Expert interviews

Expert interviews

Zilliqa Co-Founder Max Kantelia on blockchain: The tech works. Start thinking about creative applications!

by Blocks99

5 months ago

Tech entrepreneur Max Kantelia on blockchain, diversity, financial inclusion and the need to stop explaining the technology and come up with cool solutions.

 

Max Kantelia is CEO & Co-Founder at Anquan Capital, a group of deep-tech companies that includes ZilliqaAnqlave and Aqilliz. Zilliqa is a blockchain platform built for secure, scalable applications across a variety of industries, ranging from financial services, digital advertising, and gaming. Max is a serial entrepreneur with over 25 years of experience in building technology companies to deliver products and services for the financial services industry in Europe, the US and Asia. He is an electronics engineer by background, having started his career in radar systems design with GEC Marconi. He holds a degree in Engineering Science and was part of the London Business School Enterprise 100. We had the privilege of speaking with Max at the AI & Blockchain Summit in Malta in November 2019.

Blocks99

You co-founded Zilliqa in 2017. How did the idea for it arise? But could you talk about the problems you aimed to solve with it?

Max

Actually, Zilliqa is part of a group. Its parent company is called Anquan Capital, of which I’m the CEO and the founder. And the idea behind Zilliqa came after we created Anquan in late 2015, with a view to applying research from a professor’s lab at the National University of Singapore, a brilliant young professor who come from Berkeley, who was doing amazing research. I had heard about Bitcoin. But I became more interested in the underlying technology than just Bitcoin itself. I’m an engineer by background, and I was fascinated by how we could use this thing called blockchain to create a decentralized world. The idea was that we would take research from this lab, bring it into Anquan, turn research into technology, and then at some point, turn the technology into spin-out companies. So thus far we have launched three companies. And the idea was simply at the beginning that we wanted to create infrastructure. So, if you like, I wanted to build the highways first of all, a high-speed highway that was very safe and secure, because I started worrying about safety and security and this lack of throughput in existing chains such as Bitcoin and Ethereum.

So what happened was we basically took research around how to use a technique called sharding, which basically is like a divide and conquer strategy, and created high-throughput blockchain using that technique. We took that research, put it into Anquan, built a team, and then mid-2017, we launched Zilliqa. Having tested it and worked on use cases, we realized we had created something very clever, whereby the more network size you add, the higher the throughput. We had created something we felt should be open-source. And so in the middle of 2017 we launched Zilliqa. It feels like 10 years ago – the amount of work that’s gone in. That was that was how Zilliqa was born.

Blocks99

We understand that Zilliqa has now established Southeast Asia’s first member-driven security token offering exchange. HG Exchange has submitted a FinTech Regulatory Sandbox application to the Monetary Authority of Singapore. What are the latest developments in this project?

Max

There’s a lot of work going on around the regulatory sandbox. I cannot really share a lot of detail because we’re talking about a sandbox that’s run by the regulator. So there’s a lot of effort going into this by all the different parties that are involved with HGX, particularly with Fundnel, the origination platform, and with Zilliqa, the underlying blockchain.

Blocks99

Okay. So we’ll stay tuned.

Max

Yes.

Blocks99

Southeast Asia is a region with a lot of unbanked people. And you touched on this earlier in your talk as well. How do you see the potential of blockchain tech in general and DeFi specifically in supporting financial inclusion?

Max

I think it’s the biggest step forward that I’ve seen since people have been talking about financial inclusion, because we actually have an underlying technology that can bring together all of the different financial services that you and I enjoy today, and now we can offer them to people who don’t even have bank accounts. And this is made possible, of course, by the blockchain, because we can now exchange value between ourselves or anybody else without there being a central body – a central bank for example – involved. We don’t need that any more.

I think that there are regulations all over the world that make finance in some ways an overly difficult industry, especially when it comes to the provision of financial services. And of course, regulations are designed to protect consumers. But I don’t think it really feels that way, particularly when you look at emerging markets. You know, I lived in Singapore for nine years, and it used to horrify me that our household staff, whether they were from the Philippines or somewhere else in Asia, when they had to remit money back to their home countries, they were spending 50% of what they’d earned on the on the transaction fee, which is just crazy. And so I was actually feeling way back in 2014 or 2015 that the blockchain must be able to allow an exchange of value at a far, far lower transaction cost, because what our banks charge us to do any kind of cross-border transaction is ridiculous today.

In Southeast Asia, we have very high mobile penetration – I don’t know, 66 or 67 percent of the population has a mobile – which is a fantastic start. By using that as a mechanism and then putting these financial services onto a blockchain, I think if we can increase the reach by an inordinate degree.

Blocks99

You touched on regulatory issues. The Southeast Asian markets are very diverse, also in terms of regulators. We’re seeing Singapore’s MAS, SBV from Vietnam and the Thai SEC – they all have different approaches to regulating cryptocurrency. In which market do you foresee the most adoption of DeFi? Where do think the regulator will be most open-minded to that?

Max

Firstly, I think Singapore has credibility with every financial market in the world, which is why I chose to base myself there nine years ago. It has a credibility with London, New York, Frankfurt wherever you are, in a way that other Asian markets don’t. Secondly, I think the regulator in Singapore is amazing, because on the one hand, you have very strict regulations. But on the other hand, the regulator has an innovation objective, and that’s extraordinary for a regulator.

So I think Singapore is a great place where we’ll see companies being built. But I think personally, really interesting things will happen in places like Indonesia, the Philippines, Vietnam and South Korea. If we look at the unbanked segment, and think about mass, it’s got to be Indonesia. But I think the companies that will do these things will probably be born out of Singapore. And then they will provide services in other countries across the region.

Blocks99

Since you mention Indonesia, does Zilliqa already have activities in Indonesia?

Max

We’re a public platform on Mainnet, so we don’t know exactly who’s doing what from where. We did have some discussions two years ago with one of the state-owned banks about solving this remittance issue, particularly for foreign domestic workers. Unfortunately, at that time I don’t think the bank was quite ready to adopt the blockchain to help with that. So we have looked into that market. And Zilliqa has a very loyal following amongst the Indonesian community. We have very dear friends from Indonesia in Singapore, who are really, really big fans of what we’re doing. So I’m hoping that we can rekindle some of these conversations, because it’s a perfect market for what we’re talking about.

Blocks99

Please talk a little more about what you’re currently doing in the space and your future plans – if that’s possible without letting the cat out of the bag.

Max

Just to reiterate a couple of important things, we are looking at adoption from two perspectives. One is that we set up a grant program to help young entrepreneurs – not just young, but any entrepreneur who wants to build a dapp can come along and we’ll give them a grant to do it. We’ve already had some huge success stories by doing that. Secondly, we have an industry focus, and the two industries we target are digital advertising and financial services. So we launched a sister company for digital advertising actually just a month ago.

But in DeFi we’ve already built a team who are exploring the next steps and you may have seen in my presentation that we actually have a three-year roadmap of the things we want to do. I want to compress that roadmap because I’m very, very impatient. But we’ve already started by looking at building blocks. Yesterday there was a big announcement in Singapore, made by a company called Xfers, a regulated entity specializing in cross-border payments. We now have a partnership with Xfers, whereby they will use Zilliqa’s blockchain to create a prototype of a Singapore dollar-backed stablecoin.

If you’re going to build a DeFi landscape, first you have to put some tools into place. With a stablecoin, we remove the issues that are created by the volatility levels in cryptocurrencies. If we’re going to use these currencies as a medium of exchange, we need stablecoins that are pegged to something that gives them stability. So we will be the first to launch a pilot, which is actually going to be called XSGD. So that’s a really, really big step. But there are lots of other things going on behind the scenes as well in terms of looking at how we can build applications to help the unbanked.

Blocks99

You mentioned the Singapore dollar stablecoin project. But I saw on your roadmap that there’s going to be a US stablecoin as well. So what is difference and the reason, considering there are already US dollar stablecoins?

Max

As I said in my talk, I’m not fixated on emerging markets. I think there are enough problems in developed markets to solve, not just in emerging markets. We see the US as being a very, very big – albeit highly regulated – market already. Which is why of course Mr. Zuckerberg is having some of the issues he’s having right now. But it is still a huge market, as I said last week when I was told there were 40 million unbanked people in the US – that’s quite a stunning number. And so we want to build a platform for the world, not just one corner. If you look at a longer roadmap, we will have multi-currency stablecoins coming down the line as well. Because we want to build something that’s global, not just in one region.

Blocks99

So is the globalization of the US dollar, it popularity around the world, the reason behind the US dollar-pegged stablecoin?

Max

Yes.

Blocks99

You’re active in Southeast Asia and Europe. And we’d be interested to hear your thoughts on the differences between those regions.

Max

Firstly, Europe has a very well established financial services network, but it’s also heavily regulated. However, we do have some really interesting places. For example, we’re in Malta right now. Look at Zurich and Zug, Crypto Valley in Switzerland, which was really the first to embrace things like Bitcoin. So in Europe, I think there are some spots that are really very, very far advanced. But the regulators like FINMA in Switzerland are taking a very tough stance on what they allow to happen next. I think Asia clearly has more emerging markets right now. I think that’s an advantage, because when you go from not having very much, you can just leapfrog and introduce new technologies.

In Europe, one of the obstacles is that you can’t leapfrog – you have a whole legacy environment that you have to try and change and move. And that’s like trying to turn an ocean liner around – it’s very, very hard. So I personally feel that change is going to come much more quickly in Southeast Asia than in Europe.

And I feel also that the regulators in Southeast Asia are progressive and open to innovation. I also feel that the Asian population is open to new technology – I mean, just look at what’s going on in China right now or even two years ago. You see people in markets waving their phones to make payments. So I see a much, much faster pace of change in Southeast Asia, and more resistance to change in Europe.

Blocks99

Zilliqa has recently pledged five million US dollars to DLT students at Oxford University, as we understand. Could you share your thoughts and reasons behind this?

Max

First of all, let me just clarify that our total grants program is five million US dollars – we’ve been misquoted in the press – and that grants program is open to anybody around the world. But we have been telling people about our program in various universities, and most recently at Oxford. The explained to us that they have big drives to increase diversity, particularly in science and engineering, which I think is much necessary. And so it’s not a five-million-dollar grant just for Oxford. Particularly, we felt that if we could find female students who had really nice ideas that we could we could grant to, we thought that would be a very strong step forward.

We have an education program underpinning this. So we’ve started in the UK with King’s College, now Oxford and then more to follow, but I actually want to take the program to California and to the east coast of the US. I want to take it into other parts of mainland Europe. And we want to build the team further. When I talk about education, I’m talking about a course that takes people who know nothing about blockchain to – three or four weeks later – being able to actually write a smart contract using our language. And so we have team members working really hard to build amazing programs that take people through those steps. So I really want to make sure that we embed ourselves into the education system all over the world to do that.

Blocks99

You say you want to support the women who have good ideas. But does that also include seed funding to build projects on the Zilliqa platform?

Max

Yes, yes, absolutely! We are open to anybody who has good ideas. I’m a supporter of a lot of causes around maltreatment of women in various parts of the world. But that’s one extreme. Looking at the other extreme, we still don’t see a lot of female tech entrepreneurs, and I don’t really understand why that should be the case. This is a really strong initiative to try and change all of that.

Blocks99

That’s a great initiative. Diversity is a big topic in this industry. Do you also have an ecosystem for the development of other protocol projects?

Max

Yes, we do. But we are only two years old. Whilst projects like Ethereum have a very well established developer network, we’ve had to build that from scratch. But we have some, again, some phenomenal people all over the world, building things like Explorer’s wallet, all sorts of things that can make ZILs more usable. So yes, we have a fund for that also. People have been using it and applying it – really good projects have come out of it.

Blocks99

Does the grant have a certain size or is it variable?

Max

The amount that we give to people can vary from tens of thousands to many, many hundreds of thousands. We obviously do our assessment of the projects and plans, and it depends on the size of the project. But we’re very open.

Blocks99

How can developers reach out to you?

Max

We have a presence on Discord, a platform where developers can interact with us and with each other, share useful tips or perhaps even collaborate. Here, they can also leverage our tools, resources and advice from our experts as they build their own projects on Zilliqa. They can also apply to the Ecosystem Grant Programme through our Website.

Blocks99

You’ve touched on this. How did you get involved in the blockchain space? What are your thoughts on the developments in the space over the past five years since?

Max

When I first heard about Bitcoin – I’m an engineer by background, so I’m quite practical – what I wanted to do was learn how it works. How could I go about buying this cryptocurrency thing? What did it look like? How would I be able to sell it if I wanted to? And so that’s how I started and discovered it was a murky world that was very, very awkward and difficult at that time. Storing your private keys wasn’t particularly easy or safe. I became interested in how something that didn’t have a central bank could essentially become a medium of exchange. And that’s when I became interested in the protocol that Bitcoin uses to allow miners to validate transactions.

I thought it was a brilliant idea, but started worrying about the vulnerabilities, the threat of malicious people. And because I like cars and I like driving fast, I always think about how we can build things that you can drive very quickly, but very safely too – the Germans are very good at this, by the way. So my analogy has always been that this was a very insecure highway, and it wasn’t particularly safe. And when I bumped into the professor I alluded to earlier, I felt that he had what I needed to create a safer, more secure highway. If I take that analogy just a little bit further, my aim even then was to create an entire ecosystem. To build a very safe infrastructure first, and then start investing in the car companies that would actually use our highways and pay us to use the highways. So that’s how I started thinking about this back in 2014 and 2015.

And you know, I have to say a lot of people thought that that we were crazy, and that it was a complete scam. But I certainly didn’t see it that way. I mean, the Internet in 1992 went through the same thing, where people were saying this will never work, it’s ridiculous. So that’s what got me started. Once I have an idea, I have to execute it. Whether it works or not is another matter, but I like to get things done.

Blocks99

You got in touch with this professor from the National University of Singapore. And then you got together a team of engineers at the university to develop Zilliqa?

Max

They weren’t just from NUS. We actually hired a number of people, some from NUS and some from elsewhere to create the original team, who then started to work on building what would become Zilliqa. They were all PhDs. We also hired some postdocs and brought in some professors to help us well, because turning the theory into something real is very hard. If you read our white paper, it’s very complicated and very mathematical, very deep. So we assembled this group of scientists to interpret the white paper, and then we hired engineers to take that and turn it into something we could actually use. Tech transfer is a very difficult thing to do. But as I say, we did it very successfully.

Blocks99

This has been fascinating. Is there anything else you’d like to share?

Max

I think people are getting drowned in trying to understand the tech. Do you really need to understand how the Internet works and be able to use it? Do you need to understand how a gearbox works before you drive a car? Of course you don’t. We have too many people fixated on the underlying tech, and too few people focused on how we create cool applications. I’m really urging people to think about ideas, applications. Because every time I speak at a conference, I just look into the audience and think to myself: someone out there is the next Sergey Brin.

In 1993 there was something called Netscape browser. And I use that in some of my talks, to say that’s where we’re at. It’s 1993. Google hasn’t even been born yet. And this technology is very awkward to use today. So what we’ve got to do is make it more usable. Even developers need to have a more streamlined way of working with blockchains. Testability has to become much easier. So we’ve got to worry about macro things, not the micro things. The tech works. Start thinking about creative applications!

Blocks99

Thank you so much!

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