Last Friday I went to the Graph Day, a blockchain event hosted by the Graph team in San Francisco.
In addition to a line up of speakers from the Graph core team, there were a few other layer-2 protocols and founders of several leading dApps on Ethereuem, a VC and also interestingly a senior UX designer. (I will discuss the UX maybe in my next article.) And there were over a hundred attendees, which was not too bad given the bearish market.
Of all the speakers, the most intriguing was NYC-based Compound VC partner Josh Nussbaum. During his speech he shared their investment thesis, which I believe contains his ideal vision for the future of dApps.
First, what is the Graph Protocol?
The Graph is a query protocol, which allows all data to be immediately available for querying using GraphQL. It has partnered with decentralized dApps on Etheuerm as such Dharma, Compound, Origin, and Decentralized. Its use cases range from financial marketplaces to decentralized games.
Second, what is the connection between the Graph and Compound VC?
The Graph is one of Compound VC’s portfolio. And if you cross-check the speaker list of the Graph Day with the blockchain portfolio of the Compound VC, you will find a big overlap. So what is the future of blockchain in Compound VC’s eyes?
Third, what is Compound VC’s investment thesis?
Compound VC is a thesis-driven VC fund, investing in Seed stage tech startups, not just in the blockchain, but also in AI/ML, IOT, Fintech, E-commerce, and Mobile Consumer.
Among its blockchain portfolios disclosed on its website, there are Gem, BlockStack, Mattereum, which creates smart contracts with legal force of natural language contracts, Orchid, NuCypher which uses proxy re-encryption to bring private data to public blockchains, Casa, a key management system, CryptoKitties, the most successful blockchain game to this day, Kadena, Computable which is a decentralized data marketplace, Compound, the decentralized financial market on Ethereum, (which also presented at the Graph Day,) and Livepeer, a platform as a service for developers who want to add live or on-demand video to their project. And according to Josh Nussbaum’s keynote on Graph Day, there are also other investments that have not been updated on its website.
What do you see from its portfolio? If all those aforementioned projects succeed eventually, we would have a secure and encrypted internet infrastructure, decentralized financial marketplace, decentralized data marketplace, decentralized blockchain games, and wallets to facilitate it. Or in other words, it would not be an exaggeration to say that the new internet would be more utopian than it is today.
Some key take aways from Josh Nussbaum’s keynote:
Thesis 1: “Given the cost of settling a transaction and the slow nature of blockchains today, decentralized financial infrastructure will be one of the first widely used decentralized applications.” Its investment includes Veil, Compound, ) *(Jan 25, 2019, Investing in Web3 Josh Nussbaum, Partner — Compound VC)
Thesis 2: “To reach critical mass in user adoption of decentralized application, certain weakness and problems with permissionless blockchains need to be solved by protocols not part of the base layer.” Its investment includes NuCypher, the Graph, OffChain Labs, and WitNet. *(Jan 25, 2019, Investing in Web3 Josh Nussbaum, Partner — Compound VC)
Other key takeaways from Graph Day:
Everyone knows that blockchain is still at an early stage and there are obvious tech bottlenecks that are restraining adoption. Lots have been touched by speakers at the event, for example, both Origin and Decentraland mentioned the gas fee, real-world data, token economy, latency, and PITA UX for everyday users. I am particularly happy to see that for once, the blockchain industry started to shed interest in everyday UX. It’s a sign of mature. I will write another article on this. The Keynote by Tara Tan on The Road to Fixing Dapp UX was great.
With what we know now, Layer 2 solutions such as the Graph, IPFS, NuCypher, seem to be an obvious answer. Most of those are only focuses on popular public chains such as Ethereum and EOS. At the event, one attendee revealed that TRON had also approached him to develop similar Web3 solutions and he seemed to be scornful. To me, interoperability is inevitable. Eventually, there will be no chain that rules it all. The financial incentive on different public blockchain will drive such integration.
To sum up, with the ICO bubble burst, dApps with real use cases are live and robust. Decentralized marketplace, financial tools, and games, among other tools, will be the first to bridge public blockchain platform with real users. Dapps are not dead. To borrow the comments of the lead of another blockchain project, if you emphasize the ‘D’ of the Dapps it might be diresome as of now; but if you emphasize the ‘app’ of the Dapps, you will find a blue ocean of traditional mobile or PC applications that will have real profit by applying blockchain technology or have a well designed token model. This reverse mindset of jumping out of the small blockchain industry and find real use in real business and the fact that blockchain apps are starting to pay attention to user experiences is promising.
All other public blockchain ecosystems, stay hungry, stay relevant.
