Exclusive Interview with Particle Network: Chain abstraction is an inevitable product of the background of chain explosion, and we are committed to solving the ultimate problem of Web3 UX

Reporter: Shenchao TechFlow

Interviewee: Pengyu, CEO of Particle Network

Introduction

On June 20, Particle Network officially announced the completion of a $15 million Series A funding round, led by Spartan Group and Gumi Cryptos Capital, with participation from SevenX Ventures, Morningstar Ventures, Flow Traders, HashKey Capital, and others.

Currently, Particle Network is still in the first phase of its testnet, reportedly with about 1.3 million Universal Accounts registered. The second phase of its testnet is expected to launch this week, while the mainnet is planned to go live in the third quarter of this year.

Unlike before, we find that this time Particle Network seems to place greater emphasis on the description of its positioning in "chain abstraction." Compared to two years ago, when Particle started from wallet abstraction, "chain abstraction" appears to be a new leap. Recently, Particle Network has also launched new products such as People's Launchpad.

With curiosity about Particle's latest narrative and the logic and thinking behind the different products the team has launched over the years, in this issue, we will have an in-depth conversation with Particle Network CEO Pengyu. From the inside out, we will understand the Particle Network team's thoughts on narrative, the industry, and their own product and business logic.

Key Points

• Since its inception, Particle's mission has always been to empower developers and solve the ultimate problem of Web3 UX. Our products are divided into three stages: wallet abstraction, account abstraction, and chain abstraction.

• The user experience at different interaction layers is multiplicative rather than additive; any UX issue in one link has a global impact.

• The underlying logic of our products is: horizontal full-chain ecosystem, vertical full lifecycle, and we have three product lines internally: main channel products, growth product line, and operation product line.

• We are essentially a cryptocurrency project, not an internet company. We understand that running a cryptocurrency project is never about standardizing business for a single group.

• We design from the perspective of the entire lifecycle of users and developers, and technically each stage fully utilizes the technological accumulation brought by the previous stage.

• Chain abstraction is not artificially created but is an inevitable product of the context of chain explosion.

• Our chain's positioning is as a supporter, coordinator, and enabler, not a new chain competing with others. We do not compete with other chains from the perspective of TVL or developers, nor do we exacerbate the fragmentation of user liquidity.

• A good token is a utility-driven meme.

• The claim that the customer acquisition cost for crypto projects is much lower than that of mobile internet is incorrect, as future debts also have costs unless you assume they won't be repaid.

• The entire technological evolution of Web3 is a cycle of "unity leads to division, and division leads to unity." The hallmark of unity leading to division is the rise of L2 and the popularity of modularization, while the core of division leading to unity is chain abstraction.

• I believe the current issue with infrastructure is not that there are too many, but that the overall penetration rate is too low; the issue with applications is not that there are too few, but that the direction is wrong.

Underlying Thoughts: Accumulating Technological Advantages, Iterating Along the Full Lifecycle of Users and Developers

Shenchao TechFlow: First of all, congratulations on completing your new round of financing. I noticed that this round of financing seems to place great emphasis on the direction of "chain abstraction." We have also noticed that many reports related to chain abstraction cover Particle for research and comparison. However, what impresses us more is your role as a wallet infrastructure project. Can you briefly explain how you transitioned from a wallet infrastructure project to the field of chain abstraction?

Pengyu: Since its inception, Particle's mission has always been to empower developers and solve Web3 UX problems. The products have three stages: wallet abstraction, account abstraction, and chain abstraction.

• Wallet Abstraction: Reducing user friction when entering the chain by providing developers with social login and wallet suites;

• Account Abstraction: Upgrading the underlying structure of user accounts on the chain to improve interaction efficiency;

• Chain Abstraction: Reducing the fragmented experience of accounts and liquidity brought by a multi-chain ecosystem.

These correspond to the entire lifecycle of developers and users: entering the chain - single-chain interaction - multi-chain interaction UX issues.

Our understanding of UX optimization is that optimizing UX across the entire lifecycle is what truly matters. The user experience at different interaction layers is multiplicative rather than additive; any UX issue in one link has a global impact.

Shenchao TechFlow: The second question may be more straightforward. As you mentioned earlier, you have gone through several product iterations, and you have also launched People's Alliance and People's Launchpad. It seems that the BTC ecosystem is also thriving. From an external perspective, it might seem that you lack focus and have a tendency to chase trends. Can you share the underlying logic of your various products?

Pengyu: The underlying logic of our products is: horizontal full-chain ecosystem, vertical full lifecycle.

It's not that we lack focus or are seeking to cover everything, but rather that we are addressing UX-related issues, which must be considered globally.

From the perspective of industry development, the trend of multi-chain and cross-chain is irreversible. Users will have accounts and liquidity across different ecosystems, so how can we ensure that users have a unified and efficient experience throughout their lifecycle across various chain ecosystems? This is the ultimate problem of Web3 UX.

To give a not-so-precise example, in the internet era, you can't say that accessing a website in Japan is fast, but accessing a website in the U.S. is slow, right? Similarly, you can't have a smooth registration process when playing a game but get stuck during the recharge process.

Based on this thinking, returning to your question, we have three internal product lines: main channel products, growth product line, and operation product line.

The main channel product line is our core product line, aimed at developers, with the three stages I mentioned in the previous question.

The growth product line mainly refers to the growth tools like People's Launchpad and People's Alliance that you just mentioned.

The operation product line includes our testnet platform Particle Pioneer, among others.

Why establish growth and operation product lines outside of the main channel product line?

Because we are essentially a cryptocurrency project, not an internet company. We understand that running a cryptocurrency project is never about standardizing business for a single group. We need to satisfy our customers, investors, community, and end users simultaneously. Therefore, the growth product line is aimed at our community, keeping up with market hot assets to maintain community excitement and interaction frequency.

The operation product line is aimed at our end users. Even though we are an infrastructure aimed at developers, our product solutions are very innovative and unique. The operation product line helps us quickly inform the industry about the unique products or features we offer.

As for why we don't use activity or content-driven methods for operations and growth, this is determined by our team's style. We prefer to solve each problem in a product-driven manner, leaning towards standardized and data-driven approaches to achieve good results. Therefore, even in market activities and growth, we will launch products that may seem complex to achieve some of our goals. The result of this approach may be that it appears we offer more products.

The thriving BTC ecosystem is a result of executing our "horizontal full-chain ecosystem" strategy. We are not only cultivating the BTC ecosystem; we are also making significant progress in the Cosmos ecosystem.

I think the reason for the perception of a lack of focus from the outside is that we have areas where we excel: each product line has garnered considerable recognition. However, we have not effectively communicated our overall strategy and the underlying logic of iterating products and launching different product lines. I believe today is a good opportunity to discuss our overall thinking.

Shenchao TechFlow: This iterative approach is commercially coherent, but will continuously evolving products lead to reduced support for partners using your previous stage products?

Pengyu: This is a great question. If the iteration of your main channel product lacks a relationship in terms of technology, functionality, and user base, it can indeed lead to such issues. However, we do not design product iterations this way. As I mentioned earlier, we are designing from the perspective of the entire lifecycle of users and developers, and technically each stage fully utilizes the technological accumulation brought by the previous stage.

I can give some specific examples. For instance, our wallet abstraction product from the first stage and the account abstraction product from the second stage can be used independently or in combination. Developers can use independent third-party wallets like MetaMask to drive our account abstraction protocol, or they can use our wallet abstraction (social login + built-in wallet) to drive the account abstraction protocol, effectively transforming the dapp's built-in wallet from a regular EOA account to an AA account.

Our third-stage chain abstraction product has three core underlying modules: Master Keystore Hub, Decentralized Bundler, and Messaging Network.

The Master Keystore Hub and Decentralized Bundler are derived from the accumulation of the previous stage's account abstraction product, essentially representing a decentralized and full-chain solution for account abstraction. From the developers' perspective, they feel that we are continuously adding new features for them to use or choose from. Beyond wallet abstraction, they can use account abstraction to upgrade their existing account structure to a smart account, and the chain abstraction product allows them to easily extend a single account abstraction product to the entire chain.

Regarding how to provide more support to partners, we have also been iterating. We currently have over 1,800 dapps (not counting various experimental products from Hackathons) integrated with our various products, with around 1,000 of them still active (DAU greater than 0). Last month, our SDK downloads aimed at developers (various npm packages) exceeded 500,000 downloads/month and continue to grow rapidly.

However, we hope to maintain a small operation and a large R&D team structure. In this context, our strategy is layered + automated. We will focus more on projects with real traffic and on-chain interactions, while projects that simply increase the number of EOA accounts will receive automated support without dedicated manpower.

Shenchao TechFlow: I have observed that all three of your product lines have many partners, and it seems that you can gain a lot of support as soon as you launch, without facing the common startup or growth difficulties that most Web3 projects encounter. How do you achieve this? Do you have any special practices?

Pengyu: There are several reasons for this:

• Although the product lines have been iterating, the cooperative groups have not changed: public chains + dApps, allowing us to continuously accumulate cooperative resources.

• We only pursue feasible collaborations, ensuring that the trust relationship with partners is genuine. In terms of collaboration with public chains, we have direct partnerships with nearly 80 public chains, and we try to land from various angles. For example, we have collaborated with Avalanche on a large-scale Consumer Crypto Hackathon, conducted the People's Alliance inscription activity with Linea, received grants from Near and Sei, and have plans for cross-airdrop with Avail. We are about to launch Co-Testnet activities with Berachain and Arbitrum, and we have co-hosted several offline meetings with Citrea and BOB, while Merlin has appeared on our People's Launchpad. This includes some independent scenario chains, such as Peaq with a Depin theme and Xter.io, a gaming-themed public chain, where their ecosystem projects almost entirely adopt our various technical solutions.

• We have a systematic internal management mechanism to ensure that cooperation can not only land but also cover multiple angles. This mechanism includes a self-built CRM system suitable for us, and we regularly review the status of key cooperative projects to ensure that we catch up with key projects at a fixed frequency to understand their needs from various angles beyond product cooperation.

New Narrative: Chain Abstraction is an Inevitable Product of Chain Explosion, and It is Our Most Exciting Evolution Direction

Shenchao TechFlow: Currently, Particle's external positioning is "The L1 Unifying All Chains Through Universal Accounts," targeting chain abstraction. We have seen a statement that there are too many types of abstractions in the industry, and that chain abstraction is an artificially created narrative. Why do you think the industry still needs a new "abstraction"?

Pengyu: First of all, there will definitely be more and more chains. From the perspective of the cost and benefits of launching chains, this will promote the situation. The costs of launching and maintaining chains have significantly decreased due to the rise of modular infrastructure like RaaS and DA, as well as the implementation of EIP-4844. Moreover, launching a chain has obvious benefits for projects of any background: it provides a simple and efficient way to capture value for tokens and expands the operational boundaries of projects.

Currently, there are about 400 chains that can be tracked, and it is expected that there may be close to 1,000 by the end of this year, and over 3,000 by the end of 2025. The existence of so many chains not only raises the learning threshold for so-called Web2.5 users but also presents issues for professional users who have already felt the fragmentation caused by this.

Many people have a similar feeling that their USDT is scattered across many chains, and often due to time-consuming transfers or insufficient gas, much purchasing power is effectively lost. Therefore, in the context of thousands of chains, providing end users and developers with a unified interaction and development environment is definitely something that needs a solution.

I believe the core of determining whether a narrative is artificially created is to see: is it solving a specific problem, how high is the ceiling for solving this problem, and whether there is a feasible solution to actually address this problem. Chain abstraction is not artificially created but is an inevitable product of the context of chain explosion.

Shenchao TechFlow: There are many other narratives in the industry, some of which have ceilings and can also lead to practical products. Why did you choose chain abstraction as your evolution direction instead of AI or DePin, etc.?

Pengyu: The narrative is undoubtedly one of the most important tasks for Web3 projects. Because the narrative is essentially a mixture of product evolution direction, technology delivery route, and the valuation system of investors and communities. Especially in an industry without standardized value discovery paths (such as traditional PE multiples), narrative = pricing range. However, the biggest challenge here is choosing a narrative direction that suits Particle.

I understand that narrative directions can be roughly divided into: mature narratives, clear narratives, noble narratives, and avant-garde narratives. For example:

• Mature narratives are similar to oracles, cross-chain bridges, etc.;

• Clear narratives are new and widely accepted, such as AI or DePin in this cycle;

• Noble narratives are those that closely follow the Ethereum Foundation's narrative, such as ZK, privacy, reputation, etc.

Each has its pros and cons. For example, the advantage of clear narratives is that they do not require education in this track, but proving oneself as a leader is the most challenging. Noble narratives will always find buyers, but getting on the table is difficult (high requirements for team background), and delivering products and traction is uncertain. The challenge of avant-garde narratives is that they may be quickly falsified.

The direction we want is one that can deliver products, create traction, and make good use of our products, users, and technological accumulation.

Considering all factors, chain abstraction is our most exciting evolution direction.

Shenchao TechFlow: In the field of chain abstraction itself, there are other projects such as Near, Polygon, Everclear (formerly Connext), etc. What is the unique entry point of Particle's chain abstraction solution? What are your unique advantages?

Pengyu: From the entry point perspective, Particle approaches it from the perspective of universal accounts, Near approaches it from decentralized signature computation, Polygon provides shared liquidity bridges based on CDK-built L2, and Everclear approaches it from the perspective of transaction settlement.

The most unique advantages of Particle's chain abstraction solution from a product perspective are:

1. Users and developers have no migration costs, which increases the adoption speed of the solution.

2. Our solution has a Decentralized Bundler network at its core, which can package multiple UserOps into a single transaction execution, saving gas costs for complex multi-chain and multi-step operations.

From a commercial perspective, our biggest advantage is that all users and developers accumulated from our wallet abstraction and account abstraction products can seamlessly migrate to our chain abstraction infrastructure. In a sense, we have already accumulated users and liquidity for this solution before its official launch.

Shenchao TechFlow: The underlying design of your chain abstraction solution is "to design a new chain." Doesn't this contradict the original intention of "solving the problem of too many chains"?

Pengyu: Our chain's positioning is as a supporter, coordinator, and enabler, not as a new chain competing with others**.

When designing our chain abstraction solution, we mainly considered security, transparency, the marginal cost of chain abstraction services, and the sustainability of value capture. Overall, it was determined that using an independent Layer-1 to carry this is the most appropriate.

When users initiate any transaction through our Universal Account, from the perspective of the value chain, we do not reduce the on-chain gas consumption of other chains. Instead, all chain abstraction transactions are first sent to our chain, and we coordinate the execution of corresponding operations on external chains, shielding users from the perception of multi-chain and cross-chain interactions. However, users do not need to pre-transfer assets to our Layer-1, so we do not compete with other chains from the perspective of TVL or developers, nor do we exacerbate the fragmentation of user liquidity.

Shenchao TechFlow: Particle's product delivery capability has always been strong, but commercially, how does this chain abstraction solution achieve a closed-loop business model and maintain sustainable operations in the future?

Pengyu: We understand that the only scalable business models validated in the entire Web3 industry are the native gas tokens of public chains and transaction fees on-chain or off-chain.

The underlying structure of our entire chain abstraction solution is a Layer-1 based on the Cosmos SDK. Any transaction initiated by users through the Universal Account on this chain (whether complex cross-chain transactions or transactions involving only one chain) will first send a transaction that packages the user's UserOps to our chain, where the Particle L1 nodes will decompose, execute, and coordinate the corresponding operations.

Therefore, any transaction on the Universal Account will indirectly or directly consume our L1 tokens. The value capture is very natural and sustainable.

Token and Future: The Issuance of Tokens Will Bring Multi-Dimensional Help, Hope Particle Can Become the Lubricant of the Entire Industry

Shenchao TechFlow: Now let's move on to the topic of tokens, which users are most concerned about. Many users are looking forward to Particle's token design. Can you first define a good token in one sentence?

Pengyu: I believe that a good token is a utility-driven meme. The most representative example might be SOL.

Shenchao TechFlow: For you, why is it necessary to issue a token? What is its significance, and what role does it play in the development of the project?

Pengyu: Internally, we understand that tokens have several roles: starter, booster, filter, and revenue generator.

• Starter: In the early stages of a project, tokens can be used for related incentives to cold start and gain recognition from users or community supporters. However, a popular saying is that the customer acquisition cost for crypto projects is much lower than that of mobile internet, which is definitely incorrect, as future debts also have costs unless you assume they won't be repaid or you believe the token will have no liquidity or value. Therefore, using tokens as starters in the early stages also requires very careful design.

• Booster: This is about how to bind interests with core ecosystem partners when a certain scale is achieved, such as the recent collaboration between zkSync and Lens.

• Filter: The cost of purchasing and holding tokens can gradually filter out long-term supporters. However, the biggest challenge here is how the project can provide excess returns to long-term supporters; otherwise, they may end up being taken advantage of.

• Sustainable Revenue Generator: If there is a token-centric business model, it is essentially using business growth to exchange for profits, with the manifestation being the healthy growth of token liquidity and price.

Overall, we believe that if a token can simultaneously provide the above four types of help to the project, it is worth launching.

Shenchao TechFlow: A sharp question: some teams issue tokens and then become complacent. What is your view on this issue?

Pengyu: Complacency can actually be divided into two types: active complacency and passive complacency.

Many Web3 teams actually want to continue working after issuing tokens, but the lack of recognition in business afterward is due to passive complacency. This may be due to several reasons:

• Technical design is disconnected from engineering practice, making it impossible to deliver.

• The product lacks PMF and cannot find users.

• The token lacks value capture ability, making it less meaningful to continue business.

On the other hand, active complacency essentially arises because the team believes the current project's development potential is limited. No one would refuse to continue pursuing wealth returns; the choice of active complacency stems from the belief that investing personal energy and wealth in other assets is more promising, while the expected returns from continuing to invest in the existing project are low.

Returning to ourselves, we do not face the challenges of passive complacency. Every product we design from the beginning considers who the target audience is and how to ensure that technology is leading while also being delivered in a reasonable timeframe. Our token, as the native gas token of a public chain, is also one of the few validated methods for scalable value capture.

More challenges come from how Particle itself can continuously open up its ceiling. The entire technological evolution of Web3 is a cycle of "unity leads to division, and division leads to unity."

The hallmark of unity leading to division is the rise of L2 and the popularity of modularization, while the core of division leading to unity is chain abstraction.

This track occupies a central position in the wave of industry development. Without discussing ideals, from the perspective of wealth value creation efficiency, we have no reason to slow down.

Shenchao TechFlow: Web3 is a rapidly evolving industry influenced by open-source culture. Are you worried that the significant innovations you make today in the field of chain abstraction may become standard technology tomorrow, thus losing technological advancement?

Pengyu: This is actually two questions. Will open-source products lose technological leadership? What are the barriers of Particle's chain abstraction infrastructure?

The topic of open-source products is vast, and I can only briefly share my understanding. The technological leadership of open-source products is counterintuitive; companies with open-source products tend to maintain a leading position, while those accustomed to modifying and forking may lose the motivation to break through due to too many immediately usable options. Uniswap is a good example; most on-chain DEXs are optimized based on Uniswap, yet we see that innovations like Uniswap V4 continue to drive the on-chain trading sector.

The essence of chain abstraction is to establish an interoperability standard that spans the entire industry from the position of a coordinator.

Any standard is never solely achieved through product or technological leadership. It starts with product leadership leading to penetration rate leadership, followed by a snowball effect of scale, ultimately forming a standard. Once a standard is formed, it still needs to be iterated with an open attitude to sustain.

Returning to Particle's chain abstraction infrastructure, our current product solutions and delivery timelines are leading, and we can leverage our past user base effectively. From the initial release, we already have a considerable account scale and liquidity scale, and our solution's stance is entirely based on openness and empowerment logic, not competing for TVL or developers.

Shenchao TechFlow: I remember you were established in May 2022, just at the beginning of the bear market, and you have fully experienced the entire bear market. If you had to describe the biggest challenge during this period, what would it be?

Pengyu: The biggest challenge lies in the sense of tearing brought about by "balance."

Balancing a small team to do "big" things: Web3 project teams are generally small, but they need to handle many traditional large company tasks, including technological innovation, customer acquisition, brand marketing, international expansion, IPO management, investor relations, etc.

Balancing one project with four roles: The roles and interests directed at partners, communities, investors, and exchanges are not entirely unified. Balancing flexible narratives with product accumulation, and balancing Asian traffic with Western communities, etc. Overall, it requires both execution and flexibility, while being both utilitarian and long-term oriented. This sense of tearing is the biggest challenge during this period.

Shenchao TechFlow: How do you view the future development of the industry, and what role do you hope Particle Network will ultimately play?

Pengyu: Our ideal Web3 industry is a large-scale consumer industry driven by edge innovation and technology, but the current characteristics of the industry still reflect a "pseudo" technology industry that relies on financial leverage and attention monetization. The "pseudo" technology industry does not mean there are no real technological advancements, but rather that technological innovation lacks a standardized value discovery logic.

I believe that the current issue with infrastructure is not that there are too many, but that the overall penetration rate is too low; the issue with applications is not that there are too few, but that the direction is wrong.

At this point, I cannot determine what the ultimate outcome of the industry will be: perhaps everyone will redefine what Mass Adoption means, no longer pursuing content-based or general entertainment Consumer Crypto, but returning to simply pursuing the efficiency of on-chain asset issuance and trading; or perhaps the industry will break through the difficulties caused by the lack of standardized business models and shape a giant consumer industry at the level of AI multiplied by mobile internet. But in any case, all industry users will still need to interact with chains, and how to improve the experience of interacting with chains is an endless pursuit.

We hope that Particle can become the lubricant of the entire industry in the role of a coordinator and enabler, reducing friction for everyone interacting with chains.