2025 is already half over, and the crypto industry is at a significant turning point. Whether it is the accelerated implementation of global stablecoin regulations, the deep integration of AI tools in Web3 development, or the evolution of the Polkadot ecosystem's architecture and governance mechanisms, new directions are being formed.
In this episode of the PolkaWorld roundtable live stream, we invite three core builders from different perspectives - Pakman, co-founder of Kylix Finance; Luis, technical lead of Gear Foundation; and Mario, co-founder of Harbor Industrial Capital - to have an in-depth dialogue around 'turning points'.
They will provide frontline observations and forward-looking judgments from multiple dimensions, including the fracture between the market and narrative, the innovation of AI-driven development tools, the transformative opportunities brought by stablecoin regulation, the logic of treasury fund use and VC collaboration, and whether DOT needs to be rebranded.
This is a systematic scan of the mid-game situation in the industry, as well as an open discussion on 'where Polkadot is headed next'.
Due to the length of this content, we will share it in two parts! This article is the first half, primarily containing:
VCs, developers, and builders: three perspectives on the mid-game turning point of Web3
Bringing VCs and the community 'to the same table': how HIC redefines ecosystem participation
The treasury is not a cash machine; the logic of treasury fund usage from the VC perspective
One-sentence smart contract generation? Vara reshapes the Web3 development experience with AI
Kylix's mainnet is expected to launch in September; will it also apply for treasury incentives?
Continue reading! Learn all the information!
Kristen: Hello everyone, welcome to this episode of PolkaWorld live show. I am Kristen, and today I have three guests with me: Pakman, Mario, and Luis. Hello everyone, welcome!
I chose 'turning point' as the theme for this episode because it is now June, a critical moment in the year transitioning from the first half to the second half. I feel that the overall market atmosphere, the latest stablecoin policies, and the Polkadot ecosystem itself are all at an important turning point.
So reflecting on the past at this time point and preparing to welcome the next six months is very meaningful. First, let's have the three guests briefly introduce themselves. Pakman, why don't you start?
Pakman: Okay, I think most friends in the Polkadot community should know me by now. I have done many live streams with Kristin before, and she is a very good friend of mine.
I am currently mainly involved in marketing and community building within the Polkadot ecosystem and have participated in many projects, such as Aventus Network, Mandala Chain, etc. I am now also a co-founder of Kylix Finance.
Kylix is a DeFi protocol focusing on multi-chain lending features, with many interesting characteristics, such as self-repaying loans, liquidity marketplaces, and so on.
The most unique aspect of Kylix is that it does not rely on cross-chain bridges, allowing you to lend native assets directly. We have also deployed our own liquidity pools on different chains, which we can discuss in detail later.
I co-founded this project with Gianluigi, who is a graduate of the Polkadot Blockchain Academy. We have been developing for over a year, and the project is nearing completion. I am very optimistic about the development in the second half of the year.
Kristin: That's great, I'm glad you could come. I know you're usually very busy, running your own media company and being the founder of Kylix, so I'm really happy you could be our guest today. Let's now welcome Luis!
Luis: Hello everyone! I think this is my first time participating in a PolkaWorld live stream via video, but I have actually had some exchanges with you before, as our Vara Network is part of the core technology of the Polkadot ecosystem.
I will introduce myself in more detail later. I am Luis Ramirez, currently the head of core development at Gear Foundation. Gear is a non-profit organization and the team behind Vara Network. Vara is a powerful Web3 application platform that allows developers to write smart contracts in Rust and achieve parallel processing within blockchain systems.
Kristin: Welcome, Luis! We are very much looking forward to learning about the latest developments of Vara Network, after all, you haven't appeared in the community for a while. Now, let's welcome Mario to the stage.
Mario: Hello, my name is Mario Altenböger, co-founder and CIO of Harbor Industrial Capital. We are a venture capital fund focused on the Polkadot ecosystem and currently operate two funds, both focusing on Polkadot projects.
VCs, developers, and builders: three perspectives on the mid-game turning point of Web3
Kristen: That's great! We have always been very eager to hear the VC perspective, and I'm glad you could be our guest today. Now that our three guests have arrived, let's have you discuss the theme of today.
I want to start with a light topic: what has been the most important 'turning point' for you personally or for the project during this period?
Pakman: I don't think this is an 'easy' question (laughs). In fact, how to define 'turning point' varies from person to person; is it referring to individual experiences or the development of a project? But many turning points have indeed occurred in the past. If we take Kylix Finance or the entire crypto industry as an example, the biggest turning point is undoubtedly the dramatic change in market environment—especially regulatory trends and Trump's dominant role in the market.
This really made me realize deeply that all the knowledge you learned about the market, crypto, and marketing over the past years seems to become useless at certain critical moments. It only takes one person to win an election or release a meme coin to push the market cap to a billion dollars in seconds - all the marketing logic and strategies you once prided yourself on become ineffective.
For me, this was a shocking 'cognitive shift': it's not always 'the more you know, the more advantage you have'; more often, it depends on how much 'influence' you possess.
Kristen: Yes, I really feel the same! I have many friends who have been in the market for many years, but recently they suddenly feel like they have completely forgotten how to do it.
Pakman: Absolutely right. Ironically, many of us initially hoped Trump would win, but now most people in the crypto circle are disappointed with him - because he has made everything too 'personal'.
Of course, all of this may just be a temporary low point, and I hope things can return to the direction everyone expects.
Kristen: Well, not just in the crypto circle; people from other circles also have a lot of resentment towards him. Thank you for your sharing; this is indeed a very representative 'turning point of 2024'. Luis, do you have any particularly important turning points for you or the project?
Luis: I want to say that one of the most important turning points and 'milestones' in the past few months within the Vara Network ecosystem is our breakthrough in AI.
Previously, we provided many contract templates to developers so they could create various Web3 applications based on these templates. But we also found that for the Polkadot tech stack, learning new languages like Rust and Ink has a relatively high threshold, and development efficiency is not that fast.
So we created a new tool: the AI contract generator (AI Generator Tool).
We used a fine-tuned model to 'feed' a large number of existing smart contract templates from the foundation into AI. Now developers only need to input a prompt, and they can automatically generate WebAssembly-compatible Rust smart contract code.
This greatly enhances the efficiency of prototype design. Even if you don't understand Rust, you can start building your smart contracts on Vara.
This is a very important leap for us, especially for developers who want to quickly validate ideas, as the threshold has significantly lowered.
Now, even if you don't know Rust, you can create smart contracts and start interacting with the Vara Network ecosystem. This is fantastic. Not just smart contracts; we also provide corresponding tools to help developers attract users and build complete applications.
I think this is a very meaningful thing for the Vara Network community, especially for developers. I also hope that more and more developers will use this new technology in the future.
Kristen: That's great, I'm glad to hear about this progress. Do you think AI will become a turning point in the crypto industry?
Luis: I think it will bring an acceleration effect. Indeed, AI has played a significant role in various application scenarios across industries. Our team is now using AI in almost every aspect, such as writing code, auditing code, creating front-end interfaces, and so on.
For example, we have also deployed an AI bot in our Telegram community to help users learn about blockchain, understand the Vara ecosystem and various technical concepts, and also earn rewards through participation.
So I believe AI is indeed helping us. At present, I don't think AI will replace us; we just need to learn how to use it correctly. Of course, no one can predict the future, and I just hope not to see something like Skynet (the AI from Terminator) happen too soon. But for now, we should make good use of the existing AI tools and work together to build our future.
Kristen: You are indeed leading the trend in this field and doing a great job! So, Mario, what do you think?
Mario: I want to continue on from what Pakman mentioned. We were all very optimistic at the beginning of this year.
From the market performance since the beginning of the year, whether in terms of valuation or overall sentiment, it did start off well. But I remain optimistic. Although there is still much room for improvement in the execution and communication of certain policies, if some of the policy outcomes can indeed be realized, it would be a strong boost not only for the crypto industry but for the entire macro economy.
Additionally, it is important to note that he (referring to the former U.S. president) is currently pressuring the Federal Reserve. Personally, I also believe that the Federal Reserve should start lowering interest rates again.
If you look at other central banks around the world, such as the European Central Bank, the Bank of Japan, and the Swiss National Bank, they have already started to lower interest rates, with Switzerland even reducing rates to zero. So I feel like the current market is like reopening the 'floodgates' - because there is a clear imbalance: the stock market valuations are at historical highs, but other risk asset classes, such as crypto assets, venture capital assets, real estate, etc., are still in a 'suppressed' state. Therefore, I believe this is the economic sector most likely to see a significant turning point in the future.
For us, one of the most important milestones this year was the establishment of the second fund at the beginning of the year.
Moreover, just a few weeks ago, we completed the introduction of our first institutional investor - the Web3 Foundation. We are very pleased to have them on board and to have successfully completed this process.
This further illustrates that within the Polkadot ecosystem, cooperation exists not only between projects but the entire ecosystem has a genuine spirit of collaboration and motivation to move forward, and this positive atmosphere is not accidental. The Web3 Foundation and ecosystem leadership team also continuously support and promote this development behind the scenes.
Bringing VCs and the community 'to the same table': how HIC redefines ecosystem participation
Kristen: Indeed, this is a macroeconomic turning point that will also affect the entire crypto industry and the ecosystem we are in. Speaking of the advisory committee you just announced, can you introduce it further? What strategies or considerations are behind it?
Mario: Yes, we have completed the establishment of the fund and brought in the first institutional investor. We are now officially announcing the list of advisory committee members for Harbor Industrial Capital's second fund (Fund 2).
The original intention of setting up this committee is to hope to further bridge the connection with the community, allowing representatives from different fields in the ecosystem to participate.
For example, we have invited:
Angie Dalton (from Signum Growth and Topplay) - she is a co-investor;
Active members of governance from the community, like PakMan - who not only actively participates in governance but also represents an important project, Kylix Finance, which we believe has the potential to elevate DeFi on Polkadot to a new height;
Representatives from other projects, like Michael from the Mandala project, we also warmly welcome him to join;
Representatives in governance, like Tommy (Alice und Bob) - he has been deeply involved in Polkadot governance for many years and is a very powerful voice;
There are also Xiaojie from PolkaWorld and you. We are very happy to invite you to join because we believe the Chinese community is also vital to the entire ecosystem. In Harbor Industrial Capital, Max and I typically reside in Hong Kong, where we spend a lot of time working and living. We both speak fluent Mandarin, so we hope through you we can connect more with the Chinese community.
We also invited Paulina (from BBA) because we believe that introducing new projects, new developers, and new founders is crucial for the ecosystem's development. We hope to maintain close cooperation with BBA. We will actively participate in the upcoming PBA event in Bali in August and promote collaboration.
So what is the core purpose of this advisory committee? Simply put, it is:
Let's make our connection with the community closer;
Covering different 'touchpoints' and representative groups within the ecosystem;
Better 'listen to the ecosystem' and understand community dynamics;
At the same time, it's also for better coordination of external communication and our various efforts within the ecosystem.
The treasury is not a cash machine, the logic of treasury fund usage from the VC perspective
Krisren: That's great, and today’s conversation includes two advisory committee members: Pakman and PolkaWorld. I hope we can spread the information about HIC together and promote the growth of the entire ecosystem.
Speaking of the VC perspective, ordinary investors and a wider audience actually pay great attention to VCs' views. So I particularly want to hear your thoughts on the use of OpenGov treasury funds.
We often see proposals wanting to apply for funds from the OpenGov treasury, but they do not belong to the 'public goods' type of projects. HIC has previously proposed that OpenGov should operate like a VC, with a VC's mindset - when a project takes funds from the treasury, it should, in some form, 'give back' to the ecosystem.
But there are also some projects, especially early-stage teams, who would argue that if a project can attract more users into the ecosystem with treasury funds, that itself is already a positive return for Polkadot.
What do you think? Do you believe the treasury should operate like a VC and expect 'returns'? Or do you think unconditional grants are more beneficial for ecosystem growth?
Mario: Thank you for raising this question. I do believe that the current capital supply within the ecosystem is insufficient, and we indeed need to provide more funding support for ecosystem projects. But the key question is: where should this funding come from?
On one hand, we have Gavin, Parity, and other core development teams focused on advancing the underlying architecture. The Web3 Foundation was originally established to support ecosystem development and has clearly distinguished its respective roles.
I believe this is the first important step: the foundation is responsible for supporting the ecosystem but does not invest directly; investment should be conducted through funds like ours. As I understand it, the Web3 foundation's investment approach in the ecosystem is through ecological funds like ours. In other words, the foundation provides funds to these ecological funds, and we then deploy them to the market.
Why does the foundation choose to invest through a fund rather than directly investing in projects? There are two reasons:
First, there are considerations regarding regulation.
You might remember the SEC's (U.S. Securities and Exchange Commission) controversy about 'whether it constitutes securities'; this is very critical. Polkadot has always actively communicated with the SEC to maintain its legal status as 'software' rather than 'securities' - because once defined as securities, it could lead to a series of adverse effects. So this is the primary reason.
Secondly, it is for reasons of specialization and efficiency.
The foundation outsources the due diligence of projects by supporting multiple ecological funds. Each fund may have a different focus, such as:
Signum focuses more on gaming;
Cytale has been deeply rooted in the ecosystem for many years;
And us (Harbor Industrial Capital).
Each fund will review projects based on its judgment perspective and can exchange due diligence notes with each other, or even jointly invest. Therefore, multiple participants actively engage in the due diligence process, which is beneficial for the ecosystem.
This is the current operation model of the foundation + ecological funds.
As for other VCs, we certainly hope to see more traditional or external VCs participating in the Polkadot ecosystem, such as well-known names like Arrington Capital. Unfortunately, they have not been very active so far.
Next, let's look at another question: what role should the treasury play?
Of course, different people will have different opinions on this, and I don't intend to delve into these differences, but fundamentally speaking, the treasury's task is to support the development of the entire ecosystem.
This involves a key question: how should funds be allocated? For example:
How much to allocate for marketing?
How much to allocate for grants?
Funding is certainly reasonable, especially for 'public goods' type projects, such as infrastructure, documentation, governance mechanisms, etc., which may not have direct economic returns but are indispensable for ecological development.
For example, at an offline event or exhibition, like the Consensus or other conferences we participated in Hong Kong, Polkadot had a booth. How should the value of such behavior be measured? What 'returns' does it bring to the ecosystem? It's hard to measure directly in dollars. So for such activities, using treasury support is acceptable, and it can be set as a bounty or a dedicated budget allocation.
But if we allocate funds to those economic entities (i.e., projects with a business model and profit objectives), then the situation is different. According to basic economic knowledge (Economics 101):
The purpose of a company's existence is to make a profit (unless it is a non-profit organization or public project).
In that case, whether the projects supported by our fund or those supported by the treasury, if they can become profitable in the future, the supporting parties should also receive a proportionate share of the returns - this is a very straightforward logic.
So, as I mentioned earlier:
The foundation supports projects through ecological funds;
The treasury allocates funds to support public goods.
As for whether the treasury should 'directly invest' in projects - this again raises regulatory risks. For example, the SEC might say: 'Wait, is this an investment behavior? Then does this constitute securities?'
We must avoid this situation from happening.
The second question is: how can the treasury truly achieve 'investment' at the execution level?
For example, there is a proposal saying 'let's invest $1 million into this project.' How should these funds be allocated? How to manage them? Should a shareholding structure be established? How to ensure regulatory compliance? These are all very complex without a mature intermediary structure.
So what should be done?
I think there should still be some kind of intermediary mechanism, such as a dedicated committee or some kind of fund distribution mechanism, to be responsible for the distribution of these funds. Because if the treasury directly invests in projects, it can easily touch regulatory red lines again.
So the key question is not whether 'to invest or not', but how to use treasury funds to support projects in a compliant manner while ensuring that the treasury can achieve returns. This is not only a reasonable requirement but must also be executed in a compliant manner, ensuring that due diligence and legal processes are in place.
So when we consider how to allocate treasury funds to projects, the above points are very critical lines of thought.
Kristen: You do have a clear and distinct understanding of the use of treasury funds. I also very much agree with your viewpoint: we do need to draw a clear line between the roles of VCs and the treasury, while also recognizing that the treasury's function is not just to fund projects; it has other responsibilities. Therefore, we need to handle these issues very precisely. I also hope to see more people participate in such discussions in the future and promote progress in this area.
One-sentence smart contract generation? Vara reshapes the Web3 development experience with AI
Alright, let's talk about Luis. We see that Vara has been promoting the concept of AI smart contracts, and you also mentioned this is a turning point for the crypto industry driven by AI. Can you tell us specifically how AI and smart contracts are combined?
Luis: Of course, I think this is not only important for our Vara Network ecosystem but also a key issue for the entire industry.
Initially, we were connecting with developers about their ideas, such as wanting to create a DEX (decentralized exchange), a Marketplace, or supply chain applications. Our website provides many smart contract templates, allowing developers to quickly start projects by modifying only a small portion of the code instead of starting from scratch.
But now we have come much further. Now you can even know nothing and just need to input a sentence like: 'Create a smart contract with a complete supply chain structure that includes these links, these users, and these interaction logics.' Then the AI will call our supply chain contract template to generate the complete logic for the developer.
I think this is a very important thing because it means we can greatly accelerate the output speed of MVPs (minimum viable products) and early-stage projects, allowing them to build applications on Vara more quickly.
This is also the tool we are actively promoting in Meetups and workshops, and the feedback from developers has been very positive.
People have now become accustomed to using Prompts in their daily lives, such as using ChatGPT, Claude, Qwen, and other AI tools to accelerate daily tasks. The same goes for the development field.
Personally, I like this approach, but I don't particularly enjoy byte-coding itself. Because byte-coding is indeed suitable for quickly building prototypes, but once you want to do complex logic or advanced customization, you still need a strong programming background to know how to modify and extend the code.
So I think the best approach right now is a combination of 'AI + programming basics', along with the official development support we provide at Vara.
This is currently the most effective combination we have explored. Let's see over the next few months if this approach can truly accelerate the output speed of new projects, which I am very much looking forward to.
Kristen: Yes, everyone knows that AI is very dependent on computing resources and requires a lot of computational power support. But it is well known that blockchain has its inherent limitations in computing power. So how do you balance the two? For example, what requirements are there for the underlying infrastructure when developing AI smart contracts?
Luis: This is a very important question - how do we integrate AI on the blockchain?
Currently, our implementation method is based on existing AI models, which run off-chain and do not perform calculations on-chain. Of course, we have also tried different implementation methods, like our integration model called ZKML (zero-knowledge machine learning), but at present, we believe the most suitable and practical approach is: AI does not run directly on-chain but integrates with it.
We know that there are also some blockchains specifically designed for on-chain AI, even creating trading markets for AI models, but that is not the main direction of Vara. We prefer to let developers train their models off-chain and upload their computational results to the chain using our integration tools. That is to say, AI runs off-chain and the results are integrated onto the chain through ZKML.
In addition, we also have a solution called Gear EXE, allowing developers to build AI based on centralized computing networks. This approach is not only cheap, fast, but also very flexible. However, if you want to run AI models completely on the Vara network, it is still relatively costly compared to other AI platforms.
So our current main direction is: helping developers leverage AI to accelerate creative incubation, regardless of whether AI runs on-chain or off-chain.
Kristen: Yes, simply put: the AI's computational logic is executed off-chain, and the results are then written onto the chain. Have you seen any specific application scenarios for AI smart contracts?
Luis: Yes, we have currently provided some templates to support this on-chain and off-chain interaction model. For example, you can take your self-trained AI model (any algorithm implemented in the programming language of your choice) and write its results into the Vara network through our support for ZKML.
So far, this is one of the most complete cases we have achieved. Of course, it is scalable - you can continue to extend based on templates and develop any functions you want.
The reason we provide these templates is to help developers save time, so they don't have to start from scratch every time. But if you have higher technical capabilities, we welcome you to extend these templates and develop your own applications, and we are more than happy to assist in this process.
Kristen: Thank you, Luis! I also hope that developers interested in trying AI smart contracts can follow you and Vara Network to learn more.
Kylix's mainnet is expected to go live in September; will it also apply for treasury incentives?
Next, let's invite PakMan to introduce the mainnet launch plan for the Kylix project. Community members are very interested; when will you go live?
PakMan: I would love to say we are going live tomorrow (laughs), but to be honest, it's not that quick.
Before becoming a co-founder of Kylix, I had worked on many projects for several years and often got frustrated by the TGE (token generation event) being postponed again and again. At that time, I never understood how difficult it was to launch a project. Why was it always delayed?
It wasn't until I founded my own project that I truly understood the reason - everything is really complicated. It was at that moment that I realized.
For example, you have to do auditing, and you also have to do UI/UX design. I always say that it's better to launch a solid product later than to rush out a problematic one.
We are now very eager to launch as soon as possible. The testnet is already live, the UI/UX is being refined, and the front-end team is continuously developing. This process involves the collaboration of many different groups, and every step must coordinate and communicate.
If I had to say a rough timeline, I don't want to paint a rosy picture, but a more realistic prediction is: between the end of August and September, we might officially go live. Of course, it could be earlier, but we are still continuously testing and auditing, and we must ensure that every detail is in place.
Because you only have one chance to launch; if you mess it up, it could be the project's biggest failure. So we must proceed cautiously to ensure it is a successful launch. Therefore, I believe September is an ideal launch time.
Kristen: I know that liquidity is very important for DeFi projects. So have you considered applying for liquidity incentives from the treasury?
Pakman: This is a very good question and is often asked. I believe if you look at trends in the Polkadot ecosystem, such as Bifrost, Hydration, Acala, and Stellaswap, they have all applied for liquidity support from the Polkadot treasury.
This is something we might also consider. I'm not saying it won't happen, but we are currently more inclined to build a model driven by actual utility rather than completely relying on incentives. After we go live and start exploring future paths, this might be a direction we would seriously consider.
After all, you are building projects in this ecosystem, so you should be qualified to receive support from the ecosystem. So my current answer is neither a 100% affirmation nor a 100% denial; it's a 'maybe'. We will see how things develop and may take this path at some stage.
Original video: https://www.youtube.com/watch?v=1f3BU8Nbx1g