KuCoin AMA With Cardstack — Open-Source SaaS for Web 3.0

Dear KuCoin Users,

Time: June 18, 2021, 11:00-12:22 (UTC)

KuCoin hosted an AMA (Ask-Me-Anything) session with the Founding Director of the Cardstack project, Chris Tse, in the KuCoin Exchange Group, where he answered some questions about Cardstack and what is in store for the future of content creation and distribution.

Cardstack is the world’s first cooperative SaaS platform—where users, designers, developers, and service providers work together to create an open-source software catalog for Web 3.0. To enable this new software marketplace, Cardstack has built the Card Pay protocol, a DeFi payment and reward network for fast, easy, and cheap layer-2 on-chain transactions. Card Pay is backed by a reserve of stablecoins and community tokens. It introduces “spend farming”, which enables customers and merchants to earn reward tokens based on spending activities. The network is governed by the community via the Cardstack Token (ERC20: CARD) to influence the network's fees and extensions.

Official Website: https://cardstack.com

Cardstack & Card Pay Protocol Overview: https://cardstack.com/cardpaypaper

Follow Cardstack on Twitter and Telegram.

Guest:

Chris Tse — Founding Director of Cardstack

Chris is a technologist and designer focused on improving the usability of decentralized applications. In 2014, he founded Cardstack, where he leads a team of open-source contributors to build the world’s first cooperative SaaS platform. He previously built the first NFT platform on the Bitcoin blockchain. He also pioneered the use of distributed-ledger technology to create media registries. Chris has more than a decade of experience leading R&D and innovation teams for Fortune 500 companies. He holds a degree in Computer Science from Columbia University.

Chris: Hi. Thanks for inviting me to present to the KuCoin community. It's great to be here!

Q: Why don’t you start by giving us a quick overview of what Cardstack is building?

Chris: Cardstack is building a decentralized application ecosystem that can challenge the Software-as-a-Service offerings from Silicon Valley’s tech giants. We do this with a combination of open-source development tools and an easy-to-use environment for end users, backed by smart contract-based protocols.

Here is the comparison of Cardstack's Web3 product roadmap with the current centralized SaaS power players.

This article and video show how Cardstack can be compared to various SaaS tools from the centralized platforms of the Web2 world: https://medium.com/cardstack/cardstack-vs-saas-part-1-ff20434fec12

I gave talks on YouTube that walk our Cardstack community through what we are building. Here is a relevant clip about our mission to decentralize SaaS: https://www.youtube.com/watch?v=EbhqUU-GjUM

To enable the creation of a new software economy, Cardstack needed to build a decentralized payment and reward network for fast, easy, and cheap on-chain transactions. This network allows customers to purchase prepaid “credit” to use in our decentralized software ecosystem, while it allows sellers (such as developers) to claim a portion of the revenue based on what they offer at what price. We call this the Card Pay network. This is one of the first releases in a series of releases planned for the rest of this year.

You can read more about the Card Pay protocol here: https://cardstack.com/cardpaypaper

Q: What are the technologies you are using to build this software ecosystem?

Chris: On the protocol side, we are not building this on our own blockchain; instead, we are going to build this by leveraging existing Web3 infrastructure. We will leverage existing blockchain infrastructure, such as layer-2 technology like xDAI chain, WalletConnect, The Graph, Gnosis Safe, Chainlink. In the future, we plan to deploy to other EVM-compatible chains, such as Matic.

On the user-facing software side, we are building on top of the JavaScript ecosystem by packaging full-stack applications that have a UI layer, an API layer, and a database layer into modules that can be composed together to form increasingly sophisticated apps. This is similar to the composability of smart contracts written in Solidity, except we are doing this in the experience layer using a no-code paradigm. Since we are 100% open source, developers can also add their modules into our system and integrate Cardstack with both cloud and blockchain infrastructure.

Here is an announcement about our integration with Chainlink, which gives us the decentralized price feed for our Card Pay protocol: https://medium.com/cardstack/cardstack-to-integrate-chainlink-price-feeds-for-secure-exchange-rates-8c24c728ec6c

We believe that fast, cheap, and easy transactions are needed for normal users to experience Web3 technologies. Therefore, we are launching on layer-2 chains as the primary networks. xDai chain is the first one. There is the integration announcement: https://medium.com/cardstack/cardstack-integrates-with-xdai-30e2fbd9d5aa

Q: How does the decentralized software marketplace work?

Chris: The key to any healthy marketplace is to have plenty of buyers and sellers. In the software marketplace, customers pay developers for their apps and service providers for hosting services and support.

The protocol handles the collection of cash flows from customers and the distribution of the cash flows to all the people who make the marketplace work. We believe that protocols must have cash flow, so that the protocol can distribute a fraction of the cash flow as protocol fees to the other participants who make this ecosystem possible, such as the token suppliers who provided the economic bandwidth or the governance token holders who guide the growth of the platform by voting for software and/or tokens to be included or excluded.

Therefore, we are starting with a payment and reward protocol called Card Pay, which is basically Stripe for Web3, where we use a layer-2 revenue pool to aggregate payments from customers and distribute value to merchants—whether they are software developers, NFT creators, or e-commerce vendors. Card Pay is a general-purpose payment protocol that can be used for many other marketplace applications. We are supporting stablecoins as the main payment method, so it is easy for merchants to accept crypto payments; but the same payment protocol can also support more volatile tokens like ETH, BTC, or other tokens. With the Chainlink integration, we now have an exchange rate oracle integrated that shifts the currency risk from the customer to the merchant at the time of purchase without swapping tokens.

Q: How do you get people to start using your payment protocol, especially if existing payment methods like credit cards, PayPal, and WeChat already have all the momentum?

Chris: The magic of crypto is incentives. By having customers' spending history recorded on-chain, we can provide reward tokens based on how much the customer has spent and how much a merchant has earned. This concept is called “spend mining”, where customers and merchants get additional reward tokens distributed to them through a reward pool, which gives you a certain number of tokens per dollar value of spending. This is similar to earning airline miles when you pay cash to fly, or when you earn credit card points when you spend money in certain categories with selected merchants.

Our reward protocol allows multiple reward programs to coexist on-chain and run in parallel. So, for every dollar you spend, you may be earning a few cents of value from one program and another few cents from another; and thus it can add up to something significant, where you may earn double the value of what you are spending just by paying with Card Pay. Compare that to credit cards, which only give you a few percentage points, or paying with crypto in your wallet, which gives you 0%. Card Pay can be quite attractive for both customers and merchants alike.

We published a tweet on how reward programs between merchants and customers will work on Card Pay: https://twitter.com/cardstack/status/1404385627001409539

You can see in that diagram that $15 of spending has "yielded" $13.50 dollars of rewards. This is because our reward pool allows multiple token distributors to create "airdrops" based on spending history. So, one dollar of spending may entitle a customer to many rewards, including rewards from the merchant you spent money with or even their competitors!

Q: How would customers who are new to blockchain make purchases or earn rewards? Do they need to learn all the Ethereum tools, such as MetaMask and layer-2 bridges?

Chris: The current state of the user experiences for Web3 is quite uneven. You need to use multiple dApps and wallets as well as exchanges to onboard fiat value to make a simple purchase with Bitcoin or ETH. We recognized the complexity of the Web3 landscape and decided to solve this experience gap by creating Card Wallet, which is a wallet designed for day-to-day payments and rewards instead of investments and yields.

We are building a wallet to handle both the initiation of payments, likely using stablecoins, and the redemption of rewards, which is likely based on community tokens.

Card Wallet is based on the Rainbow Ethereum wallet and their open-source codebase, so it shares the basic foundations of one of the most user-friendly Web3 wallets. Building on that codebase, the Cardstack team added user-facing concepts like prepaid cards, reward cards, and merchant accounts—so we can group and display certain concepts that are familiar to users who use other mobile payment apps or popular FinTech apps outside of the blockchain space. But beneath this facade of familiarity, our wallet is doing gasless transactions via a multi-sig wallet to control multiple pools of token balances and interact with smart contracts like our revenue pool, without the user having to understand exactly how Ethereum dApps work. This way, using Card Pay is just as easy as using a digital wallet like Apple Wallet or WeChat Pay.

For merchants and token holders, we are building a companion dApp that they can access via a Web browser—where they can bridge tokens in bulk, create merchant accounts, inspect their earnings within the revenue pool, and redeem the tokens they have earned, so they can manage their business and their positions.

As for Card Wallet, we are going to initially launch on iOS. Since our wallet is written in React Native, it already has Android support; we plan to polish up the UI to expand to users who use Android phones.

Q: How does one become a merchant? What can they sell? Can they sell NFTs?

Chris: Yes. We are starting with basic payment processing, where the merchant enters an amount manually and the customer will just pay that amount; but we anticipate that the merchants will want to create a product catalog—whether it is NFTs, memberships, or even physical items that are redeemable like Unisocks. We recently completed development of the Card Commerce protocol, where we added inventory management, pricing, discounts, and automated fulfillment of Non-Fungible Tokens, so that merchants can build their own storefronts, hosted on our dApp hosting platform called Card Space. We expect to launch this in Q3.

We handle all the layer-1 to layer-2 bridging between mainnet and xDai chain. So you can earn revenue while paying low fees, and bridge your earnings in one big batch back to mainnet for trading or off-ramping: https://twitter.com/cardstack/status/1393174262630866953

Our UI on this is live in testing and it's pretty cool: https://youtu.be/3-C693T_BkU

Q: On your website, you say that Cardstack is a decentralized SaaS platform. How do you see other elements of SaaS, beyond crypto commerce, evolve on the Cardstack platform?

Chris: We see Cardstack as a marketplace of functionality, where developers create new types of Web3 apps and publish them to our Card Catalog. This allows merchants, businesses, or other DAOs to adopt their apps and use them in their spaces. We are working on the third major version of our software packaging and delivery system, which allows for the composable JavaScript apps that you can drag and drop in a no-code builder to create increasingly sophisticated apps. To do that, you assemble modules, which we call “cards” that can be sequenced and nested into documents or workflows. The first batch of cards is built by our core team, but we will be updating the Card SDK, so developers can create and distribute their own full-stack mini apps that tap into other Web3 protocols and that are distributed through our marketplace, called the Card Catalog.

Since our framework and protocols are deeply integrated, as a developer, you can connect your Card Wallet and earn a slice of the revenue of your application as a royalty or commission. These revenue splits are processed through our Card Pay network if your code ends up facilitating a sale or if it helps sustain a recurring subscription.

We are a deeply technical team that has been working on this software composability challenge since 2017, in parallel to solving many of the economic protocols to ensure fair distribution of value to all participants. We believe that the many technologies we have invented or integrated are going to become the foundation of the Web3 software ecosystem. As a community, we can work together to replace all the Web2 logos that dominate the software marketplace today.

For those interested, you can see our roadmap for the remainder of the year: https://medium.com/cardstack/2021-card-pay-card-space-card-catalog-7ad7e9860e8

We are launching Card Pay first, followed by Card Space in Q3 and the developer-focused Card SDK and Catalog later in the year. Exciting times!

Q: I read that you have developed an off-chain storage approach that will allow you to store additional metadata related to Card Pay. Is this software a type of development with similar features to cloud storage or persistent storage?

Will you integrate it with Card Wallet as a source of authentication and verification?

Chris: Off-chain storage is an important part of a complete user experience. Not everything fits on-chain. Media assets and other data must be stored off-chain and correlated back to the chain to create a composite UI for users to understand and to interact with it. So, in our off-chain storage model, we actually use a user’s connected wallet to authenticate the user and show off-chain data (e.g. images or text). So, you can prove via the Card Wallet that you are indeed the right person to see this private off-chain data. It's all integrated; once you scan your WalletConnect QR code and sign one message, you are "signed in". This is what I believe to be the UX pattern for all of Web3.

Q: Nowadays, DeFi is changing our relationship with money, investing, credit and debt. How does CARD help in this case?

Chris: DeFi is largely about collateral now. Once we are processing revenue/cash flow on-chain, we can start new types of financial transactions. We are working on one of these as part of the Card Pay protocol family; it is based on Merchant Cash Advance, which is a type of invoice factoring where a third party (a DeFi user or DAO) can purchase the future earnings of a merchant in exchange for a lump-sum payment upfront. This is similar to a loan, but a completely different structure, as it is not based on the DeFi model of over-collateralization. I believe we will introduce a lot of new possibilities to the trade finance field once the revenue is flowing through our protocol. There is much more opportunity to expand what DeFi can be once there is cash flow.

Q: As the popularity of DeFi fades, the market is becoming very bullish on NFTs. Can you share with us your opinion on NFTs as a player in the NFT market?

Chris: I built one of the first NFT platforms on the Bitcoin blockchain, called Monegraph. Monegraph predated OpenSea and other current NFT marketplaces. I'm very excited about the adoption of the NFT concept in the mainstream, starting with digital art trading. However, I think the biggest growth in NFT will come from NFTs that have utility, e.g. getting access to special content or features if you are an owner of the community's NFT collection. We are working on a framework to "provision" discount and access levels, including implicit memberships that unlock capabilities on the Cardstack platform based on the possession of NFTs in a user's wallet. These NFTs will look like in-game badges, membership cards, and vouchers. They are all compliant to ERC721, so some of them can be traded, but you need to collect a few of the right ones to level up and be a "wizard" in the arena. This is coming and we can't wait to explore the possibility of these NFTs on top of a common, user-friendly environment.

Q: Which part of the Cardstack technology are you most proud of, which can hardly be done by competitors?

Chris: Many of the Web3 projects are apps, which means they focus on one use case and make a great UI for it. What I'm proud of is that Cardstack is a true general-purpose platform. We take our inspiration from Ethereum, which was kind of the first generalized blockchain/smart-contract platform, whereas ETH's competitors at the time were application-specific forks of Bitcoin. The power of the platform is that developers can extend the capability by adding their special sauce and expand the platform's use case. Cardstack is extensible in the UI layer via the Card SDK (based on JavaScript), in the protocol layer (based on Solidity), and even the data analytics layer (based on Python). These extension points, once packaged as SDKs, would make Cardstack the WordPress of Web3, where it's easy to build on an existing platform instead of building from scratch. Our team will build most of the first-generation "apps" ourselves, but with the R&D we have done, we are ready to onboard developers later this year.

Q: Does your project support staking programs? If yes, how does your stake system work, and what is the requirement for users if they want to stake in your platform?

Chris: The Cardstack Token (ERC20: CARD) is the community token for the whole network. We want to encourage token holders to bridge their tokens to the layer-2 networks, where the economic activity between customers and merchants happens. Depositing your token in the reserve pool on mainnet will mint layer-2 tokens and automatically allow the token holder to participate in various reward programs that are metered and distributed on the layer-2 side. We are planning some fixed-time interval staking, which rewards token suppliers who bridge both CARD tokens or USD-pegged stablecoins to layer 2 as economic bandwidth for Card Pay. Details to come. Longer-term, we believe in the idea of protocol fees, where a small portion of the customer-merchant payment volume is deducted from the merchant's earning (<0.5%) and distributed to reward token suppliers or even burned. This will be the source of tokens for long-term staking. Our protocol research team is doing a lot of simulation to determine the best initial ratio to balance the different parties’ incentives, but ultimately, this is going to be a parameter we will delegate to the CARD community as a governance item.

Q: The Cardstack T-shirt looks very nice. Are you considering opening a store like store.brave?

Chris: Are you saying that we should pull a Unisock and open a "CardShirt" store? I think this is a great idea. It's also a great way to test out the end-to-end Card Pay and Card Commerce workflow in the real world. So sure, let's do this!

Q: Could you tell me a little more about the team and their backgrounds? Many initiatives have been launched with novice team members, and some of them have failed owing to easily avoidable blunders.

Chris: We are focused on bringing in engineers who know how to build in an open-source way. Our lead developer, Ed Faulkner, for example, is a core team member of a popular JavaScript framework called EmberJS. We learned from the open-source community (even outside of crypto) that the most important thing is consistency, responsiveness, and a good community norm and culture. If developers can learn from each other, they can build more powerful tools than if they were working alone. We recently hired another developer who worked for HashiCorp, another major open-source tool company. These engineers know how to craft APIs and SDKs that level up more "newbie" developers whom we will need to grow the breadth of our offerings.

Q: Why will creators join the Cardstack ecosystem to build and host their own content instead of joining big platforms like Medium, TikTok, etc., and how will marketing work when I decide to promote something I'm offering as a service/product on my own Card Space?

Chris: Creators who have already built a following on centralized platforms like TikTok and YouTube know the bargain they have struck. The big platform gives you access to an audience, but in return, controls your economic destiny within the platform. They can de-platform you at any time, and whatever you were earning may "poof" disappear. With Web3, one of the most transformative ideas is audience portability, which means that, if you use the Cardstack ecosystem to host your content and you get a new subscriber, NFT buyer, or community member, those records are stored on the blockchain and are owned by your Web3 wallet. You own that relationship the same way you own your ETH or DAI. Even if you lose your URL that is hosted on the Card Space hosting network, you can "reboot" your data on another host and recreate your site/app/community with your wallet as the seed. The content itself aka the off-chain storage is also something you can back up on a computer, as all data is stored as simple files that you can copy on a thumb drive. This doesn't mean that Card Space will be an island. We are working with data scientists to work on content recommendations that use these on-chain relationships and transaction history as input to create recommendations and feeds that are as powerful as the YouTube algorithms. We do this by leveraging GPUs that are used in the crypto world instead of just doing hashing; we can use this amazing processing power to crunch numbers and to suggest connections that give creators the distribution and discovery they seek. This is on our 2022 roadmap called Card Tally. Stay tuned!

Q: Is there anything else you would like to share or you want us to know?

Chris: I'd like to continue this conversation over our own Cardstack community channel: https://t.me/cardstack. See you all there!

KuCoin and Cardstack have prepared a total of 241,000 CARD to give away to AMA participants.

1. Free-ask section: 10,000 CARD

2. AMA activity: 231,000 CARD

Activity 1 — Quiz: 150,000 CARD

Activity 2 — Price Guess: 30,000 CARD

Participation Rewards: 51,000 CARD

. . .

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