KR1 October Update 🎎

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Devcon5 in Osaka, Japan — Ko nichiwaaaaa!

Finally, Devcon5 rolled around and 4,000 developers, hodlers and crypto addicts hit Osaka, Japan. Ko nichiwaaaa! It was a long way to travel for most of the crowd as most were non-Japanese, many including us at KR1 had never been to Japan before. The Devcon conference centre was on the edge of Osaka by the port in a shopping mall over four floors with one massive ground floor, a slightly strange and random layout. But … we were there for Vitalik and Joseph Lubin and the wonderful Unicorn Rainbow crowd. Here’s a really good video summary of the conference vibe;

There is a general frustration in the community at the slow speed of solving the scaling issue with ETH 2.0, and a further worry that ETH 2.0 upgrade will wipe out the way DeFi products interoperate.

Most of the community however are still heavily committed to Ethereum. Any platform of Ethereums’ size would have also hit road bumps, and got a legion of crypto twitter haters.

Main stage was repeatedly given to non-Ethereum projects. Is Devcon almost too inclusive of the wider crypto ecosystem?

DeFi, currently Ethereum's runaway success, should have got more airtime on the mainstage. Uniswap was an example of being in a cramped room with people not able to get in.

On day three ConsenSys founder Joe Lubin gave a great speech on the state of Ethereum and where it was heading, this is the speech we all wanted Vitalik to give on the first day, but then realised that Vitalik loves his quirky technical speeches. Joseph pitched hard for a 1 Million Developer target on Ethereum which seemed a big, but achievable, target.

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Ethereum’s Mission

With around 24,000 fairly active developers on Github, and a total of 200,000 infrequent devs across the board right now active on Ethereum, a million developers doesn’t seem such an insane target. Even the current number 24,000 developers is so waaay ahead of any other blockchain projects that it would be hard to see who could take Ethereums’ crown.

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Current Ethereum Developers

“There are an estimated 30 million software developers globally, yet the number of blockchain developers is in the several hundred thousands — with the highest number developing on Ethereum. As tooling, documentation, libraries, and onramps improve, Lubin challenged the community to refer new programmers and grow Ethereum’s developer mindshare to a million in the next year.”

To put a million developers into context there are 20 million registered developers on iOS. So there is plenty of headroom to get 1 million developers onto Ethereum.

Elsewhere at Devcon there were tons of events and a lot of great talks. Dave and Ania from Nym, we are an investor, gave a great presentation on anonymising messaging data:

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KR1 & Friends at Devcon5
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Nym, Melon, KR1 -Crypto nomads

KR1 Investments

We’re excited to announce some more investments following the batch last month with Nym, Nexus and Alice.

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The Vega Protocol allows anyone and anywhere in the world to spin up markets for derivatives (futures, swaps, options, etc) that can interact with each other and abide by relevant regulations. Vega is a fully decentralised and censorship-resistant blockchain-based trading platform that will improve access, reduce costs, and increase innovation in derivatives and other financial products.

Markets on Vega can be anything from futures on the price of oil or bitcoin, to sports betting, Contracts for Difference (CFDs) on the S&P 500, options, swaps, and more. The platform is designed to be trust-minimising, performant, and scalable, including strong on-chain governance around market creation and abuse prevention.

Barney from Vega demoing at our Kryptonight meetup

Some of the team namely Ramsey Khoury and Dave Hrycyszyn (now at Nym) were previously at Chainspace, which we were very close to before the Facebook acquisition. We are really excited to be supporting Vega in its mission, and the also the quality of the team in executing this great product including Barney, Ramsey, Dave, Rebecca, Tamlyn, Chris, Klaus and Christina (excuse us if we have left anyone out!). In addition, KR1 had an advisory agreement to provide expertise on varied aspects of bringing the new and innovative Vega platform to market, which we have enjoyed immensely. Its been a great ride and we are extremely bullish on Vega. Long Vega!

The founder Barney Mannerings was previously with the team at the London Stock Exchange working on the algorithms that power the exchange:

“Vega is a fairly ambitious project in terms of the complexity of the software with derivatives, the trade has a life cycle.”

For example, a trader could sell the right to buy a given asset at a given price six months out. This requires that prices are monitored, leverages are kept and risks are managed. It can require a lot of computation.

Dr Klaus Kursawe discusses Vega and Blockchains for traders — a better financial system

“The Ethereum network is not great at running computationally intensive,” Mannerings said. “We can get 10 to 100-times better performance for doing those calculations. It’s very powerful “compared to the slightly toylike version that can be created on the ethereum virtual machine.”

Our friends at Pantera lead in the round too! Paul Veradittakit, partner at Pantera Capital quoted in Coindesk:

“The Vega team’s vision for the future of finance is a level playing field in which all people can participate. That vision is integral to the blockchain ethos and represents everything we are fighting to enact.”

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KR1 took part in an over-subscribed successful seed round alongside a handpicked group of notable investors including US-based Pantera Capital and Seoul-based Hashed Capital.

Barney had some nice words to say about us in helping them on their journey:

“From Vega’s inception, the KR1 team have been unwavering supporters of the project and were key in introducing us to the blockchain investment ecosystem. They are great partners and advisors and we look forward to working with them further as we bring Vega to market.”

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We are pleased to announce KR1 has invested $50,000 USD into Commonwealth Labs (“Commonwealth”) via a Simple Agreement for Future Equity (SAFE).

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Ever since we saw Dillon and Raymond onstage at Web3 Summit in 2018, we have been fans and followers of their project, which was deemed very quirky at first! Commonwealth Lab’s main focus is bringing the Edgeware smart-contract platform to market (discussed below) as the main for-profit development entity.

Raymond at Web3 Summit

In addition to this, Commonwealth Labs plans to on-board other crypto networks to their state-of-the-art governance interface. The governance interface allows protocols to update new features efficiently while also keeping project teams accountable and driving correct resource allocation. As decentralised protocols and networks gain users and attract ever-larger sums of finance, governance becomes a key component to ensure these systems remain robust and develop new capabilities.

Dillon and Raymond keep innovating and that is why we are backing them. Not only did they invent the Lockdrop, a new fairer token distribution model (see our other post on explaining the importance of the Lockdrop);

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Building Better Crypto Networks with Radical New Ideas

Other notable investors in the round with us included Coinbase.

Following on from the above :)

Edgeware is an exciting new ‘self-improving’ high-performance smart contract platform implemented on the Polkadot network (as you may know, we are big fans of Polkadot!).

Thriving communities are key to building strong governance, so through the Edgeware ‘Lockdrop’ system, the development team created an innovative way of distributing their EDG token.

The Lockdrop is a radical new billion-dollar idea for fairer token issuance and is a new way of distributing tokens that does not require direct investment. Instead, for locking up ETH tokens in a smart contract, participants will receive EDG tokens in relation to two metrics, firstly the amount of ETH placed in the contract and secondly the length of time the participant chooses to lock up their tokens

The Lockdrop is a really significant new development for fairer token distribution. Dillon Chen from Edgeware;

The Lockdrop is an idea that we workshopped internally. When we were thinking about an ideal way to seed a new network and looking at the existing options in the space, this felt like the Lockdrop would get the right set of experimenters that an airdrop or an ICO would not.”

Edgeware aims to allow participants to vote, delegate and fund each other to upgrade the network.

The whole Lockdrop and Signal process feels much more in line with the radical experiment which was the ICO. Was Edgeware expecting this amount of support? Dillon comments:

“Definitely not, this has blown our expectations out of the water, we were thinking max 200k ETH.”

And does the huge amount of Ether committed make it feel like some form of burden? Dillon again:

“Yes! But also an opportunity to build a really amazing community from scratch, people came in with an experimental mindset.”

The fairer token distribution thesis proved correct and the results are obvious to see there is a good spread of participants.

Commonwealth has now even something new up their sleeves with the Lockdrop and the Cosmos ecosystem, called Stardust, allowing other projects to use the power of the Lockdrop!

With around a billion dollars of Ethereum locked into the Edgeware network we believe this is the most significant value capture in crypto in 2019. It flew totally under the radar.

The Lockdrop has been a complete runaway success and taken many by surprise, much like the ICO. With over a billion dollars of value already secured into to it, tremendous value and attention for the Edgeware project and for Polkadot has already been created. The crypto community is willing to show support for highly experimental ideas. We will see more of these novel token distribution models, which continues the legacy of the ICO, in the future to ensure a fairer launch and more robust long term network health. This evolution ensures tokens are in the right hands as a network starts its long journey in the wild.

Our George commented “As strong supporters of the emerging Polkadot ecosystem, we’re excited to back the highly skilled team behind Edgeware and Commonwealth Labs, who are working entirely on bringing smart contract capabilities to Polkadot, along with a strong governance system. Their lock-drop token issuance system for the Edgeware platform has been resoundingly successful. With the community looking very strong, this is a positive indication for the future of Edgeware and Polkadot combined.”

KR1 Portfolio Updates:

The best crypto app at Devcon5, and also that we have seen, is Pepo by Jason Goldberg and the OST team. It's like TikTok but you can tip in crypto tokens. It's so fast and seamless and amazing we just urge you to try it out! You will not know you are using blockchain and its a testament to the OST team battling away and making amazing products.

The railway lines of the blockchain ecosystem are nearly in place. IBC, “Inter Blockchain Communication”, is the glue that binds all blockchains and is the base level of the new decentralised universe and it's nearly here as it enters a testnet phase ‘Game of Zones’ soon!

In official language, IBC is “a chain-agnostic protocol that will enable interoperability for cross-chain communication between any two blockchains.”

There is already a hackathon version of IBC. This will be a huge moment for crypto and blockchain when is hit mainnet as blockchains will no longer be siloed, but be able to communicate and send data to each other. Here is Ethan Buchman co-founder of Cosmos talking about Cosmos and IBC:

There is even a new podcast dedicated to IBC — listen here.

Nexus Mutual, after quiet a rocky start for us all, is now fully pumping and generating a lot of excitement. We keep hearing ‘best DeFi startup’ ‘most promising DeFi project’ all the time, so it's a massive chops to Hugh Karp the founder for pounding the pavement and getting it flying. Funds in the pool are growing hugely, a new CTO has been appointed from Facebook, and the 100th smart contract cover has been taken out! And to top it all they announced a funding round from 1Confirmation, Blockchain Capital and our friends at Semantic VC and a few others. Here is a great podcast Hugh did recently:

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All roads, unfortunately, lead in one direction over the other side of the firewall. The only hope is that the population nod submissively, download their panopticoin wallets and then just carry on stacking up the Bitcoins, as data currently shows they’re doing in abundance.

KR1 is Europe’s leading digital asset investment company supporting early-stage decentralised and open-source blockchain projects. Founded in 2016, KR1 has been a notable first investor in many key projects that will power the decentralised assets, platforms and protocols that form the emerging Web3 infrastructure.

In the spirit of the open and decentralised movement, any individual or institution can buy publicly-listed KR1 shares through the London-based NEX stock exchange.

Follow us on Twitter for more frequent updates.

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KR1 plc is Europe's leading publicly listed investment company focused on blockchain and decentralised technologies (KR1:AQSE). KR1 was founded in March 2016.

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