On the afternoon of April 14th, Kernel Ventures along with co-host iZUMi Finance hosted “Infra & Applications Onboarding The Next Billion Users” at the 2023 HongKong Web3 Festival in WanChai. The event featured speakers from the Ethereum Foundation, OKX, StarkWare, Polyhedra Network, Curve Finance, Scroll, NEAR, Celestia Labs, Meson Network and other outstanding projects. Some of the topics discussed were blockchain infrastructure, on-chain and off-chain liquidity, crypto regulation and compliance.

The event kicked off with the opening speech “JUST HODL JUST BUIDL” by Mandy - Managing Partner of Kernel Ventures. Kernel Ventures is a trading & dev community driven crypto VC fund backed by one of the leading market makers. Currently, the main revenue source in the crypto world is concentrated in the infrastructure layer and DEXs with liquidity being a crucial element - which is why we focused on these two main topics for this event. We brought together key players in the L1/L2 field, DeFi as well as compliance and regulatory bodies, and the discussions among these industry professionals produced valuable insights. Mandy shared her views on short-term and long-term opportunities, in the short term, April is a critical time, as the Uniswap V3 Business Source License (BSL) has expired on the 1st, developers can now fork Uniswap V3 code after authorisation, and with this we should observe a trend for DEXs to move towards adopting the V3 model. This will drive the adoption and preference of concentrated liquidity and attract a large number of professional market makers with the integration of AMM and RFQ (off-chain request-for-quote) models. The emergence of a large variety of V3 LP token and related assets trends will be Kernel’s recent focus. In addition, after the completion of Ethereum’s Shapella upgrade on the 12th of April, derivatives of LSD assets is also an innovative approach, and the market is expected to have an APY war.

For the long-term, Mandy emphasised how “Onboarding The Next Billion Users” is key to kickstarting a bull market, and proposed the concept of “Frictionless Blockchain”, that is, to allow the experience of Web3 as smooth as possible for Web2 users. “Frictionless Blockchain” can be an accessible wallet; account abstraction with security and social recovery; a more efficient, secure, accessible underlying infrastructure; a frictionless cross-chain experience; a frictionless trading experience with zero slippage, sufficient depth and liquidity; or a seamless product experience (such as CrvUSD’s automated liquidation mechanism). Only with the rise of “Frictionless Blockchain”, can Web3 achieve mass adoption.

The first panel discussion “The Battle Between L1 & L2” was moderated by Rose, Managing Director of Kernel Ventures. Guests included Seabook Chen, Dev Advocate & Relations and Head of APAC at StarkWare; Young, Researcher at Scroll, Antonio Liu, VP of Products at Polyhedra Network; Mary Liu, Head of BD at Celestia Labs; and Amos, Early Contributor of NEAR. Our panel guests each discussed their perspectives on how L1/L2 would be defined in the future, and shared some of the most recent updates in their respective ecosystem. Young mentioned that Scroll deeply values the open source culture, and is currently building the world’s largest open source zkEVM circuit, giving developers a good environment to buidl.

Liquidity is crucial to a project’s revenue, the second panel discussion surrounds “Capturing On-chain Liquidity” and is hosted by Kernel Ventures Managing Partner Mandy. Panelists included Jimmy Yin, Co-Founder of iZUMi Finance; Mr. Block, Core Contributor of Curve Finance; Kevin Feng, Head of WOOFi; Ryan Chow, Co-Founder of Solv Protocol; Uwe Cerron, Co-Founder of Convergence RFQ; and Dori, Head of Greater China for Apex Protocol. The panel guests discussed recent events such as the expiration of UniSwap V3 Business Source License and the Ethereum Shapella upgrade, as well as the impact of these major events on DEXs. In addition, we clarified the essential characteristics and differences of Orderbook, AMM and RFQ models from the aspects of capital efficiency, latency, MEV, fees, or impermanent loss, and discussed the future forms of DEX.

As the financial center of Asia, HongKong’s recent release of crypto-friendly policies has attracted the attention of industry players to search for the next alpha and compliance opportunities in Hong Kong. The third panel “Crypto Regulation in HongKong & Asia” was hosted by Vincent, Managing Partner of Kernel Ventures, and the guests invited were Lennix Lai, Managing Director of OKX Global Institutional; Dr. Yu Jianing, President of Hong Kong Blockchain Association and Founder of Uweb; Dr. Chen Jingfang, General Counsel of Mask Network; and Gilbert Ng, former OKX Legal Counsel and Founder of Mura. The panel guests explained the changes brought forward by the implementation of Web3 regulation in HongKong from their respective perspectives, and compared them to the relevant practices in Singapore and Taiwan. Lennix recalled that after September 2022, regulatory bodies have been particularly active in communicating with OKX and have expressed their willingness to listen to the Web3 industry. It is generally believed that although HongKong’s regulatory system is still in the process of improvement, it has shown long-term, systematic and open characteristics, providing strong support for the Web3 industry and setting a benchmark for Asia and the rest of the world. In addition, the guests look forward to new opportunities that may arise in the future. For example, Dr. Yu Jianing believes that the future integration of AI and blockchain will drive innovation in the application layer of Web3.

In addition, guest speakers such as Jimmy Yin, co-founder of iZUMi Finance, Geoff Lamperd, Project Lead Privacy & Scaling Explorations at the Ethereum Foundation; Seabook Chen, Dev Advocate & Relations and Head of APAC at StarkWare; Antonio Liu, VP of Products at Polyhedra Network; and Sherlock Shi, co-founder of Meson Network attended the event and gave keynote speeches. Founders and buidlers gathered together and shared their ideas on infrastructure establishment and how to capture critical liquidity. The robustness of the industry requires continuous technological innovation, as well as adherence to the decentralisation of the underlying infrastructure and digital assets (such as Ethereum censorship resistance, decentralisation of stablecoins, etc.) it also requires relatively friendly, open and inclusive regulatory policies. We look forward to HongKong becoming Asia’s leading Crypto Hub backed by a regulatory framework that protects our ecosystem.

Kernel Ventures is a research & dev community driven crypto VC fund with more than 70 early stage investments, focusing on infrastructure, middleware, dApps, especially ZK, Rollup, Modular Blockchain, and verticals that will onboard the next billion of users in crypto such as Account Abstraction, Data Availability, Scalability and etc. For the past seven years, we have committed ourselves to supporting the growth of core dev communities and University Blockchain Associations across the world.