Original author: Allen
Original source: ArkStream Capital
ArkStream Capital invested in a total of 6 projects in the second quarter of 2023. We will explain the reasons for investing in these projects starting from project introductions and industry analysis.
SEI
Project Introduction
Sei Network is a Layer 1 blockchain built using Cosmos SDK and Tendermint, specifically for digital asset trading. With new consensus and technological breakthroughs, Sei will be the fastest blockchain in the industry. It has a built-in Central Limit Order Book (CLOB) module.
From August 2022 to April 2023, Sei raised a total of $35 million in three rounds of financing. Other investors include Jump Crypto, Delphi Digital, ArkStream Capital, etc.
Cosmos Ecosystem
Cosmos is a leading public chain project in the first tier of multi-chain networks. Thanks to the flexibility of Cosmos modular tools and the upgrade of cross-chain technology, many projects choose to build on the Cosmos ecosystem. Despite the huge impact caused by the collapse of the largest chain in the ecosystem, Luna, Cosmos still leads with $900 million TVL within the ecosystem and data from nearly 400 protocols, far ahead of another multi-chain network, Polkadot.
The role of Cosmos Hub in the entire ecosystem has always been unclear, resulting in a low value capture capability for $ATOM. However, as a result, there is less "taxation" for public chains within the Cosmos ecosystem, and public chains within the Cosmos ecosystem, in combination with Cosmos' IBC, have achieved better development. The well-known application dYdX also announced its migration to Cosmos as an independent chain.
Reasons for Investing in Sei
Sei is built on the foundation of the Cosmos ecosystem, enabling it to fully leverage Cosmos' liquidity and optimize design for DeFi.
Technically, Sei has a built-in order matching engine, sub-second settlement speed, parallel processing of orders, and single-block order execution, all of which are customized features implemented at the underlying layer. Sei has implemented some optimizations using ABCI++, an upcoming upgrade to Cosmos' ABCI that makes each step of consensus programmable. Sei has been trying to achieve three improvements with ABCI++: optimizing block production, intelligent block broadcasting, and parallel order execution. All of this is aimed at making Sei the optimal solution for a "DeFi-designed" Layer 1 blockchain.
Speed is an important requirement for decentralized derivatives, so on Arbitrum, derivatives have seen faster development. Currently, GMX's trading volume remains above $100 million daily volume, and protocols like Gains and Mux also have millions of dollars in trading volume. As the market gradually recovers, we believe decentralized derivatives will grow into the important position they should have, so the importance of investing in a public chain that can serve decentralized derivatives is beyond doubt.
Sei was founded by Jeffrey Feng and Jayendra Jog, team members with backgrounds in technology and traditional finance, most of whom come from companies such as Robinhood, Databricks, Airbnb, and Goldman Sachs. They are familiar with the complexity of building an L1 chain. The team also includes traders with experience in Goldman Sachs and other investment companies, as well as Cosmos OG. This team background fully aligns with SEI's vision for the TradFi public chain.
Linera
Project Introduction
Linera belongs to Layer 1 blockchain with the goal of providing a secure, highly scalable, and low-latency blockchain to give Web3 applications faster response times. Linera aims to support the most demanding Web3 applications by providing Internet-scale predictable performance, security, and responsiveness. To achieve this, Linera tackles the issue of block space scarcity by introducing a new integrated multi-chain paradigm based on elastic validators. Linera places users at the center of the protocol, allowing them to manage block production in their own chains (called microchains) to achieve optimal performance. To help web3 developers fully leverage Linera infrastructure, the project has developed a rich, language-agnostic multi-chain programming model. Linera applications communicate through asynchronous messaging across chains. Within the same microchain, applications are composed of synchronous calls and temporary sessions (also known as resources). Thanks to the Wasm virtual machine, the initial SDK for Linera will target Rust programmers. Linera infrastructure is based on delegated proof of stake. It will leverage cutting-edge economic incentives and community-scale audits to ensure strong decentralization. In June 2022, Linera completed a $6 million seed funding round led by A16Z. Details of this funding round have not been disclosed.
MOVE Language Public Chain
Move is a programming language developed by Meta (formerly Facebook) for its stablecoin project Diem (formerly Libra). The vision of Diem is to serve as a global digital native currency, incorporating stability, low inflation, universal acceptance, and interchangeability. Its vision determines that Move is a programming language designed for finance. However, due to regulatory issues, Diem could not continue, and team members started projects such as Aptos, SUI, Linera, etc.
Move language performs exceptionally well in terms of security, parallelism, and developer-friendliness.
Security: Move provides comprehensive security guarantees for smart contracts from language design, virtual machine, contract invocation methods, and contract execution.
Parallelism: Move defines digital assets specifically, classifies and identifies transactions, and combines them with a multithreaded execution engine, allowing transaction data to be run and processed simultaneously.
Developer-friendliness: Move reduces the learning curve and complexity, and experienced developers can get started with Move in about 1-2 days. For developers without smart contract programming experience, learning Move from scratch typically takes about 1-2 weeks.
Why We Invest in Linera
Move provides a more tailored handling of blockchain's most core token assets, which are currently the most important part of on-chain operations. This improvement by Move is very meaningful.
Linera has three technical highlights: building a secure infrastructure with predictable performance and responsiveness by running multiple chains in a set of elastic validators; making multi-chain programming mainstream by working on a new execution layer, enabling a rich ecosystem of scalable web3 applications; maximizing decentralization by ensuring optimal incentives for elastic validators and conducting community-scale audits. With this architectural design, it is possible to achieve elastic scaling, high responsiveness, composability, chain security, power decentralization, and language agnosticism.
Linera's founding team is composed of former engineers and researchers from Zcash, Meta/Novi. Linera's founder, Mathieu Baudet, is a cryptography PhD with strong R&D capabilities. He previously worked as an engineer at Meta and helped create the Diem blockchain. He was also the Chief Researcher and Engineer at Novi, and played a key role in the invention of FastPay and Zef protocols.
Orb
Project Introduction
Orb is a decentralized social media platform on the Lens Protocol. It combines all the best features of existing social media applications into a convenient and user-friendly platform, where users can truly own and control their identity, content, and monetization. This funding round is for seed funding and has not been disclosed.
Web3 Social App
Social networks occupy a large part of our lives, but the current popular social platforms are criticized for their censorship mechanisms and data ownership. When we talk about Web3, most people expect a fundamental change in social behavior from Web2's "read-write" to Web3's "own." We are on the eve of the Web3 social explosion. In the past two years, the infrastructure of Web3 social products has been gradually built: Ethereum upgrades, L2 and the development of new public chains have solved the congestion and high costs of blockchain. Social protocols represented by Lens Protocol have rebuilt the data structure required for social interaction on the blockchain. Numerous knowledge graphs, DIDs, wallet entries, and other products have laid the prerequisites for the outbreak of decentralized social applications step by step. However, high entry barriers and migration costs are hindering users from using decentralized social products. This can be seen in Damus, vigorously promoted by former Twitter CEO Jack Dorsey. The market is in great need of a good product.
Why we invested in Orb
Since the first appearance of Lens Protocol, we have been paying attention to the ecological projects above. Compared to the steady development of infrastructure, we are more excited about the explosive power of the application layer. The investment in Orb is not accidental, but a decision based on tracking and investigating hundreds of projects in the Lens ecosystem for the past year. They have the fastest iteration capability and the strongest user perception. Compared to adhering to the dogma of "decentralization," Orb believes more in putting users first and focusing on "how to build a user-friendly social product." If you don't deliberately look for it, it's hard to see information related to Web3 on Orb's APP. Their excellent user experience allows you to seamlessly migrate from Web2 to Web3, but behind it lies a decentralized account structure and data ownership, returning decision-making power to the users. With no token incentives or expectations of airdrops, they have already accumulated over 100,000 users, which is an important step in the development history of Web3social.
Intuition
Project Introduction
Intuition is an open and decentralized knowledge sharing platform that allows users to create proofs about any topic, using decentralized identity authentication, data, and financial primitives, to build an open, decentralized, and permissionless semantic knowledge graph to help users make better decisions. The vision of Intuition is to build an application ecosystem connected by a pool of verifiable data, inspiring global knowledge sharing and decision-making. In June 2023, Intuition announced a $4 million seed round funding, with investors including SuperScrypt, ConsenSys, ArkStream Capital, etc.
Web3 Social Graph
The user's control over their own social data is a reflection of the importance of Web3, and the purpose of the social graph is to return the user's social network to the user themselves, allowing them to freely choose the applications to use while retaining their original social relationships. This conflicts with the interests of centralized social products - most products want to continuously increase the user's migration costs in order to keep the user within their ecosystem forever. The social graph of Web3 aims to change this situation, with different projects approaching from different angles, from the user's friend list or following list, to communities built by multiple people, more and more data is being independent of centralized networks, which will help the formation of decentralized social graphs more effectively.
Why We Invest in Intuition
Unlike other social graph projects, Intuition is a "knowledge graph" that emphasizes the reshaping of people's connections, while social graph projects focus on user social relationships. Most decentralized social products are considering how to map offline relationships to the blockchain, but users lack the motivation to put data on-chain. This has resulted in most products being merely decentralized castles in the air without a compelling reason to use them. Intuition takes a different approach by incentivizing users to put countless actions on-chain with tokens, disregarding the value and authenticity of the data. It then uses a large amount of on-chain data and network effects to infer the necessity and usability of "identity." This will bring tremendous possibilities to Web3 social networks that lack data. In our investment philosophy, "novelty" and "possibility" are among the driving forces for industry development, and Intuition's approach stands out among many social products, shining bright. We believe that under the leadership of Ethereum core developer Billy Luedtke, Intuition will improve the reputation and identity data we can obtain about our daily interactive activities.
Polkastartergg
Project Introduction
Polkastartergg is a game platform established by Polkastarter, one of the largest fundraising platforms on the blockchain, positioned as the largest user entry point for future web3 games. This seed round of funding has not been disclosed.
Web3 Game Platform
Web3 gaming experienced explosive growth in 2021. According to Zeeve Link's "WEB3 GAMING IN 2022 REVIEW," there were 420,000 daily active users in mid-December 2022 for web3 games. For players, there is an urgent need for a high-quality game platform that combines game entry, information, reviews, and guides in the complex world of web3 games. Game platforms have also become the first stop for web2 users to enter the world of web3 games.
Why We Invest in Polkastartergg
In the next cycle, Game is the engine that drives the exponential growth of web3 users entering web3, with ArkStream's user entry point as a key focus. Polkastartergg launched in November 2022 and ranks first in traffic in the sub-segment, currently collaborating with 125 games and rating 75 games, with over 67,000 Twitter users. Core partnership projects include Magic Eden, Ultra, and top-tier games such as Star Atlas, Illuvium, Big Time, and Edenbrawl.
The Polkastarter team has a strong commercial barrier and successful experience in web3. The team's first project, Polkastarter, emerged from hundreds of IDO platforms in the previous cycle to become one of the largest IDO platforms, with strong traffic, growth, and project resources. The team is now focused on developing a gaming platform and preparing for game launches in the future.
Blockus
Project Introduction
Blockus aims to provide a one-stop full-stack technical solution for web3 games, including social login, built-in marketplace, and fiat currency channels. It can help web3 games establish quickly, reduce costs, and focus on game content. Blockus is a product of A16Z crypto's inaugural accelerator. In February 2023, Blockus completed a $1.1 million pre-seed funding led by a16z. The details of this funding round have not been disclosed.
Web3 Game Full-Stack Technical Solution
In order to build a comprehensive web3 game, in addition to the game content itself, teams often need to develop or integrate various technical facilities, including social login, built-in swap/marketplace, and inbound/outbound channels. This is a considerable development cost for early-stage games and comes with a lengthy development cycle. Web3 game full-stack technical service providers offer a one-stop technical solution for web2 game studios transitioning to web3, greatly reducing costs and improving efficiency.
Why We Invest in Blockus
Blockus combines the technical and business advantages of a full-stack gaming solution. Technically, apart from the team's years of SAAS technology accumulation, another core advantage lies in its technology architecture's preparation for legal compliance. This integration of compliance with the full financial and technology stack of the game is the reason why its lead investor, A16Z, has provided the team with four lawyers. This gives it an edge over similar competitors in the current wave of web3 embracing compliance. In terms of business resources, in addition to its own web3 game, its CEO's strong resources from Roblox and web2 game studios have provided it with more entry points for game business from web2. Currently, it has provided technical solutions for three games, including Aybss world and Double Jump.
All three founders come from well-known web2 and web3 companies. CEO Jess Zhang comes from the former Roblox data Science team, CTO Linglong was the former Tech Lead of Airbnb Payment, and CPO Michael Wei previously worked at Coinbase.
