Sandeep Nailwal: The Wizard Cracking Web3
Nailwal firmly believes that India can soon become a Web3 superpower in terms of the production of these digital items
Web3, a subject everybody talks about, but nobody understands, except maybe a handful of people. Sandeep Nailwal from a small district in Nainital, Uttarkand is one such exception. He not only understands it, but is today spearheading a global Web3 revolution.
In 2017, Nailwal founded Polygon, an Ethereum Layer-2 scaling startup, along with his friends in the blockchain ecosystem, Anurag Arjun and Jaynti Kanani. From then on, there is no stopping him.
By early 2021, Polygon became one of the top 20 crypto tokens globally. And in 2021, it made more heads turn by receiving a "sizeable investment" from billionaire entrepreneur Mark Cuban.
In February this year, this blockchain scalability platform raised capital from many marquee investors. It was a $450 Mn funding round that was led by Sequoia Capital India with participation from more than 40 major VC firms including SoftBank, Tiger Global, Galaxy Digital, Galaxy Interactive, Republic Capital and others. Not only that, Nailwal has invested in many startups from the space such as Koinbasket, Liminal, Samudai Kissht and FanTiger.
Genesis of Polygon
Before Polygon, Nailwal was very active in the overall blockchain community in India and that is how he met his co-founders, who together realized that Etherium was a fabulous invention, but it was not going to have a large userbase as it was inherently very decentralized but has low bandwidth.
"That's the way it is built. To have it extremely decentralized, you can't have too much bandwidth on that. And that fundamentally doesn't allow Etherium to have a large number of end-users. That's why it was very clear to us that the scalability can actually come from a layer two, wherein you keep Etherium at a layer one level, and you create a layer two blockchain where you do all the transactions and you batch them into Etherium," he said. And, that is why it made sense for the co-founders to build Polygon.
However, while on hand, the sector is investors' favorite today, the startups in the sector also have to deal with uncertainty in terms of government regulations. When asked about the same, Nailwal said, "Even the funds took a lot of time and multiple years of exponential growth in the blockchain industry for them to realize that this is something big. Also, I don't think that government is anti-blockchain, but it is anti-crypto, where people can actually buy and sell these tokens, which are reasonable and fair concerns."
But, he feels, that government bodies still do not understand blockchains enough that without this crypto-economic security, the blockchains, in the current state, do not exist and there has to be this financial angle that provides that crypto-economic security to this decentralized ledger so that everyone can work in the same direction.
Building a global company
Polygon was started in India, but the way it is built in its compliance structures makes it a global company. It has its developer base in multiple countries such as Switzerland, Belgrade, US, among others. "Initially, Indians were there and then few early developers came from India, but then it's much of a larger phenomenon. So that's why most of the companies in the blockchain world are always set up in a way to keep away from this regulatory uncertainty. And secondly, the nature of the companies is like they are technically a global company from day zero. So it's very hard for any local geography to apply their laws to it like, for example, VAT or GST or local laws," he said.
Neither the product is built in a particular country, nor the users or the validators are not in a particular country. This global distribution, Nailwal believes, makes blockchains inherently global. "That's what the governments across the world need to understand. And, eventually, I feel that sooner or later, maybe in a few years from now, governments will have to go into some sort of consortium mode where they can jointly come up with some things, like a conducive framework," he said
But for that to happen, Nailwal feels, that the space has to grow bigger and bigger and reach a point where it is too big to be ignored and everybody needs to come to the table.
Life of a Web3 entrepreneur
There are two parts to his journey as an entrepreneur, he says. One is his personal ambition and the second is the geography, that is the geographical regulations and all that. In the second, comes three different things, including country, which is the physical boundary, state, which talks about the kind of governance that is there in one particular place and the third is the nation, which is basically a feeling.
"The feeling of bharat never goes away from many of us, wherever we are. I'm very happy that we have been able to play such a pivotal role in Web3. China, for example, in the last 20-30 years was a physical goods factory, right? India has the capability to become the digital goods factory for the globe. And this is already very well seen. Many of the global game studios have their local centers in India," he said.
He also added that we are already emerging as a digital goods factory, but it's just that we don't own that IP. "We are renting out our services. Whereas with crypto, there is a possibility that we can actually productize those services and sell them at a global level," he said.
Can India become a Web3 superpower?
Whether the Web3 business exists within the geographical boundaries of India or exists outside of India, as long as it is done by Indians, Nailwal considers that a business from India. "So that way, I'm seeing the growth of the nation, not as a country or a state, who is collecting tax and all that. I'm not worried about the scatteredness of it. These entrepreneurs can be sitting in Dubai, Singapore, or Bali, it does not matter in this industry. That's the beauty of it. And I think now it's becoming the norm for the overall tech space. It doesn't matter where you are building the digital services from."
Nailwal firmly believes that India can become a Web3 superpower in terms of the production of these digital items and he is not focused on the acceptance part of it as he may not be able to contribute meaningfully to that, since it requires a lot of effort from the government. For now, his focus is on his company and on motivating and guiding Indian entrepreneurs to be the best producers, who have the resources and talent.
"If I can get 100 unicorns to be made from India in the next two to three or four years, then the government will have to think constructively for the startups," he said while wrapping up the interview.