CoinFund Invests in Dapper Labs

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Dapper Labs Leads the Way in Blockchain-Based Entertainment With the Announcement of Flow, a Platform With a Novel and Elegant Approach to Scalability

There were only a few days in the history of the Ethereum blockchain when user activity filled it to capacity. Most took place in November and December 2017 and coincided with the release of CryptoKitties — the game of collecting and breeding digital cats. The success of CryptoKitties was a demonstration of the power and appeal of digital collectables. In the words of David Pakman, “Blockchains, for the first time, let digital goods become scarce and allow anyone to verify ownership without a central authority […] this will unlock digital collecting, allowing scarce digital goods to be created, sold, auctioned and traded.” (Emphasis in the original).

Today, CoinFund is proud to announce our investment in Dapper Labs, the company that was spun out of the Vancouver-based Axiom Zen, the creator of CryptoKitties. Dapper Labs is not only working on engaging users via its new blockchain game offerings, Cheeze Wizards and NBA Top Shot, but is also building its own blockchain platform, called Flow, designed for scalable decentralized computation and superior user experience.

The design of Flow was largely informed by the company’s experience building real consumer products. While many other blockchain platform developers often fail to appreciate the practical implications of their designs to end users and application developers, Dapper Labs experience in full-stack product development gives the company a significant edge. Furthermore, vertically integrating product and platform teams ensures that the company can keep this edge for years to come.

The architecture of Flow prioritizes scalable decentralized computation and a high degree of interoperability and composability without using sharding or other off-chain scaling mechanisms. The thesis that sharding (breaking up the chain into multiple sub-chains) is detrimental to the ecosystem is somewhat unique to Flow’s architecture. It was informed by the observation that interoperability is stifled by the need for asynchronous messaging between the shards (sub-chains). Rather than breaking up nodes into “vertical” groups — by shard — Flow breaks up nodes into “horizontal” roles, by their function. This turns the process of committing transactions to the main chain into an elegant pipeline, somewhat reminiscent of modern CPU architectures.

At CoinFund, we have researched many different approaches to scaling decentralized networks, including side-chains, state channels, sharding, and application-specific blockchain ecosystems. Each approach has its tradeoffs, and we believe the architecture of Flow to be both elegant and viable, offering a unique contribution to the ongoing discussion of scalability in the realm of decentralized networks.

Flow is a platform that is designed not only for superior throughput and strong decentralization, but also for the simplified user experience that is so critical for global adoption. The creators of Flow believe that their architectural choices will enable many different types of consumer applications of Flow, such as entertainment applications, decentralized social media, and many others.

We are especially excited by Flow’s “focused generality”. Its architecture is informed by existing products with proven market fit, yet formulated to serve other types of applications as needed. This results in highly practical implementations, while still maintaining strong optionality in the future. Early focus on entertainment and gaming industries provides a strong go-to-market, while the generality of the platform allows the company to easily expand into other market verticals, creating significant upside.

CoinFund partner Alex Bulkin has been working closely with the Flow architecture team on a number of questions related to cryptoeconomics, decentralized architecture, and staking incentives. Through these sessions we have experienced firsthand the quality of thinking that Dapper Labs’ team is able to put forward. It is from this place of being informed both on the blockchain space as a whole, and of personally knowing much of Dapper Labs’ team that we at CoinFund express our pride and excitement at being Dapper Labs’ partners on this journey.

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