Background
At Chorus One, we see blockchains and decentralised networks as paths to create a more free and prosperous world. At the end of 2017, the co-founders Brian Crain and Meher Roy recognized that Proof-of-Stake allowed a future of many different, interoperable blockchains. They felt that running infrastructure for those networks was an important role at the core of network operations, performance, and governance.
We were there at the genesis of the staking industry during the first of its kind incentivized testnet for the Cosmos Hub, Game of Stakes, a little over 3 years ago. In the meantime, staking has become our core business securing billions of crypto-assets across 28 decentralised networks. The market capitalization of all PoS assets has grown to $320bn, of which around ~68% has been staked. 9 of the top 20 assets use an underlying PoS network for consensus and 63 interoperability protocols have been built to bridge assets across PoS networks.
The Changing PoS Landscape
The PoS ecosystem has changed dramatically since 2018. We have seen new innovations like liquid staking, the singular world computer model turn into one with many modular and application-specific blockchains, and Maximal Extractable Value (MEV) become an increasingly relevant topic. At Chorus One, we are aiming to play a key part in innovation in staking. We recognized the importance of the financialization of staking and published an extensive report on the topic in 2020. After helping launch Lido for Ethereum, we took it one step further and built Lido for Solana to build one of the leading liquid staking applications on Solana, where we are also one of the largest validators. We have witnessed a rise in popularity of application-specific blockchains, to the point that there are now an ever-increasing number of networks that have established a connection to Inter-blockchain Communication (IBC) in 1 year. It could be expected that hundreds to thousands of application-specific blockchains could connect to IBC in the next years. MEV has evolved drastically since Phil Daian first released his research and coined the term in 2019. Value extraction is currently dominated by miners on Ethereum (MEV searchers currently pay miners on average >90% of their reward to include their bundles in a block) as most TVL and DeFi activity exist on the Proof-of-Work network controlled by miners. However, with the transition of Ethereum to PoS and alternative PoS networks increasing their DeFi activity, the value captured from DeFi activity will shift from miners to validators and their delegators.
Announcing Chorus One Ventures
Over the past 3 and a half years, we have developed unparalleled expertise in decentralised networks through launching and operating some of the most used protocols in the space. We have experienced what has worked for networks and what has not. We have provided input on token economics, mechanism design, node operation and key management solutions, validator relations, governance structures and GTM strategies. We value projects that we work with and always make sure to contribute in an impactful way. For this reason, we are announcing Chorus Ventures, which will be a $30m fund that is investing in outstanding decentralised networks, protocols and related products. Chorus Ventures will be managed by Xavier Meegan (Research & Ventures Lead), with oversight from Felix Lutsch and Brian Crain. To date, Chorus One has made 26 investments in this space.
Our Thesis
Chorus Ventures is investing in Proof-of-Stake networks, interoperability and middleware protocols and products. We believe at least 10% of humanity’s economic activity will run through PoS in 10 years' time bringing freedom and prosperity through open and transparent decentralised networks. We leverage our multidimensional relationships with network ecosystem participants and expertise in node infrastructure operations to connect and secure our portfolio of networks.
Chorus One secures PoS networks via operating reliable node infrastructure. Since 2018, we have participated in the launch of many Proof-of-Stake networks. We expect the growth of the PoS ecosystem to continue for many years. The Ethereum Proof-of-Stake merge is imminent, other Layer 1s see rapid increases in activities, and many teams choose to build their own application-specific Proof-of-Stake blockchain instead of a smart contract application. We back the strongest teams building PoS networks. We have already backed teams such as Osmosis, Celestia, Sommelier, Nym and Stargaze.
As a part of our investment focus in PoS, we aim to back teams that are innovating to onboard the next bn+ users into the ecosystem. We see liquid staking and staking tooling (e.g. UX improvements, wallets,…) as two key accelerators to PoS adoption. We have previously backed innovative products and protocols improving staking such as Lido, Obol, Anchor, and Steakwallet. We are in the early stages of innovation in PoS and we expect teams will continue to discover new optimisations, UX improvements and ways to combine staking with DeFi to improve capital efficiency and security for networks for years to come.
As the number of PoS networks continues to expand, interoperability tools must be developed to connect them to ensure a truly efficient peer-to-peer economy. Node operators that validate on many networks are best positioned to support and foster the growth of interoperability because they can use existing infrastructure to enable communication between PoS networks of any kind. For this reason, interoperability has been a key focus for Chorus One. Over the past 3 years, we have built components for trustless bridges into the IBC ecosystem, as well as operated nodes for and invested in multiple interoperability projects including Axelar, Connext, and Biconomy. We believe that we are entering into the very early stages of a modular, multi-chain future and interoperability will be necessary to connect all ecosystems together.
Middleware protocols provide common services and capabilities to applications outside of what’s offered by the underlying PoS network. Essentially, middleware is anything that can be utilised by developers to build their decentralised applications (dApps) more efficiently by using services such as indexing, oracles, cloud, analytics, storage, RPC node infrastructure, and more. A lot of middleware is focused on data and how dApps access it. If it weren’t for middleware, dApps would be limited to only using data that is readable on the network it was built on in an inefficient, computation-heavy way. Middleware is the crucial layer of the stack that improves the performance of dApps by connecting them to the network layer in a smoother way. Node operators in the middleware layer play a crucial role in transferring and transforming data between the network and application layers. We have previously backed middleware networks such as Covalent and have operated middleware networks including Chainlink and The Graph for years.
Why Partner with Chorus One?
As a node operator, we are there on the ground with you from the beginning until the end. We strive to continuously contribute to a network at all stages of its lifecycle. Whether that be from our platform team about node operation best practices or researchers about token economics and mechanism design — we have resources who can advise across all levels of the stack. We actively participate in governance on 30 decentralised networks and care deeply about fostering productivity when committing to a network (or protocol). We uphold values of radical transparency, continuous improvement and kindness. We aspire to partner with projects that share our values.
Reach out
If you are seeking funding for your project and want to work with Chorus One, we would be delighted to hear from you.
Reach out to ventures@chorus.one to begin your next venture journey with us.
