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Notation and Blockchain Participation - 2019 Annual Meeting Presentation

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Notation and Blockchain Participation - 2019 Annual Meeting Presentation

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Notation hosted its second annual LP meeting a couple months ago, and as usual, we published our deck. In addition to the typical annual meeting topics such as fund performance and portfolio company reviews, we decided to do a few deep dives into specific areas of current interest. In particular, we've been investing and participating in the Blockchain space for a few years now. We have been deeply involved at the earliest stages with Livepeer, Bison Trails, Arwen and others - so we figured it might be interesting to go deep on what 'blockchain participation' really means to us from a venture perspective.

Notation hosted its second annual LP meeting a couple months ago, and as usual, we published our deck. In addition to the typical annual meeting topics such as fund performance and portfolio company reviews, we decided to do a few deep dives into specific areas of current interest. In particular, we've been investing and participating in the Blockchain space for a few years now. We have been deeply involved at the earliest stages with Livepeer, Bison Trails, Arwen and others - so we figured it might be interesting to go deep on what 'blockchain participation' really means to us from a venture perspective.

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Notation and Blockchain Participation - 2019 Annual Meeting Presentation

  1. 1. Blockchain Participation
  2. 2. 2 Active Blockchain Participation at Notation Agenda • We've always been active builders and participants • What participation means in the context of blockchain projects • How to participate • Why an investor would want to be an active blockchain participant • How participation works for later-stage / liquid projects
  3. 3. 3 Blockchain participation Active participation is in our DNA We've always been active participants –– founders, company builders, and the earliest, most involved investors.
  4. 4. 4 Blockchain participation Blockchain projects are a new way to organize resources The Firm The Blockchain Governance Security Computation Code Storage Bandwidth Support Documentation Governance Security Computation CodeStorage Documentation Bandwidth Support Core team
  5. 5. 5 Blockchain participation There are many forms of Blockchain participation Proof of stake Delegation/Staking Governance Proof of Spacetime Validators Reputation Full node operation Proof of work complexity
  6. 6. 6 Proof of Work Bitcoin Ethereum Grin Zcash Litecoin We’ve mined… Privacy token Privacy-protecting digital currency Our participation Our mining facility The dominant consensus protocol for blockchains has been proof-of-work (PoW), which solves reliability and security concerns by requiring mining nodes to solve computationally intensive puzzles. This creates an environment of “essentially one- CPU-one-vote” to achieve block consensus, making it nearly impossible for attackers to acquire enough computational power to hack the network. https://figment.network/resources/a-primer-on-proof-of-stake-and-why-it-matters-for-the-future-of-blockchains/
  7. 7. 7 Our participation Proof of Stake Decentralized live video streaming, built on the Ethereum blockchain. livepeer.org We have been active participants in the LivePeer project in many ways. We've operated one of the top LivePeer transcoders since network launch in June 2018 Staking is the process of holding funds to support the operations of a blockchain network through a reward-driven process. Mimicking passive-income strategies in traditional finance, staking allows users to earn rewards directly on-chain for holding a given currency. https://info.binance.com/en/research/marketresearch/rise-of-staking.html
  8. 8. 8 Our participation Proof of Stake Our participation in the LivePeer MerkleMine helped put many more LPT tokens into circulation ... but it also saturated the Ethereum network, generating over 2x the transaction volume of CryptoKitties. This is the LivePeer MerkleMine smart contract address, shown being used for 28.72% of all transactions on the Ethereum network
  9. 9. 9 Our participation Open-source and community We've also contributed code and documentation to the LivePeer project to help people run their own LivePeer transcoders on the network.
  10. 10. 10 Our participation The Future: Proof of Stake projects with upcoming launches Operating storage nodes Status: future launch Filecoin Decentralized storage OSCoin / Radicle P2P code collaboration platform Worklock + Operating nodes Status: currently on testnet Nucypher P2P privacy infrastructure Operating cache nodes Status: future launch CacheCash Decentralized CDN Governance - voting our MKR Status: Later-stage, Liquid MakerDAO Decentralized credit platform OpenZeppelin Secure, smart contract platform Reputation / Governance voting Status: alpha release Voting - vouching, reputation Status: ZEP token private beta
  11. 11. 11 Why we participate Active participation leads to better outcomes than investing alone May 2017 Jan 2018 July 2018 Oct 2019 Purchased EarnedLivePeer Token (LPT) holdings “The first few months of validating on a network is likely more profitable than many years in aggregate after the network has matured.” June 2018 • LivePeer goes live on mainnet • Notation launches transcoder • Mining period begins Source: Generalized Mining: the LP's perspective, David Fauchier, Cambrial Capital 32% 72%
  12. 12. 12 Why we participate Active participation gives us a competitive edge Our participation helps improve the networks, we become stronger investors. Our reputation leads to better access, our participation leads to better understanding. Leads to better access Operating nodes and mining Operational expertise & deeper understanding Makes us better investors & better partners to teams Our work with early software teams
  13. 13. 13 Why we participate Active participation leads to key new investments x` A robust and secure infrastructure platform for blockchain operators. Transparent and sustainable finance via decentralized stablecoin, collateralized loans, and community governance. NuCypher's Proxy Re-encryption network provides cryptographic access controls for distributed apps and protocols. A peer-to-peer stack for code collaboration. INFRASTRUCTURE PRIVACY / SECURITY DECENTRALIZED FINANCE OPEN SOURCE
  14. 14. 14 Later-stage / liquid projects Debt ceiling Liquidation Ratio Stability Fee Price Feed Sensitivity Penalty Ratio Dai Savings Rate (DSR) Extending our participation to later-stage projects: MakerDao governance Everything we've covered related to participation has been mostly focused on early-stage projects, but it applies across the ecosystem, including to later stage projects. We've invested in MKR, where we will participate by voting on governance matters.
  15. 15. notation.vc

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