Ethereum-Friendly Skale Raises Pile Of Money

Arrington XRP Capital participated in the just announced Skale funding round – some $17.1 million in total. You can read the details, soundbites and thoughtful quotes on the news sites. Here’s CoinDesk and TheBlock.

Yes, I’m a little salty today. I flew home last night on a redeye flight from New York. In coach. I was supposed to write about Skale at a designated time that coincided, I believe, with the exact moment on the flight where I, shuddering from cold, purchased two $5 blankets that I was told I was free to keep. When did we start having to buy blankets on flights? Will they install a credit card reader on the toilets next?

I’m convinced those bastard on Jet Blue turned the temperature down just to sell more blankets.

Anyway, I’ve had a solid 2 and a half hours of sleep now and I want to use my cheerfulness to explain why I think Skale is going to make us enough of a return that I will never, ever, have to fly coach again.

There are two reason. First, Skale has the best team I’ve ever seen. With the possible exception of any other founders I’ve invested in that happen to be reading this post, Skale has without a doubt the finest crypto team in the business. (I joke, but I’m serious. We invest in teams first, products second. It works).

Second, Skale can fix Ethereum. Even Joe Lubin, founder of Consensys, would admit this, and that’s why the venture arm of Consensys invested along side us.

If you are building in crypto, Skale might be an excellent partner and help you build things that actually work. And, well, scale. Mainnet is coming, soon, but you can test now.

Thank you, Skale, for including us in the round. Everyone wanted to invest, and we appreciate you finding room for us.

Arrington XRP Capital Welcomes Alex Shin, Former #Hashed Partner, As New Venture Partner

Many of you in the industry know Alex Shin well. He was a cofounder and partner at Seoul-headquartered #Hashed, one of the largest crypto venture capital and accelerator funds in the world.

Today we welcome Alex to Arrington XRP Capital as a Venture Partner. Alex will help us find new growth opportunities in Asia, the U.S. and the rest of the world.

Alex is American but speaks Korean natively and has lived in both San Francisco and Seoul for the last several years.

We are excited to work with Alex, helping us grow our footprint in Asia and beyond.

Algorand’s First Australian Tour, A Welcome from Arrington XRP Capital

Next week, Algorand is launching its first official Australian tour, where Founder Silvio Micali and Steve Kokinos will host a packed week of events in Sydney and Melbourne.

As Australian partners at the fund, Ninor and I are thrilled to welcome two of crypto’s brightest minds to our very own backyard. 

Silvio and Steve are a dynamic duo to say the least and definitely a pair you don’t want to miss live. As part of the roadshow, Algorand is hosting a big week of events from lectures at Australia’s top universities to a series of meetups and panel discussions with industry leaders from the local scene. 

Arrington XRP Capital will be joining the tour alongside partners Mozaik Capital, Blockchain Australia, Sydney Blockchain Professionals and the Blockchain Centre.

For our Aussie readers, here’s a summary of Silvio and Steve’s week ahead:

September 4 – Melbourne

September 5 – Sydney

September 6 – Sydney

On the 5th, I will moderate a panel discussion between Silvio and Steve, where we will be joined by legal mind Hannah Glass from King & Mallesons and blockchain engineer and Deepyr founder Adrian Guerrera. 

One of the best parts of being a crypto fund manager is the opportunity to not only invest in projects and founders globally, but to make friends and build communities across the world. It’s events like these that make the 24/7, timezone-agnostic chaos of the crypto markets well worth their permanence.

Algorand is one of the most ambitious projects in crypto. The team’s vision for a “borderless economy” aligns very closely with our own guiding principles at Arrington XRP Capital: our team is spread across continents and we invest globally in technologies and teams that are unbounded by the closed walls of a legacy financial system.

Hopefully the first of many. Welcome!

Our New Investment In Algo Capital

We are very pleased to join forces with Algo Capital, a new $200 million venture fund founded by David Garcia and Arul Murugan. We have invested in the fund, which will focus on the Algorand ecosystem.

See Coindesk: Arrington XRP Backs Fund’s $200 Million Raise for Algorand Blockchain

We join our friends at the Algorand Foundation, Neo Global Capital, Eterna Capital, GSR, Cognitive Blockchain, Rokk3r, Wibson, 11-11 Ventures, DG Ventures, Winslow Strong, Invermaster and other investors in supporting this new fund.

Algo Capital only takes commitments in Algos, much like our own XRP-only policy. We are very excited to be investors in the new fund, and look forward to co-investing in new blockchain projects with them in the future.

Additional coverage:

The Block: Bakkt investor backs $200M VC fund focused on Algorand blockchain

Finance Magnates: Algo VC Fund Raises $200M to Promote Algorand Blockchain

Yahoo Finance: Arrington XRP Backs Fund’s $200 Million Raise for Algorand Blockchain

BusinessWire: Algo Capital Closes Algo VC Fund at $200 Million

hypepotamus: ATLANTA-BASED VCS RAISE $200M BLOCKCHAIN FUND

Blockchain News: Algo Capital Closes Algo VC Fund at $200 Million – Doubling Expected $100 Million

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.

The Monetary Experiment: Algorand

We explore the monetary experiment of Algorand, a new cryptocurrency invented by Turing Award winner Silvio Micali. Arrington XRP Capital will be participating in the Algorand economy by running a relay node and bidding in the Algorand Foundation’s dutch auctions.

Algorand brings together bleeding edge cryptography with a clever economic model that bootstraps Algo currency markets. This is a novel development that ties the token and technology to economic incentives that encourage efficient market pricing.

The Algorand Foundation will distribute 30% of Algos through downside-protected dutch auctions. In this world, auctions are akin to monetary policy catalysts, not only circulating tokens, but guiding price discovery both today and in the future. The clever part of this story is that any purchaser can refund their Algos one year after purchase, giving them up to 90% downside protection. This has wide implications for Algo market dynamics.

Algorand’s monetary experiment marries Silvio Micali’s solution to a three decade challenge in distributed systems with lessons from Foreign Currency (FX) trading, options pricing theory and traditional asset management. As these markets mature, we predict that Algo will behave unlike any other cryptocurrency today. Not a stablecoin; but a cryptocurrency whose economic model motivates financial markets to form rational expectations and seek out self-fulfilling equilibrium.

The downside-protection clause also opens up a new world for institutional investors such as family offices or endowments who have not yet ventured into cryptocurrency because of its drawdowns. The simple question for these investors as well as others who hold cash in their cryptocurrency portfolios is thus: Why hold cash when you can hold downside-protected Algos, gaining cryptocurrency exposure without significant downside risk?

Algorand’s economic experiment is unprecedented. It is where macroeconomics meets cryptocurrency; and we believe that it will have wide-ranging implications for cryptocurrency portfolio management, hedging and broader market dynamics.

DOWNLOAD OR VIEW THE REPORT HERE.

DOWNLOAD THE REPORT IN MANDARIN HERE.

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.

Why We Are Joining Terra Mainnet as a Genesis Validator

On the dawn of the Terra Genesis Block, the Arrington XRP Capital team is in the final stages of preparing a Genesis Validator for MainNet launch.

After many months of technical and business development, the countdown finally comes to a close.

Terra will launch tonight–April 23rd–at 23:00 PST.

From the moment Michael met the team last year, he knew there was something special about this project, likening Terra to his early investments in Uber and Pinterest. And for myself, as a new partner to the fund, there is no better way to be part of the network than to work closely with the Terra team and launch a Genesis Validator.

Terra represents the first real deployment of a non-collateralised, algorithmic stablecoin at scale. It is not a stablecoin science experiment. Rather, Terra is the first project of its kind to come to market with an existing and sizeable network of e-commerce merchants. More importantly, it is the first consumer-focused stablecoin, targeting non-crypto online shoppers who care more about discounts than they do about blockchains.

Alongside Cosmos & Binance Chain, Terra is one of the few public chains built on Tendermint Core. Tendermint Core is a Byzantine Fault Tolerant (BFT) mechanism designed to achieve agreement if no more than 33% of the network is malicious or faulty.

Deploying Tendermint Core publically needs another mechanism: sybil deterrence. This is where Terra’s Delegated Proof of Stake (dPoS) mechanism comes into play. By allowing LUNA holders to delegate to MainNet validators, Terra empowers token owners with real skin-in-the-game, as they ultimately decide who will secure the network.

There are plenty of challenges in deploying validators in adversarial environments, especially on high value networks like Terra (all we need to do is look to the history of chains victim to 51% attacks). Without proper node design, key management & security auditing, validators are sitting ducks, honey-pots, prey to malicious hackers & DDoS attacks.

After many months of defining availability demands & security requirements with the Terra team, we are very excited to launch our Genesis Validator.

It is not everyday that you have the opportunity to be a foundational part of what is potentially a multi-billion dollar e-commerce economy.

Contact us on terra@arringtonxrpcapital.com if you are interested in delegating your LUNA tokens with us.