Crypto adoption: 'Right now it’s about gaming,' Ava Labs president says

Ava Labs President John Wu joins Yahoo Finance's Crypto in 2022 special to discuss the next wave of blockchain adoption, involving DAOs, NFTs, gaming, web3, and the metaverse, as well as what's next for crypto.

Video Transcript

EMILY MCCORMICK: Welcome back. Our next guest is building the next big thing in crypto. We're joined now by Ava Labs President, John Wu. John, it's great to see you. Thank you so much for your time this afternoon. Crypto has come a long way over the past several years and past year, especially. Give us a quick snapshot of where we are now in this space and how Ava Labs and Avalanche are helping solve the current challenges at this stage in the industry's development.

JOHN WU: Happy to, and it's good to see you again. So I think what is really great about Ava Labs and Avalanche is it has the ability to attract both crypto native products and projects as well as developers, as well as traditional enterprises and financial services firms. So what's happening is you get an inflow of developers from both sides of the aisle if you will. And they're all looking for ways to deploy on open permissionless blockchains and create utility.

EMILY MCCORMICK: And last year we saw a smart contract platforms like Ethereum and Solana broadened out DAOs and NFTs really had a breakout year. What are your biggest predictions for crypto and DeFi this year?

JOHN WU: So yes, there was a lot of breakouts last year, but crypto is so new. Don't forget some of the great things that happened last year are going to continue to happen this year. But in addition to all that, I think still the word DAO or the acronym DAO is still only a thing that most crypto native people are aware of. I think they're going to see more and more of this so that it becomes part of the nomenclature of a normal person. There are more and more DAOs popping up you here, [? B2B, B2C ?] You're going to hear about [? B2DAO ?] soon.

Another thing I think is happening right now is continue inflow of [? web2 ?] type talent, whether that be a Google or Facebook engineer who wants to get into the blockchain crypto space or be that banker from x, y, z Wall Street bank who is now interested in trying to create business development deals for a blockchain company. That inflow is going to continue to happen this year.

EMILY MCCORMICK: Well, as you mentioned, a lot of exposure to the latest innovations in crypto and blockchain are still contained to those already in the space or just dipping their toes into the space. What do you think is going to be that project or the use case for crypto or blockchain that makes it a ubiquitous or perhaps even necessary part of people's everyday lives?

JOHN WU: Well, everyone wants that one thing that's going to just turn it on and become the overnight success. But the reality is still very evolutionary. We saw DeFi create a lot of interest, and now financial services firms are very interested in it. The NFTs create a lot of adoption, and right now it's about gaming. Gaming companies and AAA publishers are looking for their web3 strategies and talking to all the top players in this space.

On top of that, you have brands. You've seen Nike, Adidas, world class brands all exploring NFTs and also exploring the metaverse. So I think it's not one thing, it's this whole web3 movement that continues to grow at a massive pace and a great growth rate.

EMILY MCCORMICK: And when you think about some of the blue chip S&P 500 companies that have started to delve into the space you think of Meta Facebook, you think of Microsoft now with Activision Blizzard, who do you think is perhaps best positioned to be a long term leader as we continue to build out the metaverse and shape what that could be in the future?

JOHN WU: So Facebook's going to go about their metaverse in their way more of a closed loop ecosystem. I think one of the things that will attract people to a metaverse environment on a blockchain because it's open. More and more of these traditional tech companies [? in ?] web2 are having a hard time retaining the trust of the users and that of other companies to be fair.

I think what you're going to see, though, is that the gaming companies you mention Activision and other AAA publishers, they're probably going to start doing a lot of things not necessarily what you would think metaverse is, but just in pure gaming. And that's a very exciting because you get quality gameplay like that and imbue that with the NFTs that give you a unique character that you can carry over and then a play-to-earn concept around that, then you have a very, very powerful adoption mechanism.

EMILY MCCORMICK: And in the financial services side of adoption, one of the predictions that you've discussed previously for this year is that hedge funds will begin looking to use DeFi for institutional projects. What would these projects look like and what would this mean for the space going forward and the expansion into this?

JOHN WU: Well, there's two ways. One they're trying to create with partners like ourselves a DeFi for institutional product, whereas proper KYC, AML, et cetera. And that's super exciting, because one of the benefits that people don't realize that the decentralized finance ecosystem is the disintermediation all the middlemen. And therefore, you can get more yield partially just from the fact you're decent to meeting people who take a piece of that reward away.

The second thing that they're doing I think is also pretty exciting is they're trying to figure out ways to wrap these products in a way so they can also provide it for their end user. Certain operating agreements of hedge funds and VC still don't allow you to invest in tokens directly. So they're creating unique like SPV structures and other structures that allow their end customers to participate in some of the cool stuff you see in DeFi and other things that crypto native people do.

EMILY MCCORMICK: And on one hand, there are these projects that you're talking about. And then there's also the trading that's happening in crypto is speculative crypto trading that's been going on, especially in the past year alongside the meme stock frenzy that we've been seeing. Is that an issue in your view? Does this create a hurdle for adoption and detract focus from these underlying projects that are taking place or is this just staying relatively contained in its own corner of the crypto landscape?

JOHN WU: I think if you look at the history of the emerging technology, whether it be now crypto or internet stocks back in the late '90s, that's speculative [? furor ?] that develops around these companies really highlight two things one interest in users. But also the wisdom of the crowd is basically saying at some point, this is going to be here. This technology is going to be here. It may or may not be the specific companies that are existing today or back in the late '90s, but out of this group, there will be the Amazons, there will be the Google's that will pop up. So speculation is just part of any emerging technology.

EMILY MCCORMICK: So ultimately, who do you think is going to be the Amazon then or the Google to use that analogy? Is it going to be an existing player that you see continuing to grow and get bigger? Could it be another emerging platform that you're seeing just developing at this point? And what are going to be the features that make in Amazon or Google to, again, use that analogy for the crypto space?

JOHN WU: So I think this is like the third generation of crypto already. The first generation was Bitcoin, the second generation was Ethereum, and third generation has been this new group of call it layer ones and other crypto companies that have improved upon the previous generation of technology. It's no different from call it Friendster, Myspace and then Facebook. I think this group of new cryptocurrencies/blockchain companies have the right timing in terms of both technology and interest from the greater populous that it's going to happen from one of these.

With that said, I do believe it will be a multichain world. It's not going to be just one winner take all. Be more like kind of social media. It would be maybe a winner take most, but then you still have a whole bunch of other dedicated specialists social media platforms out there.

EMILY MCCORMICK: All right, we'll leave it there for now. Ava Labs President, John Wu, thank you again so much for your time this afternoon.