Dialogue with Ankr Founder: How Far Are We from "Web3 Version of AWS"?
Interview: flowie ,Chain Catcher
Interviewee: Chandler Song, Founder of Ankr
Without nodes, there is no blockchain. The construction of node infrastructure is crucial for the development of Web3.
Since Ethereum announced its transition to a PoS mechanism, the rapid growth of various public chain ecological applications has led to an increasing demand from users for a convenient and low-cost way to run a node. In an interview, Ankr co-founder & CEO Chandler Song revealed, "Since Ankr focused on PoS infrastructure, the total API request volume has increased nearly 25 times in a year."
The development space for node infrastructure is undoubtedly vast. However, with leading node service provider Infura experiencing multiple outages that affected the Ethereum ecosystem, the issue of centralization in the industry has come to the forefront.
As a provider of Web3 infrastructure, Ankr also recognizes the urgency of expanding decentralized networks. The Ankr 2.0 released in July has begun to lay out a decentralized node network. However, in Chandler Song's view, decentralization and centralization are not binary opposites; the transition from concept to implementation still needs to be determined by market demand, and Ankr aims to find a balance between the two.
Since founding Ankr in 2017, Chandler Song has almost experienced the entire process of the node ecosystem from 0 to 1. Recently, Chandler Song was interviewed by Chain Catcher, discussing the development history of the node ecosystem, his understanding of the industry's centralization issues, and the next wave of development trends in the industry. Chandler Song believes that following the prosperity of the PoS public chain track and DeFi Summer, the next catalyst for node infrastructure will be the active expansion of Web3 business by large Web2 companies. Here is the full dialogue:
1. Chain Catcher: Ankr has been established for about 5 years. Could you introduce the core team and important development milestones?
Chandler Song: Ankr was founded at the end of 2017, with the initial idea of creating a distributed cloud computing platform using the PoW algorithm. After completing the first round of financing in 2018 and undergoing a period of development, we realized that the idea was somewhat idealistic and not closely aligned with market demand.
By the end of 2019, we began to consider whether to shift towards node infrastructure. With the arrival of DeFi Summer in 2020, we clarified our goal to provide node infrastructure services. Initially, Ankr's focus was on DeFi-ifying validation nodes and creating liquid staking, which we actually started even before Lido.
After Ethereum announced its transition to PoS, we were very optimistic about this trend and launched the ETH2.0 Staking business. The staked ETH quickly reached 20,000, and now it has grown to around 70,000 to 80,000.
In addition to the staking demand related to validation nodes, developers also need RPC (Remote Procedure Call) for development and transactions, so we expanded into RPC as well. The RPC business really took off after DeFi Summer ended. By the end of 2022, various EVM public chains emerged, but MetaMask could not support them, and users could only paste URL links into MetaMask. At that time, many DeFi users added Polygon and others to MetaMask, and more exchanges and wallets began to use our RPC, leading to a growing user base.
Overall, we expanded liquid staking through validation nodes and developed a decentralized network through RPC.
Since last year, we have also expanded into a multi-chain ecosystem, aiming to cover as many chains as possible. Currently, the three chains with the largest market share for us are Polygon, Avalanche, and BAB Chain. We will also gradually cover the newly emerging Aptos and Sui chains that focus on the Move language.
This year's goal is to enrich our product line. At the beginning of the year, we launched gaming SDKs that are compatible with Unity and Unreal engines. These features allow users to generate NFTs directly in development software, integrate wallets and key management, and connect with DeFi liquidity, including NFT price oracles.
Additionally, we see many industry opportunities, such as Layer 2 zk-rollups, sidechains, etc. We have also helped the BNB Chain ecosystem develop sidechains to enable projects within its ecosystem to easily switch between networks.
Currently, the Ankr team has grown to over 160 people, with the core team mainly based in the San Francisco Bay Area, while other teams are distributed across Europe, the Netherlands, the UK, Russia, and other locations.
2. Chain Catcher: Ankr focuses on node infrastructure services. Can you explain to entry-level readers what significance this product has for the industry? And what are the important stages that node infrastructure has gone through?
Chandler Song: Without nodes, there is no blockchain. Everything in Web3 relies on nodes, including Layer 1, DeFi, the metaverse, blockchain games, and NFTs. There are mainly two types of blockchain nodes: the first is validation nodes, and the second is RPC nodes that interact with developers.
From 2016 to mid-2020, both the staking industry and the developer industry could be largely ignored. At that time, people didn’t understand the importance of EVM compatibility and wanted to create their own public chains. In reality, the only chains with true staking were Polkadot and Cosmos. The rise of staking demand was triggered by Ethereum's announcement of its transition from PoW to PoS.
Regarding the developer node issue, before the end of 2019, the focus was still on public chains, with relatively few applications, so the developer node issue was not significant. Many people thought about setting up their own Ethereum node and Ethereum client.
It wasn't until the DeFi Summer of 2020 that various public chains like Solana and Polygon sprang up, each expanding their own ecosystems. In each ecosystem, decentralized exchanges, lending, stablecoins, derivatives, NFT markets, and various protocols and applications became standard. As applications increased, developers realized that running a node was not cost-effective in terms of time and economic costs, leading to a rising demand for node services.
3. Chain Catcher: After DeFi Summer, what do you think will be the next catalyst for the node infrastructure service ecosystem?
Chandler Song: Most of the necessary applications are already in place. I believe the next catalyst will be large Web2 companies beginning to embrace Web3, such as gaming companies, traditional data companies, and payment companies that are all showing trends of expanding into Web3. If node infrastructure services can provide Web2 companies with tools to quickly enter Web3, it will create a huge incremental space. However, achieving this is not just about offering some incentives; it requires deep thinking about the entire product and coding.
4. Chain Catcher: In July of this year, you announced the launch of Ankr 2.0. What are the core changes, and what market demands and trends are behind it?
Chandler Song: From a decentralization perspective, Ankr 2.0 has added a decentralized network. Through our decentralized network, users do not need a traditional registration process; they can connect directly with a wallet. Our node partners include Pocket, the Polygon Foundation, and Chainlink.
Additionally, Ankr 2.0 also includes the addition of enterprise-level services, such as the gaming SDKs mentioned earlier, and advanced APIs to enrich data for users. Finally, there is APPChain, which helps various ecosystems create their sidechains.
This shift is related to my understanding of philosophy. I believe that every person and every company in this world has different ideas. In the Web3 industry, we often hear people express a strong preference for the concept of decentralization and the boundaries and freedoms that come with not needing to register an account.
However, I believe that Ankr, as an infrastructure provider, should serve different user profiles, rather than assuming that everything must be decentralized just because we are in the Web3 industry.
Our philosophy is to find real needs and meet them. If users want decentralization, we provide a network; if they need more custodial services, we can also offer enterprise-level services.
We hope to play a role in building bridges, connecting ecosystems like Ethereum, Polygon, BNB Chain, Solana, and others.
5. Chain Catcher: Currently, there are many node infrastructure service providers, including Alchemy, Infura, Ankr, and at least a dozen others. What are the differentiating factors in this market? Or what are the main paths of differentiation?
Chandler Song: One path is to deeply engage in the staking industry, such as Blockdaemon and Figment, which started with enterprise-level staking needs, while Alchemy and Infura lean towards enterprise-level RPC needs related to developers. Ankr currently operates between the two, providing both staking and RPC services.
Another aspect is the degree of decentralization. Alchemy and Infura are more enterprise-level, while Pocket is a more decentralized network. Ankr is positioned between the two, offering both enterprise-level solutions and a decentralized network.
6. Chain Catcher: Everyone is benchmarking against Web3 AWS. How far are we from Web3 AWS, and what is the expected future scale?
Chandler Song: The scale of Web3 infrastructure will definitely be very large, but it will not replace the internet; the two will definitely go hand in hand in the future. In the next five years, I see that some basic services of Web3 will gradually replace certain product lines of traditional Web2 companies and departments.
However, while Web3 infrastructure can provide values such as privacy protection, convenience, low trust requirements, and transparency, not all companies will fully pay for these values.
Ultimately, it comes back to what actual changes Web3 brings to users. For example, will some banks, tech companies, and supply chain companies see a reduction in labor costs or a decrease in fraud incidents through Web3 and blockchain? Can products like gaming and social media, which are consumer-facing, explore more operational possibilities through Web3?
For us as service providers, the main thing is to engage with as many companies as possible and identify actual needs. You can't just say you want to create a Web3 AWS and develop all related products based on AWS, only to find that no one uses them.
Currently, the bear market serves the industry by eliminating the unnecessary and revealing the true value. In a bull market, some unnecessary demands will disappear, such as derivatives of derivatives, which are actually very unnecessary. This transformation also takes time; it took over a decade for the internet to transition from traditional servers to cloud services, and for large banks to move from counter transactions to online banking.
The success of AWS and Alibaba Cloud is also due to their ability to continuously expand boundaries and meet the general needs of developers, thus forming an irreplaceable barrier. In today's Crypto/Web3 field, who can confidently say that by using our services, you can independently develop a site? Web3 infrastructure still has a long way to go, but it also means there is significant incremental space.
7. Chain Catcher: Currently, many public chains are criticized for having overly concentrated nodes. Leading node supplier Infura recently mentioned that due to community concerns, they will build decentralized infrastructure by early next year. How do you view this concern?
Chandler Song: From 2017 to 2021, many people opted for convenience and speed by setting up an Ethereum node on Google Cloud or Amazon Cloud, which is a very normal logic.
I believe that centralized service providers like Alchemy and Infura have their value. They can provide good support for somewhat mature enterprises, such as offering excellent after-sales service, so that if something goes wrong, they can be contacted for resolution.
Today, we can no longer view Web3 as a cyberpunk concept. Moreover, for this industry to grow and expand, it cannot just be a group of geeks working on it. In the future, persuading various entertainment, gaming, and even enterprise service sectors will not happen overnight.
DeFi's rise compared to traditional finance is not just due to a concept; it provides users with tangible value. We are driven by demand; if clients need decentralization, we provide a decentralized network, but if they need more enterprise-level services, we offer those as well.
Regarding the issue of overly centralized node infrastructure, some research reports mainly focus on data from the Ethereum chain, which is currently the most mature data on the Ethereum chain. However, multi-chain is a trend, and from the perspective of multi-chain nodes, the situation is not as severe as imagined.
8. Chain Catcher: Is the market currently leaning more towards centralized or decentralized node service solutions? What will the future trend look like?
Chandler Song: Right now, it's a 50-50 split. What the future landscape will look like still depends on market demand. If everyone were a developer and understood technology, there would be no need for wallets and exchanges. So, expecting everyone to set up their own nodes is also unrealistic. Ankr's philosophy is to find a balanced solution that respects market development.
9. Chain Catcher: In early August, after Tornado Cash was sanctioned by the U.S. government, Infura immediately announced it would block access to the application, sparking much market skepticism and discussion. How will you balance compliance and decentralization? Have you taken any related actions?
Chandler Song: Our business in the U.S. will comply with local laws. Is it impossible to balance compliance and decentralization? I don't think so.
You have to put yourself in the shoes of someone whose money is stolen in DeFi and washed away by Tornado Cash. How would you feel? If decentralization is meant to provide a loophole for crime, I believe such decentralization is entirely unnecessary.
10. Chain Catcher: There is an article on Messari questioning that although you have made commitments to decentralization, Ankr only has 345 operational nodes compared to tens of thousands of independent nodes operated by competitors. How do you view such skepticism?
Chandler Song: First, we need to clarify one issue. Just because a network has many nodes does not mean all of them are widely used. Ankr's operational nodes are genuinely utilized, maximizing the use of each node. We currently have only 345 nodes, but as market demand gradually increases, the number of nodes in this network will naturally rise.
Ultimately, whether it is a decentralized or centralized product, payment is required. For Ankr, we have always focused on how many people are using our product and how many are willing to pay for it. Currently, Ankr can fully support its development through the revenue generated from services.
11. Chain Catcher: Based on public data, it seems that you still have a distance to cover compared to leading node service providers. What do you think are Ankr's shortcomings and your response plans?
Chandler Song: Our total request volume has now reached 7.2 billion, which is comparable to Infura. What we might currently lack is market promotion and financing expansion, so this year we are starting to build a stable developer community and engage in strategic partnerships with large companies like Binance.
12. Chain Catcher: Recently, you experienced DNS hijacking on the RPC endpoints of Polygon and Fantom. What was the extent of the impact? What specifically caused it? What measures have you taken to ensure it does not happen again?
Chandler Song: First, this DNS issue was not an attack. The specific reason was that the customer service of the domain provider fell victim to social engineering attacks, leading them to believe that the hacker was an Ankr employee, resulting in the loss of keys. We resolved it within a few hours, and the impact was not significant. As a Web3 node service provider, we must use domain services, but this issue is not fundamentally ours and is difficult to fully control.
13. Chain Catcher: Besides the issue of overly concentrated nodes, what other challenges does the node infrastructure industry face?
Chandler Song: The entire market is in a bear market, causing some companies that originally wanted to try Web3 to give up, while the changes in Web3 projects have led to a more concentrated developer base. However, this is just a temporary crisis. If we can firmly identify our market needs, we will definitely be able to capture the entire market when it returns.
14. Chain Catcher: Over the past year, a large number of developers have flooded into the blockchain industry. As a developer tool platform, can you share the number of users and growth situation? What advice do you have for new developers entering the field?
Chandler Song: The platform has received nearly 90,000 email addresses, which is just the tip of the iceberg. Web3 developers may account for less than 0.1% of all developers, so we still have a lot of incremental space ahead. For new developers entering the field, it's important to respect demand and the market.
15. Chain Catcher: In the crypto bear market, as an infrastructure service provider established in 2017, how did you survive the last bear market? What lessons have you learned?
Chandler Song: Don't be overly optimistic in a bull market, and don't be overly pessimistic in a bear market. Just because a bull market is here doesn't mean you are doing everything right, and don't excessively self-doubt in a bear market.
Moreover, the current bear market is not just a decline in Web3 but a general downturn. We must learn to respect the market.
During a bear market, if you firmly believe in something, try to remain steadfast. Focus on management and avoid rapid expansion at the first sign of market improvement. Consider how to sustain the company through the value brought by the product itself, rather than relying on token issuance and sales. Relying solely on capital is not enough; many companies in the Web3 field have this speculative mentality. But it is essential to understand that capital and technological innovation must complement each other.