Companies are useless in decentralised world of Web3: Harsh Rajat of EPNS

In a Q&A, company's co-founder talks about starting the company amid the pandemic, the financial machinations of Web3 organisations and his vision for the future of his firm

Web3 infrastructure startup Ethereum Push Notification Service (EPNS) recently raised $10 million in funding at a valuation of $131 million in its Series A round led by Tiger Global, Alpha Wave Capital and others. Why they make for an interesting read is because after Polygon, which recently got valued at $10 billion, EPNS is the second largest player in the Web3 segment from India. The firm's co-founder Harsh Rajat in an interview with Deepsekhar Choudhury shared the journey of the company amid the pandemic, the financial machinations of Web3 organsations and his vision for the future of EPNS. Edited excerpts:

Both your co-founder Richa Joshi and you were senior software professionals. You are also a couple and started EPNS in the middle of the pandemic. Tell us about the founding journey.

Richa was working for Deloitte a few years back when she felt the urge to try out something new. She went on to try her hand in cooking and worked with one of the top chefs in a Mumbai restaurant. But she did not like it very much and then started working as a marketing and growth leader in startups.

As for me, I started my entrepreneurial journey in 2009 with mobile apps and games. I also started a web browser that did very well in the US App Store in its category. After that, I joined a fintech blockchain firm in New York to gain expertise and learn the nooks and corners of blockchain tech. 

We used to stay in Mumbai before the pandemic hit and returned to my hometown of Allahabad when the Covid restrictions were put in place. That’s where EPNS started with just an internet connection. But the seed of the idea had been sown in late 2019 itself when we started to compare and contrast the user experience between Web2 and Web3 platforms. That’s when we realised that a communication layer was missing in the Web3 world.

And the most vital part of the communication layer in the Web2 world of apps are notifications irrespective of whether you are using an email app, a payments app, a social media app or anything else. So, we created a basic architecture for notifications in Web3 and took it to the Ethereum Foundation where they really liked it.

Unicorn crypto exchanges are Web2 platforms, and you are the second highest valued Web3 startup from India, after Polygon which was valued at $10 billion in its recent fundraise. Why is there a 100x delta in valuation between No. 1 and No. 2?

Firstly, we have raised a smaller round as we want to be very strategic in our fundraising as to what stage of the project we are in. Even our advisors like Sandeep (Nailwal, co-founder of Polygon) and Nischal (Shetty, co-founder of WazirX) suggested the same.

On the valuation part, there are certain brackets in which different series happen. And we have to discount Polygons or others building blockchains from that as they are exceptions. Typically, Web3 projects get a valuation in the range of $50-100 million in Series A and a very few attract a valuation that is between $120 million to $200 million. Also, while Polygon is already one of the key players in the Web3 ecosystem, we are established on Ethereum and are going multi-chain which will act as beds for different product-market fits.

Another thing is that you might not see a lot of unicorn funding rounds happening in Web3 platforms because they would already have their token offerings in the crypto market. As a result, they won’t need to raise so frequently from VC investors.

You have said that EPNS is gasless. So, users do not have to pay any fees to EPNS?

Whenever you are interacting with dapps (decentralised apps), you pay a small amount of fees to the protocol or to the network on which it operates. This is different from the Web2 world where the user might not need to pay anything as the platform might be using your data to sell ads and make money.

We began with the same concept that there will be a gas fee – not for the users who are receiving the notification, but for the services that are sending it. But we very quickly realised when we started working with these projects that we could compete with the Web2 platforms if we made a lot of things free for the services as well.

The services will eventually have to pay a monthly or yearly fee to send out the notifications whereas it will always be free for the users. 

As EPNS is a dapp, does it mean that people who hold your native crypto token, Push, are footing the bill for the free notification service currently?

At present, EPNS is paying for it. We are very close to blockchain because now we are a network. Just that we don’t have to sequentialise the information from the output yet which happens in a blockchain. In the future, this network will also become decentralised which means that just like Etherium or Bitcoin, anyone could be running this network. And if you're running the network, you will be awarded Push tokens.

It’s the same circulating economy that the Push token and EPNS will pivot to where everyone can run these validators called Push nodes. Also, the fees which we will charge from the services will go to a smart contract and anybody holding the Push tokens would be able to claim a proportionate part of that income.

Was your funding round also based on tokens?

In Web3, a company is usually useless. The basic idea is that you start out as a company and in four to six years’ time, you decentralise it. Unlike the Web2 world, the founders and investors can’t dictate what happens in the decentralised world of Web3. You can put up a proposal, but ultimately it is the community that can give an approval or not.

When founders take funding in the Web2 world, they have to lay out a vision for the next few years. If it is a community that ultimately decides what happens in Web3, is not that something that VCs would have a problem with?

You pitch to investors that this is what I want to do with the project. No one can stop you from building the thing, but the community decides whether to adopt it or not. Generally, the community knows that the founder of a project will act in its best interests. Also, they know what kind of things are in their best interests given that they own tokens in the project. 

As such, the community’s interests are also aligned with the founders and investors. So, they won’t stop something that can add value to the project and appreciate the price of the token unless the founder is dishonest or mis-aligned with their interests.

What are your plans for EPNS and what about the competitive landscape?

The vision is that irrespective of which blockchain(s) you are using, you can just log into a crypto wallet and find all your notifications in one place. Next, the user would also be able to interact with anyone else on other blockchains such as Solana or Ethereum through a text chat or video chat option. Few competitors have started coming up, but we are still the one which already has a product out there. The others still are at the idea level