Executive Summary
1. Investment Recommendation
Masa Protocol (“Masa”) is used to be committed to addressing on-chain/off-chain credit issues and now focuses more on assisting users and projects in resolving challenges related to identity verification, credit loans, user acquisition, and user retention. These demands from both sides have persistently existed in the market without effective solutions.
Masa quickly responded to the market, becoming the first Soulbound Token protocol, launching just three months after the publication of Vitalik’s May 2022 paper. The team has demonstrated exceptional adaptability and agility.
The investors and founders behind Masa have a relatively strong alignment with the business objectives, and the founders’ accumulated expertise in the Web2 space will contribute to expanding the project’s reach into specific markets. Additionally, the market cooperation will be further strengthened as Masa enters the Binance Labs MVB Program.
**2.Company Description **
Masa is a Soulbound Web3 identity protocol that aims to mint standardized Soulbound tokens (“SBTs”) on five different blockchains, used for various purposes such as KYC verification, credit scoring, and other use cases, enabling projects to acquire, retain, and verify users and enabling users to enhance their creditworthiness and access loan opportunities. In addition, Masa offers low-code SBT development toolkits to developers and projects, facilitating their integration with the ecosystem. Furthermore, Masa intends to establish a decentralized identity data governance system through a network of oracle nodes, developing its own SBT oracle.
3.Company Value Add
The SBTs field is still in its early stages. Currently, there is no unified issuance standard, but Masa aims to become the standard setter for SBTs and is in the process of applying for EIP-SBT. Since SBTs are publicly recorded on the blockchain, Masa also is developing zkSBT to address privacy protection and verifiability concerns.
Any on-chain user or organization can issue SBTs to users. While the entry barrier for this business is low, it requires several large and influential organizations to aggregate credentials into an identity that can be universally recognized across multiple applications and even networks. By accumulating collaborations with influential organizations, Masa can effectively extend its business into precision SBT-based marketing and SBT-powered credit lending, building a relatively higher barrier.
Masa has the advantage of being a leading hybrid credit lending protocol. Masa aggregates over 10,000 sources of off-chain data (bank, credit bureau, and alternative data) from 78 countries through integrations with credit bureaus, bank data aggregators, and alternative data through its partner Pngme (also founded by Brendan Playford). Additionally, Masa has global coverage for on-chain data through 26 integrations to exchanges and wallets - opening up a market of 4.95 billion people through its decentralized credit infrastructure.
4.Capital Structure (Equity + Tokens) w Org Chart
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Analysis - Market & Valuation
1.Total Addressable Market and Feasible Solution
In The Web2 Market Segment (to C)
Over time, as traditional financial systems evolved, they left behind vast segments of the population that have little or no means to build credit and participate in the global economy.
According to incomplete statistics, global unsecured lending is a $11 trillion market. There are 1.5 billion people worldwide with credit scores, while 3.3 billion people are “credit invisible”, which means they have credibility but their credit records are unrelated to them in the traditional banking system. Accessible credit scores are a prerequisite for many financial services, especially credit loans, and can impact opportunities for identity verification and obtaining insurance.
Especially in Africa, only 20-30% of the population has credit scores (as of February 23, 2023, Africa’s population in 57 countries is 1.4 billion, with Nigeria being the largest with 200 million people). Some developed countries and regions such as South Africa, Nigeria, Kenya, and Morocco have a higher proportion of the population with credit scores. In other impoverished and rural areas, the prevalence of credit scoring systems is low.
Meanwhile, Africa is one of the fastest-growing crypto markets in the world, according to Chainalysis, but remains the smallest, with crypto transactions peaking at $20 billion per month in mid-2021. Kenya, Nigeria, and South Africa have the highest number of users in the region, with 33.4 million Nigerians owning a cryptocurrency. Therefore, in regions with high cryptocurrency penetration, blockchain can enable people without bank accounts to access loans, borrowing, and insurance services more quickly.
By making credit infrastructure accessible to decentralized credit markets, DeFi platforms can launch a broader set of credit use cases to take DeFi mainstream, opening DeFi to a $2.5 trillion household lending market. Uncollateralized lending has been the hard-to-achieve holy grail of the DeFi ecosystem since 2017. Because the current DeFi protocols lack native Web3 identities, it is difficult to directly integrate DeFi into the real-world economy. However, Vitalik believes that Soulbound can be a crucial component in building a decentralized Web3 society.
Therefore, a way to expand access to financial services is by creating creditworthiness for individuals without credit scores through the SBTs. The current SBT segment is still in the early stage, as a unified technical standard is absent so there is still a dilemma in privacy protection, validity, and solving loopholes in some application scenarios. There may be some new application scenarios when the whole segment progresses, such as cross-platform SBT as a solution for more flexible user operations, refined SBT for more accurate marketing, and SBT-based credit lending.
Masa is essential for on-chain lending to succeed as demand for DeFi and cryptocurrency services surges in emerging markets. Masa was created to help billions of people around the world who are unbanked and credit invisible to establish decentralized credit scores.
In The Web3 Market Segment
With approximately 420 million global crypto users and 22 million monthly active wallets on Masa-supported blockchains as of 2023, there exists significant potential for Masa to further expand its reach from the Web3 perspective.
2. Financial Projections
Since the launch of the Mainnet in January 2023, Masa has generated over $187,000 in protocol revenue by Masa Souldname NFT(.soulname) minting and secondary royalties (a total of 82 ETH earned between January 16th and June 5th, 2023). Masa currently has 7,142 total domains registered under its soulname.
3.Current Valuation/Future Valuation
H2’21 Pre-seed Round: Raised $3.8 million with an FDV of $24 million
H2’22 Seed Round: Raised $3.9 million with an FDV $40 million
Q2-Q3’23 Private Round: Target to raise $5 million with an FDA $80 million
Community growth: The Masa community grew exponentially in this short time, having generated over 1.4 million SBT mints, over 500,000 users, and over 150,000 community members.
Potential cash flow business: Masa has recently announced Masa GrowthPad, a community growth and loyalty product powered by Masa SBTs. Masa plans to charge fees to collaboration projects in the future.
Token value accrual: gas token for the protocol
4.Competitors
There are two distinct buckets for competitors to Masa 1) Identity/Credential protocols, 2) DeFi credit platforms.
Identity/Credential protocols
Galxe is the leading credential data network in Web3. It raised $2 million in its seed funding round in October 2021 and secured a $10 million series A round co-led by Multicoin Capital and Dragonfly Capital in January 2022. In February 2022, Galxe successfully completed its public sale on CoinList, with a valuation of $300 million. At that time, the Galxe community had grown to include 200,000 unique on-chain users from 7 different blockchains. Galxe Credential Data Network now has over 700 digital credential sets covering more than 5 million users in Web3. Additionally, Galxe’s digital credential data and NFT infrastructure were leveraged by over 120 projects and organizations, resulting in the launch of more than 500 campaigns. As of June 13th, the latest fully diluted market cap stands at $239 million.
Proof of Humanity is a system combining webs of trust, with reverse Turing tests, and dispute resolution to create a sybil-proof list of humans. Proof of Humanity is built by Kleros, an open-source online dispute resolution protocol that uses blockchain and crowdsourcing to adjudicate disputes. There is no financial information available from public sources.
DeFi credit platforms
Goldfinch is a decentralized protocol enabling crypto borrowing without crypto collateral. Goldfinch has raised $36.7 million to date, with their most recent round being $25 million in January 2022, led by a16z crypto. Notable investors in the company include Coinbase Ventures, Varient Fund, and Divergence Ventures. The latest fully diluted market cap as of June 13th is $39 million.
RociFi, a decentralized zero, and under-collateralized lending protocol, completed a seed funding round of $2.7 million in November 2021 from Arrington, Goldentree, Nexo, LD Capital, and Skynet Trading. RociFi and five other blockchain fintech companies are teaming up with Mastercard through their Start Path Digital Assets program in 2023.
5.Runway and Burn
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Analysis – Technology
1.Technology Analysis
EIP-SBT
Masa’s standard provides basic functionality to mint, track, and burn SBTs, resulting in a gas saving of 38% on the deployment and 3% on the minting over EIP-721. In EIP-SBT, Masa outlines three types of SBTs:
Authority SBTs, which give authorized parties the exclusive right to mint tokens;
Self-sovereign SBTs, which allow end-users to mint new and verified tokens independently;
Zero-Knowledge SBTs, which provide privacy-preserving and secure storage of private data on any EVM blockchain.
zkSBT Standard
The Masa zkSBT is a brand-new token design that provides privacy-preserving and secure storage of private data on any EVM blockchain. With Masa zkSBT, zero-knowledge proofs can be used to achieve complete privacy and encryption for an individual’s data, which can be stored on-chain. Masa utilizes libraries from ZoKrates (zksnarks on Ethereum, https://zokrates.github.io/introduction.html) and Iden3’s Circom (circuit framework for programmable zero-knowledge, https://github.com/iden3/circom).
When minting a new SBT, the user’s private data is encrypted using their public key, and the encrypted data is stored in the sbtData mapping (A mapping that associates a token ID with its corresponding SBTData). Additionally, a hash of the unencrypted owner address and private data is stored in the SBTData (A structure that stores the hash data and the encrypted data associated with a specific token ID), which is used to verify the integrity of the encrypted data, when it’s decrypted by the user.
The zkSBT contract includes functions for retrieving the hash and encrypted data and minting new tokens, ensuring that only authorized users can mint tokens and access the associated data. In the case of Self-Sovereign SBTs, the mint function verifies the caller’s authorization and mints a new SBT with the provided encrypted private data. It also ensures that the caller is the owner of the address to prevent unauthorized token minting. In the case of Authority SBTs, the mint function verifies the caller’s authorization and mints a new SBT with the provided encrypted private data.
Sequence diagram
Developer Stack
CLI: A command line interface for interacting with the Masa Protocol through the Masa SDK
SDK: An SDK for developers to use when implementing the Masa Protocol in their applications
Masa-react (front-end SDK): A boilerplate react library that includes scopes that define specific actions you wish a user to take in your front end; for example, the identity scope ensures that a user has a Masa Identity (MID). If the user does not have an MID then the scope will prompt the user to mint one.
Masa Express (back-end SDK): A collection of examples and functions that can be run using the Masa SDK
Oracle Network
Masa utilizes a set of oracle nodes to govern decentralized identity data, drawing inspiration from Chainlink’s decentralized oracle network. To date, over 22,000 node operators have participated in Phase 1 and Phase 2 of the Masa oracle node Testnet — Phase 3 is due to commence in 2023.
Additionally, the Oracle nodes integrate key components from EIP-4337, such as account abstraction, bundlers, and paymasters, to provide a superior way to manage identity through a more efficient and user-friendly Web3 experience.
2.Tech Validation and Usability Feedback
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3.Usage Metrics
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4.Development Team Feedback
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5.Audits
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Analysis – Business
1.Company Revenue Model
Masa sees three revenue streams under the current financing model:
Sales from minting .soul names;
Royalties from the secondary trading of .soul names;
Protocol fees are charged to Developers who use Masa’s toolkits;
Additionally, Masa has recently announced Masa GrowthPad, a community growth and loyalty product powered by Masa SBTs. Masa plans to charge fees to projects in the future.
2.Team/Experience
Masa currently has 13 full-time teammates, of which 9 are in product and engineering.
Brendan Playford is a co-founder at Masa. He has built Pngme, a lending marketplace for Microfinance Institutions and MSMEs (Micro, Small, and Medium Enterprises) in Africa. He is a serial entrepreneur and a specialist in fintech, data science, formal crypto-economics, distributed system architecture, blockchain architecture, and consumer-centric design.
Calanthia Mei is a co-founder at Masa. She has been a global fintech builder and investor in the past decade, as a founding member of PayPal’s venture capital arm where she invested in 25 leading fintech and Web3 startups across US, Europe, Asia, LatAm, and Africa. Most recently, Calanthia scaled a fintech startup from 20 to 450 people to a public company acquisition. Her work has been featured on industry publications such as CNBC, New York Stock Exchange, CoinTelegraph, and Blockworks.
3.Notable Customers/Partners
According to Masa, they have had more than 130 partner pipelines since May. Participating in the Binance Labs MVB Accelerator Program has also allowed Masa to gain more market branding and forge partnerships with renowned players.
Now, multiple partners already established partnerships with Masa:
Layer-1 Blockchains: Ethereum, BNB Chain, Polygon, Celo, Base
Web3 Projects:
Arcomia, is an exciting pre-launch next-gen metaverse game on the Polygon.
Solid World DAO, a transparent carbon market on the Polygon that will enable the pre-funding of high-quality sequestration-based carbon projects to help them get off the ground.
Valora, is a leading mobile-first wallet for exploring the Celo ecosystem, offering access to over 50 crypto assets and 30+ dapps. Valora will be a good use case to start the Celo ecosystem collaboration.
Teller Protocol, is a decentralized, non-custodial lending book on the Ethereum and Polygon that allows users to lend and borrow any crypto asset with time-based liquidation. Teller brings forth the first use case of on-chain credit in DeFi.
Mesha, an all-in-one financial platform on Ethereum for Web3 organizations. Masa and Mesha have partnered to launch Web3’s first Soulbound Line of Credit for Web3 organizations.
4.Competitors
According to the nature of MASA’s business, competitors come from two segments. The first is identity/credential protocols, while the second is DeFi credit protocols. However, the latter does not pose real competition if they don’t embed identity attributes and actually represent potential downstream partners for Masa.
Identity/Credential protocols
As a Soulbound identity protocol, Masa doesn’t have the exact same competitors in the space for now. However, there are many projects focusing on domains, identity aggregation, credit scoring, and credential issuance segments using SBTs, such as Proof of Humanity and Galxe.
Proof of Humanity is a system combining social verification with video submission in order to create a Sybil-proof list of humans. Use cases include insurance, credit scoring, quadratic funding, Sybil-resistant airdrops, and human DAOs or Universal Basic Income (UBI). Version 2 will use SBT, each unique ID corresponds to an address of the human.
Galxe aims to solve this problem using an open and collaborative credential data network that helps Web3 developers leverage digital credential data to build better products and communities. Data curators are rewarded when credentials are used in Galxe’s application modules and Credential Oracle Engine. Galxe Passport is designed as a Web3 identity stored as SBT. To mint the passport, the user will need to pass KYC.
DeFi credit protocol:
Projects like Goldfinch, TrueFi, and Maple Finance have not embraced the concept of SBT. Instead, they have their own methods for credit evaluation. For instance, Goldfinch has introduced the Unique Identity (UID), which is a non-transferrable NFT representing on-chain verification of KYC, KYB, and/or U.S. Investor Accreditation. The UID is interoperable with other DeFi protocols and follows the ERC-1155 standard, allowing any protocol to benefit without the need to develop its own KYC process or handle data.
The project most similar to Masa is RociFi, which relies solely on on-chain data to generate users’ credit scores. To borrow from RociFi, users must undergo credit risk assessment through the protocol’s credit risk scoring API. RociFi’s non-fungible credit score (NFCS) serves as an SBT, minted based on users’ on-chain history and reputation. RociFi has 36,389 SBTs minted to date.
Setting the SBT standard from a technical perspective is not difficult, but the challenge lies in gaining market recognition and adoption. Therefore, expanding exposure and actively seeking influential collaborations are important strategic steps. In terms of data and partnerships, Masa currently holds advantages over other startup competitors. With the approval of their EIPs, it will further enhance their brand, fueling their goal to become the cross-chain and interoperable identity standard.
5.Product Roadmap
Masa has already launched tools to help developers, dApps, wallets, protocols, and communities get up and running with Masa SBTs using a low-code and easy-to-integrate SBT bundle.
In Q3 2023, Masa will onboard 22,000 Testnet node operators. TGE and its own data oracle will be launched.
6.* Significant milestones or traction achieved*
Mainnet Launch
In Q1 2023, Masa launched the Mainnet across four blockchains, including Ethereum, BNB Chain, Polygon, and Celo. As of May 1st, 2023, there have been more than 1,000,000 Masa SBTs minted, across five different blockchains, and more than 450,000 users with at least one SBT in their wallet.
Celo Prosperity Passport & Celo Domain Launch
On March 10(th), 2023, Masa launched Celo Prosperity Passport, their first partnership with a Layer-1 blockchain. The launch of Prosperity Passport drove 258,000+ mints and 42,000+ new users in the first 21 days of launch. With a Prosperity Passport, developers can build utility-driven Soulbound use cases for the 10,000,000 wallets on Celo.
Masa Green & Referral Program Launch
In Q1 2023, Masa launched Masa Green SBT, the multi-chain bot killer on Ethereum, BNB Chain, Polygon, and Celo. Masa Green is a way to verify the authenticity of user’s wallet, and help projects confirm that the user is not a bot. The product launch was in tandem with a Soulbound Airdrop and the Masa Referral Program.
Teller Soulbound Lending Pool Launch
On March 29(th), 2023, Masa went live with their first Soulbound lending partner Teller. Teller uses Masa Credit Score SBT to assess users’ creditworthiness and provide instant loan approvals. Masa SBTs will also be used to track repayments and build users’ credit history over time.
Binance Labs MVB Accelerator
In April 2023, Masa was selected for Binance Labs MVB Accelerator Program for BNB Chain Projects.
Exponential Community Growth
Now Masa has a community of 38,415 Discord members, 90,123 Telegram members, and 76,300 Twitter followers.
7.GTM Strategy
See the milestones section above.
B2C GTM (August 2022- Now)
Masa has accumulated users on Layer-1 Blockchains like Etherum (through Masa SBT App), Celo (through Prosperity Passport App) and Base (through Base Camp App).
Masa has been working hard to integrate Masa SBTs with some of the largest projects and communities in Web3 in coming months. As a part of the MVB Accelerator, Masa will include the opportunity to partner with the most established dApps, protocols, projects, and communities on BNB Chain.
B2B2C GTM (May 2023 – Now)
Continuing with more partners, Masa aims to expand its ecosystem by launching tools to assist developers, dApps, wallets, protocols, and communities in adopting Masa SBTs. These tools provide a low-code and easy-to-integrate SBT bundle, facilitating collaboration with additional partners.
Analysis - Deal Terms
1.Cap Table
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2.Financing History
In November 2021, Masa raised a $3.8 million pre-seed round with a FDV of $24 million. The funding was backed by Unshackled Ventures, executives from GoldenTree Asset Management, Flori Ventures, GSR, Decentranet, Intersect VC, Lateral Capital, Peer VC, Alves Ventures, and several angel investors in the fintech/blockchain space.
In the second half of 2022, Masa raised a $3.8 million seed round with a FDV of $39 million. The funding was backed by DCG, GoldenTree Asset Management, OP Crypto, Citizen X, and other investors.
3.Notable Investors
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4.Use of Proceeds
Listing preparation on Binance, Kucoin, OKX
5.Deal Terms and Dynamics
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