Exclusive Interview with Layer3 Co-founder: Layer3 Should Be About People and Community

Interviewee: Brandon Kumar, Co-founder of Layer3

Interview and Compilation: Wendy, Chandler, Foresight News

"We have long been overwhelmed by low-quality projects. Ultimately, crypto projects serve real consumers, and people are an indispensable part of the entire ecosystem." ------ When discussing how crypto projects can achieve sustainable development, Brandon Kumar, co-founder of the attention commodification protocol Layer3, told Foresight News. In explaining the naming of Layer3, he emphasized: "We believe Layer3 is people, it is the community, and we hope to highlight the importance of user experience and community building through this naming."

In today's information explosion, attention, as a scarce resource, has become an important component and competitive object of economic activities. In the world of Web3, the commodification of attention is gradually being explored, becoming a new business model. Layer3 is a pioneer in this field, aiming to build decentralized infrastructure on-chain through user online identity, content consumption, and monetary incentive layers, releasing over $500 billion in application value behind attention.

Specifically, Layer3 has constructed a bounty matching platform through a unique three-layer staking + dual burning token economic model, which defines the user activity across the entire chain and the token distribution mechanism for project task incentives. The core idea of Layer3 is to aggregate user activities across multiple cross-chain environments and complex dApps applications through on-chain behavior tracking and asset distribution mechanisms, forming a unified on-chain identity view. This view can help project parties identify truly valuable early users while systematically distributing tokens to suitable users based on on-chain activities, CUBE credentials, social graphs, and task participation, thus providing a foundational, fair, and efficient ecosystem for users and project parties.

The founding team of Layer3 has prestigious academic backgrounds. The project's co-founder and CEO, Dariya Khojasteh, graduated from the University of Southern California, while another co-founder, Brandon Kumar, graduated from George Washington University and previously served as Vice President at the venture capital firm Accolade Partners. The project’s engineering lead, Peter Ng, was previously the CTO of Mojito and graduated from Columbia University. In June of this year, Layer3 completed a $15 million Series A funding round co-led by ParaFi and Greenfield Capital, with participation from Electric Capital, Immutable, Lattice, Tioga, LeadBlock, Amber, and others.

On July 24, Layer3 opened the airdrop allocation check, and L3 tokens will be distributed based on users' historical and current activities, according to the number of CUBE, task completion status, cross-chain and exchange transaction volumes. On July 30, Layer3 announced on Discord that the Layer3 Foundation had added token allocations for all eligible addresses and included 1,592 users in the eligibility list. The current user allocation review has been completed and finalized.

Seizing the opportunity of the project's TGE, Foresight News conducted an in-depth conversation with Layer3 co-founder Brandon Kumar to discuss the concept of attention, how to construct a new paradigm for token economic models, and how to better coordinate ecosystem participants. Brandon Kumar emphasized in the interview that quality means different things, and meaningful crypto projects need to generate real value. For example, why has Maker (MKR) been able to exist for so long? First, it is a cornerstone of the industry; second, it has real fundamentals and cash flow behind it.

Foresight News: Please briefly introduce yourself and other core team members of Layer3. What motivated you to establish Layer3?

Brandon Kumar: Thank you for the invitation. My name is Brandon Kumar, and I am one of the co-founders of Layer3. My career began in the investment field, where I worked at Accolade Partners, a large alternative asset management company managing billions of dollars in venture capital, growth, and acquisition strategies. I joined in 2016 as the Director of Investments, primarily responsible for investing in companies across risk, growth, and acquisition strategies. We are one of the key limited partners of Andreessen Horowitz, and in 2018, they launched their first crypto fund, marking their official entry into the crypto space.

In my previous job, I spent a lot of time meeting with founders, conducting due diligence, and thinking about aggregation theory. I found that there was a lack of a product in the market that could connect protocols looking for on-chain users with consumers hoping to find suitable protocols. Through Jay Bhavnani, the founder of Rari Capital, I met my co-founder Dariya. At that time, Dariya was building a growth marketing project branded as Layer3, aimed at helping DeFi protocols activate their communities through off-chain behavior. We found that our skills were very complementary; he mainly focused on product strategy and product marketing, while I concentrated on B2B and partnerships. Therefore, in September 2021, we decided to combine forces, raised seed funding, and since then, our business has been continuously expanding. We are now approaching our third anniversary, having raised over $21 million in funding, with protocol revenues reaching eight figures and a team of 14 people.

Foresight News: Clearly, you have many entrepreneurial options and could start different types of projects. Why Layer3? What are the core concepts and goals of Layer3? Where is the team's current focus?

Brandon Kumar: That's a great question. First, to pursue anything in a market, you need to ensure that the problem you are trying to solve is significant enough and that the opportunity is substantial. So why choose the crypto space? I believe the crypto market is a very dynamic market, and as a founder, it is full of exploration and excitement. In the next decade, the crypto market will accumulate tremendous value.

Next, what problem do we want to solve in the industry? We aim to address a very large issue. If you look back at some of the biggest companies of the 2000s and 2010s, they all followed what is known as aggregation theory. Aggregation theory refers to a business model that establishes direct relationships with end consumers, aggregates suppliers, and provides a distribution channel that enhances overall efficiency and user experience. For example, Amazon, Netflix, Spotify, and Facebook are typical examples of aggregators because they have direct relationships with consumers and aggregate supplier resources.

In 2020, as a user, I spent a lot of time during DeFi Summer looking for Yield Farm protocols and trying to find protocols relevant to my needs and interests, but searching for protocols through Twitter was clearly unreasonable. This made me realize that we could combine these forces to build a platform. If the crypto industry develops as I expect, then in the next decade, the industry will grow tenfold or even more. Therefore, a mature matching engine is needed to connect builders and consumers. This way, if you are building a purpose-driven protocol, rather than burning funds through airdrops or liquidity mining, you can allocate tokens to the right users at the right time.

Our goal is to improve the experience of the existing user base while helping to expand the market size, making it easier for more people to find suitable protocols. If we successfully achieve this vision, it will be a tremendous victory for us and all participants. Currently, our focus is primarily on creating an extremely user-friendly platform that allows users to enjoy the fun of crypto. Because in the crypto space, the barriers to deploying protocols are very low, and the market is flooded with low-quality projects. Our emphasis is on curating the best projects in the industry so that users can access the highest quality projects while exploring the on-chain ecosystem on Layer3, thereby ensuring user loyalty and retention. Through our continuously optimized matching engine and strategies, we hope to provide maximum value to users and protocols while promoting the healthy development of the entire crypto market.

Foresight News: On your company's blog, you emphasized that "attention is a scarce resource, and fragmentation is the biggest risk in cryptocurrency." Could you further explain the meaning and connotation of "monetizing attention"?

Brandon Kumar: The era we are in now, whether in artificial intelligence or the crypto field, sees rapid innovation in almost every key vertical, leading to what is called "computing power surplus." This allows developers to build various products and services, and content creators can disseminate their content widely across multiple channels, significantly speeding up the process of bringing products to consumers. If you started a company 20 years ago, you needed to raise a lot of capital and bear high operational costs, such as physical servers. Now, these costs have been greatly reduced.

Similarly, in the crypto space, you can deploy a smart contract that attracts hundreds of millions of TVL in just a few weeks. With the lowered barriers to market entry, consumers will ultimately be overwhelmed by the sheer number of things to explore. So what is the most valuable commodity? The most valuable commodity is consumers' time and attention, especially their on-chain behavior.

If you can somehow profit from controlling users' attention or get users to perform certain actions on-chain, that is a very powerful business model. However, this model has not yet been fully realized in the current market. For example, MeMe tokens reflect the concentration of attention on-chain to some extent; their lifecycle may be short, but they also showcase this trend. Similarly, large Layer2 ecosystems exhibit this phenomenon, where attention concentrates on a specific project and then gradually diminishes. Take Forecaster as an example; previously, there was significant attention on decentralized social media. While this attention may not have diminished, it is not growing as rapidly as before. Our business primarily helps to guide and allocate this attention in the most valuable way.

Foresight News: What are the technical highlights of Layer3? Could you detail how these technical highlights work and their significance for users and projects?

Brandon Kumar: When we first started the company, it was just my co-founder and me, and I was still working at my previous company. We needed to raise funds and build a product, so we utilized no-code platforms like Webflow to raise seed funding. In fact, the complexity of our tech stack and infrastructure has increased several orders of magnitude compared to when we first started.

Layer3's technical architecture has two key components: value distribution and identity verification. Take Facebook as an example; their business model is to attract users to spend a lot of time on their social platform, with user data owned by Facebook, which then monetizes this data by selling it to advertisers, making a lot of money while the value primarily goes to Facebook. In the crypto space, protocols have their own tokens, which are mainly used to acquire on-chain users. The top 20 crypto projects have $24 billion in native assets in their treasuries, most of which are used to help teams expand their ecosystems. Our protocol is designed so that when users complete specific actions (X) on-chain, they receive corresponding rewards (Y), and this is all programmatic. The X actions have two sub-variables: transaction cost and transaction value. The transaction cost depends on which chain the user is trading on; for example, Ethereum mainnet costs more, while BNB costs less. The transaction value depends on the amount of the transaction. Through a programmatic approach, we can provide corresponding rewards based on users' on-chain actions.

The second technical highlight is identity verification. When you use the platform on Facebook, the data is owned by Facebook. In our model, after users complete activation on Layer3, they generate a credential called CUBE (Credential to Unify Blockchain Events). Simply put, this is on-chain session data, but you own it. CUBE is an ERC-721 token minted after completing actions, containing detailed transaction data for each on-chain session, and it belongs to the user. Additionally, users will receive rewards, and the economic benefits are positive for them.

Foresight News: Layer3 is a popular term in the crypto world, especially when people discuss whether Ethereum needs L3, right? In fact, you named the project Layer3, but why? Where does it come from?

Brandon Kumar: When we started this project, Ethereum as Layer1 was the core layer. With the emergence of scaling solutions, Layer2 began to shine, such as Optimism and Arbitrum. However, we believe that the most important layer is actually the layer of people, that is, the community layer. We want to emphasize that crypto projects ultimately serve real consumers, and people are an indispensable part of the entire ecosystem.

Therefore, the naming of Layer3 reflects this perspective: the third layer is people, it is the community. We hope to highlight our emphasis on user experience and community building through this naming. Later, as the crypto space developed, the concept of Layer3 became increasingly popular, including the emergence of application-specific Layer3 and gaming Layer3. This has, to some extent, helped our performance in search engine optimization (SEO), allowing more people to find us. But more importantly, this name captures the core idea of our project well, and we are very proud of it.

Three-layer Staking + Dual Burning New Paradigm Economic Model

Foresight News: How is Layer3's token economic model designed? Please explain in detail Layer3's token economic model, including layered staking and dual burning mechanisms?

Brandon Kumar: Our initial vision was that when network effects are established, we could redistribute value to both sides of the market in the form of tokens. In traditional markets, companies typically raise large amounts of venture capital to subsidize the costs of establishing network effects. For example, early on, Uber operated at a loss to grow, but ultimately they needed to raise prices and lower driver incomes to become profitable. This model can enhance network effects in the crypto space by redistributing value through tokens.

We decided to introduce tokens only after achieving a clear product-market fit and growth in network effects. Fortunately, we reached this goal in about two and a half years, so we decided to launch the L3 token. In short, when users use the token, they can earn more L3 token rewards. At the same time, they can also earn OP by operating on Optimism or ARB by operating on Arbitrum, in addition to L3 tokens. This amplifies their earning opportunities. In terms of the protocol, if you deploy value through Layer3, our success will be tied to your success, and you will also gain corresponding token ownership. You can think of it this way: if we applied this model to Facebook, it would mean Facebook would distribute stocks to all users and advertisers instead of just profiting the platform itself.

In terms of token distribution, Layer3 allocates tokens based on users' on-chain activities. Whether it's users with low wallet balances but frequent transactions or users with high wallet balances but low transaction frequency, rewards will be allocated based on their contributions to the protocol. This method ensures that every user receives corresponding returns based on their transaction volume and transaction value, achieving fair distribution.

Fairness is crucial at Layer3. Layer3 ensures fairness through the curation of high-quality projects and precise user matching. Now, we all know that deploying protocols is too easy, and in reality, we have long been overwhelmed by low-quality projects. Users often do not know where to spend their time and may even have a bad experience because of it. Quality means different things, and we will focus on curating the best projects in the industry to ensure that users only encounter the highest quality projects while exploring the on-chain ecosystem. This not only ensures user loyalty and retention but also ensures successful service to the ultimate protocol.

The layered staking model tightly aligns the interests of token holders and active users of the platform. Layered staking is an innovative model. In any token environment, there are active users and token holders. Ideally, these two roles should be aligned, but in reality, this is not always the case. Layered staking has three parts: first, users passively stake and earn rewards; second, users stake and actively use the platform to earn additional third-party tokens; finally, users stake and actively use the platform while earning more L3 tokens. This progression from passive to active promotes alignment between the two roles.

The dual burning mechanism is another major feature of ours. I believe that in the long run, only those protocols with real fundamentals and actual revenue can succeed over time. Fortunately, Layer3 is a profitable business. We plan to establish a burning mechanism where the revenue generated by the protocol will be used to burn tokens, creating deflationary pressure and increasing value for token holders based on cash flow growth. I think this is a very powerful business.

Foresight News: How does Layer3's token economy achieve system sustainability? Could you elaborate on how Layer3's token economy achieves sustainability through acquiring external value?

Brandon Kumar: The design of Layer3's token economic model ensures that the tokens have real fundamentals and revenue; sustainability is merely a byproduct of whether value is reinvested into the business. In the long run, only those protocols with real fundamentals and actual revenue can succeed. Layer3 is a profitable business that creates deflationary pressure through revenue buybacks and token burns, benefiting token holders. Layer3's role is to pass value to users and protocols. Through token redistribution, network effects are enhanced, allowing users to not only earn L3 tokens but also acquire other tokens by operating on different chains, amplifying their earning opportunities. At the same time, protocols deploying value through Layer3 ensure that success is aligned with us, gaining corresponding token ownership. This model ensures that Layer3 can capture external value and achieve token sustainability through buyback and burn mechanisms.

Foresight News: I see you previously mentioned that multiple airdrops will occur. What are the future airdrop plans? How will you reward and incentivize the community?

Brandon Kumar: We recently announced the airdrop eligibility check tool, and the tokens are about to go live. The specific airdrop plan will be determined based on users' activity on the Layer3 platform. Factors considered include the time users spend on the platform, the number of tasks completed, the credentials obtained, the value transferred through our bridging and swapping functions, and daily activity on the platform. These factors collectively determine users' airdrop eligibility. Compared to most airdrops, our distribution has received a lot of positive feedback and anticipation. Users are generally satisfied with the distribution results released yesterday. We look forward to seeing the community's reaction once the tokens go live. Future airdrop plans will continue to be based on these core factors to ensure that active users and early supporters receive the rewards they deserve.

Regarding the listing timeline, we do have plans to list the token, but we cannot disclose specific dates yet. The token is about to go live, and the specific timeline and related details will be officially announced soon. Please stay tuned for the upcoming announcements. We hope that through these arrangements, we can ensure a smooth launch of the token and bring more value and incentives to the Layer3 community.

Becoming the "Google" of the Crypto Space

Foresight News: Let's talk about the future. Recently, Layer3 completed a $15 million Series A funding round co-led by ParaFi and Greenfield Capital. What do you think they are betting on by investing in Layer3?

Brandon Kumar: That's indeed a good question. In my view, they are betting on a future that can connect billions of dollars in value with users. From the very beginning, we made it clear that we wanted to solve an important problem in a large market. Layer3's goal is to become the "Google" of the crypto space, providing users and protocols with an efficient matching engine. If we can successfully execute this vision, it will not only bring tremendous value to Layer3 but also have a profound impact on the entire industry.

From an investment perspective, ParaFi and Greenfield Capital see the enormous growth potential of Layer3 over the next decade. If history can serve as a guide for the future, this business model is often very valuable. While there are still many things to achieve, if we can execute this vision correctly, Layer3 indeed has the potential to become an important player in the crypto world.

Foresight News: Could you explain how this funding will help Layer3 achieve its future goals and plans?

Brandon Kumar: This $15 million funding will primarily be used in several key areas. First, we plan to expand our team in the Asia-Pacific region, including China, Singapore, Thailand, South Korea, and Japan. This will help us better serve these markets, attract more users and partners, and further promote Layer3's globalization. Second, we will significantly strengthen our engineering team to ensure we have enough resources to develop and launch some very exciting new features. These features will be rolled out over the next few months, including a more intelligent matching engine and personalized user recommendation systems.

Foresight News: What are the main development directions and focuses for the next one to two years?

Brandon Kumar: First, we will focus on more personalized matching. When you use Instagram, you see content highly relevant to your interests, which greatly enhances the user experience. However, such an experience does not yet exist in the crypto space. We perform various operations on-chain, but there is no way to make precise recommendations based on historical data. Therefore, we are investing a lot of R&D resources to create an engine that can provide highly personalized and accurate matching. The second focus is to expand and enhance the scale of the platform. Layer3 drives a large number of transactions across various Layer2s. In many ways, we are currently "renting" these infrastructures. We hope to achieve more autonomous infrastructure by further vertically integrating our tech stack. Additionally, we are developing some new features related to asset trading and custody methods, which will be launched in the coming months, and we are very excited about this.

Foresight News: Last question, as you said, you were previously an investor, and now you are an entrepreneur. What are the differences between the two? How do you feel so far?

Brandon Kumar: The biggest difference between being an investor and an entrepreneur is the frequency and nature of decision-making. As an investor, you might only need to make five to ten important decisions in a year, spending more time observing and thinking. As an entrepreneur, you have to make five to ten key decisions every day. This shift in pace has been a significant adjustment for me.

Throughout this entrepreneurial journey, I've learned a few things: First, having a complementary co-founder is very important. My co-founder excels in product strategy, while I primarily focus on business development. Second, the first few hires are crucial; these people will become the core of the team, and their quality and capabilities will directly impact subsequent hiring and team culture. Finally, maintaining high discipline throughout the market cycle and strict cost control is very important. In 2021 and 2022, many companies spent heavily during the market boom, while we remained cautious, allowing us to stay stable during market downturns and build a counter-cyclical business model.