Rarimo has also pioneered new use cases for cross-chain digital assets transfers, such as NFT checkouts, which allow users to buy NFTs using any cryptocurrency, regardless of the blockchain it’s held on. They eliminate excess transaction fees and time-consuming manual steps from an endless range of use cases, and instead offer users single-click, single-fee solutions. Pantera recently led a $10M round in Rarify Labs, one of Rarimo’s service providers, along with Protocol Labs, Circle, Eniac, Slow, Hyper, and Greycroft.

Problem space

As more layer 1s and 2s continue to enter the space, fragmentation is becoming an increasingly urgent issue. Users need to be able to access their assets and identities from across different ecosystems.

While in the case of digital assets, pre-existing solutions do exist, they often offer a poor user experience or have limited functionality. Users are generally required to pay multiple transaction fees, provide multiple signatures, execute multiple manual steps, and in some cases, shoulder a vulnerability to hacks. When solutions do offer an improved user experience it generally comes at the cost of providing universal support. Typically, they support only a narrow range of use cases and are often only focused exclusively on the transfer of ERC-20 tokens. This infrastructural bias makes it extremely challenging to expand to other ecosystems.

Meanwhile, users of decentralized social layers are currently unable to transfer their identity artifacts from one blockchain to another let alone in a seamless, cost-efficient manner.

Architecture and how Rarimo works

Rarimo’s multilayer architecture. Source: Rarimo

Their highly composable multi-layer architecture is what allows Rarimo to support such an expansive range of use cases. It consists of three components: the Base Layer which operates as a generalized messaging protocol and includes an independent and decentralized blockchain; the Cross-chain Layer which includes bridging and oracle services; and the Application Layer which leverages the two underlying layers to provide support for specific projects.

The protocol was designed to provide the low transfer costs of centralized solutions, but the security of decentralized ones. Rarimo creates proofs using a Threshold Signature Scheme that reduces network costs while also supporting a large number of independent validators. On top of this, Rarimo bundles transactions. This allows multiple flows to be executed at once, and therefore saves users from having to pay multiple transaction fees.

As well as improving the experience for users, Rarimo’s design makes development faster and easier for builders whose dApps leverage multi-chain liquidity and access. The Application Layer means developers can effortlessly expand existing dApps from one chain to many without having to build notable amounts of custom, use-case specific logic.

Currently, Rarimo supports Ethereum, Solana, Binance, Near, Avalanche, and Polygon. Rarimo’s testnet is currently accepting developer applications.

Rarimo x Circle

Most recently, Rarimo partnered with Circle, a Pantera portfolio company, to integrate Circle’s Cross-Chain Transfer Protocol (CCTP). This allows USDC to flow natively across chains for NFT payments.

Right now, users who hold USDC on one chain and want to buy NFTs listed on another face an extremely complex process. They are forced to manually exchange their tokens on a DEX, accruing multiple transaction fees along the way. With the Rarimo x CCTP integration however, they will be able to make cross-chain NFT purchases with USDC with only a single click, and paying only a single transaction fee.

Developers can also utilize the Rarimo-CCTP integration to enable paying in USDC while minting NFTs on different chains.

Rarimo Use Cases

Rarimo’s additional interoperability use cases include:

●  Access: cross-chain proof of identity including SBTs, multi-chain DAO voting and governance, and multi-channel state replication

●  Liquidity: cross-chain NFT purchases, proof of ownership / reputation for lending, NFT fractionalization, optimized NFT pooling / staking, and bulk transferring NFTs between chains

●  Compatibility: scaling assets multi-chain for metaverses, cross-chain NFT drops, brand asset migration by end users, and layer 1 to layer 2 (or vice versa) asset swaps

Team

Rarimo is maintained by the decentralized Rarimo Foundation. Service provider, Rarify Labs, was founded by Lasha Antadze, Revaz Tsivtsivadze, and Vlad Dubinin in late 2021. Revaz has previous experience in APIs and fintech products including Shutterstock and Mastercard. Lasha and Vlad are the previous co-founders of Shelf Network, a platform for cross-border decentralized auctions, and Vlad is also the co-founder of Distributed Lab, one of the largest Blockchain research and development centers.

We believe that Rarimo is well-positioned to solve the imminent issue of fragmentation to become a leader in the interoperability space. They are set apart by their modular, multi-layer architecture which enables hyper-secure and user-friendly multi-chain transactions. We at Pantera are thrilled to back Rarify Labs as they continue to develop solutions for the secure transfer of data, identity, and digital assets across web3.

- Paul Veradittakit

DISCLAIMER

*Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. *

MEV refers to the total value that miners or validators can extract from a blockchain beyond their normal fees. MEV is created by the order in which transactions are included in a block. When a transaction is included in a block, it can interact with other transactions in ways that produce additional value. This additional value can be captured by miners or validators who re-order transactions in a way that maximizes the MEV. This has led to the emergence of companies like Flashbots, a Pantera portfolio company, which are attempting to address this issue.

Let's take a look at a hypothetical scenario to break down MEV in the context of crypto.

Suppose you're a trader on a decentralized exchange, looking to buy a particular token at a specific price point. You place your order and wait for it to be executed by the blockchain network. However, what you may not realize is that your transaction is now part of a complex web of transactions and actions that are happening simultaneously.

In the meantime, a miner on the network has access to all the pending transactions and can potentially manipulate them to their advantage. For example, the miner could choose to prioritize certain transactions over others, including their own, to earn more profits. This is known as MEV or Miner Extractable Value.

In your case, if your order is placed after another transaction that has a higher fee attached to it, the miner may choose to execute that transaction first, resulting in your order not being filled at your desired price. This can result in a loss for you as a trader, while the miner earns more profits.

Overall, while MEV is an issue in the crypto space, there are solutions being developed to mitigate its impact and provide a more equitable and secure environment for traders and users.

Here are the most common attacks you should be aware of and how they work.

Front-Running

Front-running is when a malicious actor places their transaction ahead of a known pending transaction in the execution queue. This is typically done by using specialized front-running bots that scan the network for large orders on decentralized exchanges. The bots then submit competing transactions with higher gas fees to get them mined before the victim's transaction, which allows them to gain a financial advantage.

Sandwich Attacks

A sandwich attack is a type of front-running where the attacker places two transactions around a pending victim transaction. The attacker places one transaction before and another right after the victim's transaction. This type of attack is often used to extract MEV from unsuspecting traders on decentralized exchanges. The attacker manipulates the price of an asset by identifying a token the victim is about to buy, making a trade to push the price up, and then selling the token after the victim's buy order has increased the price even further.

Back-Running

Back-running is when a malicious actor places their transaction immediately after a known pending target transaction. Searchers use back-running bots to monitor the mempool for new token pair listings or liquidity pools created on decentralized exchanges. When a new token pair listing is found, the bot places a transaction order immediately after the initial liquidity and buys as many tokens as possible, leaving only a small amount for other traders to buy later. The bot can then wait for the price to go up after other traders have purchased the tokens and sell at a higher price for a profit.

Liquidations

Liquidations are a type of attack where searchers specialize in extracting MEV through the liquidation of over-collateralized loans on decentralized on-chain protocols. Liquidators run specialized bots to monitor the network for transactions presenting liquidation opportunities and act to either front-run or back-run transactions to be the first to liquidate a loan. They extract MEV from unsuspecting borrowers by liquidating their loans before they can repay the debt and profit by selling the borrowers' collateral.

Time-Bandit Attacks

Time-bandit attacks are a type of attack that only miners can execute. These attacks retroactively reorganize blocks to capture MEV opportunities in previously mined blocks. When MEV is high enough compared to block rewards, it can be rational for miners to destabilize the consensus to capture MEV in older blocks. A miner with significant mining power may decide to re-mine previously mined blocks to capture arbitrage opportunities and have a longer chain than the miner who originally mined the block.

Flashbots

Flashbots is a company that focuses on reducing the negative effects of MEV. They do this by allowing miners to privately and securely pool transactions before they are included in a block. This reduces the incentive for miners to extract MEV by re-ordering transactions. Instead, they can simply include the transactions in the order they were submitted, preserving the MEV for the users who created it.

Flashbots has developed a number of mechanisms to enable this.

One of the most important is the Flashbots Relay, which is a peer-to-peer network that connects miners and transaction senders. The Relay allows miners to receive transaction bundles from users directly, without having to rely on the mempool. This allows for greater privacy and security for users, as well as reducing the incentive for MEV extraction.

Another key mechanism developed by Flashbots is the MEV-Geth client. This client enables miners to access the full set of transactions that are available to be included in a block, rather than just those that are in the mempool. This enables miners to more effectively capture MEV without having to re-order transactions.

In addition to these mechanisms, Flashbots has also developed a number of other tools and technologies to address MEV extraction. These include a transaction simulation tool that allows users to estimate the potential MEV of their transactions, as well as a transaction pool management system that enables miners to manage the transactions they receive.

• Total extracted MEV (defined as successful MEV transactions + successful MEV transactions gas fees + failed MEV transactions gas fees) tops $690M.

• In just the past 30 days, over $5M in MEV has been extracted.

• Out of all extracted MEV, 36.4% is MEV miner income while 63.6% is MEV searcher income.

• A vast majority MEV is done through arbitrage; less than one percent is done via liquidation.

• When MEV extraction is sorted by protocol, Uniswap V2 has the largest amount extracted with ~62% of the total. Uniswap V3 and Balancer also each have a substantial amount extracted.

• ETH/WETH are the primary tokens used for MEV profit taking (95% of total).

Cumulative extracted MEV – gross profit. Source: Flashbots

Conclusion

In conclusion, MEV, or Miner Extractable Value, is a term that has emerged in the cryptocurrency industry to describe the profit that miners can earn by manipulating transactions in their favor. While MEV is not a new concept, it has become increasingly prevalent in recent years due to the rise of decentralized finance (DeFi) and the growing competition among miners for transaction fees.

MEV has both positive and negative implications for the cryptocurrency industry. On the one hand, MEV can incentivize miners to contribute to the network's security by prioritizing more important transactions and blocks. On the other hand, it can also lead to market manipulation and unfair practices that undermine the integrity of the network.

Despite these challenges, companies like Flashbots are working on innovative solutions to mitigate the negative effects of MEV and promote a more equitable and transparent cryptocurrency ecosystem. As MEV continues to be a topic of discussion and debate in the industry, it is crucial for stakeholders to work together to find effective solutions that balance the interests of all parties involved. With continued innovation and collaboration, the potential of blockchain and cryptocurrency can be fully realized, creating a more inclusive and decentralized financial future.

- Paul Veradittakit

DISCLAIMER

*Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. *

Blockchain technology offers a solution for transparent and decentralized data storage. Information stored on-chain is open, permissionless, and backed by its immutable nature that provides data trust and integrity. While on-chain data is available for everyone to verify and utilize, it is expensive to derive semantic meaning in a reliable and efficient manner. Blockchains are distributed ledgers; data needs to be indexed to serve the needs of applications. As the explosion in web3 developer activity continues, we need a reliable data readability layer to speed up product innovation.

Nxyz seeks to improve web3 by offering indexing and data infrastructure that is performant, flexible, and reliable. A spin-off from Neeva, nxyz ingests data straight from blockchain in real time and provides developers with a robust API suite for easily accessing on-chain data. Currently, there are more than 4000 DApps that interface with various chains with different schemas and routing systems. The slowness of data retrieval and the necessity for high throughput creates hurdles for protocols and projects. Nxyz's multi-chain API allows any engineer to acquire specific on and off-chain data across wallets, transactions, NFTs, and smart contracts by reading blockchain into real-time data streams. With a lightning-fast API that offers immediate data support in less than 200 milliseconds, the company is enabling developers to focus on building at scale.

The Case for nxyz

Blockchains have emerged as the decentralized and transparent data storage paradigm. While blockchains are the ideal solution for decentralized data storage, they have their own set of problems. As vital as the decentralized infrastructure of distributed ledger technology is, the verification procedures used to assure data integrity can slow down querying and general blockchain performance.

Indexing providers dApp developers offer fast access to data. It is vital to offer easy data navigation inside the crypto networks in order to take advantage of the transparency and decentralization of data storage that blockchain enables. However, the market's current solutions struggle with infrastructure issues like reliability, a significant lag behind chains, and lengthy processing times. With its massively parallel infrastructure, nxyz provides a solution that provides dependable, low latency, and high real-time connectivity to the blockchain that dApps require.

How to use nxyz

The current nxyz API suite consists of a wallet, token, and collection endpoints that considerably simplify data retrieval.

Steps to interface with nxyz

1. Pick the desired endpoint from the currently supported list here. This contains predefined APIs that cover common entities (NFTs, ERC 20's, & balances) and also support complex needs such as the ability to specify a custom indexing pattern for any set of contracts.

2. Input the endpoint-specific values parameters such as wallet address, chainID (Identified for blockchain eg. “polygon”), etc.

3. Make the request like any other API call and obtain the desired data.

Since its launch earlier this year, nxyz has processed over 5 billion transactions to provide real-time blockchain data. Nxyz offers a multi-chain index of Ethereum, Optimism, BSC, Avalanche-C, and Arbitrum. This solution can greatly speed up popular blockchain applications and let developers concentrate on their core products.

Team

Nxyz was incubated in Neeva, a private ad-free search engine, and browser, before being spun off into its own product. For the past year, co-founders Sridhar Ramaswamy, Todd Wang, and Nathan Wiegand, among many others, have employed their expertise in creating some of the biggest distributed systems on the internet to develop a solution to scale blockchain innovation. Before leaving his position to start Neeva, Sridhar was the SVP of Ads and Commerce during his time at Google. Todd and Nathan are also distinguished engineers who previously worked at Google and Neeva before joining nxyz as CTO and VP of engineering, respectively.

Final Thoughts

Blockchains and new L1s are rapidly taking over as a venue for decentralized practices. Although this has been a fantastic innovation, it has also presented its own difficulties because there is no one optimum way to interface with this data storage. To enable scalable innovation, nxyz provides a lightning-fast API for interacting with on and off-chain data. With low latency and support for several chains, the platform offers seamless web3 data indexing. With a solid early customer base that includes companies like BitGo, Citrus, Fractal, Crossmint, and others, nxyz is poised to streamline web development by providing easy access to both on-chain and off-chain data.

- Paul Veradittakit

DISCLAIMER

Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. 

Problem space

Traditionally, the only way to really “make it” as a musician was to sign with a major record label. Unfortunately, the web2 music industry is rife with problems:

• Creators are exploited by record labels and middlemen; without these players, artists don’t have to split profits with intermediaries.

• The tradeoff for access to reputable record labels is a lack of freedom regarding artistic direction. Once corporations have a meaningful stake and become more heavily involved in the creator’s content, the creator is often bound to their inputs.

• Working with record labels is slow and painful because of legal technicalities and backend processes that the corporation must follow through with.

• The musician is much less in touch with their fan base when operating through record labels and intermediaries versus interacting with them directly and creating a true community around their brand.

With web3, we can craft new creation and go-to-market models that directly support artists and make it much easier to grow their fanbases in an organic way. Cryptonatives and investors are beginning to recognize the power of these use cases as well. Cooper Turley just launched Coop Records, a fund focused on investing solely in the future of music, specifically music NFTs. CreatorDAO recently raised a $20M seed round from a16z crypto to invest directly into creators and the content they produce. New platforms and design structures like these help drive the creator economy forward and make it a more equitable and collaborative industry.

Product

Arpeggi is the first and only 100% on-chain music creation platform that allows users to intuitively and collaboratively create sounds in a web3-native way. Users have the option to remix others’ work, build on top of Arpeggi’s rich sample library, create a sound or song from scratch, or work with a mixture of all three. When users finish creating sounds, they can mint them as NFTs, which publishes them back to Arpeggi for others to iterate on.

Arpeggi’s interface shows recent projects, featured creations, and trending sounds. Source: Arpeggi

One key aspect of the creation process on Arpeggi – and one that sets it apart from other music creation platforms – is the idea of “sampling.” Sampling, which Arpeggi describes as a lost art form, is the process of remixing beats from existing songs and led to massive creation in the music industry (including hip hop). However, in music now, there’s often huge hurdles to working with other peoples’ creations because of legal concerns. Arpeggi brings the theme of sampling back by allowing creators to work with existing sounds on the platform. In James’ words, “the ethos for this project is open-source music creation and changing the standard so that any sound you hear is a sound you can create with.” An open-source platform with underlying blockchain technology ensures that all creators working on a specific song are appropriately recognized and paid.

Arpeggi changes the game by ensuring all contributors to a song get attribution. Source: Arpeggi

On Arpeggi, sounds can be iterated on while ensuring that proper attribution is given to the original musician. The platform’s core thesis is that when a person creates a song, it should be open for future artists to play with and contribute to in their own way. This creates a dynamic definition of music creation where an emphasis is placed on iteration rather than stagnation. By default, then, Arpeggi is also building a strong community on its platform of music enthusiasts who work together to create amazing sounds.

This theme has strongly resonated with creators: the platform has 4305 songs minted and 829 sounds minted as of October 9.

The music creation interface on Arpeggi. Source: Arpeggi

Blockchain tech, optimized for music

Arpeggi uses the Audio Relationship Protocol (ARP) to store music primitives on-chain. At its core, ARP is a registry that enables transparency and permissionless characteristics of music on the blockchain, and therefore allows for open collaboration among parties. Benefits of ARP are consistent with core blockchain features – for one, media on ARP can be tracked as it’s iterated on by different users. This traceability ensures that the original artist is getting the deserved attribution. Sounds, once published on the ARP, can be immediately remixed by users via the Arpeggi Studio. ARP is currently supported by Polygon.

Remixing inspires and expedites the creation process. Source: Arpeggi

Team

Arpeggi was founded by James Pastan and brothers Evan and Kyle Dhillon. All three are technical and have strong backgrounds in web3, product, and music technology. The idea for Arpeggi first started when Kyle was playing around with a side project: a platform that generated hip-hop beats. At the time, music in web3 was nascent but interesting enough that Evan saw an opportunity to build the product out in the context of blockchain. With James’ experience in product combined with Evan and Kyle’s music technology and development skills, the trio was perfect for creating Arpeggi.

Future

Arpeggi has exciting plans in their roadmap, and plans to extend their core value prop of permissionless sampling and remixing to support any DAW in the near future. The team plans to demonstrate the power of on-chain traceability by automating splits information for all songs published to the platform. The web3 space is filled with music NFT’s from different platform and Arpeggi team plans to leverage the interoperability of those assets by allowing any artist to easily make their music NFT remixable on the platform. Many new artist and platform partnerships are also in the pipeline to help drive product growth. As Arpeggi builds out their platform and ecosystem, we believe they’ll be integral in creating a future of music that is multiplayer, fair, and collaborative.

- Paul Veradittakit

DISCLAIMER

Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. 

In recent months, venture has shown an increasing appetite for investing directly into creators and the content they produce. Jellysmack, a creator content solutions platform, recently raised from Softbank at a $1B valuation. Spotter also recently raised $200M from Softbank to help creators scale by investing in future ad-generating content. Slow Ventures launched a Creator Fund that invests in individuals in exchange for 1-5% of their future career earnings. These are just a few examples of how revenue streams are changing around creators and investors are eager to get involved in creator’s careers.

However, the industry still has yet to catch up with the rest of the investing world. Michael Ma, CreatorDAO’s co-founder, stated that even though $300B of VC money was invested in tech startups in 2021, less than $100M of that money was invested in creators. CreatorDAO was designed to fill this market gap in an innovative and community-oriented way.

The primary goal for creators is (by far) to grow their audience. Source: CreatorDAO and Patreon

Creators investing in each other through crypto + cash

CreatorDAO is a decentralized community that provides a strong network, operational support, and capital to creators at various stages in their career. In return, the DAO receives a percentage of the creators’ future earnings. Essentially, CreatorDAO is aiming to do what Pipe did for SaaS MRR (non-dilutive cash-flow management) to creator earnings. CreatorDAO’s thesis is built on the ideology that the growth of creators combined with crypto’s decentralization will accelerate profitable content creation.

When up-and-coming creators are able to get access to upfront capital and a strong community through a DAO, they’re more likely to both succeed financially and form deeper connections with their fanbase. In addition to a supportive community, the DAO can also serve as an initial audience and provide mentorship by leveraging existing member’s connections in the industry. Of course, there is also a huge financial incentive to see the creator succeed because the investors have a stake in their content. As CreatorDAO puts it: “the creators are the owners and investing in each other.”

CreatorDAO’s strong market position. Source: CreatorDAO

The DAO has a few key components that make it poised for success: it operates structurally as a group investment vehicle and socially as a mentorship and collaboration group. It also has an artistic edge as often, creators can find synergies between one another. Because of this, the DAO structure may be the best model for idea incubation and creation. CreatorDAO leverages a mutually beneficial model: with group ownership, the assets appreciate in value, and DAO members reciprocally benefit from voting and investing. CreatorDAO uses a new financial instrument that combines tokens and cash to pay creators – the expected value is split with part of the percentage in cash and part in tokens.

CreatorDAO offers capital, community, and mentorship to its members. Source: CreatorDAO

A team with diverse skill sets

CreatorDAO was founded by Michael Ma and Jonathan Wald. Michael is the founding partner at Liquid 2 Ventures and previously founded TalkBin, a customer engagement platform acquired by Google. He was also previously a Product Manager for Google My Business mobile and a Mentor at Binance Labs. Jonathan also spent time at Google as a Product Manager on the Search team, specifically its Knowledge Graph project. He founded Union7 Labs, a mobile computing platform, and Boiled Ocean, a software development company. The co-founders together have deep expertise in building companies and product management. With Michael’s VC background and Jonathan’s technical experience, the team is uniquely suited to serve creators seeking community and capital.

An emphasis on community

CreatorDAO intentionally places importance on community building as a natural byproduct of the DAO, rather than something that’s forced and used primarily as a pump of value. Because creators have an incentive to see each other succeed, we’ll see more collaborations and support from fellow DAO members through technology and tokens.

This message has clearly resonated: famous web3-adjacent creators like Paris Hilton, The Chainsmokers, Shawn Johnson, Joma Tech, Andrew East, Austin Evans, Nate O’Brien, and others have already joined the DAO for Season 0. The combined audience of these creators is over 100M individuals from around the world. Initial users include Garry Tan (210K+ Youtube subscribers), Joe Montana, and the East Family (1.35M+ Youtube subscribers).

Many famous creators have already joined the DAO. Source: CreatorDAO

To join, the DAO asks individuals to apply through a process similar to YC, and has seen huge interest: it recently received over 3,000 applications. CreatorDAO is focusing on expanding their internal team as well – they’re continuing to hire top engineering talent to create both comprehensive DAO infrastructure as well as an amazing user experience. As creator content revenue streams are revolutionized, and community becomes ever-important in the industry, CreatorDAO will increasingly become the most attractive organization for both new and existing creators to grow their careers, gain mentorship, and access capital.

- Paul Veradittakit

DISCLAIMER

Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. 

Arkive landing page: “We are building a museum.” Source: Arkive

Arkive is a decentralized physical museum democratizing access to art and collectibles that are traditionally inaccessible to most. The DAO recently raised an exciting $9.7M seed round led by TCG Crypto and Offline with participation from Coinbase Ventures, NFX, Freestyle Capital, and others. 

Culture is ever evolving; museums are collecting dust. Since the dawn of collecting, fine art has become a vessel for lucrative investments and power. As a result, much of art history is lost in the common biases of gallery curators or stored away in the exclusivity of rich private collections. Arkive is building the world’s first decentralized museum to reimagine the way we own and display culture. Functioning as a DAO, the neo-museum allows its members to hand-pick the items that will join Arkive’s growing collection.

Fractionalization of fine art

Traditionally, fine art has catered to the uber wealthy, with Basquiats and Da Vincis selling for hundreds of millions of dollars and the average “investment-quality” piece averaging over $10 million. Nevertheless, art as an investment vehicle has performed dominantly over the recent decades, keeping the rich wealthy with the spoils. Over the past 25 years, contemporary art has performed better than the S&P 500, averaging about 13.8% annual appreciation.

How can retail investors start cracking into this lucrative market? The early steps into democratizing this exclusive asset class began in 2017 with the launch of New York startup Masterworks. By allowing retail investors to chip into high-end art, Masterworks began the revolution into fractionalizing fine and contemporary art works. Arkive takes it a step further with greater democracy, social value, and the power to earn passively by lending the artworks for display. 

Internal Masterworks analysis. Bloomberg. 12/31/2021. Source: Masterworks

A new agency over culture

Coming out of stealth in July of this year, Arkive operates as a DAO, admitting a limited number of members weekly. Its members each token vote through their Eth wallets on pieces of work for the organization to acquire. Every item is tied to a concurrent theme that was initially voted on by the collective. While it purchases physical pieces of art, Arkive operates as a decentralized museum by lending pieces out to various other showcasing organizations. This means that in the future members not only can invest in the value of the art piece, but also can earn through passive income from many different elements of the art-as-a-service model. 

To be a part of this neo-museum, there are currently no fees. However, in the future, Arkive plans to convert to a bifurcated model where members can buy NFT based memberships as well as a potential token representing the fractionalization of the Arkive collection. At the moment, prospective members are asked to apply through a selective application process. Arkive members are typically unique collectors and art connoisseurs; nevertheless, the end goal is to work to democratize the landscape of those involved in art. As a result, the team focuses especially on building a diverse community that is tightly connected via its custom built community portal “The Atrium.

Arkive Team. Source: Arkive

Unlike Masterworks, Arkive is aiming to democratize art through more than just financial accessibility but also by redefining culture. Arkive plans to lend the artifacts to various other showcasing institutions, allowing for their art pieces to move around and not be held to a single hosting site. Thus, more people are brought into the thought process of selecting culturally significant art to preserve and showcase. In this case, Arkive is bringing to light the more than 90% of fine art locked away in private collections and shipping bays. 

Purchasing the patent for the world’s first computer

Arkive’s current community defined curatorial theme is “When Technology was a Game Changer,” with the museum's first tour as a travel exhibition. The initial acquisition came with the original patent filing for the ENIAC computer, the first programmable general-purpose digital computer. They have since acquired the piece “Seduction” by Lynn Hershman Leeson, The Prototype for MTV Music Awards Moonman, “Eulogy for a Black Mass” by artist Aria Dean, and Madonna’s ‘Vogue’ fans used in her 1990 MTV VMA performance.

Lynn Hershman Leeson’s Seduction in the Atrium Gallery. Source: Arkive

To cofounder Tom McLeod, this is not his first rodeo trying to reinvent a capital intensive sector. McLeod previously founded Omni, a decentralized storage leasing company that was acquired by Coinbase in 2019. His other co-founders, Aleksander Rendtslev and Jordan Topoleski, are also serial entrepreneurs, and together they boast a team of visionaries. 

Arkive puts forth an enduring thesis: "What if the Smithsonian was owned and curated by the Internet?" Recently raising $9.7 million, the team is pushing full-steam ahead to ghost curate the most transparent and self-sovereign trove of culture and history. In the future, Arkive plans to have over 20 new acquisitions and grow its membership base to several thousand by the end of 2023.

- Paul Veradittakit

DISCLAIMER

Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. 

Identity ownership and management has been an increasingly relevant part of the crypto scene, especially as web3 becomes much more social, collaborative, and expressive. Comprehensive tooling around identity in themes such as privacy, social, and infrastructure have become necessary and in response, many protocols have surfaced to provide data management, on-chain identity profiles, wallet-to-wallet chat, and collateralization mechanisms around identity. For example, solving existing issues with token-gating and verification tools are popularizing through protocols like Unlock and Backdrop. On the consumer side, networks like Lens Protocol and Gallery (as well as infrastructure like Cyberconnect) are enabling social interactions through curation and community building on-chain. Disco, Privy and Orange Protocol are tackling identity privacy and reputation through different mechanisms including decentralized identifiers (DIDs) and verifiable credentials. As companies continually arise in the space, it’s important to consider some of web2’s flaws around identity management and data privacy. Direct ownership and control over one’s identity is one of the core theses of web3, and Unstoppable Domains is unlocking this by providing web3-native usernames for individuals to navigate, transact, and communicate across the decentralized web. 

PRODUCT

A domain name is an NFT composed of a word of the user’s choice plus an ending like “.x,” “.nft”, or “.crypto.” A user’s domain name lives on the blockchain and acts as a universal username stored in the owner’s crypto wallet that can be attached to other on-chain data. Unstoppable customers have already registered 2.5M+ domain names, 1M of which have been minted on Polygon. Domain name use cases include:

• Sending and receiving transactions with your domain name instead of a long, confusing, and typo-prone wallet address. It’s common for users to send tiny test transactions because of how cryptic and easy-to-mess-up current wallet addresses are, and using a domain name eliminates this need (275+ coins and tokens are currently supported across multiple blockchains, with many more on the way)

• Using your domain name for identity management and navigating web3 (e.g. logging into apps)

• Hosting your own website with your domain name (Unstoppable offers pre-made website templates with tutorials on how to build one and quickly publish it to IPFS)

Unstoppable is continually expanding the utility of its domains, both for those who are very cryptonative and for people just entering the ecosystem. 

Domain search interface on Unstoppable. Source: Unstoppable Domains

MARKET

Domain name prices range from just $5 up to hundreds of thousands of dollars: lengthy names are usually cheaper, while shorter, common names are more expensive. Unstoppable’s product appeals to a wide market: those new to crypto can start off with purchasing a domain name as a kind of introduction to web3, while cryptonative users can enhance their transaction and navigation experience through purchasing a domain. Because the NFT domain is fairly cost-flexible and can be used in so many different ways (with even more use cases on the way), a broad user base is attracted to Unstoppable’s products. Users don’t have to be particularly cryptonative to transact on UD - domain names can be purchased with crypto, credit card, or PayPal. Furthermore, once a user purchases a domain name, it’s theirs forever – the platform has no renewal fees, unlike .com or .eth domains. Unstoppable Domains customers also don’t pay minting fees or gas fees – the only charge is the domain name itself. Unstoppable has generated over $80M in sales since their launch in late 2019. 

With a domain name, a user’s transacting experience is much more seamless. Source: Unstoppable Domains 

PARTNERSHIPS

On the partnership side, Unstoppable is a force – the company is working with over 330 protocols and projects including Brave, blockchain.com, Polygon, and 1inch. For example, Ramp just integrated UD so their members can use their domain names when buying tokens. Today, users can log in to more than 210 platforms using their Unstoppable domain. By partnering with Unstoppable, protocols support their users’ identity management, reduce errors/lost funds, get early access to UD’s new developments, and help build brand awareness through UD’s strong community. 

UD has a strong network of integrations – with many more in the pipeline. Source: UD

INFRASTRUCTURE

Unstoppable has also built out comprehensive developer infrastructure and guides to make integration as seamless as possible. Some applications of these tools include:

• Integrating sending/receiving crypto payments with an Unstoppable domain 

• Integrating logging in/authenticating on an application with an Unstoppable domain 

• Resolution service APIs/libraries that allow applications to fetch/resolve UD data

As applications increasingly look to make their user experience as intuitive and easy as possible, integrating UD will be an obvious step. 

Many different kinds of applications, from fiat on ramps to oracles, use UD in unique ways. Source: Unstoppable Domains

TEAM

The Unstoppable team has incredible experience in scaling startups, developing product, and designing performant software across a number of companies. Core leaders include: 

• Matthew Gould (co-founder and CEO) – extensive expertise in both software development and founding companies, formerly in product at Talkable. 

• Bogdan Gusiev (co-founder and CTO) – previously co-founder and CTO at Talkable and has full stack development experience, particularly in startups. 

• Bradley Kam (co-founder and Head of Business Development) – founded Talkable alongside Gusiev. 

• Braden Pezeshki – co-founder and full stack engineer at Unstoppable Domains. 

• Sandy Carter (SVP for Business Development and partnerships lead) – former VP of public sector partnerships at Amazon AWS, with extensive Silicon Valley experience spanning companies including IBM and a startup she founded, Silicon Blitz. 

• Ray Utech (VP of Finance) – previously CFO/COO at Iconic Ventures.

… and many more individuals passionate about building the future of identity in web3. 

The UD team is also working on other important projects outside of their username product. They pioneered Unstoppable Women of Web3 (WoW3), a project focused on making web3 accessible through education and networking. WoW3 already has 120+ partners across crypto and web3 verticals from blockchain infrastructure to social protocols. In addition, UD is passionate about crypto literacy and education and has a learning hub on their website as well as an active podcast and blog. 

FUTURE

Most recently, Unstoppable launched its iOS mobile app, where users can mint and manage their domain names directly from their smartphones. The company is also working with Blue Studios to develop a non-custodial family-oriented crypto wallet. 

As Unstoppable aims to reach 100M domain names minted, there’s certainly no shortage of use cases in the crypto space and beyond. Domain names have significant applications in web3 gaming and metaverses for universal logins, communication, and in-game transactions. Another interesting area is the creator economy, where proof of identity is important for token-gated communities and artist-fan interactions. In the education sector, universities are beginning to work with Unstoppable for students to store certifications, diplomas, and course completion certifications in their domain names. Domains may also be able to store healthcare data to streamline the doctor-patient relationship and consolidate medical data in one accessible place. 

We’re excited about what else the Unstoppable team has in the pipeline: rapidly expanding partnerships, building out new product features (like reverse revolution), and innovating on use cases for domain names and beyond. As this interoperable infrastructure is developed and launched, identity management and autonomy is increasingly put back into the hands of those whose data it actually is. 

You can find me at paul.nft.  

• Paul Veradittakit

DISCLAIMER

Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This article does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this article are solely those of Paul Veradittakit, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. 

marginfi solves this problem by offering a unifying interface for trading on Solana, allowing users to share margin across different protocols and therefore minimizing capital inefficiency resulting from liquidity fragmentation.

Problem Space

Though most DeFi protocols are composable with one another due to how smart contracts are written, the sheer number of DeFi protocols means users must choose which of them to allocate their capital to for particular use cases. Though this results in healthy competition, it also results in capital from users being split across different protocols that may or may not have overlapping functionality, which decreases capital efficiency across the entire system since protocols, especially those involved in trading, do not share information on margin or collateral. In other words, users allocate large amounts of collateral which are locked up in isolated protocols instead of allocating smaller amounts to unified pools of collateral that would meet the same needs for protocol risk management needs – if only protocols shared information on user portfolio health with one another.

Aside from liquidity, trading infrastructure in DeFi is also highly fragmented in and of itself. Although dashboards exist that allow users to look at their assets in one place, users are still unable to seamlessly manage all of their trades from a single interface. It is even more difficult to build a complete picture of a portfolio when some assets are housed in a trader’s wallet, other positions are held in an account at the protocol level, and generally trading protocols have different methods of displaying position information to traders. All in all, these operational frictions actually pose a challenge in risk management, as users may face liquidation risks from a large number of protocols. In general, these problems can be solved using an appropriately crafted portfolio management protocol. Mrgn Labs, the team behind marginfi, is exploring data and analytics SaaS tooling around this issue – built on top of the marginfi smart contract – to help trading firms better understand market trends and exactly how individuals are using their services. 

How does marginfi work?

marginfi itself is a DeFi-native global clearing house protocol. From the user’s perspective, marginfi is simply a holistic trading platform: USDC is deposited into their margin account and users can start trading from that account with different DeFi protocols within the Solana ecosystem. They also need to maintain sufficient margin depending on their open positions.

However, under the hood, users’ margins are in fact not isolated. They are pooled together such that deposits into accounts with currently positive net balances can be used to offset margin loans to other accounts. The mechanism used to shift balances to and from different accounts within marginfi is, in fact, a lending pool. Users with excess margin can lend their margin to others for an interest, leaving no margin unused. Those who borrow to take leverage collateralize their positions with their own pool of assets purchased on margin and any excess capital held in their global margin account. Importantly, the lending does not happen directly, but rather through the pool itself as in other DeFi lending protocols, which leads to a seamless user experience.

Overall architecture of marginfi. Source: marginfi

In general, marginfi’s mechanism allows users to trade more safely with higher leverage. marginfi’s platform can also be used to more effectively hedge user’s positions in various derivatives protocols that marginfi supports to produce more customized risk-return profiles.

A sneak peek at the marginfi interface. Source: marginfi Twitter

Team

marginfi is led by previous entrepreneurs with experience in private equity and endowment advisory at Goldman Sachs, as well as early stage ML/AI, MLOps and DevOps in mission critical software. One of the team’s founders, Edgar Pavlovsky, previously founded Jia and has experience in many sectors such as machine learning, data science, and private equity. MacBrennan Peet is also a co-founder and leads marginfi’s growth team and institutional relationships. Peet started the hedge fund Katalpa Capital Management and has a background in traditional finance including at Morgan Stanley and MedEquity Capital. The team has strong experience across many verticals including private equity, institutional consulting, mid-market healthcare, enterprise SaaS growth equity, and corporate development. 

Roadmap

Currently, marginfi v1 alpha has been launched to Solana’s Mainnet-beta, and an official mainnet release is coming soon. Until the end of 2022, the roadmap for marginfi is as follows:

• Q1 2022 - $3M seed raise from Pantera, Multicoin Capital, Sino Global Capital and Solana Ventures

• Q2 2022 — mainnet launch

• Q3 2022 — Web, mobile, and institutional product suites in development

• Q4 2022 — $250M volume target

Closing Thoughts

marginfi is tackling an important problem in the DeFi space that has had no good solution yet. Though the protocol is directly suited to margin trading, the technology could be extended to other markets as well, especially permissionless lending markets which also require collateralization.

• Paul Veradittakit

On-chain gaming has been one of the most explosive parts of crypto: over 500 active games exist and gaming transactions now compose over half of all blockchain activity. As P2E gaming reaches mass markets, it’s important to step back and analyze the sustainability of a game and its user base. If a Web3 game is just being treated as a short-term income stream, its health and community will suffer. It’s becoming clearer that Web3 gaming is a promising sector because it puts power into the hands of gamers, but there must be a focus on innovation and user experience over financialization. The best games combine blockchain technology’s elements of ownership with traditional gaming’s immersion and fun. We believe InfiniGods strikes this balance with its cross-game NFTs, complex worlds, and innovative rewards system. 

A creative and user-centric product

InfiniGods’ thesis is built around creating fun games backed by powerful blockchain-enabled features like interoperability, scarcity, and community. The team noted that they’re focusing on creating an amazing user experience and high level of game quality first and Web3 integration second. Instead of launching a singular development-intensive game, InfiniGods plans to continually release three smaller games and one large game per year – all in their “Mythoverse” – with a focus on gaging the market and deeply knowing their user base. 

An Elder God. Source: InfiniGods

Cross-game NFTs and a flexible token

InfiniGods is developing interoperable NFTs for cross-game utility – a huge unlock for liquidity and synergies across different gaming ecosystems. This seamlessness enhances stickiness across games and makes users more likely to purchase or develop NFTs on InfiniGods’ platform. InfiniGods’ NFTs are designed to be dynamic, with character SDKs provided so they can be leveraged by creators and players across the entire InfiniGods Universe and beyond. A governance token is being discussed to generate in-game rewards and encourage community engagement. Owning the token would enable users to help determine the direction of game development, choose which artists are chosen for game design, and decide on release schedules. InfiniGods is also considering integrating utility tokens into at least two of their games for users to earn in-game rewards. 

Beta levels in Infini Merge. Source: InfiniGods

A game experience focused on fun

InfiniGods is designing immersive worlds based on ancient mythologies and civilizations with initial worlds of Greek, Norse, Chinese, and Egyptian myth. In-game NFTs are flexible and customizable:

• NFTs can also be used across all InfiniGods games, so their utility is more likely to grow at a faster rate because of cross-chain interoperability. 

• Each one has a specific set of traits that help determine its value and in-game utility. 

• NFTs can be characters set in mythological times such as Gods and Heroes.

In June, InfiniGods dropped InfiniPass, an NFT collection of all-access passes that give users powers across the InfiniGods universe. InfiniGods’ “Community Pass” (0.05 ETH to mint, supply of 4,000) gives users early access to InfiniGods games and access to mint all future NFT sales on the platform. The “Ultimate Pass” (1 ETH to mint, supply of 259) gives buyers airdropped NFTs for every subsequent InfiniGods release, exclusive merch, and access to IRL experiences. InfiniGods currently has 4 games in the pipeline: 

• Infini Merge: players are given a new daily level to play which together compose a mythical story

• Infini Towers: a tower-defense game where each day players are given a new island with a unique layout

• Infini Isles: an exploration-based game where players discover lands, rescue heroes, and find treasures

• Infini Arena: fight against other players’ Gods and earn treasures for winning battles 

• Infini Realms: a unique take on the city-building genre, following in the footsteps of such classics as Civilization, Clash of Clans, Pharaoh, and Age of Empires

Infini Merge’s closed beta period ended on July 15, and the open beta period is scheduled for mid-August. 

An in-game God (Odin – Norse God of War & Thunder). Source: InfiniGods

Characters used in these games will have a set of body, mind, and soul traits including might, speed, cunning, charm, spirit, and luck. An example of an in-game character is Zeus: all Zeus’s are classified as “Elder God” but each have attributes such as “Vengeful” or “Wise.” Each character also has a culture classification (e.g. Greek or Chinese) as well as a description of their appearance (e.g. tall, beautiful, rich), personality (e.g. angry, calm, persuasive), and affinity (in-game actions like lightning or fire). Characters also are classified by attributes (e.g. Spiritual, Charmed) and skills (e.g. Archer, Hunter). 

A level in Infini Merge. Source: InfiniGods

A team of gaming experts

InfiniGods’ cofounders, Damon Gura and Owen O’Donoghue, are both gaming industry veterans and have assembled an impressive team with deep industry experience. Damon founded the mobile gaming firm DGN Games and has 25 years of experience in the gaming sector, and Owen was the Director of Gaming at Facebook focused on helping game developers launch and grow their products. Matt Jackson is InfiniGods’ COO and has decades of operations experience at Motorola and Scientific Games. Mat Willows is the team’s Creative Director and has also been in the gaming industry for 25 years. He has produced, designed, and engineered dozens of games including Children of the Nile, Hinterland, Caesar 4, and Prelude to Darkness. InfiniGods’ Art Director is Chris Beatrice, who was the Impressions Games studio head, designer of Pharaoh, and founder of Tilted Mill Entertainment. Ryan McCarthy has extensive experience in the entertainment industry and is coming on as a Game Designer. The team is now 22 people and growing rapidly. 

Designing the future of blockchain gaming

After the success of the closed beta for InfiniMerge that wrapped up on July 15, InfiniGods is excited to open up Infini Merge to the general public in Q3 2022. In that same quarter, they plan to release an NFT sale called Gen 0 - Elder Gods. Subsequently, the team will drop the Gen 1 - Gods and Monsters collection and the Infini Towers game in Q1 2023. Infini Isles and Infini Realms are slated to come out in Q2/Q3 2023 along with two more NFT collections. InfiniGods has already created a flourishing gaming community with ~4,000 Discord members and ~7,000 Twitter followers. By creating a strong and interoperable network of games – each with a unique player experience – InfiniGods will become a popular Web3 platform for both traditional and cryptonative gamers. 

InfiniGods’ game roadmap. Source: InfiniGods

• Paul Veradittakit

DISCLAIMER

Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies.  Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein.  This article does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise.  The information and opinions presented in this article are solely those of Paul Veradittakit, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations.  Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper.  Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness.  There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate.  Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company.  Opinions included here incorporate subjective judgments or may be based on incomplete information.  This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions. 

In both traditional finance and DeFi, derivates serve the purpose of providing a suitable risk/return tradeoff on an existing asset between two parties. Such assets can be equities, bonds, existing derivatives, or even baskets of assets. In DeFi, many efforts have been made to mimic traditional finance derivatives in a permissionless way, which requires that the product is overcollateralized. However, certain protocols such as Ribbon have been making a move to allow for undercollaeralization, which opens the door for more options for risk/return profiles. Others are also making it easier to adjust risk/return profiles by offering only one side on chain and the other to market makers. Cega offers one of such risk/return profiles by offering fixed-coupon notes traded with market makers.

Pantera recently invested in Cega’s seed round.

Cega: Fixed-Coupon Notes

In traditional finance, fixed-coupon notes (FCN) are equity-linked structured notes that pay regular distributions at pre-defined intervals, where the payment of coupons are dependent on the price of the security. Essentially, this is somewhat similar to a bond in that FCNs are debt obligations with coupon payments and maturity dates. However, the principal may not be returned in full at maturity. Instead, a basket of assets with assigned strike prices is considered, and the payoff is the difference between the closing price and the strike price of the worst-performing asset, plus any coupons payments along the way. Furthermore, FCNs also have predefined “knock-out” levels where if the price of an asset within the chosen basket exceeds the price level, the FCN expires and pays out immediately, enhancing investor liquidity.

The FCN offered as a first product by Cega. Source: Cega Documentation

The fixed-coupon notes offered by Cega contains the following:

• Short positions on 2-3 put options (i.e. selling puts), the primary purpose of which is to earn yield

• Knock-out barriers

• Knock-in barriers, to provide a backstop on the downside.

Mainnet Launch

Cega recently launched on Solana miannet, accumulating $10m in TVL. Cega launchd three FCN vaults: Cruise Control, Genesis Basket, and Gotta Go Fast. Cruise Control tracks BTC and ETH, and the latter two track BTC, ETH, and SOL. The difference between Genesis Basket and Gotta Go Fast is the price drop protection, otherwise known as the Knock-In barrier: Genesis Basket has a 90% price drop protection whereas Gotta Go Fast only has a 50% price drop protection, but the latter has higher APY. In particular, currently Cruise Control and Genesis Basket have approximately 10% APY and Gotta Go Fast has upwards of 200% APY. Since mainnet launch, the number of unique users has more than quadrupled in little more than a week, which marks a great success.

What’s Next?

Cega has released the Cega Super Sanics Utility NFTs, which allow for airdrop boosts, access to highest APY vaults, and many more. After their FCN vaults offering, Cega is planning to implement more exotic options and structured products that offer an even more diversified risk/return profile. Given that they already work with promising market makers, this is much easier to do than with other projects.

• Paul Veradittakit

During the pandemic, consumer spending on video games and virtual experiences surged to over $60B. Now, more and more of those funds are shifting away from traditional video games and towards web3 entertainment experiences. These metaverse experiences are much broader than a video game: they can include complex in-game economies, NFT character collections, and play-to-earn elements. Metatheory is integrating all of these elements – and more – to build out a huge metaverse complete with many games, tokens, NFTs, and virtual worlds. 

Metatheory’s thesis is in part driven by the sheer amount of capital in the gaming, collectibles, and metaverse markets. More than $170B was spent on the gaming industry in 2021 and that number is expected to grow to $200B+ in 2022. The collectibles market is twice that size, generating $400M in part driven by NFTs. Metatheory also plans to capitalize on the metaverse market, which is expected to reach $1.5T by 2030. In addition, the incredible popularization – particularly in emerging markets – of play-to-earn games that include NFTs is a strong market growth driver for the platform. NFTs have been particularly performant, with over $20B in total sales volume and 1.2M traders on OpenSea. 

DuskBreakers

DuskBreakers, launched in December 2021, is Metatheory’s first metaverse and gaming experience, complete with a set of 10,000 DuskBreaker Genesis NFT characters. 

Snapshots of the design of the DuskBreakers metaverse. Source: Metatheory

DuskBreakers launched its first Genesis NFT collection in December 2021 with a  play-to-mint (P2M) game, an innovative technology where users played a mini-game to win an NFT mint. P2M, according to Metatheory, helps prevent botting and reduces gas fees via an allow-list mint approach. The Metatheory team wanted to show their community that they were builders and thus released a game prior to NFT minting, rare for projects at the time.

Central to DuskBreakers storyworld is a derelict, alien spaceship that has parked itself above Earth. Eventually, Earthlings discover that the ship is abundant in world-saving materials and create a company, DuskTech, to manage the mining of the ship. Breakers, humans anointed by DuskTech to risk their lives exploring and fending off enemies on the ship, travel to the Dusk every day via the Kinshasa Life (a space elevator) to bring valuable metals and novel technologies back to Earth. The Dusk also bestows on certain Breakers cybernetic upgrades, currently a mystery. Holding a Breaker NFT enables the owner to become a part of a community that will, according to Metatheory, directly influence the development of the Duskbreakers metaverse and upcoming Metatheory experiences. 

Each DuskBreaker NFT has a distinct uniform, helmet, and set of accessories. Source: OpenSea

Team

Metatheory is led by Twitch cofounder Kevin Lin, who is very experienced in building digital experiences and creating communities around them. JT Gleason is Metatheory’s CTO and worked with Lin as a senior engineer at Twitch. David Barthwell, Metatheory’s CDO, is the founder of Verge Studios, a graphic and web design studio based out of Chicago. At Metatheory, Lin says, “we’ve built a team of industry vets who are focused on embracing blockchain across multiple media categories with a focus on elevating standards of consumer experience and shared ownership.” Metatheory’s team now consists of 46 individuals, including gaming engineers, an Emmy winner, experienced content creators, and metaverse creatives. The team is also advised by Dreamhaven game studio, created by the cofounder of Blizzard Entertainment. 

Next steps

Though some NFT prices have dropped in the recent past, parts of the gaming ecosystem are now fairly reliant on NFTs – and increasingly continue to be – for attracting market share. NFTs, which represent ownership in the metaverse, are obviously integral to play-to-earn games and aren’t going anywhere. 

Metatheory plans to release more games, NFTs, and interactive experiences as they build out their metaverse offerings. In particular, they plan to release a new collection with companion games in Q322, followed by a P2E competitive game in Q422. At the end of 2022, Metatheory will launch an esports program to support the P2E game. Beyond that, Metatheory will continue to build out a thriving metaverse experiences and new IPs, complete with stimulating games, NFT collections, and a vibrant community. Through these developments, they’ll become the one-stop gaming studio with a world of offerings.

Towards Mainstream Crypto Adoption

One key barrier to entry for new users in web3.0 is the enormous complexity of completing what should ideally be simple, self-contained actions. Sending assets to an account on Ethereum, for example, requires a non-trivial number of steps: re-logging in to one’s MetaMask wallet; ensuring that one is connected to the right network; entering the recipient’s wallet address; signing and submitting the transaction; verifying the transaction completed on Etherscan. Compared to the simplicity of sending money to a friend on Venmo or paying one’s rent from their bank account, crypto today offers an unsophisticated, unfriendly UX. 

To take the payments example further, consider how a significant portion of payments are often recurring––rent, bills, payroll, subscriptions, etc. Completing the workflow outlined above for each payment period is extremely operationally intense, making crypto a poor rail for handling recurrent transactions. Handling recurring payments with crypto becomes even trickier in the context of businesses, who often have multiple partners to pay on a weekly, monthly, or annual basis. To sustainably mainstream users, crypto must reach a point where common workflows, like making recurring payments, are as easy to complete on the blockchain as they are with traditional financial products. 

What is Loop Crypto?

Loop Crypto is a new platform that allows organizations to automate recurring crypto transactions, substantially reducing the complexity of handling an organization’s financial operations on the blockchain. The project believes in, and is actively working towards, a future where companies can easily integrate crypto transactions into their financial workflows.

What does Loop offer?

Loop’s core product is similar to a traditional bank’s auto-pay feature; with a single approval, a Loop user can automate recurring transactions, so they do not have to re-sign and re-submit the same transaction during each payment period. It does this by delegating the duty of executing a recurrent transaction from the end user to an automated smart contract, allowing for automatically invoked payments. 

Loop has also abstracted away all of the technical complexity of the on-chain smart contracts and the off-chain tooling behind a suite of easy-to-use webhooks, greatly simplifying the process of integrating crypto payments into one’s product. Particularly for crypto-native businesses, which often take the shape of DAOs with multisig-managed treasuries, Loop makes it remarkably easy to set up sustainable financial workflows that remove the overhead of having every key-holder sign every transaction all of the time. 

On top of its core autopay feature, Loop offers its users several additional benefits, including:

• allowing customers, not just an organization’s treasury managers, to authorize recurring payments, enabling crypto-based subscription services and more

• verifying that transactions have landed, conducting payment retries, saving transaction receipts, and sending reminders so that end users don’t have to

• unlocking powerful payment insights for businesses through Loop’s analytics dashboard, making it easy for organizations to get a pulse on their finances and track transactions

Loop also allows users to automate recurring swaps, where Loop makes a trade on their behalf recurrently against a chosen AMM. This allows investors to easily implement dollar cost averaging strategies and better automatically manage their portfolios. Moreover, Loop is planning to allow AMMs like Uniswap and Balancer to directly integrate their front-ends with Loop’s recurrent swap smart contracts, meaning that users of those products can easily gain access to Loop’s automation for trades. 

Loop has also invested heavily in security efforts to ensure that their automated smart contracts are not exploited; namely, only the counterparty company to a transaction is able to receive the sending user’s assets, and the contracts are coded so that there are no “infinite allowance functions” that can be used to empty a wallet’s balance.  

Who’s behind the project?

Loop was founded by Elena Steinman and Shane van Coller, both of whom previously helped build the ultra-fast DeFi trading platform bloXroute. The company recently raised a $4 million seed round led by Andreessen Horowitz, with participation from Alchemy Ventures, CoinList, Lauren Stephanian, myself, and dozens of other angels. 

The company is currently testing its product with ‘alpha customers,’ targeting a public launch this coming June. Interested partners can request to join the beta here. 

Final Thoughts

Recurring payments are one of the most common financial workflows for organizations today. To get these organizations to move their financial operations to the blockchain, it’s imperative that handling recurring payments with crypto reach the same level of simplicity and automation as with using traditional financial products. 

Loop makes it easier than ever for organizations to automate recurring crypto transactions by delegating the steps involved in executing a transaction from the end user to a smart contract, which can be automated. Businesses can easily integrate with Loop’s webhooks to set-up recurring payment workflows, isolating all of the technical complexity of automated smart contracts and off-chain blockchain gateways away from their tech stacks. Moreover, Loop superpowers businesses with automated error handling around payments and powerful insights about their payment history, raising the incentives to move their financial workflows on-chain. In sum, Loop is a major step towards a future where companies can easily integrate crypto payments into their financial operations, helping accelerate widespread organizational adoption and popularizing crypto as a legitimate payment rail. 

• Paul Veradittakit

Many play-to-earn NFT owners purchase assets which lack lucrative financing and are generally only used in-game. To address this issue, MetaLend, a new DeFi company, built out a platform for NFTs to generate yield even if they’re being used as collateral. Users are able to appraise their assets and borrow up to 30% of their value in ETH against the NFTs. MetaLend’s protocol essentially provides liquidity from lenders seeking to earn interest. APY varies by currency loaned, and is set by utilization of the liquidity, with higher utilization corresponding to higher APYs. MetaLend currently supports Axie Infinity because of the substantial amount of liquidity and more stable price prediction, but plans to expand to Sandbox Land and others in the coming months. According to MetaLend, the Axie NFT market better enables the team to track prices and liquidity of their collateral. In addition, $SLP (Smooth Love Potion, the in-game digital currency of the Axie Infinity game) allows MetaLend to track USD yield of collateralized NFTs and $AXS (Axie’s token) enables them to track game popularity and engagement. 

Snapshot of net APY, supply balance, and interest earned. Source: MetaLend. 

According to MetaLend, “gaming is now responsible for half of all blockchain usage and the ‘Metaverse’ is estimated to be worth $1 Trillion – yet no financing exists for asset owners.” In November 2021, there were over 1M active gaming wallets out of nearly 2.8M total active wallets composed of DeFi, gaming, NFTs, and other categories. This proves the strength of the play-to-earn ecosystem and the demand for tooling to improve the efficiency of gaming NFTs. In MetaLend, month-over-month growth in collateralized NFTs grew over 60% in June, active borrowers grew by over 77%, and game accounts grew by 80%. The platform also saw total value locked, lenders, and scholar/game accounts grow. 

Yield-generating collateral on MetaLend. Source: MetaLend. 

Mechanism

The protocol allows borrowers to take out loans (in the form of ERC-20 tokens) against ERC-721 (NFT) assets, which then earn yield. MetaLend ensures that “borrowers still have partial access to their ERC-721 assets and have full rights to any yield that is generated by that asset.” With the borrowed tokens, users can either buy more yield-generating Axies invest in other NFTs. This creates a positive feedback loop that helps the liquidity and stability of the protocol. 

MetaLend asset yield. Source: Attack On Axie on Twitter

The current max loan-to-value ratio – the ratio of the value of the loan taken out to the value of the NFT used as collateral – is 30%. If a borrower’s collateral value drops and the max LTV threshold is reached, the protocol’s smart contracts will begin to liquidate the NFT (at a 10% liquidation discount) in order to pay back the loan. The value of the ERC-721 token is determined by an appraisal engine run off-chain which re-appraises the assets hourly. The engine is run by a machine learning algorithm that analyzes transactions of similar NFTs to the one being appraised. For Axies, these traits include Axie class, breed count, body parts/cards, purity, last sold time, and last sold price. 

Community

MetaLend has already built an impressive Discord community with over 1,000 members. Many of MetaLend’s users are similar in that they want to put their NFTs to work and are passionate about the NFT communities they’re a part of. Building a community around MetaLend is essentially bringing these like-minded individuals together to generate yield and further build out NFT use cases. 

Team

MetaLend is led by co-founders Sudjeev Singh and Nikhil Bhardwaj. Singh led the marketplace product teams at Bird and ZipRecruiter, and Bhardwaj was the right-hand man to the Ring CTO, where he helped run the core engineering team. MetaLend has two blockchain developers on the team with extensive experience between them; one was a senior data engineer at Riot Games and the other built on Axie Trading Bot and was the #1 rated Solidity/ETH responder on StackOverflow. TJ, the team’s data and machine learning developer, was an engineer at Palantir and went to Carnegie Mellon for math and CS. 

What’s next

MetaLend is planning on building out the protocol to support other GameFi NFTs besides Axie Infinity, with the first being Sandbox Land. Supporting different collections will help attract more users and grow revenue and diversification. To explore which options to enable, MetaLend is aggregating NFT data that analyzes a collection’s volatility, liquidity, yield, and longevity. The team also continues to onboard engineers and contractors as they expand. In addition, MetaLend is building out their own payout automation system internally for Axie borrowers to claim and payout their earnings to scholars. Since the protocol generates revenue from interest payments on loans, they’re able to price their payout system well below the market average (0.5%). By expanding financial tooling for lenders and borrowers and enabling every step in the process on their platform, MetaLend will become the go-to solution for GameFi business managers. 

Because of the lack of performative financial tools for NFT owners, MetaLend is a great solution for users to accrue value on their play-to-earn NFTs. Pantera is excited to partner with MetaLend as they build effective financing tools for NFT owners and encourage growth in the play-to-earn ecosystem. 

• Paul Veradittakit

However, for TVL to accrue to these alternative blockchains, there must be a way to transfer assets to them. The most common approach to doing so is to utilize a cross-chain token bridge, where users lock up their tokens on a source blockchain (most commonly Ethereum) and a third party mints a wrapped version of the token on the target blockchain, and vice versa. This guarantees that, assuming no minting of the token on the original blockchain, the supply of the token remains constant across all blockchains.

The main problem with a cross-chain token bridge is that its bare-bones usability can be lacking. Swim Protocol is a protocol built on top of one of the most infamous bridges, Wormhole, that allows users to more seamlessly transfer assets across multiple blockchains.

Cross-chain token bridges and their woes

As mentioned above, the paradigm for implementing cross-chain token bridges involves a trusted third party (i.e. relayer) that watches for changes two or more blockchains, where this third party controls the contract that mints wrapped tokens. To better illustrate this, consider moving assets between Ethereum and Solana. If a user wants to move ETH from Ethereum to Solana, they would first lock the ETH in a smart contract on Ethereum which relayers monitor, and upon receiving a deposit relayers would issue a transaction on Solana to mint a version of wETH (wrapped ETH). If a user wants to move wETH from Solana to Ethereum, they would call a function to burn wETH in its contract on Solana, from which the relayers will watch the transaction and release ETH from the Ethereum contract to the desired address. One of the major issues that arise is that there can be many cross-chain bridge protocols, which can give rise to many different versions of wrapped assets on each blockchain. Furthermore, some tokens have canonical versions on many different blockchains, which further adds to this confusion. For example, USDC exists on both Ethereum on Solana, but when bridging USDC to Solana via Wormhole, the user receives wUSDC on Solana as opposed to the canonical USDC. Most users, therefore, resort to swapping these wrapped tokens through decentralized exchanges to obtain the canonical version for interoperability with existing protocols on the target blockchain, which adds another layer of complexity, and even capital efficiency, to the user experience of cross-chain token bridges. Furthermore, another glaring problem is that the relayers are often not decentralized, which creates a potential vector for censorship risk. In particular, users may no longer be able to transfer assets back to their source blockchain if the bridge is compromised.

What is Swim Protocol?

Swim Protocol builds on top of an existing cross-chain token bridge, Wormhole, to make the experience of bridging more seamless for stable assets (USDC, USDT, and BUSD) between Ethereum, Solana, and Binance Chain. It incorporates a StableSwap AMM (the underlying architecture of Curve.fi’s AMM, to ensure minimal slippage between USD-pegged assets) and directly swaps the wrapped tokens through it to obtain their canonical versions so the user does not have to do this manually.

Users can also provide liquidity to the AMM by depositing any amount of any asset on any blockchain. Furthermore, the user can opt to receive LP tokens on any blockchain they prefer. However, the AMM itself is deployed on the Solana blockchain to ensure low protocol-level transaction costs, so all supplied assets are first bridged to Solana through Wormhole. Like cross-chain transfers, cross-chain liquidity is also highly seamless, as can be seen below:

Swim Protocol’s interface for providing cross-chain liquidity. Source: Swim Protocol Stablecoin Hexa-Pool

What about the decentralization of relayers? Wormhole is not a decentralized coalition of relayers but rather a centralized federation of trusted parties, but it is run by those whose incentives are aligned with maintaining the infrastructure of its peripheral blockchains and is the most used bridge between Solana blockchains, which justifies its use in Swim Protocol.

Who is behind Swim Protocol?

Troy Tsui (CEO): Quantitative Trader at Alameda Research and SIG

Arv (CTO): Software Engineer at FTX and Alameda Research

Teddy Pornprinya (Head of BD): Associate Coinbase Ventures and Analyst at DC Advisory

Closing Thoughts

Pantera recently led a $4m round into Swim. Swim Protocol provides a highly capital-efficient and seamless experience for performing cross-chain asset transfers, particularly for stablecoins. Currently, Swim Protocol is planning to launch more pools that involve other assets and other blockchains such as the BTC Tri-pool (Solana BTC, Ethereum WTBC, and Binance Chain BTCB), and USD-pegged pools on other alternative blockchains such as Avalanche and Polygon.

Though the decentralization of relayers remains an issue for Wormhole, Swim Protocol could easily switch to a different, more decentralized bridge. Furthermore, Swim Protocol can also easily add functionality to swap any asset across blockchains by adding an interoperability layer with other DEXes like in Symbiosis.

Even though there is a large competition for building blockchain interoperability solutions, Swim Protocol offers one of the most elegant interfaces for cross-chain transfers.

• Paul Veradittakit

An up-and-coming decentralized network called the Helium Network is working on solving these systemic, costly, and inequitable issues by introducing coverage operated by a cluster of nodes each emitting their own radio frequency from their location. By enabling anyone with a Hotspot the ability to participate in the network, hundreds of thousands of people are able to earn rewards, access more reliable coverage, and participate in creating a robust network. 

The Helium Network

Nova Labs – formerly known as Helium Inc. – is the pioneer of decentralized wireless communications and creator of the Helium Network, a physical decentralized wireless network powered by nodes, or “Hotspots.” Users who deploy Hotspots are rewarded with cryptocurrency in the form of HNT, Helium Network’s token for growing the network. Pantera is excited to have participated in Nova Labs’ $200M Series D equity funding round, which values the company at $1.2B and elevates the company to unicorn status. The round also included participation from Tiger Global, a16z, Seven Seven Six, GV, and Deutsche Telekom. 

Right now, the most popular form of telecommunications networks are enabled by centralized mobile carriers that compete with each other for business. Nova Labs takes a different approach: the Helium Network is powered by a collection of consumer-deployed nodes called Hotspots that operate together to provide coverage. Essentially, owning a Hotspot means the owner becomes a “mini cell tower” that emits coverage via radio frequency technology. The Helium Network, also known as The People’s Network, is run on Proof-of-Coverage infrastructure and incentive mechanisms to build the network in a decentralized way. 

Proof-of-Coverage

The Helium Network uses a unique algorithm called Proof of Coverage to run their network that essentially verifies that Hotspots are located where they claim. If a Hotspot is emitting wireless network coverage from a certain location, Proof of Coverage consistently verifies that that location is honest. Proof of Coverage harnesses radio frequency (RF) technology to create proofs that help the network run. According to the company, Proof of Coverage relies on three core characteristics: RF distance, RF strength, and RF speed. Using an algorithm called the “PoC Challenge,” PoC routinely “checks in” on Hotspots and ensures that they are actually broadcasting coverage from where they say they are. The “challenge” involves the Hotspot that issues the challenge, the Hotspot that receives the challenge, and a geographically proximate “witness” that reports the existence of the challenge to the network. First, the Challenger Hotspot generates a public/private key pair for the challenge. Next, the SHA256 algorithm is submitted to the blockchain with the public/private keys as a Proof of Challenge “request.” The blockchain will then accept the request if it is valid, and a new block will be created with the challenger’s identity and a hash of the public key. Challenge proofs are issued by Hotspots about once every 360 blocks, and they earn HNT, Helium’s token, in return. Once a Hotspot is checked and verified, the data is stored in the Helium blockchain. 

HNT: The Helium Network’s token

HNT is currently trading at $6.64, with a market cap of $1.5B and 24H trading volume well above $146M. The circulating HNT supply is more than 100M, which proves the strength of Helium’s core infrastructure and Nova Labs’ thesis on decentralized telecommunications. 

The percentage of HNT distributed as rewards depends on whether the node is a Challenger, Challengee, or Witness, and also what type of work is being performed (verification, data transfer, issuing new blocks to the network). Mining HNT also is done via radio technology, as opposed to traditional mining, which utilizes energy-intensive GPUs. Mining crypto via GPUs is one core critique of crypto skeptics – the Helium Network takes these demanding processes out of the equation entirely. 

HNT token allocation. Source: Helium

Hotspots

As of today, there are over 781,600 active Hotspots up and running on the Helium Network, up from just 14,000 at the beginning of 2021. According to Nova Labs analytics, there are over 59,000 cities around the world with Hotspots, and nearly 5,000 additional cities are added each month. When the presence of a new Hotspot is verified or when coverage that the Hotspot provides is utilized, HNT is mined. 

A Helium Hotspot. Source: S. Higginbotham

Hotspots connect to existing WiFi or Ethernet to operate. At a given time, around 65-85% of deployed Hotspots are online and emitting coverage to the network. The Helium Network also recently introduced Light Hotspots, “a software update that removes the need for all Hotspots on the Network to store blockchain data.” Instead, validators store the information on the blockchain; this improved Hotspot efficiency allows the entire network to run more seamlessly. When Light Hotspots are rolled out, the upgrade will be applied to all Helium-compatible Hotspots for free and with no action required on the user’s part. These improvements will make the necessary amount of data storage for a given Hotspot much less and therefore help alleviate network congestion and other inefficiencies. The scheduled date for Light Hotspot activation is May 11. 

Locations in the US covered by The Helium Network. Source: Helium

Team

Nova Labs (formerly named Helium Inc) was created by Shawn Fanning, Sean Carey, and Amir Haleem in 2013 with the intention of the network being for Internet of Things (IoT) devices, such as trackers and sensors. In 2019, the team transitioned to a decentralized network coverage model with tokenized rewards. Fanning is an entrepreneur, investor, and computer programmer best known for developing Napster. Haleem has a wealth of experience in the gaming industry as a member of the team behind Battlefield 1942 (developed by DICE) and at startup Diversion. He also co-founded the esports community esreality.com/. Carey has years of programming experience, including at Brightcove and Basho Technologies (developer of the technology Riak). 

Network growth & the future

In talking about scaling the Helium Network, Nova Labs COO Frank Mong commented, “... this is clearly a marathon and not a sprint. While we’ve had sprint-like traction, I really want the entire team and ecosystem to run like a marathon. This is, to me, a multi-decade effort.” Eliminating the need for large coverage-providing corporations will be a slow but steady effort as individuals make the more cost-effective and secure decision. Entire communities and cities will transition to using decentralized coverage, especially as The People’s Network becomes more and more commonplace. 

The use cases for trustless, equitable, and wide-reaching network coverage are numerous. For example, in 2021, the Helium Network and the City of San Jose partnered to help provide internet access for low-income communities within San Jose, funded by hotspot rewards. Furthermore, decentralized network coverage eliminates collusion and unfair behavior by big coverage providers and reduces the negative effects of oligopoly. It also empowers individuals themselves to contribute to the network, earn rewards, and use the network. With the raise, Nova Labs plans to grow out their team, invest in the Helium ecosystem, build community, and drive “continued wireless protocol support.” The company also intends to build out new applications on top of the Helium network itself.  

These benefits culminate in a strong and impenetrable network – one in which, if a few nodes were to fail, the Helium Network would continue operating smoothly. Decentralizing telecommunication networks is an impressive engineering feat, and Nova Labs is well-suited to continue to expand and strengthen their coverage as well as grow its community. Pantera is proud to have participated with Nova Labs as they built out decentralized, efficient, and secure wireless telecommunications coverage and close the digital divide. 

What is Mina Protocol?

Mina is a new layer-one protocol that makes use of compact zero-knowledge proofs to be the world’s lightest blockchain. While most popular blockchains today are more than 300GB large (and growing!), the Mina blockchain is designed to remain at a fixed size of 22KB, allowing users to access the network from hardware-limited devices (like a smartphone) and to efficiently bridge the network to other blockchains. The project recently raised $92 million in financing from Pantera Capital, FTX Ventures, Three Arrows Capital, and more. 

How does Mina work?

To fully understand what Mina enables, it’s first important to understand the different types of nodes within a decentralized network. In most blockchains, nodes called “miners” are responsible for processing submitted transactions and updating the state of the blockchain. Generally, through a process called consensus, the network will elect a single miner to propose their updated blockchain state to the entire network, allowing all of the nodes to agree on a unified shared state. Rather than blindly trusting miners, nodes will often verify the current state of the blockchain through a series of cryptographic computations. These verifying nodes, called “full nodes,” are also responsible for maintaining a full history of the blockchain, which becomes prohibitively costly as blockchains grow and process more transactions. 

Thus, for most popular blockchains today, end users are typically unable to operate a full node and verify the state of the network because of the insane resource requirements. Instead, end users typically interact with the blockchain through an API gateway, like Alchemy, or a light client, which is a miniaturized version of the blockchain that connects to a full node in the network. In this sense, most blockchain networks aren’t truly decentralized, as currently, most end users are still trusting some third-party full node operator when interacting with the blockchain. This can become especially problematic when these intermediaries go down; just last week, an Infura outage resulted in MetaMask users not being able to use their wallets.  

Mina addresses this problem by reducing the storage requirements necessary to verify the history of the blockchain, making it easier to operate a full node and to verify the current state of the network. Specifically, Mina leverages zk-SNARKS (zero-knowledge succinct non-interactive arguments of knowledge––primer here!) to combine blocks into a single, small proof or certificate. This proof verifies the blockchain state; it ensures that all transactions are validly-formed and signed, and that all consensus rules have been correctly followed. Moreover, the Mina blockchain also maintains a fixed size, regardless of its history of transactions, by generating its verification proofs recursively; at a high-level, a proof from timestep n+1 can also verify the state of the blockchain at timestep n, meaning that full nodes need only maintain the most recent proof to verify the entire history. 

Thus, to verify the blockchain state, a full node only needs access to a single proof, which is much smaller and easier to manage than the entire history of the blockchain. 

What makes Mina different from other L1s?

The key distinction between Mina and most other L1 blockchains is Mina’s fixed size, which allows end users to operate a full node and to actually interact with the blockchain trustlessly, instead of relying on an intermediate full-node operator. Then, as the network scales, the blockchain is truly decentralized to every participant in the network, as opposed to a handful of full node operators. This enables a number of downstream features, including:

• Better Data Sovereignty. One key feature of zk-SNARKs, besides their compactness, is that they reveal absolutely no information about the claims that they verify. This means that full nodes can accurately verify the state of Mina without having access to any of the data stored in Mina’s history. Users of Mina thus share proofs of their data instead of the actual data itself, which prevents sensitive information from being leaked on the blockchain’s public state, and gives users more precise control of their data. Since users also interact with the blockchain directly by operating their own full node, user data never has to leave user devices; only the proof does. 

• Cross-Chain Communication. Bridging between blockchains is a notoriously complex, risky, and costly problem. Much of the complexity lies in the process of verifying the state of a target chain from a source chain, especially when the history of the target chain amounts to several hundred gigabytes of data. Mina’s lightweight design makes it incredibly simpler to bridge between Mina and other blockchains, not only increasing the scope of the Mina ecosystem, but also enabling other blockchain ecosystems to leverage Mina’s unique features like privacy-preserving data verification. 

• Security and Stability. Because of the reduced technical requirements for operating a full node on Mina, as the network grows, we can expect that most participants will actually run full nodes (that also participate in consensus) rather than using third-party intermediaries. In other blockchain ecosystems like Ethereum and Solana, the actual state of the blockchain has largely been centralized around a relatively small set of full node operators, who serve as intermediaries for the rest of the ecosystem. This centralization around intermediaries makes these other networks more susceptible to things like 51% attacks or the network going down when a critical mass of nodes fail.

What’s next for the ecosystem?

The Mina team is currently building out a software development kit (SDK) to help external developers build dApps on Mina. dApps on Mina are referred to as “zkApps,” and use smart contracts powered by zero-knowledge techniques. These zkApps will be able to verifiably leverage off-chain computation and off-chain state, allowing both computation and state to be customizably private or public (you can read more here!). Because computation can also be moved off-chain, zkApps can limit the fees they occur by only processing specific computations (e.g. sending a zero-knowledge proof of some off-chain data) on-chain. Once the SDK is released, developers will be able to write zkApps on Mina with simple TypeScript, making it easier than ever for new projects to get started. 

Simultaneously, the Mina team is building out a cross-chain bridge between Mina and Ethereum which would allow the state of Mina to be verified on any EVM-compatible chain, like Ethereum, Polygon, and more. Crucially, this enables these EVM-compatible ecosystems to leverage the capabilities of zkApps built on Mina, potentially also helping projects in those ecosystems address issues around data privacy, expensive transactions, and more. 

With these incumbent releases, there is likely to be a surge of new projects within the Mina ecosystem targeting classical crypto use cases (money markets, AMMs, lottery pools, etc.) but also newer, more complex use cases, including permissionless web oracles, single decentralized sign-on, and financial underwriting for uncollateralized loans––all enabled by Mina’s zero-knowledge technology. 

Final Thoughts

Decentralization, as a principle, has long been championed by almost all blockchain and web3 projects. In practice, however, the dApps and technologies that most crypto users interact with on a regular basis are far less decentralized than we’d like to believe. The average end user does not have the hardware or cryptographic know-how to be able to operate a full node and verify the state of a blockchain network, meaning they must rely on third-party node operators or API gateways as an intermediary in their interactions with the blockchain. As of today, most crypto projects aren’t truly trustless, but rather simply involve the delegation of trust to these centralized operators. 

Mina enforces true, large-scale decentralization by making it easier than ever for end users to operate full nodes in the network––even from resource-limited hardware like smartphones. By using zk-SNARKs as a cryptographic tool to compress data on the blockchain, Mina is able to guarantee that the entire history of its network can be verified with a simple, compact 22KB proof, meaning end users can finally interact with the blockchain directly instead of relying on (sometimes faulty or insecure) intermediaries. Beyond just decentralization however, Mina’s zero-knowledge technology allows zkApps (dApps on Mina) to leverage a variety of new features, including verifiable off-chain computation, custom controls around private and public data, and efficient, inexpensive bridges with other blockchain networks. Altogether, Mina represents a major step in the evolution of layer-one blockchains, making true decentralization and trustlessness possible, and reimaging data privacy, security, and scalability with zero-knowledge technologies. 

• Paul Veradittakit