Portfolio Report for the 2nd Quarter of 2021 (5) — ArkStream Capital
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 Titan and Panther.
Titan
1. Project Introduction
Titan Network is a leading software and service developer, aiming to create a trustless, distributed smart contract network around the production and delivery of hashpower, using shared proofs. Titan is built by miners for miners, through advanced mining management software and North America’s first enterprise-level mining pool, making mining simple, profitable, and scalable. Titan is composed of three parts: software, trading market, and protocol. Software products are for the management of computing power. The trading market is used for computing power distribution. The protocol part provides a Layer 0 global hashpower integrated distribution platform” — Space between’’layer’’and’’0'’, helping public chains to manage and distribute mining power and revenue.
2. Hashrate Token
As an original and intuitive segment of the entire cryptocurrency ecosystem, the mining industry has the characteristics of high profitability but tight liquidity. The average life of a mining machine is about 3–5 years, and it can be resold up to 2–3 times during the normal life cycle. The lack of liquidity of mining machines has led miners to seek effective hedging strategies, allowing the large amount of hashpower in their hands to continuously and steadily generate value.
In the demand for liquidity, there is currently a hashrate token that abstracts hashpower into standardized, freely circulated tokens. Anyone can participate in the mining of cryptocurrency by holding tokens, and at the same time, tokens can be transferred on the secondary trading market at any time, thereby exiting mining and obtaining stable cash flow.
BTCST is the first hashrate token issued by Binance on LaunchPool, and it is currently the largest-scale hashrate token recognized in the global cryptocurrency market. The current total lock-up volume is about 120 million U.S. dollars. With the novel model and the support of large capital, BTCST is supported by many miners, who output approximately 12% of the global BTC hashpower.
Compared to the BTCST token model issued by the Binance Smart Chain by collateralizing BTC hashpower in exchange for BTCST, Titan’s hashrate token issuance model is more decentralized. Issue hashrate tokens and move freely on the platform. Through smart contract control, holders of hashrate tokens can obtain stable mining income. For buyers and sellers, it has more freedom and choices, but the technical difficulty of the platform is also more challenging.
The development of hashrate tokens has gradually begun to attract the attention of miners in the market. The development of such derivatives has further promoted the financialization of the mining industry. On the one hand, this allows mine owners or miners to reduce the change in the return cycle caused by price volatility. On the other hand, this will allow mining participants to expand from the original single miner structure to individual investors. Obtain mining rewards and hashpower at a low cost, and improve the liquidity and efficiency of the mining industry.
At present, due to the influence of policy factors, China’s mining plants have been shut down one after another, and the pattern of the world’s mining farms is also quietly changing. In the future, the foreign hashpower market will have more potential.
3. Why did we invest in Titan?
As a platform, Titan not only attracts the liquidity of hashpower, but also provides comprehensive hardware and software services.
Last year, the mining power of Chinese miners accounted for 65.08% of the global mining power. But this year, under the influence of domestic policies, China’s mining industry began to shrink. At present, domestic mines have been retired and withdrawn from the global mining market. On the contrary, the proportion of hashpower in the United States has risen to about 12%, which provides a rare opportunity for foreign mining development. Titan Pool members are located in North America, with nodes all over the US states, resource compliance, and obvious geopolitical advantages.
With the gradual clarity of various regulations on the mining industry, the deployment of mining industries in some countries and regions with relatively clear policies, and the reduction of price fluctuation risks by removing derivatives, can further promote the development of the industry. This is also the grand vision that Titan wants to achieve.
Panther
1. Project Introduction
Panther is an end-to-end privacy protocol that allows other public chain digital assets to map to zAssets in a 1:1 ratio, which can be used freely in the DeFi protocol but will not be known by anyone. Panther is composed of Panther Wallet, Panther Vaults, Panther DAO, and other parts. The wallet can prevent address reuse, use private addresses to achieve a private connection with Ethereum DeFi, and is used to vote on governance proposals.
2. Privacy protection track
Throughout the development of the entire cryptocurrency industry, we attach great importance to privacy protocols. Although privacy-related encryption projects have not received a lot of attention from the market, privacy is currently one of the most compelling needs of DeFi and Web3. This is encryption. An important part of the future of money. From the current development of DeFi, there are many problems like reckless data sharing and greedy data collection, privacy is gradually becoming transparent, and future users’ needs for privacy are self-evident.
The research on privacy protection has had a relatively complete direction during 2018. It mainly covers four directions: privacy tokens, smart contract privacy, privacy infrastructure, and privacy research. Privacy tokens, mainly ZCash and Monero, once entered the TOP10 cryptocurrency industry. With the continuous upgrade of public chains and the outbreak of DeFi, new projects have emerged in the direction of privacy, such as PlatON, the public chain in the vertical field, which is based on the characteristics of privacy computing; like the Web3.0 shared cloud platform Phala, which was born to solve the trust problem in the computing cloud; and the financial protocol platform Evanesco Network that combines the Layer0 network infrastructure and the privacy computing framework. The refinement of privacy is reflected in the fact that user transaction data, packaged data on the chain, and underlying protocol information all require privacy protection. We re-categorize privacy protection and classify it as four layers of privacy protection on the chain: Layer0, Public Chain Layer1, Protocol Layer, and Application Layer.
Public chain Layer 1 is the direction that many projects have continued to explore since 2017. Projects backed by top capital and scientists such as Oasis Network and PlatON hope to solve the problem of privacy protection at the lowest level. The development cycle of public chains is relatively long. For assets and users to enter, in addition to technology development, a large amount of ecological support is also needed. Without the entry of developers and funds, the ecosystem is difficult to form, and it is difficult for more people to use it. Layer0 is the next layer beyond the public chain. It can gather assets from multiple public chains. The core is to break through asset barriers, while protecting user privacy, and enhancing the speed of asset circulation. Panther provides a one-stop solution. through the user’s wallet, users can use DeFi applications with sufficient privacy protection. Products at the protocol layer and application layer focus on user assets. This asset is divided into digital currency assets and data. For example, the currency mixing protocol Ternado allows users to conceal the flow information of assets through products at the protocol layer, while Ocean, the data transaction project, helps users protect data at the data circulation level by establishing a data transaction market.
From a purely technical perspective, privacy computing is an indispensable part of the cryptocurrency industry; from a commercial value perspective, the growing transaction volume and huge user data in the DeFi field are equally urgent for privacy protection. In the future, the development of privacy will bring great changes and profound influence.
3. Why did we invest in Panther?
With the widespread use of chain data websites such as Nansen and Messari, any operation of encrypted users is transparent in the market, and it is easy to be monitored and targeted attacks. There is an urgent need for a product on the market to help users reduce the impact of being “perspective” to a certain extent. The Panther protocol uses zkSNARK technology to provide DeFi users with interoperable, fully mortgaged privacy-enhancing digital assets, and provides a novel privacy price discovery mechanism. Users can forge zero-knowledge zAssets by depositing any digital assets in the blockchain into the Panther vault and using these zAssets in various DeFi applications.
Panther is building an interchain private DEX to enable full interoperable privacy. Besides, Panther has the ability to support KYC and selective disclosure- which gives it the ability to operate in a more regulated DeFi space. For any retail or institutional entities who would like to deploy their strategies — Panther also protects their “alpha” in addition to providing resistance to MEV attacks.
We are optimistic about Panther’s potential in the privacy track in the future. Panther cuts into DeFi through the privacy track, which is a smart choice.
About ArkStream Capital
Founded by @Block_Ark, ArkStream Capital is a token fund dedicated to growing Web3.0 unicorns. Our portfolio includes Efinity, Calaxy, HOPR, Xend, Litentry, etc.
Website: https://blockark.io
Twitter: https://twitter.com/ark_stream
Twitter: https://twitter.com/Block_Ark
