Ron Palmeri Joins Arrington XRP Capital

Ron Palmeri is a seasoned silicon valley entrepreneur and investor. Today we welcome him to the Arrington XRP Capital team.

I first met Ron shortly after launching TechCrunch nearly 15 years ago. At the time he was a partner and cofounder at Minor Ventures, an early incubator and fund that launched a slew of amazing startups. Companies he helped start include Grand Central (which later became Google Voice) and Open DNS.

Ron later started and invested in more companies, including most recently Layer, a communications infrastructure company that was recently acquired.

That acquisition was lucky for us because it made Ron, an incredible leader and mentor, available to us. He has joined as a strategic advisor and consultant. We’ll keep him as long as we can, either until I convince him to join full time as a partner, or he goes off to start his next operating company.

Follow Ron on Twitter @Ronp.

DefendCrypto.org Launches To Help KIN And Others Fight The SEC

We’ve all watched KIN and others fight the SEC over how the U.S. government classifies their tokens. And while we often (always) bicker amongst ourselves about every detail of every coin and protocol out there, nothing can bring us together as well as a common enemy. The SEC is out of control, and hurting our industry with indecision.

That’s why we stand behind KIN and others fighting the SEC. Today KIN launches DefendCrypto.org to help spread information about their legal challenges, and request financial assistance from the community.

KIN has set aside $5 million for their legal defense fund and Coinbase will host the fund. You can contribute directly at defendcrypto.com. Anything left over after their case will be used to help other companies fighting the SEC.

Arrington XRP Capital will be donating to the KIN fund. We urge you to help them as much as you are able, and to spread the word.

Thank you.

Additional links about this:

Fred Wilson

The Block

CoinDesk

Our Investment In Dekrypt Capital

Our investment thesis at Arrington XRP Capital is to invest in great people and great projects. It really is that simple, and sometimes that means we invest in our “competitors” – other funds making investments into crypto-focused companies and projects.

We’ve made three investments in other funds to date – Ausum Ventures last year, one confidential investment (per the request of the fund), and most recently, Dekrypt Capital. More investments into other crypto-focused funds will come in time.

Why Dekrypt Capital? It’s all about the people. Jon Allen, Howard Wu, Ronen Kirsh and Jack Baumruk are the Dekrypt partners. They are among the most respected people investing in crypto projects today.

In 2011 they were mining Bitcoin.

In 2014 they invested in the Ethereum ICO.

In 2015 they helped develop Zcash, the first untraceable token with zero-knowledge proofs.

In 2016 they created Blockchain at Berkeley.

In 2017 the SEC spoke for the first time at a blockchain conference hosted by Dekrypt.

And in 2018 they hosted the first San Francisco Blockchain Week, with over 4,000 attendees.

Howard’s background in cryptography and various papers he has written such as DIZK and ZEXE have positioned him as one of the leaders in the zero knowledge proof domain.

They were co-investors in about half our deals last year, so we already knew they made some great investments. Like us, they aren’t shy about traveling and have made investments in fifteen companies in five countries.

They don’t publicize themselves much (a refreshing change in this industry), they have spectacular credentials, and bend over backwards to assist the companies they invest in. Actually, they help anyone that asks, even if they haven’t invested. When someone reaches out to them, they say yes, and help all they can.

Here’s an example of how helpful they are. Earlier this year we were expanding our team (eventually merging with another firm). We reached out to many people in the industry for assistance in finding good people. Ronen and Jon quickly came back to us with two amazing candidates out of Berkeley. Their deep ties to Blockchain at Berkeley helped us immensely.

Dekrypt has been in the blockchain space for a long time and will continue to be in the blockchain space for a long time. They have a builder’s mentality and the companies we have co-invested with them say that they are very engaged. Being helpful to your companies is perhaps the best way to advertise yourself – people talk, and being a force for good is a good reputation to have.

Their focus is on early stage projects. They have deep technical backgrounds and close ties with the developer communities which allows them to help their companies solve technical challenges as well as build out their team as they scale.

Dekrypt focuses on privacy preserving technologies and believe there are massive potential applications ranging from scalability, interoperability and obviously privacy. Like us, they believe this thesis is being validated and will continue to grow in importance.

They raised $20 million last year to start the fund, and they are now raising additional capital, as we did in late 2018. We made the investment last month and are proud to be doing business with them.

Arrington XRP Capital Goes To Korea Next Week

We are on our way back to Asia to attend the Deconomy conference in Seoul next week.

I’ll be on stage in the afternoon of the first day for a panel called
Silicon Valley VC’s Crypto Investment Strategies. Joining me are Alex Pack (Founding Partner at Dragonfly Capital), Bryan Chang (Principle at Collaborative Fund) and Alex Shin (Partner at Hashed).

I was last in Korea last summer and that trip, hosted by Hashed, led to at least two deals that worked out really well for us (Contents Protocol and Terra). Korea is a wonderful country full of wonderful people, and I’m looking forward to this trip.

Joining me are Ninor and Ninos Mansor, our new partners. See you there.

Arrington XRP Capital Merges with ByteSize Capital

See CoinDesk: TechCrunch Founder’s Crypto Fund Tops $100 Million, Completes First Acquisition and CoinTelegraph: TechCrunch Founder’s Digital Asset Firm Acquires Crypto-Focused Private Fund

Arrington XRP Capital is very pleased to announce a merger with ByteSize Capital, another crypto fund. ByteSize Capital partners Ninor Mansor and Ninos Mansor have joined Arrington XRP Capital as partners, alongside founding partners Heather Harde and Michael Arrington (see the Team Page for more information). In addition, Geoffrey Arone will be stepping down from Arrington XRP Capital and moving to an advisory role.

ByteSize Capital is a private fund and research house focused exclusively on cryptocurrency. They have made investments into projects including Algorand, CertiK and Arweave. ByteSize Capital combines a wealth of technical expertise with data-driven frameworks for the crypto markets.

As part of the merger, Arrington XRP Capital will onboard ByteSize’s proprietary investing suite. The partners at ByteSize have developed a set of tools for navigating the crypto markets, including systems for data ingestion and quantitative backtesting. These systems will be incorporated into Arrington XRP Capital’s existing investment framework.

The merger strengthens Arrington XRP Capital’s barbell approach, combining early stage venture with a multi-strategy outlook toward the liquid markets.

Arrington XRP Capital also took a new $30 million commitment in December 2018 and continues to fund token and equity rounds for crypto projects worldwide. Investments are at http://arringtonxrpcapital.com/companies/.

Terra To Launch With Ecommerce Giant TicketMonster

Terra is a Korean startup that is preparing to launch its first price-stable cryptocurrency, or stablecoin. It is one of our largest investments at Arrington XRP Capital, and I am excited to see this move from theory to product and, hopefully, mass adoption.

You can read a recent interview with Terra at Global Coin Research here for additional information about the company and the upcoming launch.

Terra will first launch its payment network in Korea, with direct integration into a multibillion dollar Korean e-commerce company called TicketMonster from day one. The payment network presents an innovative stablecoin design that brings together algorithmic price stabilization and Tendermint’s proof-of-stake. While unveiling the payment network and a dApp designed for use in Korea, the company plans to expand aggressively into the rest of Asia.

As I described in my first post about Terra last year, relies on stabilizing mechanisms common to a new class of stablecoins. In addition, however, they rely much more heavily on something no one else is doing, a network of large ecommerce companies, in a variety of countries. This integration into some of Asia’s e-commerce giants makes it the first stablecoin to launch with an existing network of potential users.

Up until now, collateralized stablecoins like USDT and USDC have focused on speculators within the cryptocurrency ecosystem, while non-collateralized stablecoins have remained economic thought experiments (e.g. Basis). In some sense, Terra is the first stablecoin to actually come to market with a large potential user-base which isn’t focused on crypto.

In Q2 Terra says they are aiming to launch a payment service with TicketMonster, a large ecommerce platform in Korea with about US$3.5 billion in yearly gross merchandise sales. People will be able to purchase items at TicketMonster as usual, but if they use the Terra dApp they can pay with Terra, which is locked to the value of the Korean Won. As an incentive, the ecommerce partners will give Terra users a discount of ~5%.

That means a lot of people will want to use Terra right away to get that discount. Retailers will be reimbursed the discount through seigniorage issuances of new currency as the Terra economy expands.

From the retailers perspective, Terra is only charging ~1% transaction fees instead of the normal 2-3% (or more) charged by legacy payment companies.

The launch with TicketMonster will be the first time cryptocurrencies become easily accessible to mainstream consumers. The dApp is designed in a way very similar to PayPal. You select Terra at checkout as your payment method, you link your bank account, and then the dApp automatically exchanges fiat for Terra and finalizes the transaction. You don’t need to keep track of your private key or go to a dex to buy Terra, and most users probably won’t even notice that blockchain technology is running in the background.

So it’s a win/win for consumers and retailers, as payment friction declines significantly, and non-crypto enthusiasts are introduced en masse to a new type of crypto payment product, some of whom won’t even know they are using a crypto currency.

So How Does This All Work?

Terra employs a two token seignorage shares model for price stability first conceptualized in 2014 by Robert Sams. This model incentivizes holders of the mining token Luna to absorb price volatility in reward for seignorage – profit generally restricted to governments issuing national currency. In practice, this means investors – like us – join the network as miners & stake our coins to enable the expansion / contraction of the money supply, earning our keep of transaction fees from the Terra economy along the way.

As one of the first non-collateralised stablecoin experiments with significant real world traction, performance of the underlying consensus layer is critical to its success. This is why Terra opted for Tendermint, a battle hardened protocol (see Game of Stakes) inspired by traditional distributed computer science, and soon to be deployed on MainNet by the likes of Binance DEX & interoperability giant Cosmos Network.

The company tells me that both the Terra and Luna coins will be listed on exchanges soon, before the product launches.

I’m hoping that the dApp is released and live by the next time I visit Korea. I can’t wait to try it out.

A Hell Of A Year

2018 was a hell of a year. Yes, getting crushed in the market sucks. And yes, many were left shell shocked. But as someone who’s lived through a few big market downturns, I can tell you this. If you’re still standing, you are stronger for it.

You are a veteran of the 2018 crypto disaster. The next time the markets get shaky, you’ll handle it like a pro. And you’ll tell those around you, “This is nothing. I was in crypto in 2018.”

Perhaps your story is more heart wrenching than most. Maybe you lost your job, or more money than you could afford. That sucks, certainly. But greatness will be molded from the ashes. As I wrote nearly a decade ago (when we were just getting out of a different financial disaster), entrepreneurs live for this craziness. It’s supposed to be hard to be successful, that’s why the journey is so valuable.

Those of us that remain are stronger, forged in fire, and less likely to break down the road when new and even greater challenges approach. Be thankful for 2018, because to truly appreciate the good times, you have to suffer occasionally, too.

We are excited at Arrington XRP Capital. We are still aggressively investing in new projects, and our investors are doubling down in this market. Great fortunes will be won or lost in the coming years, and new technologies will emerge that we can’t even imagine today. Don’t let 2018 get you down. 2019 is here, and full of possibility.

Silicon Valley’s Harmony Ready to Debut

It’s no secret to anyone following the crypto space that most of the innovation is happening outside of the United States. There are many reasons for this, but one of the main ones is the complete lack of regulatory guidance by the SEC.

Companies here are largely in limbo as their lawyers freeze most token issuances. Entrepreneurs that used to move to the U.S. to start their companies are looking at the huge tax burden, visa bureaucracy and regulatory black hole and just staying home instead. 

As a result, we’ve focused most of our investment energy towards Asia, Europe and the Middle East.

None of this has stopped Silicon Valley based Harmony, however. They are one of the hot new infrastructure startups tackling the next generation of blockchain.

They have an amazing team and are growing quickly. I met with the company earlier in the summer before my world tour. Pictured here is me on the left, then Rongjian Lan, Nicolas Burtey and CEO Stephen Tse.

The company was run out of Stephen’s home until they recently moved to dedicated offices (another house, I’m told) in Cupertino.

This is probably the hottest pre-funded crypto startup in the valley right now, and investors are clamoring for introductions. They are also hiring. 

You can contact Harmony on their website or on Twitter @HarmonyProtocol, and you can read about their product and history in their own words here – Introducing Harmony: An Open, Scalable Marketplace for the Decentralized Economy.

Terra’s Ambitious Ecommerce Backed Stablecoin

I visited Korea in July and while I was there I had the very fortunate opportunity to meet Terra founders Daniel Shin and Do Kwon. This was one of those rare meetings where it might have appeared that the company was pitching me, but I already knew I wanted to invest and in reality I was pitching them to get the largest allocation I could.

Terra is our third investment in a Korean company and our second largest single investment by size. I’m VERY excited about this company. This is only the second stablecoin we have backed (the other is U.S. based Reserve).

Most stablecoins have a mechanism for keeping the price stable to another (usually fiat) currency that involves an algorithm and reserves. While Terra is also using these same tools, they are mostly focused on keeping their coin price stable via a network of the largest ecommerce companies in the world who are going to agree to use the currency and peg its value. That means the heavy lifting will be done via partners who will simply use the coin, and it’s a compelling argument.

We join an incredible list of co-investors (Binance Labs, Polychain Capital, OKEx, Huobi Capital, FBG Capital, Arrington XRP Capital, TransLink Capital and many others). You can read lots more about the company at the links from their press debut below.

TechCrunchFortune, VentureBeat, Tech In Asia, CoinDesk, CoinTelegraphDeal Street AsiaBitcoin Exchange GuideCryptoNinjas, newsBTC and Finextra.

Press Release:

Terra Raises $32M in Seed Funding to Build the Future of Digital Money

Terra has created an unprecedented global alliance of major eCommerce businesses and secured investment from an all-star lineup of prominent global funds, including Binance Labs, Polychain Capital, OKEx, Huobi Capital, FBG Capital, Arrington XRP Capital, TransLink Capital and many others

SINGAPORE ​- Terra has successfully closed its seed funding round with an initial USD $32M raised to kickstart its vision of creating the next generation of digital money. In a rare event, the capital investment arms of four of the six largest cryptocurrency exchanges globally have signed on as lead investors, including Binance Labs, OKEx, Huobi Capital, and Dunamu & Partners (the investment firm of Upbit operator Dunamu). An impressive list of leading global blockchain-focused funds, including Polychain Capital, FBG Capital, Hashed, 1kx, Kenetic Capital, Arrington XRP Capital and many others, have also joined as investors alongside major mainstream funds like TransLink Capital.

Terra will invest the initial seed capital in building the modern financial system on the blockchain. The team aims to solve key barriers to the mass adoption of digital currencies by creating a price-stable cryptocurrency (“stablecoin”) that can be readily used on Terra’s blockchain payment solution. The company’s unique go-to-market strategy leverages the large and ever-growing transaction volumes of eCommerce platforms. Terra is using a proven model that has worked tremendously well for payment platforms like AliPay and PayPal, which grew by capturing the rising transaction volumes of TaoBao and
eBay respectively. To drive the same kind of rapid adoption, Terra is integrating its payment system into the Terra Alliance, a formidable alliance of global eCommerce partners on an unprecedented scale.

“We are pleased to support Terra, which sets itself apart from most other blockchain projects with its established and immediate eCommerce go-to-market strategy” said Karthik Raju, partner at Polychain
Capital. “Its existing technology and compelling business model provide an ideal launching pad for Terra to fundamentally disrupt how everyday digital commerce is conducted across global consumer markets.”

The Terra team is already deeply connected to the eCommerce industry, where co-founder Daniel Shin is founder and Chairman of TMON, a leading eCommerce platform in South Korea with a total Gross Merchandise Volume (GMV) of nearly $4 billion and 9 million annual customers. To date, a total of
fifteen companies along with TMON have joined the Terra Alliance, including Woowa Brothers, Qoo10, Carousell, Pomelo, and TIKI – some of the fastest growing eCommerce companies in Asia-Pacific servicing Southeast Asia, Taiwan, Hong Kong, Australia, and other major markets. With a total of USD $25 billion in annual transaction volume and 40 million customers, the Terra Alliance sets the stage for Terra to become a medium of exchange at massive scale. More partners will be joining the alliance as Terra
expands its global footprint.

“From experience, I know that faster, more secure transactions at a fraction of today’s fees could be a game-changer for many eCommerce platforms. We are excited to be working with great partners and look forward to beta-testing Terra’s payment system in Q4 of this year,” explained Daniel Shin, Co-founder of Terra. “However, our vision goes beyond positioning Terra as a trusted and secure medium of exchange for eCommerce. The potential application of Terra is immense, and we foresee it being used for all types and forms of financial products like loans and insurance.”

Terra was conceived in response to the need for a stable digital currency that is immune to the price volatility that comes with speculation and manipulation. However, creating a widely accepted digital currency is only part of its mission. Beyond being a currency, Terra hopes to evolve into an open platform where innovative financial dApps can build upon Terra’s stability. In finally bridging the gap between digital currencies and real-world application, Terra will help unleash the vast and yet-to-be-realized potential of blockchain to revolutionize the very nature and form of money.

“While we see many stablecoins coming out, Terra’s journey is especially meaningful as they are designing one of the few price-stable protocols with existing, working, and strong go-to-market strategy and usage. We are constantly impressed by the founders’ leadership and earnest commitment to the business, and excited to support the team,” said Ella Zhang, Head of Binance Labs.

To learn more about Terra visit: https://terra.money/

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ABOUT TERRA

Terra is designing a price-stable digital currency that will power the next-generation payment network on the blockchain. Terra partners with an ever-growing alliance of global eCommerce platforms to bring blockchain’s benefits such as low transaction costs to merchants and everyday consumers. By bridging the gap between digital currencies and real-world application, Terra aims to evolve into an open platform for innovative financial dApps and grow the real GDP of the blockchain economy. Founded by a team of business, finance and blockchain experts, Terra has offices in Singapore and Korea.  For more information, go to https://terra.money/ ​

Follow us on Telegram: @terramoney
Visit the Terra blog for regular updates: https://medium.com/terra-money
Join the Terra community on Discord: https://discord.gg/bYfyhUT