We sit with Ahmed Al-Balaghi to talk about gasless trading experience and abstracting away blockchain complexities through gas-efficient meta-transactions.
Hello! What’s your background, and what are you working on?
Hey there! My name is Ahmed Al-Balaghi, and I am a co-founder of Biconomy. I come from an economics and finance background, having worked at companies such as Dow Jones and Citibank. I love travelling too, where I’ve found myself studying and working in China and the UAE. I attended my first crypto meetup in Shanghai in 2016, and I’ve never looked back.
At Biconomy, we are building the transaction infrastructure for next-generation Web 3 applications. Currently, every transaction on the blockchain is a complicated interaction. There are various friction points such as complicated onboarding, the necessity to pay gas, understanding crypto wallets, spending ETH for every action, fluctuating gas prices, slow and stuck transactions, interacting with layer 2, managing layer 2 exits, and more. Thus, simplifying the transaction experience is critical for the success of not just DeFi projects, but the whole blockchain space.
We aim to solve these key pain points at the crypto-transactional layer to simplify Web 3 experiences in order to drive mass adoption. We want to abstract away transaction complexities so that everyday users can easily onboard and interact with DeFi apps. Through our APIs, developers can customize the perfect transaction experience to enable use cases such as gasless transactions, instant L1<>L2 communication, & gas payment in ERC20 tokens. This would help delight their users to decrease drop-off rates & drive higher conversion.
What’s Biconomy backstory?
As three co-founders, we came together at the beginning of 2019 to set up a staking operation. After 3-4 months of building, learning, and working together we asked ourselves ok, great we’ve been staking, but what’s next? We’ve helped to secure this particular network, but where is the adoption on these blockchain networks? After asking ourselves key questions and speaking to various people, we realised there are big pain points in the user experience and developer experience. This led us to deep diving into meta transactions and eventually, we started to build a developer platform around it.
In Q3 of 2019 we managed to build a simple working demo of what a frictionless dapp would look like, and had quite some interesting feedback and validation from the community. Since we were bootstrapped too, we also expanded the team. At the beginning of 2020 we built our first working MVP and were the finalists at the Meta Transaction hackathon organised by Metamask, which validated our idea and thesis. Later, we made it to the Outlier Ventures Basecamp Accelerator, which connected us to a ton of talented individuals, mentors, investors, and builders in the space. During the program, we refined our messaging and gained a strong understanding of the problems we have to solve. This exercise proved to be fruitful as by the time we did our beta launch in May 2020, we had 10 major launch partners.
Since then, we have many more successful interactions. We now enable a gasless frictionless trading experience on Perpetual Protocol. Decentral Games leverages our relayer network to sponsor gas on behalf of users. We also help improve the gaming experience on Zed Run. We have also been working on new products such as Forward, which will allow gas payments in ERC20 tokens, and Insta-exit, which will enable instant transactions between various layers.
Recently, we also closed our seed round in January 2021. We’ve always ensured that we have stuck true to our values and vision, as we have been building for the long term since day 1, and it’s been crystal clear to us that removing as much friction as possible really does expand markets. That is why we are building Biconomy because we believe in the value of crypto. For it to go mainstream, it has got to be a bit simpler so that everyone can join!
What went into building the Biconomy?
We started building Biconomy in May 2019 with a core focus on meta-transactions. That is because meta-transactions are a great way to abstract blockchain complexities and improve crypto adoption by enabling users to bypass onboarding complications such as paying gas or changing metamask RPC. That’s why meta-transactions are also called gasless transactions.
A meta-transaction is a blockchain transaction that technically separates out the sender (end user) and gas payer of the transaction on the Smart Contract. It enables interesting use cases such as gasless transactions, network agnostic transactions, as well as the ability to pay gas fees in ERC20 tokens, and more. As the usage of L2 increases and ETH 2.0 gets closer, we will see gas prices drop drastically. Thus, over the next few years we will see multiple projects enable meta-transactions to sponsor all the gas fees for their users. Perpetual Protocol is already doing so using Biconomy! It would be how Web 2 projects such as Netflix don’t charge for every video you watch, rather cover these infrastructure costs with a monthly subscription payment.
It took us around 1 year to launch our beta product on mainnet which focused on gasless transactions, along with a fully functioning developer dashboard. The networks we supported on our launch in May 2020 include Ethereum, Matic and xDAI network.
The first iteration of our product was based on smart contract wallets, where every new users will have a smart contract wallet he can keep his funds and it can be integrated in any smart contract to enable meta transactions but it was not that comforting to the end user as they feel safe when their funds are in their client wallet like Metamask, Wallet Connect, etc.
Also when it comes to sponsoring gas fees on Ethereum mainnet, it was too much for the developers and became impractical as gas fees skyrocketed in 2020. So we provided support for native meta-transactions where DApp smart contracts needed to be changed to support native meta-transactions i.e., remove dependency on msg.sender and msg.value.
This approach is widely accepted in the community, and even existing smart contracts developers made proxy contracts on top of that to enable native meta-transactions. In 2020, the layer-two space was evolving and we started seeing many new dapps coming on L2 like Matic and xDAI. Developers had no problem in sponsoring the gas fee on L2 as it was very cheap.
Looking at how developers used our meta-transaction product, we decided to fully focus on native meta-transaction approach and not work actively on our smart contract wallets. We shifted to give support for Gnosis smart contract wallets due to its high usage in the market.
Since Biconomy is a non-custodial solution and we do not take custody of user funds at any time, you don’t have to trust Biconomy with your funds. All the smart contracts written by Biconomy are audited with respectable auditors in the space. You can finds our audit reports here and here
Our servers are running behind firewalls and under DDOS protection mechanisms.
The technical limitation we see is when developers need to enable native meta-transactions in their smart contracts. If in the future native meta-transactions support is inbuilt in the protocol itself, it’ll be much easier to onboard new developers to use meta-transactions. Apart from that we are trying to make it as easy as possible for developers to integrate our solution and provide seamless interaction for their end users. Right now it just takes a few hours to integrate our solution.
What’s your business model?
As of this interview, we are operating a SaaS model within the B2B space targeting dapps. This could change in the future. Given the new products we expect to ship in 2021, these will have different business models.
Our intense focus on the problems we are solving, picking the right trade-offs, diligently building for the customer and enhancing developer experience have all been critical factors in us being able to obtain customers. We are now serving top projects in the Defi, gaming, & NFT spaces and are looking to target more.
We started giving free subscriptions to early customers to onboard them, and we found these same customers wanted to start paying us for our services. I’d say our particular attention on building the brand and focusing on customer success have been differentiation factors compared to other players in the industry.
What’s your position on the regulatory landscape today?
It’s always important to remember that regulation is mainly in place to safeguard the public. And regulators always have this at the top of their mind. Given bitcoin, Defi, and the wider blockchain space including new intermediaries such as exchanges, custodians, and more, regulators will naturally have red flags they need addressed. And they are all being addressed, one by one, jurisdiction by jurisdiction. Regulation today has been way more positive than before.
Because of the amazing innovation this space has seen, it has forced regulators to play catch up. And now we are seeing companies who provide any centralised services in the context of crypto, will be regulated at some point, and the paths to regulation are being clearer. This is what the regulators will be nailing down in the years to come because it’s easy to put rules and regulations placed on centralised companies.
Decentralised protocols and products however, regulators will have a tough time understanding and putting in appropriate regulation in. Luckily we’re seeing some light with the recent approval from the U.S. banking regulator allowing the use of stablecoins for banking transactions.
What are your goals for the future?
We plan on releasing Biconomy V2 in Q2 2021, along with the launch of exciting new products such as Forward and Insta-Exit. Forward will enable dapps to let their users pay gas in ERC20 tokens such as stablecoins. Insta-exit will enable instant & seamless transactions between different layers & L2 solutions. Accomplishing deep product market fit is a key milestone for us in 2021.
We also are looking to start our path towards decentralisation and actually including more stakeholders within our platform. This will allow us to be more community driven, and be community owned in the future. We are always looking for amazing people to join our journey!
What are your future thoughts for the DeFi market?
Everything we have seen in Defi so far has literally just scratched the surface. We’ve seen a glimpse of what the future will have for us. Honestly, the next wave of DeFi will see us on L2 chains interacting freely or near zero cost with newer defi applications. UX will play a paramount role, otherwise we won’t be able to scale and onboard new people.
In terms of applications, we will see newer protocols that address risk, and insurance which will need to serve the growing space. Defi + NFT use cases will also emerge, where play-to-earn gaming is becoming an increasing trend that will be underpinned by DeFi.
Where can we go to learn more?
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