DFINITY may well be the most exciting project of 2018.
It is a visionary undertaking with an exceptionally talented team. Apollo Capital is proud to have invested alongside a16z Crypto and Polychain Capital.
Apollo Capital invested in a $102 million round jointly led by Andreessen Horowitz (via its crypto fund a16z crypto) and Polychain Capital.
Both a16z and Polychain were investors in a $61 million round DFINITY announced earlier this year.
DFINITY is a decentralised computation network that is able to make digital platforms constructed from trustless, autonomous, and open source software. The ownership and governance of these platforms is controlled by a distributed community of users and developers, rather than companies.
Why is having distributed ownership and governance of a computational platform a feature and not a fault?
The answer lies in the outsized control that Web 2.0 incumbents have on almost every aspect of their user and developer base.
a16z explains the extent of this reality:
Today’s web platforms like Google, Facebook, and Twitter control each and every interaction between users on the platform, each user’s ability to seamlessly exit and switch to other platforms, applications’ potential for discovery and distribution, all flows of capital, and all relationships between applications and their users.
Total control, in other words. A handful of companies dictate the rules of the game.
This breeds mistrust and is not sustainable.
Today’s centralised platforms have an incentive to extract value from users and developers. This problem has become more acute as the relative power of platforms has increased substantially, locking users into walled gardens that house the network of most value.
What is DFINITY?
DFINITY is a scalable and sufficiently decentralised ‘Internet Computer’.
A functional internet computer is a fundamental building block to a Web 3.0 economy, which itself relies of the data layer merging with the protocol layer at scale.
DFINITY’s distributed computing network allows the creation of smart contracts, perhaps more accurately called verifiable programmable agreements, to run at scale. In doing so, DFINITY may perform a function that today relies on a myriad of organisations, companies, firms, people, and paperwork.
“The property of trustless verifiability is the core reason why DFINITY can credibly be used to disintermediate the central organizations that today mediate many of our interactions with others.”
A programme that is able to verifiably and trustlessly execute could be used to settle large swathes of the financial economy, for example, to mediate contracts about fundraising, trading, lending, derivatives, payments, to insurance which may be better expressed in code than in legalese.
The inherent efficiencies that this kind of internet computer could present to the global economy are too significant to ignore.
However, it does rely on an internet computer that can perform at scale — for a user base of billions. This has yet to be achieved.
Where DFINITY Fits In
Ethereumin its current state is clogged by simple applications with only hundreds of users. This is because Ethereum is a platform that relies on every miner in the network executing every computation. While this is strong in terms of security and decentralisation, it does not scale. Crypto kitties and FOMO 3D, hardly world changing applications, respectively consumed a large proportion of Ethereum’s network capacity almost rendering it unusable.
Ethereum is making headway on the scalability headache with state channels, plasma, and sharding, but the problem still hasn’t been cracked.
EOS’ssystem of delegates ensures scalability, but at the cost of decentralisation. By delegating a group of trusted and static actors, the cost of bribing the delegates is likely to be lower than the possible reward, exposing the network to human biases and greed.
DFINITY, on the other hand, have devised a compelling solution, that sits somewhere between the currently unscalable but secure Ethereum and the scalable but potentially insecure EOS. It achieves this by randomly selectinga delegation each block. Because it is impossible to know who will be selected, and each block only lasts for 3 seconds, the ability to maliciously influence the network is small.
Apollo Capital invests in projects that have the potential to radically reshape the global economy. Permissionless, open, and decentralised blockchains fuelled by a scarce token have the ability to collapse the cost mediation thereby replacing the plethora of middlemen that exist in our economy.
Project like DFINITY could scale human collaboration to unprecedented levels by virtue of that collaboration not relying on trust.
We are thrilled to have invested in DFINITY and look forward to being a supporting role in this important stage of their journey.
James Simpson is an investment analyst at Apollo Capital — Australia’s Premier Crypto Fund. The Apollo Capital Fund is a professionally managed portfolio of crypto assets, offering investors exposure to the fast growing crypto market. For more information, please see apollocap.io.