Dialogue DEV Marvin: How to excel in on-chain transactions? An analysis from the perspective of "main players"

The following text is organized from the Twitter Space series #DialogueDEV, hosted by FC, founding partner of SevenX Ventures, Twitter @FC_0X0.

This episode's guest: Marvin, founder of Phala Network, Twitter @marvin_tong.

First Time as a Dev: No Top VC Endorsement, But Listed on Binance with Community Support

After graduation, Marvin became an ordinary worker, working as a product manager in a large company. In 2018, the disruptive revolution brought by smart contracts inspired him and his brother @bgmshana, who was in the Gmail team working on Machine Learning, to consider starting a business.

What track to choose? Marvin and his team had a logic: the core value of Web3 is to solve the trust crisis, which in turn gives rise to new innovative models, and the value of these innovations will be captured by the most trusted technologies.

TEE is exactly such a technology. Thus, Phala was established, a decentralized cloud using TEE as hardware. After experiencing initial "setbacks," entering the Polkadot ecosystem became a turning point for the project. After a period of building, Phala became one of the leading projects in the Polkadot ecosystem, seizing the opportunity to successfully list on Huobi and Binance.

Regarding the listing, Marvin believes that one thing they did right was the fair launch of the token. Most of Phala's tokens were mined, and users did not need to run dedicated nodes; as long as they had TEE hardware, they could mine tokens.

This garnered widespread support from the community and thus attracted a lot of traffic. Although there was no top VC endorsement and the team did not have a "first-class" resume, the impressive data metrics from the community and user dimensions, aka grassroots support, combined with the trend of Polkadot, led to the project's listing.

However, the trade-off of Fairlaunch still exists today. Because the team only holds 5% of the tokens, many capital collaborations sought after the listing fell through.

The Transformation Journey of a Dev: Going to the U.S. to Find PMF

From 2021 to 2022, during the DeFi Summer and NFT Summer, Marvin and his team went through a very painful phase, constantly trying to find some use cases, but unfortunately, they did not achieve much.

Marvin began to reflect; he had a vague feeling that in the past few years in crypto, due to some pre-listing, post-listing, and other crypto-specific game rules, they overlooked the real points that needed attention in project development. He came to two conclusions:

1. Any infrastructure must have real users to find PMF.
2. The entire team must focus solely on this matter until PMF is found, without getting distracted by anything else.

"Of course, the premise of this conclusion is that the founder must understand what they want. We felt that TEE still has a thousand times the space that has not been explored, so we must pursue this direction. If we choose a direction, we should aim to be the leader in that direction."

To find a breakthrough, Marvin and his team moved to the U.S. in 2023. One motivation was that 70%-80% of the projects that could truly have users and PMF in infrastructure aimed at enterprises and developers are likely in the U.S., so they needed to be closer to this market, meet these people, and understand how they operate. They talked to projects, participated in hackathons, and engaged with developers to identify their issues. Since last year, they have begun to establish some PMF systems.

What does it feel like to find PMF?

1. Someone is genuinely willing to pay for your product.
2. The way it is used is very peculiar, usually not the way you expected.

It's like selling bricks for building houses, but no one is buying. Then one day, someone wants to buy your bricks to put out a fire on their head; that’s roughly what finding PMF feels like. Once such a scenario appears, what you need to do is to keep looking for people with their hair on fire and change the product form of the bricks to extinguish the fire more quickly.

Key Points of Transformation: How Important Partners Onboarded

Throughout 2024, Phala has been primarily focused on onboarding clients. During this process, Marvin mentioned two key teams:

1. Flashbots

Flashbots is the key team that discovered the necessity of using TEE to solve the censorship problem off-chain on Ethereum. They also found Phala while addressing TEE issues, leading to a series of technical exchanges and collaborations. Now, Phala is also providing some services for Flashbots.

2. ELIZA

Marvin met Shawn in a hacker house and explained that if AI Agents run inside TEE, they could achieve fully autonomous agents, which is the "End Game" for AI Agents in crypto. Shawn was very receptive to this logic, and afterward, some Phala developers began to contribute more deeply to the ELIZA ecosystem.

It was also because of this opportunity that Marvin launched spore.fun last December.

The Story Behind the Launch of Spore

After getting to know Shawn and having in-depth discussions, Marvin conceived the idea of creating an ELIZA + TEE case, with two routes:

1. Create Unrugable AI. By running the agent inside TEE, it can eliminate human-induced rug pulls. The product Marvin and his team collaborated on is called AI POOL, where they provide technical support.

2. Create Autonomous AI, to fully embody the concept of autonomy, leading to the creation of spore.

When is AI truly autonomous? It is when it does not need humans to sustain it. Currently, all AI on the market still requires humans to pay the bills; developers are quietly paying Google and the API fees for OpenAI's large models. What Marvin aims to do is to have the agent run inside TEE, where it pays for itself and earns its own living. If it earns a lot, then it can replicate its genes, evolve, compete, and ultimately undergo natural selection.

After the launch of spore, it received a lot of love, with an ATH market cap of around 80M, prompting Marvin to start taking this product seriously and operate and develop it as a separate project.

"Actually, after GPT-3.5, we found that more and more AI segment projects are willing to try our offerings or at least are willing to spend time listening to our pitch. Later, as we onboarded more AI clients, we began to focus on serving the AI sector well."

When a Dev Switches Trading Perspectives, How Does He Describe His Project's Potential?

About Phala

First, if you believe that one day the penetration rate of Web3 can grow from today’s possible 10% to 90%, then this process will definitely require low-cost, trustless technologies to be compatible with Web2 software, because rewriting all Web2 software is impossible. From the current perspective, Phala is in a leading position in the infrastructure track necessary for Web3 mass adoption, and to be unpretentious, it is number one.

Secondly, all problems stem from insufficient growth. Issues like insufficient chips for the big players and shallow capital are insignificant in the face of violent growth, so the focus should start on the project's growth potential.

Finally, quantitative data may not be very meaningful, including so-called value capture and profits; what matters is the application scenarios, specifically whether more people are using Phala's TEE and who is using it.

Regarding Spore

Currently, its value comes from the team + the theme, and this product is still being continuously built by a passionate team, so its growth potential lies in:
Spore could become the most popular launchpad in the ai16z ecosystem, and this launchpad is autonomously generated by AI.

"Platforms like Virtual, which are excellent low-code agent platforms, produce AI with a unique or intelligence level of around 60%. The AI generated on spore also has an intelligence level of around 60-70. The difference is that on Virtual, if you stack resources or have a good team, there’s a 1% chance of elevating an AI from a 60-70 level to a 90 level, like AIXBT, but the remaining long-tail AIs have no difference in level compared to those on spore."

Thus, spore has a significant opportunity. Many teams with ideas or those that have previously created good products but cannot issue tokens can achieve the following through spore:

1. Leading in AI Agents without needing any AI knowledge. It has unique skills that can be added to the AI automatically generated at a 60-70 level, transforming it into something at an 80-90 level.
2. All agents produced on spore automatically operate within a TEE ecosystem, defaulting to use the ELIZA framework, with tokens issued on SOLANA, ensuring interactivity.

What Dimensions Should a Dev Consider?

Marvin describes the current crypto market as extremely retail-driven and attention-driven.

He draws an analogy with the development of short video live streaming sales. Initially, unknown influencers and actors were streaming, but gradually more and more streamers entered the scene. At this point, three types of people emerge: 1) The audience, who find it interesting and become addicted, tipping and buying; 2) The critics, who morally condemn it, believing it is sensationalism and a decline in societal standards; 3) The practitioners, who think, if the world is going to be all about selling, what will everyone need? What should I do to capture market growth?

The current crypto market is similar; even the president is issuing tokens. As a "practitioner," one should consider: if issuing tokens becomes as common as air, a way for everyone to express their needs, what should I become? Should I be a seller? A supplier for sellers? A tool in the process? Or become the short video platform itself?

If there were no influencer system, becoming a seller would not be easy.

Becoming a supplier would be best if you could find active markets that are not yet widely circulated or are scarce, and then sell through binding channels. Many teams are suitable for this, and many people are already doing it.

Providing tools, becoming a platform, or part of a platform is a process of finding PMF, with a relatively low success rate. "But something like GMGN, which captures both demand and trends, may be a product that can emerge from an extremely practice-driven team and approach."

In fact, for a Dev, under the premise of being unable to predict the market long-term, there is no need to think about what will happen in two years. What needs to be clarified is what you want and what you can do.

What Should a Dev's Stop Doing List Include?

"Don’t just mimic others. I think the thing I regret the most is not thinking from first principles to build my uniqueness.

The core logic of business is that you can provide value that others cannot. All actions, what products to make, what services to offer, ultimately fall back to this point.

Once you slack off in deep thinking and first principles, the cost is that you may find that although you have done many things and perhaps achieved some results, it is a waste of time and resources because it may not be what you truly want."

Regardless of whether one has experience in the crypto industry, they should quickly distinguish which game rules are essential to master when entering the industry and which ones they believe have value based on their first principles. Even if they are wrong, their speed of iteration through negative and positive feedback will be faster than others. If this realization is not made from the very beginning, it may lead to many detours.

Trading Opportunities in Crypto AI

If Marvin were to adopt a trading perspective, his method of observing the market would not be to look at mindshare, as that pertains to people; instead, he should focus on the content itself, examining the most popular posts related to AI topics in Kaito. By reading the top 20 posts daily, it would be like looking at K-lines, finding a sense of the market. The most liked and shared content by the big names is discussing what matters in AI, and gradually, you will grasp the trend.

Regarding new directions in AI, Marvin focuses on two:

1. AiFi

AiFi is not simply Ai + DeFi; it is not enough for an agent to swap or for a DeFi to adjust AAVE to be called AiFi. Marvin believes this has practical value but lacks imagination. AiFi is likely to involve some economic exchanges between agents.

2. Swarm Concept

This refers to how multiple AI agents can interact to hit interesting scenarios, rather than just returning simple search results. So how to find this? As mentioned earlier, look at the posts that are liked and shared the most daily, focusing on posts rather than people to gradually develop this sense.

Finally, Marvin has three small bells:

1. @NousResearch team members @SHL0MS and @ropirito

Recommendation: Strong builders, with excellent AI development capabilities and cultural precision, shaping things with high mindshare.

2. @shawmakesmagic

3. @yoheinakajima

Recommendation: A remarkable True Builder in AI, not only skilled technically but also closely aligned with market needs, capable of shaping what everyone wants.

FC's Final Note

From a results-oriented perspective, Marvin, as a Dev, did several things right:

1. Chose the right track with demand.
2. Knew where the game leaders were and stayed close to them.
3. Because he chose the right track, he encountered a new opportunity and met key people within that opportunity.
4. Understood the rules of crypto, how to play in secondary and primary markets, where the resources are, and how to leverage them.
5. Luck and persistence.

I hope this brings some inspiration to everyone.

Once again, thanks to Marvin for participating in Dialogue Dev. The audio from the Space will be updated on Xiaoyuzhou, and we will open a separate podcast section. Any suggestions for the new series are also welcome in the comments.