How Pharos Network is building a layer 1 for real world assets

0:00I'm Ashton Addison from the Crypto Coin Show, and today on Blockchain Interviews, we have Wish Wu, co-founder and CEO of Faros Network, an EVM-compatible layer one focused on real-world assets, cross-chain liquidity, and more. Here to talk about institutions moving on chain and building scalable infrastructure for tokenization and enterprise DeFi, and just more

0:23real-world adoption of crypto. Wish, welcome to the show and thanks for taking the time. Yeah, nice to meet you. Um, I'm Wish, um, the co-founder and CEO of Faros, and great to know, uh, to meet everybody here. Yeah, likewise. Excited to dive into Faros, and more specifically, why this technology is needed and important for the next stage of adoption of digital

0:47assets into the financial world and and the world overall. I'd love to start out with a bit on your background in in blockchain and how you found this problem that needed to be solved. Yeah, so, um, the actually the founding members of Faros, uh, is Alex and I. We previously worked at Ant Group, and we developed the uh, largest blockchain platform in

1:17China. It's a consortium blockchain. It's called Ant Chain. Actually, we started quite earlier, and it's back from 2017. We started to develop the infrastructure underlying, uh, uh, technologies for the, uh, blockchain. And we, uh, at that time, because it's in, in one of the largest fintech company, we supported the, uh, many, many scenarios, uh, regarding the, uh, the government,

1:45the financial institution, and companies to do the, uh, ABS, the industry financing, all those kind of a scenario. And also, we supported the largest NFT marketplace in China. It has, at the peak time, I think there are uh, over 1 billion users on that platform to claim NFTs, uh, at that, at that, you know, the the, it's like a the web two system, like

2:10Alibaba and etc. So, at that time, we realized it's really important that the infrastructure can support such large amount of users, accounts, and a high volume of the transactions, and uh, so, we built this infrastructure for that. And it's in 2024, we, uh, come out from the Ant Group and, uh, building Faros based on the previous,

2:36uh, tech stack, what we were building in the past few years, uh, that is Faros. So, we make it EVM-compatible, but really, really high-performant layer one. And, uh, because we, uh, firstly, we realized that it's really important to have this very high, uh, and reliable, uh, infrastructure for, uh, TradeFi, for real applications for the for the normal

3:02users. And also, we, uh, because of this experience, we build those, uh, user cases, those applications with institutions and the companies, and, uh, we, uh, we think that they they has they have also have very strong motivation and momentum that want to, uh, onboarding their asset, their capital, and even the users on the chain. So, then we catch that trend, and

3:29so we build Faros, which is aiming to connecting the web two and the web three. It's not only the, uh, uh, the capital or asset, but also the users and applications. Mhm. That's very interesting, and that's it's a lot of users, uh, on the NFT side, and I feel like we can bring in hundreds of millions of more users on on the finance side as well. I have a

3:55question. Why, what makes Faros Network, uh, differentiated between other Ethereum, uh, chains, like other EVMs, like Ethereum or layer twos? You know, why is a separate chain needed again? Yeah, so, that's also, uh, uh, what our strategy is when we are initial this project. And in terms of this, uh, high performance,

4:24it's not about only about the TPS, right? So, some of the layer two can do quite good on the TPS, but it's, uh, from the requirement, uh, from the, uh, traditional finance, the what they really care is first about the, uh, reliability, and then is about the finality. So, if it's a layer one, layer two on Ether, we cannot never solve the finality problem, because all those, uh,

4:50all those, uh, how to say, consensus is still relying on the, uh, Ether mainnet, and they are slow, and they have this finality up to like uh, few minutes. So, which is not acceptable by serious financial activities. So, that's why we decide we want to build a layer one, which is not only high-performant in TPS, but also have real-time finality. So, which can only be achieved by a

5:17layer one network. Mhm. That makes sense. On the real-world asset tokenization, do you believe that RWAs are the next step for adoption of of crypto technology into financial products? Yeah, I think it definitely that because we we saw many of the leads, uh, from both the web two and the web three. On the web two, they are looking for

5:46a more a more channel to distribute their asset and the capital. And also, they are looking for, uh, a a more efficient ways that can, uh, build their financial applications. So, and across the border, and, uh, also have this very high efficient in the smart contract to build the applications. I think that's, uh, what they need from the web two. But from the

6:11web three, we also saw a lot of users, they are so, uh, unsatisfied and and, uh, disappointed on the previous, uh, crypto, uh, finance, because most of those project are, uh, they they have yield or was whatever is from the inflation of the token. It cannot be sustainable, and >> [clears throat]

6:36>> I think, many user are tired of chasing different meme coin or other projects. So, I believe that the, uh, with all that, majority of the users, even in web three, they also want to looking for a more sustainable and safe, uh, yield source from the, from on on the blockchain. That's what, uh, RWA can bring to them. It's based on the real yield yield from the

7:04web two, no matter it's, uh, uh, private credit or a treasury bill or, uh, or even tokenized stock, the yield is is real and that and they can uh, they can bring incremental capitals from the web two, and then bring the yield to the users. I think that's what is the majority of user are needed nowadays. I agree. It's nice to have something with substance uh, that's tokenized,

7:32and, uh, you know, if it's something that you could hold in your hand, we're getting to that, more physical, uh, tokenization, but it seems like early on, you mentioned treasury bills are are one of the early use cases. Um, how broad it, in terms of, uh, what the plan is for the mainnet of Faros Network and tokenizing different financial products and real-world assets?

7:58You know, is T-bills and like money market products, is that the first step or, you know, how deep can we get, how quickly? Yeah, so, definitely the the the, uh, treasury bill and the money market fund are the are the basis of most of those financial product, even in the in the web two, it's it's the basis. We we need to onboard them because they have a very

8:23high liquidity. They are the most reliable and safe asset, which could be the foundation of all those asset. But we are also looking for more innovative and with more high yield product, and, uh, uh, they can come from some of the premium financial, uh, product, which I think a normal user cannot access in the in the real life. Some of them are only

8:49accessible by people with private bank, right? Uh, they some of them have they have very, uh, high barrier for the users. And but they have very quite good, uh, yield or reliability, uh, that we want to bring them to the user, inclusively for all the user on chain. I think that's one of the goal. And the second is I think, uh, it's, uh, uh, we also want to support

9:13more, industry, uh, companies for that. They have some, uh, some of them they have, uh, have, uh, equipment, they have, uh, for example, what we did, uh, recently is from the, uh, renewable energy companies. They want to tokenize their, uh, uh, solar panel station, the wind turbine station, all those, uh, kind of renewable energy equipment. We use, uh,

9:40IoT devices to put to making sure all the data are traceable, all the yield and the equipment performance are traceable and reliable, and then tokenize them under the chain. So, they can provide a very, uh, secure and sustainable yield for the users. And I think that's some kind of a how do you say differentiators on the asset variations. Definitely. And with those more

10:08innovative financial products, it's great to get some of them in, but what are some of the hurdles that you've seen in discussion to, you know, to doing more types of innovative financial products? Is it compliance or legal or just scared of the unknown of of of switching systems? I think that the first one is about the the the I think it's education for the

10:34people on chain. And, uh I think people are more get familiar with crypto asset. And, when it it goes to the so-called real world asset, they may have unfamiliarity and what they what is the really those underlying asset is. And, because it's really hard to do due diligence for retail user when they are getting access to those asset. I think that that's

11:01quite the first step for the mass adoption world of real estate. And, also I think it's definitely another hurdle for for the compliance rhythm because it all the other real estate is in a very early stage, especially for for those more innovative asset. There are lack missing of some regulatory or those stuff. So, it's quite in a quite gray area, I would say. And, it's needed

11:28some innovation at the same time how to making sure all the things are compliance and secure. I think that's the second step. And, the third step is to on the application side because the all the existing DeFi protocols are designed for crypto asset, but not designed for auto base. So, it has quite different between those different two different assets.

11:56So, the web two how how you get all those data and the price feed to the on chain. And, also how you build a DeFi protocol with asset that all the value are from the off chain. And, how how how you can manage that with especially with a liquidity with a liquidity gap between the web two and web three. I think that's the third step when you really want to build some

12:21applications based on those asset. Definitely. And, with with treasury bills as one of the early products, you know, most people are are looking at, okay, US treasury bills. And, then as we get into more physical products, off chain products, there's they're in different jurisdictions, whether it's in the US or whether it's in Asia where, you know, all the NFTs

12:46were being bought. How can we convert that into more physical products? How do you balance different jurisdictions on opposite sides of the world and trying to tokenize them on the same platform? I think uh Firstly, I we need to make sure the issuance of those asset are fully compliant. I think no matter is in TBO in the States and most of the asset are issued by licensed

13:13institution or partners. And, also that's the same for for Hong Kong or for Singapore. It needed some kind of a license to issue the asset. And, but we also want to say that when it goes to the on chain, especially goes to the DeFi protocol, and they're they are fully making it fully permissionless. It has a lot of rooms to build the application on those asset,

13:43making it widely accessible to all the users even permissionless in some some cases. I think it's possible even under the current regulatory framework. That's nice. And, when you tokenize and put it on to the Phala Network on its own L1, how easy is it to interact with that if you are already on Ethereum or other chains and and like the cross chain

14:11interoperability? Yeah, so we So, for the last 1 years what we we spend most of the time trying to build a really comprehensive infrastructures on Phala Network as not only about bonding the blockchain side, but also about the the stable coin, the the cross chain protocols, also the RPC, the oracles, and etc. So, and the wallet for no matter it's for

14:41users and for institutions. That's what we we spend most of the time on to build this infrastructure for all the users and institutions to do this. Yeah, so on Phala, I think uh uh we uh Although I cannot reveal the partner's name, but we we will have the most reputable stable coin on Phala natively. And, we will have the we also you can see from our social media that

15:07we work with a Chainlink, with Layer Zero to provide the cross chain capabilities. And, we also working with Safe, with Fortify, with some other also with Ankrage to do the no matter is a multi-sig or MPC or custodian wallet for the users and institutions. So, yeah. Yeah, we we we already have the I would say one of the most comprehensive infrastructure on the chain right now

15:34even we haven't published the mainnet yet. That's great. And, you know, coming from a security background, I'm sure security is top of mind especially when you're bringing in off chain assets and and you have multiple chains interacting. What are some of the top mistakes that you see in other in other platforms that are things that are important to ensure

16:00that you have security-wise for for this kind of product? Yeah, I think uh uh a few years ago people are more mostly rely on the security audit to making sure the protocol and all the chain are safe. But, in reality uh most of those attacks uh let's say like after the very beginning of few years, most of the

16:26attack are on the smart contract, right? But, later on most of the really incidents are not because of the smart contract, but because of many other stuff. No matter some of them are because of the web two systems on the no matter is on the cloud servers or the the the back end of the system itself. And, also uh there are even more cases because of the incidents

16:51because of people. People are not accustomed about what they are operating on the chain uh to manage their their keys. Or, even when they do operating their system, writing their code, they may have uh or they may have hijacked their their computers or the developers, etc. So, I think uh it it is the security is is how do you say? Is uh a very should be a very comprehensive

17:17stuff. It's not only about one aspect, but the full aspect. So, they're not only about the web three, but also about the web two. And, not only about how you have audit to prevent something bad happen, but also have a very very comprehensive incidents responsible response plans for the the stuff when something happen, how you react into that. And, how you rehearsal and plan

17:45all those those uh uh those your your your your response beforehand. I think that's what we care about right now. And, to build we're making sure that no nothing is is missing on our side. We have covered all the stuff about security. Definitely. And, so what you're saying is it's not enough to just take my smart contract, put it in cloud code, run the

18:13new security security plug-in and says that it's safe. And, so and then we start loading uh hundreds of millions onto the contract. Exactly. Yeah. Definitely. Um So, with the you know, with the testnet stage right now, obviously, you have more time to lay out the security aspect, the the foundational pieces, and ensure that

18:41you know, the real money is not doesn't have flaws. What's the current status of the the load bearing in the testnet, you know, how much you guys are building on it towards the the mainnet launch? Are you mean the the performance wise? Performance wise? >> Yeah. Yeah, so I think our testnet is really battle test, I

19:09would say. We have launched that I think it's May of last year. And, we also have a few campaigns on the testnet. And, uh I think we have I think we have over uh three or four billions of transaction on the testnet right now. >> Wow. And, and it's about the 300 million, I would say. You accounts I would say not user accounts are are interacting with our

19:38testnet. I think especially during the campaign the the transaction peak is really high. And, uh yeah, we have So, frankly, in at the very early stage of the testnet, there is some issue on the tech wise. we also get some problem on that, but we trying to fix that and refine the net the the technology now it's quite stable on our second test net. And uh

20:03And also we have a internal network to do the pressure test. And at that that test net we uh it should be definite. Yeah, we reached uh 20 to 30 K TPS with with over 100 million of accounts interacting with the blockchain at the same time. Yeah, there's that uh I think that's um um uh barely that already meet our requirement uh on the performance wise. That's why

20:32we we we are quite confident that we can release our main net soon. So you guys are close to the main net launch then? Yeah, should be the following uh months, I think. That's very exciting. And how does uh you mentioned there was a stable coin coming out uh potentially and uh if there's a governance token or a non-stable coin, um is there plans for

21:01that inside of the ecosystem? Honestly, I think uh because I think it's a big all all because uh from the requirement uh or from the users and applications currently for auto base and uh I think no matter is the asset issuer or the users, they are requiring uh licensed stable coin. Uh which is most widely accepted the most compliant stable coin.

21:29That's why we choose that one. Mm. Okay, that sounds great. Yeah. >> [clears throat] >> Um what what's the best way to to follow along or to test it out? Uh should should we wait for the main net launch in the near future or should we get in the test net so that we can get uh ready on day one when when it launches? Yeah, so we we we are preparing some of

21:56the uh campaigns before the TGE. Uh it should be uh one to weeks before the TGE. We will have our TGE campaigns that for the users. It's uh it's related to auto base asset, of course, and we want to uh onboarding the first batch of asset we had, which we think is the most premium asset uh for the users. And uh yeah, just stay tuned and uh uh

22:24uh and uh pay attention to our social media. We're going to to release that soon, I think. Sounds great. I'm looking forward to it. Uh I I'll leave the social links and the platform website in the show notes below. Uh appreciate your insights into this. Wish uh more tokenization of real world assets is coming and we want to do it right, safe, secure,

22:47compatible with the real world and with the current uh network effects we have in blockchain. So wishing you and the team all the best moving forward. Yeah, thank you. Let's looking forward to that uh world that we can have less gap between the web two and the web three. Definitely. Thank you so much. Yeah, thank you. Thank you so much. Bye-bye.