Portfolio Report for the 2nd Quarter of 2021 (1) — ArkStream Capital

Portfolio Report for the 2nd Quarter of 2021 (1) — ArkStream Capital

By ArkStream Capital | arkstreamcapital | 25 Jun 2021


ArkStream Capital invested in about 20 projects in the second quarter of 2021. We will start with a project introduction and track analysis to elaborate on why we invested in these projects.

DAOSquare

1. Project Introduction

DAOSquare was born in the Ethereum community MetaCartel, dedicated to the construction of an incubator in the Web3 era, and its goal is to become a Y Combinator in the Web3 era. DAOSquare plans to launch the MVP of the Web3 incubator, which is an incubation system based on the DAO concept and will start the first phase of the global incubation plan.

2. Why DAO is important

With the popularity of DeFi, DAO related to DeFi governance has also begun to attract market attention. Many application-oriented DAOs have emerged, such as PieDAO, NFTX, and Stacker Ventures. Most of these DAOs are decentralized investment funds, which achieve management goals such as fund custody and exit through smart contracts. Some DAOs have also begun to provide other financial services, such as providing DeFi mining services similar to those launched by CEX.

In the past six months, the size of funds in the DAO has increased by 523.63%, participating addresses have increased by 533.53%, the total number of proposals has increased by 55.97%, and voting addresses have increased by 96.00%. However, the actual governance activity of the DAO has not increased simultaneously, and the voting participation rate has dropped by 26.35%. It can be seen that with the progress of the bull market, the data of DAO projects in the market has grown quite well, but the users who actually participated in DAO governance have not kept up with the rhythm of the market. We believe that, on one hand, the imperfect infrastructure and high threshold hinder users to a certain extent; on the other hand, it is difficult for developers and entrepreneurs to spend their time exploring governance mechanisms.

At this time, the continuous exploration of the DAO mechanism is particularly important. When developers and entrepreneurs spend more energy on product iteration, they urgently need a product that can provide one-stop DAO components to help them make the project transition to DAO governance.

3. Why we invest in DAOSquare?

The main function of DAOmaker and some other platforms is IDO, which is aimed at the public issuance of project tokens. The purpose of DAOSquare is to discover potential and valuable projects on a global scale and help projects from 0 to 1 in terms of funding, products, and growth. Therefore, it can be understood as the Y·Combinator of the web3 era. DAOSquare believes that it will be a “community-driven innovation farm.” Typto, the founder of DAOSquare, is a senior participant in the DAO organization in Asia. From MetaCartel Ventures China, HackDAO, WhaleDAO to DAOSquare, he has been exploring the development of DAO on the front line.

DAOSquare’s platform token RICE also fully embodies the role of DAO governance. When RICE is released to a certain proportion and scope, the governance rights of DAOSquare will gradually be handed over to the community, including the selection of high-quality projects. Regarding voting rights, there will be two parts: the early fundraising stage and the community issuance. The early fundraising stage is determined by the voting of VentureDAO members, and the voting rights are determined by the proportion of their capital injection. The community issuance is decided by the decision-making committee, and all RICE holders with up to the standard have the opportunity to participate in the decision-making membership meeting. Such a mechanism allows investors to become project participants and contributors, helping to promote project development.

We believe that with the establishment of the Web3 incubator of DAOSquare and DAOHaus and the exploration of more and more high-quality projects, the value of DAOSquare’s own platform will be further reflected.

Republic

1. Project Introduction

Republic is a U.S. compliance investment platform founded in 2016. It has helped 300+ projects raise 300 million US dollars, covering multiple sectors such as start-ups, real estate, and cryptocurrency, with more than one million users. Note is a security token launched by Republic Core, a subsidiary of Republic, and has been issued with a Reg D exemption from the SEC.

2. Compliance with crowdfunding platforms

Since 2017, the crowdfunding model of the cryptocurrency industry has been iterating continuously, from ICO in 2017, to IEO endorsed by exchanges in 2019, and IDO based on DEX and DAO in 2020, attracting many retail investors to participate. And the development of the platform is closely related to the needs of users.

Safety, quality, and compliance are the main demands for users to participate in crowdfunding projects. From the beginning it only provides fundraising and distribution tools, to the pure chain operation of the smart contract without trust, almost all steps of the new IDO platform are directly controlled by the smart contract, and there will be no capital risk of running away from the original rollover. Most retail investors do not have time to make due diligence on projects like professional investment institutions, so choosing an organization with trust and endorsement to participate in all the projects is an efficient approach. Besides, the United States and other countries this year gradually began to have clear regulations on the supervision of cryptocurrency. They are more willing to choose a compliant platform for the token sale, and help projects avoid legal risks through the platform’s KYC/AML system.

With the development of the crypto industry, the primary market crowdfunding for retail investors has changed its main purpose from fundraising to cold-starting or seed community building as the primary goal. Compared with the uncontrollable risks caused by harsh conditions such as lock-up of private equity investment, Token public offering is more sought after by the community because of its high liquidity. From the original need to search for projects, users now only need to find a platform with strong trust endorsement and a higher selection of projects, which saves a lot of time. This provides larger growth space for the compliance crowdfunding platform.

3. Why we invest in Republic?

Republic is not a start-up, but a separate company from AngelList, the world’s largest investment platform. AngelList occupies a pivotal position in the investment community in Silicon Valley and even the world. He has helped thousands of companies including Robinhood, Cruise, Calm, and Notion raise more than one billion U.S. dollars. Kendrick Nguyen, the CEO, and founder of Republic, was originally the legal director of AngelList and the former co-founder of Coinlist. Secondly, there are 8 full-time lawyers in the team, which meet the compliance requirements of the US financial regulation.

In terms of business, Republic provides quite complete investment incubation services, including general consulting, Token sales, financing equity advisory FA business, business tokenization, compliance, community, and community services. In addition to private equity and equity crowdfunding, Republic has also acquired Fig.co game crowdfunding and getcompound.com real estate crowdfunding; RepublicLabs focuses on the mid to late-stage and will set up special funds for high-quality projects.

NOTE issued by Republic Core, a subsidiary of Republic, is a compliant security token. When a crowdfunding project or a mid-to-late mature project exits, Republic will realize the carried interest of the project and use it to repurchase the platform token. Under normal circumstances, users who are more active on the platform and invest in more projects will earn more notes. The accumulated notes can be used to invest in more projects and unlock a series of rights and interests, including information rights, voice rights, priority investment rights, etc. We believe that regardless of market fluctuations, users have the need to participate in high-quality projects in the primary market, which brings a lot of opportunities to compliant public offering platforms such as Republic and Coinlist. The issuance of Token will also help Republic better attract users to participate in platform project investment and grow together with the platform.

Ternoa

1. Project introduction

Ternoa is an NFT-based decentralized data transmission blockchain based on the Substrate framework and the Polkadot Blockchain, developed by Capsule Corp., a French startup. Ternoa aims to store and ultimately transmit data in a secure manner, using the most advanced technology to protect content and correctly trigger data transmission. The Ternoa Application allows the creation of “Time Capsules” to encrypt, store, and transfer data in a secure way, and through time. These Time Capsules are non-fungible tokens issued on the Ternoa blockchain and may represent digital assets, videos, or pictures; personal items or human memories; and or confidential information that only the owner of the NFT can access.

2. The first combination of blockchain storage and NFT

There are still three pain points in decentralized storage projects. One is that the data structure defined by the smart contract is very limited; the other is that it is very difficult to retrieve various conditional data, and the third is that any content written to the blockchain will be synchronized to all nodes causing high storage costs and also, any stored data would be freely accessible to anyone who searches the storage blockchain data.

In the current storage sector, Filecoin is the leader, and AR and STORJ are outstanding in light node storage and mining. In order to solve the above three pain points, Filecoin adopts the consensus mechanism of Proofs of Spacetime (PoSt) to reduce storage costs; AR uses the consensus mechanism of Proof of Access (POA) to incentivize miners to store historical blocks permanently; STORJ is a distributed storage protocol based on Ethereum and can be paid through zkSync by using the idle storage space and bandwidth of nodes to reduce transaction costs.

NFT involves many sectors, for example, the NFT artwork “Everyday: The First 5000 Days” created by Beeple, a famous crypto artist; or NBA Top Shot, the Digital Collectibles, with an average daily transaction volume of tens of millions of dollars; or NFT CryptoPunk, Twitter avatar, with an average price of 300,000 dollars; Centrifuge and Persistence that use NFT for asset securitization to move real assets to the chain. Now with Ternoa, NFT is not only on the road of merging with DeFi, but also trying to merge with the decentralized storage track.

3. Why do we invest in Ternoa?

Ternoa data storage is presented in a unique form of NFT. As the first project on the market that combines NFT and decentralized storage, it is a first-mover. The Ternoa blockchain currently includes an NFTmarketplace that allows artists to issue authenticated NFT digital artworks and host them on the testnet — Chaos Net. SecretNFT provides NFT creators with watermark, secret hiding and fuzzy custom functions to prove the uniqueness of NFT and holder verification. In the future, SecretNFT will interact with Ternoa mobile clients, which will become all Ternoa products (including SecretNFT market). The application will also have its own wallet to manage CAPS and discover the Ternoa blockchain ecosystem.

Ternoa has established a 30-person team composed of entrepreneurs, engineers, designers and researchers, and has 4 consultants with relevant experience in supporting the team. Mickael, CEO of Ternoa, is the co-founder and CTO of a number of startups and has developed various smart contracts on Ethereum. In total, the team worked with 30 artists to continue to improve the SecretNFT catalog.

Blocto

1. Project Introduction

Blocto is a cross-chain wallet and smart contract service platform, and also the first product of portto portal technology. Blocto supports BSC, Ethereum, Flow, Solana and Tron. The first core product currently on the market is the AMM automated market maker protocol BloctoSwap, which is the first DEX project built on the Flow chain. In addition to continuing to build Blocto’s original ecological wallet, the future development focus will be on Blocto’s four original projects and provide wallet SDK solutions to other DApps.

2. Multi-chain wallet

In 2021, multiple public chain ecosystems begin to explode. In addition to Ethereum, a large number of high-quality applications have begun to appear on multiple public chains, such as BSC, Polygon, Solana, Avalanche, Flow, etc., and funds have also begun to flood into these new public chains. In addition, there are some public chains with the top market capitalizations ready to go. Polkadot’s parachain slot auction is about to start, hoping to create a new Internet world, Dfinity (ICP), lightweight blockchain Mina, etc. have already been launched mainnet. In the future, hard-core crypto players will continue to explore these new public chains. However, in addition to the public chain that supports EVM or the Ethereum Layer2 network, each public chain corresponds to a completely different user wallet and account system.

As the infrastructure of cryptocurrency, the wallet has asset management in cryptocurrency, consolidating user group traffic and diversion-related functions. In the public chain ecology where a hundred flowers bloom, wallets must develop in a multi-chain direction in order to meet the needs of users.

In addition, relying on the technical implementation of the wallet and the attributes of fund storage, the cryptocurrency wallet can naturally be used as a flow portal for products such as DApp, decentralized transactions, lending, and fund management. When digital assets enter the wallet, they can fully operate in the ecosystem: asset storage, value-added, payment, transaction, and third-party service connection. Through cooperation and intercommunication with other projects, expand a larger Token circulation environment. It can also empower other projects to promote the development of the entire ecosystem.

3. Why we invest in Blocto?

When the Flow public chain was launched on the market in January, Blocto was one of the three Flow official wallets. With its NFT product NBATopshot, Flow successfully went out of the circle, and Blocto also gained the first wave of traffic. With the development of Flow, Blocto’s embedded cross-chain DEX Bloctoswap is also the first DEX to support Flow. In addition, Blocto has reconstructed the wallet account system. Users can directly create wallets with Email without difficult private key operations. At the same time, it takes into account the functions of decentralized wallets. The interface of currency types and quantities in the wallet is simple and clear. It is simple and easy to use, has low barriers to entry, and has strong user stickiness.

In terms of Token and community, BLT as a governance token, in addition to representing the governance rights of the Blocto ecosystem, users who hold BLT Token will have some privileges in the products launched in the future, and the future benefits of these products will even be used as the BLT Token Reserve assets, and BLT Token itself can also be used to pay for GasFee transactions on different blockchains in the wallet. One-stop GAS spending greatly reduces the threshold for users to participate in various public chains, which will also compete in the future multi-chain ecosystem Become a big killer in the pattern.

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ArkStream Capital
ArkStream Capital

Founded by BlockArk, ArkStream Capital is a crypto fund dedicated to growing Web3.0 unicorns.


arkstreamcapital
arkstreamcapital

ArkStream Capital (founded by BlockArk), a leading investment bank based in Shenzhen, China. Currently, our portfolio covers over 100 projects including Ocean, Litentry, Filecoin, FLOW, DIA, and is still growing.

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