Why We Invested in These 5 Blockchain Companies

ArkStream Capital, a primary market fund founded by BlockArk, invested in more than 10 projects in the first quarter of 2021. We will start with the project introductions and track analysis to explain why we invested in these projects.

1. Apron

Apron Network is committed to building a decentralized infrastructure service network platform. All infrastructure service providers can be integrated on Apron, and it can provide all kinds of decentralized infrastructure for all blockchains and blockchain applications (DApps) to meet different needs.

Centralized node problem for decentralized services

On November 11, 2020, a dormant loophole in Ethereum caused Infura’s chaos and caused Infura’s server to go down. Many projects that used Infura, including the well-known Ethereum wallet MetaMask, non-custodial wallet Coinbase wallet, and CryptoKitties and the lending platform Compound, etc. could not be used normally, and even caused an undisclosed hard fork of Ethereum. Industry insiders commented that this was the most serious accident on the Ethereum blockchain after The DAO incident.

This incident has alerted many people. Although the technology of Ethereum is decentralized, Ethereum needs nodes to maintain its network. As the largest node service provider, Infura is centralized and relies heavily on Amazon. Managed cloud server, which means that if Infura has a problem like this incident, or if there is a problem with the Amazon cloud behind it, it will affect Ethereum.

Why we invested in Arpon?

The Chainlink boom is a sign of what will happen in the future once the market realizes the need for critical infrastructure components that allow actual use cases to exist. Since GRT went public and listed, ATH has also reached 96X. As Uniswap and other Defi use search protocols, the market has fully discovered its value. In the wave of value discovery of middleware, Arpon aimed at the positioning of decentralized Infura.

Arpon is developed based on the Substrate framework, and the team has strong development strength. It is the award-winning team of Polkadot Hachathon and has received Web Grant support. Apron wants to become a decentralized Infura, providing users with API access services in a decentralized manner. In addition to Ethereum, it will also support multiple chains, such as Bitcoin, Polkadot, IPFS, Tron, and so on. Apron will also integrate various services, including data analysis platforms, data storage and messaging services, and so on. Multi-chain and multi-function will greatly enhance the value capture effect of the Apron network.

2. InsurAce

InsurAce is a decentralized DeFi insurance agreement that aims to provide DeFi users with reliable, robust and worry-free DeFi insurance services. Its characteristic advantages include extremely low premiums, stable income, rich product lines, and low barriers to entry. Provide DeFi users with guaranteed and profitable insurance services.

The huge potential of DeFi insurance coverage

At present, the coverage rate of the entire DeFi TVL is less than 2%, and the coverage rate of 8%-10% is a reasonable ratio that can be expected. The insurance sector has great potential.

The insurance sector has not been further developed so far. There are two reasons: Firstly, insurance still belongs to the category of risk management, it belongs to a follower position. Generally speaking, the industry always advances in cash business first, and then risk management keeps up. Second, insurance is different from lending, exchanges, and other circuits that rely on liquidity and profitability. The insurance circuit is a circuit that can build user trust, user loyalty, and brand. This also requires time accumulation and precipitation. Insurance is a track that needs deep cultivation and is worthy of long-term focus. It has just started, and there is still a lot of room, but it also requires great efforts to develop and cultivate.

Why we invested in InsurAce?

As a community-driven decentralized open insurance platform, InsurAce has fully mobilized the three parties of policyholders, insurers, and investors-all of them can obtain platform governance tokens by providing liquidity (participating in SCR liquidity mining), thereby maximizing The capital utilization rate has been improved to a minimum.
At the same time, InsurAce refers to the business model of traditional insurance companies, builds a DeFi investment sector based on insurance, uses insurance to escort investment, and uses investment income to deny insurance services, and finally builds a two-wheel-drive model of insurance + investment to create a safe DeFi portal, And continue to create revenue for users.
InsurAce has created a comprehensive platform with both investment and financial management functions.

3. Pocket

Pocket Network provides a trustless API layer, allowing easy access to any blockchain. It is building a complete distributed network of blockchain nodes. Developers can seamlessly access these nodes, use encrypted economic incentives, and are ready to provide node hosting services for development API requests to meet demand. Pocket Network aggregates supply and demand through a distributed network, creating a powerful open-source infrastructure layer.

Node incentives for decentralized services

Different Web3 middlewares serve different needs. Some middleware solves the expansion needs, some solves the storage needs, and some solves the cross-domain interaction needs. The continuous prosperity of the middleware field allows people to enjoy it more effectively. Convenience and advantages brought by Web3 application.

Recently, solutions in the field of decentralized API have appeared frequently, which has laid a solid foundation for the complete decentralization of Web3 applications. However, from the perspective of the underlying network, there is one area that has not received enough attention, and that is the issue of full node incentives.

There is no shortage of mining nodes in a network where the mining revenue is greater than the mining cost, but it is not so optimistic for full nodes. Although for users, running a full node can completely guarantee the security and privacy of operations on the chain, but because there is no native economic incentive mechanism in the network, the cost of running a full node is higher than its advantages, so most users choose a centralized full node service provider.

Similarly, the cost of running a full node for developers forces them to use a centralized full node to support the back end of the application.

Why we invested in Pocket?

Web3 native problems need to be resolved by the Web3 native middleware protocol.

Pocket Network provides a complete bottom-level network full-node incentive and Web3 application decentralized data acquisition solution, which provides a coordination mezzanine with decentralization as the core for the Web3 infrastructure and upper-level applications.

From the perspective of the agreement, Pocket Network provides a bilateral market composed of full-node supply and demand sides, and the agreement itself is responsible for promoting the application layer data demand and the underlying network data supply market to operate more efficiently.

Pocket Network has received support from API3, Skale, MyEtherWallet, HOPR, ethers.js, Satun Network, Mycrypto, fuse, portis, and other projects. The downtime of Infura has warned of the importance of decentralized node services, which is why Pocket can quickly obtain cooperation and investment in many projects.

4. HOPR

HOPR is a protocol that allows users to run peer-to-peer private network nodes. It can send data through the network without exposing metadata. Metadata can be described as the object of sending and receiving data, the time of sending data, the amount of sending data, the address of sending data, and so on. Protecting metadata is crucial, because metadata can be used by malicious actors in various network attacks, such as hacker attacks or user profile attacks.

User A passes the message to Z. The message will be transmitted and confused by different nodes in the HOPR network through “onion encryption”, and finally reach Z. The jump-type transfer method between different nodes gives the network the name HOPR.

The privacy dilemma of the Internet

“I think Chinese people can be more open and less sensitive to privacy issues. If they are willing to exchange privacy for convenience, in many cases they are willing, then we can do something with data. But we must follow certain principles. If the data will benefit the user and he is willing, we will do it. This is our basic principle. This is what should be done and what should not be done.” Li Yanhong said at the China Development Forum.

The status quo of Internet privacy is darker than Li Yanhong said, and countless applications steal user privacy without the user’s permission.
Almost everything we do online today is protected by different types of encryption, from our online banking to simple WhatsApp messages.
The problem is that this encryption only protects your data (the actual content we are sending). It does not protect your metadata: all information about the data you want to send.

Why we invested in HOPR?

HOPR provides a full-stack network-level privacy solution.
When sending data through HOPR, the data is sent to the destination through many intermediate “hops”. At each hop, data is mixed with other data through a network called a mixnet, so anyone observing from the outside cannot know what is being sent or who the sender and recipient are. HOPR uses the Sphinx packet format to ensure that each piece of data sent through HOPR is indistinguishable from each other, and can even be accurate to the same size.

Users can fully control the route taken by their data. As long as not all these parties are secretly colluding, the entire hop is safe and private. Unlike the standard centralized method that we used to be used to, mixnet has a huge advantage in terms of numbers. Like all the best-distributed systems, despite human beings’ personal interests, people are still forced to work together: there is no benefit to doing anything other than following the rules.

5. Razor

Razor Network is a decentralized oracle project that currently runs on the Ethereum network, but it does not target applications on the Ethereum mainnet.

Instead, it will cooperate with multiple L1 and L2 blockchains to improve A fully decentralized oracle is provided on the platform. Hope to connect smart contracts with data in a fast and safe way.

At present, the testnet of the flagship product decentralized oracle network has been launched, and at the same time, the official also released a testnet browser for browsing testnet information.

The explosive growth of the oracle track

An oracle is a third-party service that provides data required for the execution of smart contracts, usually related to prices.

The traditional financial system requires intermediaries, so there will be a single point of failure. They are prone to corruption, fraud, security accidents, etc. And smart contracts and decentralized networks give us the opportunity to rebuild these systems. They are accessible to ordinary people and can improve the traditional financial products built on these systems, especially in lending.

With the rapid growth of the DeFi track, the oracle machine has received the most attention. Nevertheless, the track can accommodate more competitors. BAND, DAI, API3, and NEST have good market performance and more innovative solutions are also accepted by the market.

Why we invested in Razor?

Compared with previous competing products, Razor’s balance of decentralization, safety and performance has allowed it to find the possibility of “overtaking in corners”. Razor uses a sliding computer mechanism to prevent attacks such as invalid sources and (bribery) signals that may occur on the oracle.

This mechanism can iteratively resolve disputes over the results of the oracle, and will ensure a steady improvement in system security. The project focuses on providing the maximum security allowed by game theory without sacrificing speed. Because of this, Razor has found a balance between efficiency and security, and its completely decentralized setting also avoids The bottleneck problem that the centralized oracle may encounter.

The founder of Razor, Hrishikesh, comes from Consensys and has rich experience in the blockchain industry and code. Under his leadership, Razor has reached cooperation with a series of projects such as Skale, Matic, MatraDAO, and Conflux.

Also published on Medium's Subdomain: https://arkstreamcapital.medium.com/portfolio-report-for-the-1st-quarter-of-2021-2-arkstream-capital-a8696d6edda8