pure, I would say, proof of stake sidechain with its own sort of validator side and independent consensus with some checkpointing mechanisms on Ethereum, and that's what ended up getting this adoption within the developer community, mainly because it was very easy to just any developer can just quickly come and go, and I think one of the key things that ended up being part of was ava, and this is where the role d5 somewhat kind of exploded and that also kind of led to a lot of adoption for matic network, as bad than it was. So I think that is what, like part one of the journey, I would say, where this whole plasma to p-verse strategy but obviously p-verse was not the most, I would say, long-term solution kind of a chain, mainly because it had a given challenge. You can only like I think it was able to scale, I would say, 5 to 10x of the number of transactions, but given the way the the things are coming together in the ecosystem, I think it created a very significant or at least that is what I would like to believe in terms of this and it being like be part of this ethereum ecosystem in that sense, because any ethereum app could just deploy with a very, very low gas fee and also, from same, from the user side on this j, and that is what I think the intent was and that is what ended up happening. But obviously, if you tell us five years into this, was this though solution? That was in 2001, then probably that was not done and that's it.
Speaker 3:Zk kind of was was something that we took a conscious call to from the bet on and, uh, yeah, that said, I think, ended up spending around a billion dollars or behind that flexibility, having started with nothing and having that flexibility to invest like billions into new tech and just being more pragmatic about what is that long-term solution.
Speaker 3:Zk seemed like that fact and that's how the zk journey started, and I think with zk that we kind of incorporated and understood a lot of things.
Speaker 3:I think I can probably cover it in the later pieces of the discussion, but yeah, so that was the later pieces of the discussion. But yeah, that was the second phase of the ZK where I think that whole research angle kind of started fitting into how things could evolve and how the core Ethereum and the scaling infrastructure would move more towards ZK, and that's where even the current product, which is the AgLayer which is, I would say, a much, much different idea than what it initially was, but still kind of being a part of the same thing, where the whole idea was to like help scale, like the blockchain network, mainly Ethereum, so, but yeah, I think that's how the three part of some of this thing kind of ended up coming together. We are still kind of still to figure out of how Aglia is and can work, but yeah, but so far, I think it has been pretty good so far, even the initial reaction we have seen from the market and the developers.
Speaker 1:Okay, I think, Sanket, you've given me a lot to double click on with that answer, but I want to first sort of ask you about your journey from intern to head of strategy. Tell us, I mean, how would something like that happen? What is it that you did right along I mean along that journey? And yeah, like, just walk us through your experience.
Speaker 3:So I think, honestly speaking, there was always this. So, given how I started with Polygon, right so I was always just willing to help them whenever it was required. Like I think I remember back in my preschool that I was like studying some people that I used to just have a call around Okay, this is what's happening. Well, I think you were kind of still starting early and like figuring out, okay, how do I like? I remember like figuring out which influencers to talk to, or, like you know, there was this private groups back then, or like even the tokenomics, because back then, like you had to have your tokenomics structured in a certain way for you to figure out, like you know, how the market would kind of understand. I remember like I was just really just thinking like this was like with no strings attached in in that sense, and it was just fun for me because, you know, I had not seen that side of building very closely from anyone and I think just having someone do that that is what I think kind of excited me initially, and I think I believe that excitement kind of just sparked my way because even during my preschool I was just spending most of my time either trading or just figuring out stuff. I remember, almost for the first year, I was not able to just focus on what I was supposed to do in preschool. I was just spending time with either like like polygon team or like just figuring out something on the market side. I think, just that curiosity. I think that is what kind of stayed with me and what's my b school also.
Speaker 3:You know, I've never had this conviction, to be honest, to kind of join full-time crypto, because crypto no one what it has okay, a full-time career, like it was always this side gig that you were doing, mainly because I I think the incentive structure that worked in the market back then was more like you could still figure out and do the same thing by just being on the sideline. And I think that is where I think it took a lot of effort and like conviction from my side to also like commit to make it full-time. Just, I think before covid, where I just realized, okay, if, if there's something I need to spend most of my time in crypto and poly1 seems to be the like I ended up spending time irrespective of whatever I was doing so, like if there is anything, I should just bet on this, and that's when I just tried full-time and like that's when I think sir was uh doing bd and like few other things were kind of coming together there and uh, yeah, I think that is what started and I initially I didn't start it like head of strategy, it was more like just like a bd role and it was still a much smaller team. So people were more like generous, like whatever is required, you kind of just get it done, like that was kind of the way it worked. And then slowly, slowly, as this market traction and the whole plasma to POS taking started and the developer adoption started coming in, two things started working, because back then it was not like the outbound, so people didn't know Matic Network. It was so tough to get people to even respond to you. But suddenly this adoption from the developer side came in and so then we started things started working and everything started working in our favor and in that sense I think I ended up seeing like how, like the whole, like startup kind of just scaled. But I think back then polygon was like 200 million fd or something and by the time it sort of all of this kind of happened in the world, it was almost like 2828-29 billion.
Speaker 3:So it was a pretty good jump and in that whole journey I was fortunate enough being part of that thing from just doing BD, sometimes even marketing, or even sometimes just pure off-related stuff. I remember at some point for three, four months I ended up becoming part of the whole HR team and figuring out how to hire, because initially we did not ever had a proper HR team, we did not have a talent recruiting guy until I think we were 100 plus strong and I strongly believed few things like this is how we can, because I was always curious of how some of these things happened and when I was given this opportunity I was just taking whatever I was able to get in. So, yeah, even that HR or even for some sometimes like I was overseeing some of the finance and stuff with the team. So, yeah, I think there was this whole crazy period for I think around 10 to 12 months where whatever given on the plate you just figure out and like I would sit like just figure out, like a solution, around that until things started stabilizing and like I also started defining my own much better.
Speaker 3:Uh, moving from this to pd, to this thing, and the way I like to put it is, wherever there is a fire, I try to go and extinguish. That's how I think that, that my sort of role started evolving and I think to some extent, even right now it's kind of there. But but yeah, so I think that is how that whole journey it did it kind of happened. It was pretty chaotic, I would say, when it was like happening as of in that moment.
Speaker 3:But yeah, but I think when you start zooming out slowly, you start seeing like these bits and pieces and like in inside, as they say right, like the dots connect, always inside. So I think, yeah, things kind of worked out. But I would say that curiosity always was that main thing. That is what led to, because whenever you are thrown with some challenge, like I didn't know anything about HR or even, for that matter, like business development as an org, but it's more about like you know what needs to be figured out and you need to be like just focused on figuring out that and like just get the get work done. So I think, yeah, that's what kept me alive and that in the ecosystem, rather than Polygon Even at Deco we don't have set roles or people bucketed into, you know, like rigid boundaries.
Speaker 1:This is what you can do and not beyond it, and typically that's how it is with smaller teams. So yeah, I mean, I think I can to an extent relate to, obviously, the scale at which you've done. It is much larger, but you know I can relate to it a little bit yeah, no, I think it's funny.
Speaker 3:The other day I was at the office of deco and, like I was, I think sid and I were just chatting about it, of something like you know you guys were figuring out, and sid is like joel, joel, uh, should go bd1, uh, because I think he was, he was not, he was not really. Uh, yeah, I think he was frustrated about something. If someone who has done BD in their life they know like okay, then it's probably just very normal, so I could fully relate to it of you know how they are thinking also.
Speaker 1:I'd love to see Joel do BD.
Speaker 2:By the way, I absolutely love it there are multiple forms of bd right and there are multiple projections. One kind of rejection is what you faced when it was still matic right and not polygon right, when you were still trying to create a name for yourself and trying to go to conferences to get these redevelopers to talk to you. Right now, once someone has gone through that, I think there is nothing that they can't take right. But that brings me to the question right like there has been an immense change in the positioning of matic when it was matic and now to being a sector leader right in terms of scaling at polygon, right. So how has that transition been from a geographical length right? So, for example, a lot of projects look up to matic or looked up to matic back in the day, right and now I think the whole ecosystem has been seeded in some way. So how has this traffic harm at polygon been responsible for this right?
Speaker 3:I think one of the most important things that we started thinking about was the ecosystem sustainability, because, you know, there is always this mania, sort of a height where you know a new thing you figured out and like things just kind of form around it and until, like you know, the dust settles or the tide kind of settled, you don't really know what was good and what was kind of not good, right.
Speaker 3:So I think partly it's just first understanding of what stage you are in, because I think, when, when you are in that stage of where things are just moving, just go and run with whatever you have which is what happened with us, because I think, like the same thing with d5 summer, right, I think a lot of things, obviously we had some conviction but, like you can't like really anticipate of how the growth will come or where it will come from. Let's really plan for all this. So I think you just need to be ready when things kind of start happening. I think that is how some of these things kind of started coming together and when the dust settled, with that the whole the defy summer and like few things, I think that's when we realized, like, eventually, what matters is what use case because, like defy was one of the first ones that a lot of brought people on chain, and then then suddenly there was NFTs and there was some part of the gaming and there was something, because eventually, for something like Polygon to succeed, right, the whole idea of scaling like an Ethereum network is for people to interact on chain. That was the whole idea. Use cases were the key part and I think, that said, you always start working backwards, like which use case is showing up like good potential? I think gaming and d5 were the top ones, I think, which I think, uh, like gaming I would just broadly categorize gaming, but the update to earn and all the other sort of functions.
Speaker 3:The other thing we also started seeing was the brand side of thing, because I think there was this whole movement because of the nba top short like really powering through and, like you know, some nft like board apes or fudgy penguins or like even azuki and all of that. Suddenly people realized the importance of IP and this is where I think a lot of brands kind of started getting intrigued by this the sports IP, entertainment, ip, and that's kind of where they're all, because IP world is something that they understand right, and now there was this platform. Because of the way crypto works as a decentralized platform like something like around ip, could work. I think brands started becoming that thing because they were putting in that effort and like creating much better ux's for people to onboard. It was not ideal because you don't directly interact with, let's assume, change the way you would do with like a defy app, but I think eventually people were still getting onboarded. So that was kind of a good thing.
Speaker 3:I think a lot of our strategy or a lot, so that was kind of a good thing. I think a lot of our strategy or a lot of things that we kind of played around was based on what we were seeing from the market and because we did not want to seed a new thing where things were not there. It was much easier to work with something where there was some traction. So I think that is what was the key thing for us. So in that sense, and eventually I think the idea was from from our perspective, was one of this thing kind of sticks really well and like becomes this thing for like becomes this tool for mass onboarding, because we're still talking about few hundred thousands or like maybe like lower billions users kind of using this product, but still not like very, very high number of people still using the product. But it was a good pilot testing kind of a board for us to like figure out where exactly it was, because crypto as an ecosystem of people actually who use on-chain apps is much, much fun.
Speaker 3:I'm kind of even surprised, even at this point when I talk to people, of how less people actually use the crypto because they have this sense of optimism that suddenly when you just talk to someone, you just realize, okay, if he's too optimistic, I don't think he has used a lot of apps. So I think that is what we try to always optimize for and I think, yeah, that's kind of what basically drew a lot of, I think, strategy or like the strategic decisions for us. This is, I think, during the period, I think, till early 2022. After that there were like few things that changed, mainly from the ZK side and like on the ad lane. That currently what we are trying to build. But yeah, but that I think I can cover next session, but at least for that year, I think this is what kind of drove most part of the strategic decisions for us.
Speaker 1:Let's talk a little bit about Aave deploying on Polygon POS. I think, sanket, you hinted in one of your answers that it was one of the catalysts that made polygon what is today. So I think sid was just about leaving, or had already left, polygon at that point. But talk us through what happened. When are we deployed on polygon?
Speaker 3:yeah. So I think, just for context, before I can get, so that people are aware of this, was just just a time where you know there was no one core metric for judging DeFi, which right now, obviously is total value log. But I think it was just kind of starting up, with Uniswap just starting deploying in our way and Compound doing their own thing. So I think there were two major catalysts that drove us to even think about something like going big with our way. One was, I think, when Compound launched their liquidity mining program. Uh, now, obviously, compound did it with their own token and in a very different way. That was more to like drive a lot of users for them. But I think what one thing that was very interesting about that was because of the way the most important thing of why that worked as a acquisition strategy is that you were basically as a user. You were being paid to borrow money, which is what's very important. When you're building a lending market, you need, like, the supply demand figured out. So I think that was this dynamics around that whole thing. Uh, that worked and what we started thinking was okay, obviously there is compounds. There is not much you can do with them because there was an ongoing liquidity mining, but our was the other big there in our way, sandeep and Stani know like both of them know each other like way back and we started figuring out the same way how lot of users were driven to compound can we bring a lot of people on chain by figuring out some similar mechanisms? So I think that's where we took a big bet with Aave and did a liquidity mining in like Matic tokens on top of Aave, mainly to like, first, have more on-chain liquidity and this is where that whole TVL as a metric was a key thing for us to kind of optimize for and secondly was also figuring out how we can have more people interact on-chain using that whole thing. So I think that was kind of the backstory to how those things happened.
Speaker 3:And back then obviously we didn't know, know, but we knew if there was one thing we had to take a big bet on, probably this was the most important one, because I think this was the time also when Matic Network had just rebranded to Polyval. People were not very clear of what was happening. Mihailo had just been onboarded as a co-founder and, yeah, things were just starting to kind of get good. So I think a lot of things eventually came together or whatever ended up happening or during the D5 summer, but at least this was the thought process and yeah, I would say after probably.
Speaker 3:I think it lasted for a year and it was a pretty interesting experiment and I think it was pretty successful because during that whole journey I think we were able to onboard, I think, 10 or 20 times more users to Aave and also on Polygon because of that, because there was a whole network effect that started coming, because now there was more liquidity on chain, so more projects started deploying on Polygon. Because of that more liquidity on chain and more projects on chain, more users started coming. And this is where I think even Mark Cuban eventually kind of ended up seeing that and he offered to join as an angel with Polygon, because this was a time when Polygon still did not have really VC-driven money in that sense, so it was still very driven by very small friends and family or this thing. So I think all of this kind of happened, one after the other thing, but yeah, there were some catalysts that ended up helping us reach where we wanted to be.
Speaker 1:Okay, I'm going to add some context for listeners here. When Polygon moved from Matic Network to Polygon POS Matic Network was a plasma implementation and then to the POS version it became a lot easier for developers to deploy their applications. It became a lot easier for developers to deploy their applications. So that was one of the reasons why Aave deploying on POS was sort of you know, that helped Aave to deploy on Polygon POS. And this was the time after which, I mean once Aave deployed, it kind of acted as a snowball effect on Polygon POS and, if I'm not wrong, sanket, the TVL sort of jumped from around 100 million to close to $10 billion in a matter of months. That's correct, sid. If you have anything more to ask, we can. Otherwise I want to jump into the next strategic bit of acquiring the ZK protocols.
Speaker 2:So Matic had immense amount of success, not because, necessarily, we were the best technical solution out there, but because we out executed the competition in terms of BD and always focused on the developer experience. Now that's the story with the POS chain, with the whole DeFi summer. I think there were a lot of positives to look forward to. But, sanket, I want you to walk us through what made the decision internally at Polygon right to focus on the ZK tech and focusing I think a lot of teams do focus on the ZK part. Right, but having the conviction to go in on it and double down with a one billion dollar fund, right and make not one, not two, but three big acquisitions happen. Can you just walk us through that? What was the thing?
Speaker 1:kind of yes, I think let's just go there and spend some time on the zk front, both from an acquisition and then execution perspective. Right sanket all yours. Before you do that, please also give us color on what made you guys change or change your thinking towards ck internally and then how you identified those particular target and so on. Okay sure.
Speaker 3:So I think, before I directly jump into the question, I'll try to give a context of where we were when you know we were discussing this strategy around it. You were just, I think, three to four months into the old DeFi server with the Aave campaign. Matic had just re-branded to Polygon, mialio had just joined us as a co-founder and we had a lot of developer adoption in the network effects that were built because of the whole snowball effect of the Aave liquidity mining campaign that had happened back then. So this was kind of the situation where we were in and we knew, because of the transition that happened from plasma to pos, one thing was pretty clear is, like developer experience is the mush without that. Having like people just come in, deploy their solidity language from ethereum to whatever, whatever scaling network that we end up building, was very, very important, because we faced a lot of troubles with plasma adoption and then with POS, suddenly it was much, much easier. Without our effort. People were able to do that. So I think that was the situation where we were in and like the classic buy versus build kind of a model that you know typically apply when you're trying to upskill or, like you know, figuring out like a newer technology. That's what I think we kind of started looking into. Like there were two or three approaches and we were seeing, like at the same time, there are a lot of other competitors also raising money and figuring out stuff. Obviously, from actual user standpoint, one good thing worked for Polygon was we were the only one that was working and that was live back then. So naturally, if you wanted like a low gas fees and like the same people can feel off like the EVM. I think Polygon was probably the best choice back then. So I think that worked in our favor the fact that we were just ready back then. But it was obviously not sustainable.
Speaker 3:So, thinking about the road by which this built, we started looking at multiple opportunities and one thing was very clear we spoke to a lot of folks was that zk is is, the is the end game, and this is something people have believed for a long time. The only problem was was the timeline, because you know, zk is is a pretty newer tech in terms of for someone to build engineering solutions around it like theory, wise, zk has existed for 20-25 years, so there's a lot of like good research and theoretical knowledge. That was back then and in seeing crypto, zk and Starknade were the two early pioneers who kind of had even popularized ZK as a tech. But building engineering solution on top of that was something that was there. So the timeline for doing something like this was a big issue. But one thing was certain is like zk had that potential. If things really come together, you can like do miracles with that. So that's certainly like that buy was just big where okay, now that we have narrowed it down to zk either take and this is after looking at optimistic role of understanding their implementation, because plasma optimistic role of was like a stepping stone to what plasma eventually, like you know, kind of like was supposed to do and we knew the same challenges still exist in that. So we didn't didn't focus much on that because it was still like a bad, dead solution in our mind, even the fact that we had just went through like two, three years of building plasma tech and so, yeah, now with the buy, world is built.
Speaker 3:The whole idea was can we build it ourselves? And the answer was obviously no, because we did not have enough engineers who understood ZK and it's not something you can just upskill like your existing folks, because it's a very domain, specific knowledge that you need, like people, and that's where the thought process was of going and buying some of the companies and it and it was a very simple thought process where GK was still very nascent, it was still not a buzzword that people used of any type. But one thing was clear is you need a good talent to build a lot of this thing, and our goal was to aggregate a lot of good talent around GK, because if we were to be a GK powerhouse, we needed the talent, because that is what eventually builds about this product. And that's how we started looking out at multiple opportunities and uh, yeah, I think me protocol was one of the top ones because they're building the zkl1 and uh, I think with them they were one of the top. I would say, uh, zk research guy who knew how to build stuff, because that engineering knowledge to build zk tech was very limited. There are like handful of people who knew how to build stuff because that engineering knowledge to build ZK tech was very limited. There are like handful of people who were able to do it. This guy had showed immense potential with their, with their long libraries in ZK that they were using. I think they were. They were kind of the most outlier ones that we had identified and that's one of the things that we are doing, because they were building a zkl1. So the the the conversation was more around convincing them to build a zki2 and not a zkl1 and uh, yeah, so I think that was one mir protocol.
Speaker 3:The other one was herpes was already building a zkevm kind of solution. Uh, and herpes network was, I think. If I remember it correctly, they were actually just about or just like on banded also with their zk evm. Like the first version, it was very rough version of it, which limited transfer than capability, but it was there and they had a roadmap of how they want to be like a full-blown zk evm where anyone can just come and deploy on the red one.
Speaker 3:And the third one that we ended up doing was more of an acqui hire. That was more on the ZK virtual machine because, like you know how there is EVM, one of the biggest bottlenecks of scanning is actually the EVM and the data storage and, like the way EVM function, but the other side of it is it is probably the most adopted solution. So I think what we tried to do was aggregate talent from these three different sort of groups, because one required very good knowledge of engineering around, like the ZK Trueware systems. The other one had the idea of how to make it EVM compatible, which was the RBC, and the third one, which is the Myden, which was more of an acqui-ire with Popin on Facebook, was around like building a virtual machine around ZK, because that was like the ultimate end goal. And, yeah, that is how some of these things came together. And, uh, we're like, yeah, let's, let's bring this together, let them do their own thing, because all of that had their own.
Speaker 3:Yeah, I think for us it was a pretty the decision war.
Speaker 3:We were not very clear of which part of the zk would win, because back then there was obviously some inside capabilities right now, if I think.
Speaker 3:But back then it was obviously some inside capabilities right now, if I think. But back then it was very simple. I don't know which ZK technologies work because a lot of effort was not actually put into building some of the stuff. It was just getting started. That's where we took a bet in terms of figuring out In the short term, let's have the ZK VM from Hermes, kind of like it, built up With the proving system that the meal protocol or polygon zero guys were kind of trying to build and at the same time much longer, but it was the gk virtual machine which would take much longer. But then if it works, it actually ends up like opening up like, yeah, really good design possibilities for every developer, and I think that's how the journey started and we end up, I think, spending close to around 800 to 900 in the air, like acquiring this thing and aggregating the talent around it and like just also getting him on board with the polygon vision of scaling ethereum later.
Speaker 2:I think one thing that I want to understand was right. Like, getting talent is one thing, getting them aligned to work towards a common goal is another right. So how has integration of all of these three teams happened inside of Polygon right? Is it still that they're working independently on all of their pursuits or have they aligned somewhere together to kind of pursue a common goal right which kind of brings down the time to execution or to take it to market?
Speaker 3:Yeah. So I think when we had acquired right, I think our goal was just talent tagging. I think one thing that we used to do was they were anyways doing things without Polygon. I think Polygon ended up just helping them accelerate a few things, because these were like primarily very tech-driven things, not much like business sense or business was there yet, because they were still figuring out a few things, and that's where we ended up helping. So that's where that synergy kind of played, naturally because Polyworld was looking for some tech-related stuff. So that was one thing. Second was the talent aggregation.
Speaker 3:As I said, and I think one thing that worked really well was these guys had their own roadmap in terms of what to try to do. I think for the first year or so we didn't bother any of them because the whole idea was or so we didn't bother any of them because the whole idea was, uh, as I mentioned with me protocol, they're building anyways a zkl1 at. The biggest pivot for them was just moving from a zkl1 to zki2, where ethereum is like the base and like we're building on top of it, which is not a much, I would say like complete, like 180 degree pivot for them. Or with zkvm, with hermes they already had like a blueprint of what they wanted to do, so even that was there in the favor. And with polygon maiden it was also like the zk virtual machine was a two, three year kind of roadmap and like there were a few things that was slowly kind of coming together and they kind of were doing their own. So I think for the first year we just didn't touch anything like let them just do their own thing with their own separate team. So yeah, you can say practically for the first one year you could like it was not even like polygon like kind of involved with anything of the show.
Speaker 3:And during that whole time what we tried to do because you know, with the acquisition the biggest thing is, which is always is will people work together? Like you know, there is always this cultural thing, because so me protocol was from us, armand was primarily from europe and my then like was more of a one-man show in that sense with, uh, with my bobbin. So it was always this cultural thing. So let's say, rms would come in like 10. Okay, this is what I am facing a problem with while trying to do this, because like even see, it's all mad. So they understand each other, but the way they approach some of this stuff is different.
Speaker 3:So I think that's where those things kind of ended up helping, because that ended up creating like a good synergistic combinations for each and every one of the team and also they, they started appreciating each other's roadmap and I think that's where, you know, things just naturally kind of came together where suddenly, like you know, what mere protocol was working on, that prover ended up helping with the kfp, and what myden was working on, that prover ended up helping with ZKVM team, and what Myden was working with their new account model ended up helping, uh, figure out how the ZKVM that was being built.
Speaker 3:So so I think there was this, there was this like wall bits and pieces, uh, that ended up helping and like, just helped build. And after, I think, one word and a half year into that which is, I think, 2023, the integration started happening more with the larger Polygon team, where now, obviously, you had multiple team members from the other departments, and now things with GK also started coming together a lot, because we are much closer to shipping the GK games. So I think that's how the natural integration happened and the team started just coming together and like yeah, eventually being part of the larger identity polygon I completely understand the buy versus build, and why build one here?
Speaker 1:in the case of polygon, when they went to acquire zk teams? Uh, just to give more context to listeners, back in the day there were about 100 people who understood the ZK tech and its intersection with crypto. So, yeah, that was possibly the best way to go forward at that time. Okay, sanket, I want to move a little bit towards the CDK and AgLayer bit. Now I understand that many applications are moving towards app chains and CDK plays a huge role there. Can you walk us through how all that happens?
Speaker 3:So I think during this whole process, you know, while you're building like I'll just probably take a step back where when Nyario onboarded with Polygon as a co-founder, right, so one thing that he was working was his vision kind of an app chain infrastructure ecosystem. That's what polygontechnology was, which you know technically. When nyalo kind of got on but it rebranded to that, but that was the whole idea. And I think with the zk angle, what we realized was, while we were chatting with a lot of these developers, one thing became very clear is, while you're trying to build this sort of you know, scaling ecosystem where you can onboard, like millions of people, the reality is the dominant app, the ones that become big, right, they are still not comfortable, once you become big, to be fully on public chain, mainly because the network is not able to really support the way the current and that said, everyone would like probably migrate towards an app chain itself because they would want their own. I always use the analogy of how clouds are. Back then, very early 2000s, late 1990s, cloud was very not meeting and eventually, early on, everyone was on this public cloud interface and it worked to kind of give them a basic platform to kind of grow their apps and like build and get some users. But as the crew you wanted your own dedicated setup because that's how you know you can be comfortable and you can actually scale without being, like you know, hostage to like what the limitations of an intro would be. So I think that was the whole idea with me. I know got it because there's something I really believe in With ZK. We kind of just took that and what I think you're seeing from the market also, and it was very tough to and the speed at which people wanted to kind of get a lot of the adaption figured out. And in that whole process we realized so we had launched something called a Spawning on SDK.
Speaker 3:This was not a ZK version, this was a pure, I would say, evm compatible, where you just use that of the interface and like build your own app. I think SportX Network was one of the first ones to kind of try it out, and Arcana guy and I think it worked. But there were a lot of issues with that and, like I think what we realized was ZK can play a big role with this and that is where the whole idea of from that polygon hdk who I think then we bought. We bought super reds to what right now is called polygon cdk. We just build it, where we just simplified that whole journey for anyone trying to build a chain uh into something called a chain development, and we try to make it as modular as we can. Uh, in a sense like okay, you can choose your own virtual machine, your your own execution cloud, your own data availability chain and all the other things, but give full flexibility to your developer so that they can build this app chain, because building some of an app on public infrastructure was something that I think we saw like was not really because the dominant app always wanted their own thing.
Speaker 3:And in this whole process, now that everyone is basically using or building the app chain infra, I think what we realized was, uh, that block space is suddenly not the most premium in that sense. Like you know, if you think about ethereum or bitcoin, the first thing that people are accustomed to is like block space is kind of the premium because there's a limited block space and that's where the demand supply is implemented. But now you suddenly enter this world where the developers are moving towards something like where they're just building their own blockchain, suddenly like block space is not that as premium. Obviously ethereum, bitcoach, block space is still premium because of the provenance and like the history with that. But if I'm an application, then what I am building is not really like full, like that says premium, because I can like just create my own chain and in that sense what would make more usefulness and just going back to the same principle of you know what makes a developer's life easy or the like just was solving for the liquidity fragmentation, solving for that security sort of fragmentation that happened and solving for that security sort of fragmentation that happens and solving for that user onboarding.
Speaker 3:And that's where the ag layer of the concept came in. Because if everyone is building that own AppChain infrastructure, then the interoperability or like the seamless movement between those AppChains will be the most important. And taking the same cue from, like you know, like the cloud, let's say, where everyone has their own sort of small cloud, but each cloud they can talk to each other, that's a much more powerful kind of vision, or much powerful, because that's what eventually ends up simplifying people's life. So I think with this chain development kit, now that everyone can launch an app chain, what we realized was AgLayer is a much bigger thing. Mainly and this is where we leverage the power of ZK, uh, where we try to give the security from Ethereum directly. Everyone can launch their ZKL2 and, without worrying about it, can just seamlessly move between it. What that means, or what what the vision basically paints in this scenario
