SPEAKER_01: 0:00

Hey, hey, hey, welcome to this week's episode of Blockhead's Blockcast. I'm your host, Takatoshi Shibayama. I'm also the head of APAC for Ledger. I aim to uncover the creative, intelligent, and radical minds who are shaping the crypto industry today. I'm as crypto curious as anybody that's tuning into this show. We're doing this together, guys. Let's go. Mr. Sota Watanabe, CEO of StarTale and Soneum. Welcome to the show.

SPEAKER_02: 0:31

Thank you very much for having me today.

SPEAKER_01: 0:33

Yeah, we'd love to talk about Sony and what it's trying to build out. But let's dive into a little bit more of your kind of journey into this space. And why did you get into crypto and how's the crypto journey so far?

SPEAKER_02: 0:43

Cool. Let me introduce myself first. My name is Sota Watanabe, CEO of StarTel Group. And StarTel Group has been making Asta, which is the layer one blockchain in the Sonium together with Sony Group. A lot of people are confusing about product name and the company name. So let me make it clear first. StarTel Group is the company which i founded two or three years ago and the sony group is obviously the company name right and we created a joint venture sony group invested in startel and sony is the largest shareholder of the startel at this moment and thus we created a joint venture in singapore called the sony block solution lab this is company name and sony block solution lab is creating sonium Sonium is the name of the Ethereum layer 2, powered by OPStack and joining Superchain. And Aster is also the name of the blockchain, which is 100% owned by Starter Group. So from the Starter Group perspective, we have two chains, layer 1 Aster and layer 2 Sonium. I joined the blockchain space back in 2016 when I was a college student. After joining the college, I didn't know what I wanted to do. So I traveled a lot and I worked at the local NPO, non-profit organization. in India, China, Russia, Japan, and U.S. And I saw a lot of the social issues, such as poverty or discrimination, global warming, and more. And then I realized that I wanted to devote my life to something bigger than myself. And I started my career at non-profit organization. And I realized that through these kind of the nonprofit activities, we can make 10 people happy or 30 people happy inside of the class. But it is extremely difficult to make billion of the people happy because of the capital issue, I would say. So I joined the tech space. I started working at the software and robotics. So starting from AI. After that, I realized that AI empower big company or big nation and a company which has data. And the blockchain actually decentralized data flow and empower individual. So I joined the blockchain space back in 2016, and then I went to Silicon Valley to start my career at blockchain startup in San Francisco. After coming back to Japan, at the time I was still a college student, and I became a co-researcher of the blockchain at the University of Tokyo, and I started Asta. back in 2019 when I was at the

SPEAKER_01: 3:17

University of Tokyo. supposed to be. It wasn't supposed to be for that. It was supposed to be for the people to have access to financial freedom. And with all this regulation coming in, institutional money coming in, you kind of start to lose sight of that. And I feel like you're still true to your heart, like where you want to kind of take this industry. So what do you think that Sonium can bring to this world that kind of aligns with your values?

SPEAKER_02: 4:09

Yeah, that's a good question. I personally think that this industry is a little bit stagnating right now, and only less than 1% of the people using blockchain crypto today, simply because it's too hard to use right now, maybe because of the technical problem, or maybe because of the, you know, regulation problem. When it comes to that 1%, I think, aggressively speaking, either rich people or tech people. So I Original mission of the blockchain is to empower individual, especially the weak people, right? But right now we are empowering the either rich people or tech people. So what we would like to do is to bring billion of the people on chain. So we needed to remove technical burden and we needed to shape a clear and a good regulation for people. And what's missing today is the distribution channel. The crypto people, Web3 people are still making Web3 product for Web3 people, by Web3 people. I think this idea is wrong, so we should start from the users, the customers, outside of the Web3 space, and then decide what to develop. So this approach is pretty missing. And that's why we have been working with a company which has distribution channel like Sony. I personally would like to prove that billion-dollar people can use blockchain and crypto without understanding Web3, just like internet of today. A lot of people are using internet without understanding TCP IP, HTTP. They are using it because it's convenient, right? And they can use it. Today, you know, crypto and the blockchain, it is impossible to use blockchain without understanding Knowing Ethereum, for example, without knowing Solana. But eventually, people are going to use blockchain. It's because of the convenience. So we would like to make the wall where people are using blockchain without knowing blockchain.

SPEAKER_01: 6:07

I totally believe that. It has to be ubiquitous, right? So nobody really rallies behind internet technology. It doesn't really matter. Nobody really cares. I think that when blockchain could be ubiquitous, then that's when you actually know that... we have succeeded in this game. But so far, while we see it in a kind of semi-cycle right now that we're in, we've attracted more and more people into things like meme coins and pumped up fun and everybody gets wrecked.

SPEAKER_00: 6:34

And

SPEAKER_01: 6:34

I think every cycle, we're wrecking retail people in this market because of Let's say we're making tons of vaporware that nobody really is going to use and then throwing out tokens that nobody really cares about. And they're just coming in for the speculation. And part of that, I do understand why people want to come into crypto. I mean, it is for them to. potentially make some money. But the way that they've been making money is very nihilistic in my view. People are not really looking at the value of what it is. They're just looking at short-term speculation. How can it be pumped so that I can dump, right? Basically. And I know from my little research on Sunium, you guys don't have a token yourself. You're using ETH. What is the logic behind that?

SPEAKER_02: 7:15

We are always long term, right? It's kind of sad to see that so many speculation or so many people are seeing this industry in the short term. But in the long term, the company which provides the best tech with great UX will eventually win. Before speaking about the reason why Sonium does not have a native token, I would like to speak about history. a little bit. When it comes to internet, right, internet and the Web3. Web3 in 2025 is similar to the internet in 1999. And in 1999, there was the age of... It was, you know, super early phase. When it comes to the users or the internet, you know, it was 1% of the human being at that time. Internet Explorer 1, because of the Microsoft distribution channel. Microsoft pre-installed IE and sold a lot of the PC. So if we are using Microsoft PC, they're going to use IE. That's why they won. But after 2008, Chrome was born. I mean, Google, they got a lot of market share. There are two reasons. The first reason is the product quality. The Chrome is much faster and better. The second one is the platform shift. Previously, a lot of the people are using browser through PC. But after that, a lot of the people are using browser through phone. And Google has Android, and Apple obviously has Safari. So Chrome and Safari got a lot of the users. The quality of the product and the platform shift are the key. Right now, we are very early stage, in 1999. So distribution channel is going to be the king. That's why we are pretty much focusing on the distribution channel. But eventually, after a lot of the company, a lot of the project enter the Web3 blockchain space, the distribution channel will be commoditized. Everybody is going to have a distribution channel. And then the product quality, the capturing the core technical shift will be the key. So right now, our strategy is securing the distribution channel, but eventually we would like to focus on usability, quality of the product. That's why we are pretty focusing on account abstraction or chain abstraction and so on. And speaking about native token, we are always long-term, right? A lot of the project issue token, even though the project does not need a token. The only one business model for majority of the project is just selling the token. But it's not sustainable. Because if project sell token, eventually they are running out of the money, the capital. So we would like to be a long term, right? If we see Ethereum layer 2, it can be a good business for the company too. Because transaction fee goes to revenue. It's sequencer revenue. Like base is generating a lot of the sequencer revenue. So base is part of the Coinbase business. Sonium can be the same. So before issuing the token, we have to ask why we need a token, right? And then if we don't need a token, we don't need to issue a token. So from my perspective, issuing the token from the beginning is the bad approach. That's why there are two. does not have a token as of now,

SPEAKER_01: 10:36

yeah. Okay, let's put a pin in that because you said something very interesting before we dove into the reason why you don't have a token. You talked about distribution channels. And that's something that I think blockchain has been struggling with because it's not everywhere, right? You can't put it in something. And as you mentioned, like the Internet Explorer was wrapped up inside of a laptop. So that was a distribution channel, right? And then for Chrome or Safari, it was wrapped in a smartphone. So what kind of wrapper do you think blockchain needs for it to go? I mean, what is the distribution channel do you have in mind?

SPEAKER_02: 11:09

Good question. Wrapper is the one with aspect, right? And another aspect is what kind of a use case. Because even though, let's say, smartphone comes in without great application, nobody use it, right? So I think quality of the application is more important than the, let's say, hardware distribution channel. So in terms of use case, Starter Group is pretty much focusing on entertainment right now because entertainment has power. to connect the people. It's a fundamental desire for human being to share emotion, share passion, or share enthusiasm, right? People are excited, then they would like to share. And that's why we are focusing on entertainment segment on the top of the blockchain, on-chain entertainment, I would say. As I said, less than 1% of the people are using crypto today. I think Wave 3 is already recognized as the finance of the next internet. As a result, we onboarded 1% of the people. So how to onboard the remaining 99% of the people? Again, in terms of the internet, SNS, like Facebook or maybe Twitter, the critical products to onboard a billion of the people, right? I think entertainment can be the key for Web3 because of the reason which I said. To do so, we should focus more on the usability because... Eventually, fun or creators, these kind of people are going to use Web3 without knowing Web3. And we also need to protect creators' right on-chain because there are so many scams, so many IP infringement in the Web3 space. From the outsider's perspective, they are pretty worried about it. It's scary from their perspective to enter the Web3 space because of this kind of a scam. So we need to make the good balance between ethos of the decentralization and mainstream adoption. And this is another reason why one of the value that Sony has is going mainstream.

SPEAKER_01: 13:15

It makes sense. I mean, Sony has the music department, they have the entertainment, they have PlayStation. Sony generally covers all the entertainments that you just mentioned. And so is Sony looking for projects that will build on it so that it would also complement the Sony business? Or are you okay with keeping it very open source and let people decide what they want to create on it.

SPEAKER_02: 13:36

One of the use case which Stardell Group is making right now is Yowake. Yowake is the project we are making together with a lot of the entertainment company. Yeah, outstanding entertainment company in Japan. And the Yowake hosted Idol Runway Collection, which was the concert for artists, like singers. And then more than 11... Thousands of people gather at one place and enjoy together. Two weeks ago. Through Yowake application, this is the Web3 application, fan decide which song the artist is going to sing and which order and what kind of clothes they are going to wear and so on. So it's kind of decentralized voting. And because it's on chain, even we cannot change the vote. Previously, there are a bunch of the concert, right? But how can I say? It's just one time, right? But there are a bunch of the concerts, right? So if you are the first fan of the artist and you are constantly supporting the artist by visiting multiple concerts, this can be the value, right? This can be the value. So we would like to visualize this kind of value on-chain and then that fan can be rewarded, right? let's say securing the good seat at the concert hall, or maybe financially they can get token and so on. Yeah, this is kind of the experience. And this is already happening. As I said, 11,000 people gather one place. They don't know Web3 at all. But they're using our application. And they generated more than 200K transaction in a week. I saw X. And they are saying that I cannot vote or the confirmation is slow, maybe server is down, blah, blah, blah. I saw this kind of voice. It's because of the blockchain. Yeah, finalization is very slow. But they don't know. It's kind of fun for me because they're using our application without knowing blockchain at all. So we need to make this kind of application more to onboard ordinary people on-chain.

SPEAKER_01: 15:49

Yeah, I think that really makes sense. And then I guess from those ideas, like fan-based models, that really makes sense to me because if I think about back in the NFT times as well, I really understood why certain things actually work. Like if a fan base, I follow a music band, I really like them, I follow them everywhere. I want to get something that works. kind of gets me rewarded for being such a fan, right? And maybe it might be a special version of a certain song that only 10,000 people can have or something that gives me special access to the VIP or take snapshots with the band, whatever it is. Those things don't really require tokens, but it can work if... I can verify that I've been to certain concerts or this and took certain actions to prove I'm a big fan. And I think that kind of use case, obviously, as I mentioned, doesn't need a token. And then I don't even need to know that all the verification is done through the blockchain. So I could really see that. What about like games, for example? Because, you know, I've seen a lot of GameFi, all this stuff. And then one thing that really comes to mind when I think about games is that there are tokens, yes. But if the token fluctuates in price and it just gets dumped, There's no incentive for me to play that game anymore. So what is your view on GameFi?

SPEAKER_02: 17:06

GameFi is extremely hard to predict. But right now, a lot of people are using GameFi because of the token incentive. So the quality of the product is not sufficient, not enough. if we compare Web 3.0 gaming to Web 2.0 gaming. But eventually I think people are going to use Web 3.0 gaming if Web 3.0 game heavily improve the UX, UI, and quality of the product because they can get incentive. So incentive should not come first, right? This is gonna become at the last. It's not only about game, but also maybe, you know, socialify, music, everything. Project should focus on the quality of the project, then eventually consider how to use token. I think industry is stagnating right now, struggling right now, but I hope we can find a solution in coming, you know, a year or two.

SPEAKER_01: 17:58

Totally agree. I mean, you know, we said we want retail to come back. If there's no retail, institutional investors can't trade. So they don't want to trade against each other. They want to trade against retail, right? I mean, that's kind of how the... market works and it's going to be the same for crypto. And I just don't see that catalyst for retail to come back. And I just mentioned about people being scammed, pumped and dumped, all these things need to kind of really go away for people to actually think, okay, let me reenter this market. You know, DeFi does make sense. I mean, obviously, you know, there are people who wants to learn and earn at the same time, right? I mean, they want to learn, okay, these are very new products that they had a regulation wall behind them that they couldn't really access to because of the traditional regulations that that are in place, but in crypto and DeFi, there's none of that. So it's more accessible for me to place an option contract, or I could do structured products, I could do staking, yield farming, restaking, whatever they are. And there's so much information out there that it's quite difficult for a lay person to consume at this stage, right? I mean, if you enter the market like when you did in 2016, you have a long leeway to kind of learn step by step, right? I mean, that was the same too, but if people are coming in today in 2025, There's just insane amount of information that keeps you kind of like a blocker in entering it. And then you've heard all these scams. So maybe your suggestion is probably. The better way is maybe have them look at something else that's more approachable that they can start off with, that they can understand, oh, what blockchain is. And I think entertainment in various genres could be that.

SPEAKER_02: 19:33

So there are two things. The first thing is I think we are making the playbook for mainstream adoption. And if we are successful, I think more and more Web2 companies or larger companies are entering the Web3 space. This makes the whole pie bigger. in our industry bigger. But if we fail, I think they will afraid, right? Joining this space. So I see huge responsibility here. This is the reason why I can work even harder. Money is important things, but money follows people. So I'm following my dream. The second thing is how to create moat. How to create competitive advantage. A lot of the project try to create competitive advantage or moat. through token incentive. But it's not long-term sustainable solution. So what we want to do is onboard people who have never used Web3 before on-chain. These kind of people will not switch the network much. Let's say Web3 people switch the network a lot to look for higher yield or higher APY, right? And AirDrop. So a lot of people comes to the TGE project And then after the TGE, they look for another one. So it's like immigrants, right? And then it's going to be difficult for ordinary project to make a strong network effect or mode. But for us, I think one of our core advantage is the strength of the distribution channel, especially for Wave 2 people. And then we would like to onboard Wave 2 people because they are not going to be migrated through token incentive. or a higher APY, because they're using bank. If they are looking for higher APY, all people comes to DeFi, but they don't, because they're not looking for higher APY. But they are looking for opportunity to make their lives better. like sharing the emotion, sharing the passion, and these kind of things. So that's why I think entertainment has very strong opportunity to create strong mode and strong core advantage. And we would like to secure this to differentiate ourself from existing project.

SPEAKER_01: 21:47

And how are you searching for these type of projects? So I know that because you don't have a token yourself, obviously, if I was a VC, then there's nothing for me to buy. So obviously, you might not get help from VCs sometimes when you have your own tokens then you can attract a certain community of people maybe not the best type of community I mean they're going to be mostly speculators anyway so you don't want those degens always in your community so how do you look for you know good projects and what is your definition of a good project because you've probably seen quite a lot you know throughout the years and then you know some are kind of finance related but in this entertainment space it's very hard as a lay person I don't know anything about entertainment like what is a good project? What can stick? What do you see?

SPEAKER_02: 22:31

Yeah, I think you are speaking about incentive, right? The good thing is that Sonium is a joint project between Starter Group and Sony Group. Starter is pretty much a Web3 native company, so we can do Web3 play. And we have been developing Asta. We are positioning Asta as one of the representative assets on Sonium. Asta can support Sonium adoption. Right now, we are conducting Asta contribution score, and by contributing to They will be rewarded through Aster token and Optimism OP token because we are part of the super chain. So we do have an incentive. When it comes to Sony, Sony is a wave two company, right? So they have a bunch of the existing product. So I think they are also cooking.

SPEAKER_01: 23:16

Yeah. And also, you're in Japan. So, I mean, it's a country of tons of entertainment. Yeah. And, you know, you've been in that market for quite some time. Tell us about, you know, what the Japanese market looks like in this case.

SPEAKER_02: 23:29

I think I'm pretty lucky to be Japanese because when it comes to entertainment, there are tons of the contents, right? Like anime, manga, music, movie, and beyond. A lot of the project trying to secure anime or manga but it is extremely difficult if they do not understand the Japanese market. I think a lot of the manga, anime contents are born, they're constantly generated by the Japanese people and Japanese market. It's not a coincidence. It's because of the structured business environment. There are a bunch of the stakeholders over there, and there is the system to constantly generate IP. And these kind of people... know nothing about crypto, nothing about Web3. But project have to talk with them to onboard this kind of the contents, right? I think we have an advantage here because I can understand Japanese culture and obviously how I should behave in a Japanese environment. I know obviously Web3. So I think we are in a good position to onboard these kind of contents. Second one is Japanese government made Web3 as a national strategy back in 2022. So a lot of the big companies are entering the Web3 space, including Sony. A lot of the Japanese big companies are trying to do Web3 business. This is a good move, right? And speaking about the regulation, from this year, the ruling party of the Japanese government proposed to include crypto asset into existing finance framework. The crypto was recognized as cryptocurrency. So it was separated, but the ruling party of the government proposed to include crypto inside of the existing finance system. This is good things because they're trying to include crypto under the existing finance system, but recognize as crypto, not security. So they are making new framework for crypto under the existing finance framework. If this is approved, cryptocurrency ETF will be coming and tax can be deducted from up to 55% to 20%. If that is approved, I think more and more people are entering the Web3 on-chain. So I'm pretty excited and very optimistic. about the future of Japan in coming two year. At the same time, we are somehow responsible for the future, right? So we needed to make our product successful so that we can prove that Web3 is actually a very potential domain. for Japan and beyond.

SPEAKER_01: 26:13

And you recently moved to New York. Tell us about that because you're stepping out of Asia and then your market, Japan, and going to New York. What's behind that move?

SPEAKER_02: 26:22

Yeah, I'm pretty entrepreneur. So if I am satisfied with the status quo or current environment, there is no growth. My growth and the company's growth, right? And Asia is pretty comfortable place for me, especially Japan. US is pretty uncomfortable in a good sense. So I would like to explore a new challenge. Our team is getting stronger and right now they can talk with the government, they can talk with the big company without me. So I should focus more on the US market so that we can make a core advantage because a lot of the US founder are struggling to enter the Asia market because they don't know how to. But we know how to. Our business in Asia is pretty sustainable right now. And this is the reason why I moved to New York. But fundamentally, I like uncomfortable environment as an entrepreneur.

SPEAKER_01: 27:19

Yeah, I mean, I think that's kind of all of us right now in the crypto space, right? Like we're jumping ourselves into a very volatile asset class. And then one day is different from the next. And, you know, we've seen so many cycles for that. But even in terms of entertainment, I mean, Sony Music, you know, PlayStation, all those are actually quite big in the US, right? I mean, there's tons of content. I'm sure there's a possibility of bringing those things into the Sony and blockchain as well.

SPEAKER_02: 27:44

Yeah, maybe. Yeah, I think they are doing their best.

SPEAKER_01: 27:49

Awesome. Yeah. So this has been a great conversation. Is there anything that we've left off that you'd like to talk about?

SPEAKER_02: 27:55

I think the market is tough right now. But simply being optimistic can be a core advantage over other project because environment is the same, right? So just being optimistic and just focus on building, just focus on delivering the product. And eventually all efforts in the bear market will be rewarded during the bull market. And this is my third or fourth, I would say, bear market. A lot of the winning project today overcame this kind of the market. And they keep delivering. And that's why they're winning. We would like to do the same. So we are hiring a lot of people right now. And we would like to focus on product. And eventually one day we're going to win. I mean, this industry is going to win. So that's why we should not stop ourselves to deliver. Yeah. Thank you very much.

SPEAKER_01: 28:45

Yeah. Thank you so much. And where can people follow you?

SPEAKER_02: 28:49

Please follow X. And if you have any questions, please join Discord. And you can check our website as well. And if you have any questions to me, feel free to DM me on X. Awesome. Thank you very much. Thank you very much.

SPEAKER_01: 29:03

And thanks for listening. If you like what you hear, give BlockCast a like and subscribe on all your favorite podcast channels, Spotify, Apple, you name it. And for all the juicy Web3 news, keep updated on Blockhead.co. Catch you in the next episode.