First and most importantly, thank you all for being avid readers of my newsletter and Merry Christmas/Happy Holidays to you and your families!
I wanted to write about Alchemy which is building the leading developer platform for blockchains. Pantera led the Series A with tremendous investors such as Mayfield, SignalFire, Samsung, and others. I will be joining the board of directors.
Blockchain, being a nascent technology, naturally attracts a lot of controversy. Many feel that cryptocurrency is a fad and that blockchain unnecessarily complicates rather simple concepts within technology, begging the huge question of when blockchain will become big.
The wariness to adopt new tech is not an intrinsic problem to blockchain; it’s been seen in the past with smartphones, open source technology, the Internet, and AI. The problem is that with early technologies, the industry doesn’t yet have the quality developer tooling that enables developer adoption.
The inflection point in the growth and expansion of these technologies has always been the creation of sophisticated developer tools and platforms, like software development kits and libraries that make it easy for the average developer to build interesting use cases with these new, often complex technologies.
Today, building and running a decentralized application is an extremely costly and difficult process––from managing data sharing across chains, to running nodes, to debugging failed transactions. These processes have made it hard for developers and enterprises to really explore the power that blockchain has without getting bogged down or deterred by its complexities. Alchemy offers core infrastructure and tools that greatly simplify the blockchain development process. Alchemy provides smart node infrastructure powered by proprietary technology that enables companies to have a reliable, scalable foundation to build their products on, as well as developer tools that handle all development needs, including monitoring, alerting, and blockchain-specific tools.
Alchemy aims to provide the blockchain industry with the necessary professional infrastructure and tools that will greatly improve blockchain development and enable the next generation of blockchain companies.
Today, Alchemy is the industry leader in blockchain infrastructure and tools. Within 2 years, Alchemy’s amassed over a million weekly users and hundreds of applications and companies, including some of the world’s largest blockchain companies like Augur, Bitfinex, 0x, and the Opera Browser. These companies are extremely enthused (to say the least) about the value that Alchemy’s simplifications add to their engineering process.
Ultimately, Alchemy enables the “next big thing in blockchain” by providing the underlying layer that powers those innovations. Now any developer or enterprise who can think of a brilliant use case can use Alchemy’s simple technology to build and deploy their blockchain tech, without getting unnecessarily caught up in the complexities. Alchemy’s tech will hopefully power a surge of new use cases and apps within the blockchain sphere, helping mainstream the tech.
The Big Question: When will blockchain finally take off?
Blockchain and cryptocurrencies are probably one of the most contested areas of technology today––some enthusiasts proudly tout its benefits, from complete user-ownership of assets to enhanced privacy and regulation, while other critics claim that cryptocurrency fundamentally holds no value and technology like consensus and signature schemes unnecessarily complicate a working system. Since Satoshi Nakamoto first published the Bitcoin whitepaper, the sphere of blockchain has grown tremendously in many dimensions. As a result, both sides of the “usefulness” debate have merit; some crypto applications do truly offer real power to users in a way that’s never been done before, while others are just grab bags of buzz words and unnecessary technology.
In some sense, the answer to “when will blockchain finally take off?” is that it already has. MakerDAO has already hit over $300 million worth of ether allocated in loans, and lending platform Compound has $91 million locked in collateral. Many users already use crypto to finance big-purchase items, like mortgages on their house. In the developing world, cryptocurrency also prevents a promising alternative for failed financial institutions and corrupt, broken economic policies.
Still, many are hungry for blockchain and cryptocurrency to disrupt our society at the scale of other technologies––like the Internet, the camera, the smartphone, artificial intelligence, etc. The crucial question is when.
A look at a similar disruptive wave
In 2008, Apple launched the first generation of its flagship smartphone, the iPhone. At the time, the tech seemed to be something for use by the rich & famous; it was expensive, shiny, and in many senses felt unnecessary. The general public was happy with their Motorolas, Blackberrys, etc. The idea of a smartphone with multiple capabilities wasn’t a new development of the iPhone––previous “dumbphones” could do more than talk and text, like play games, take photos, surf the web, etc. But still, the capabilities of these phones were limited by the companies that developed them. Blackberry had to make a BrickBreaker game if you wanted to play it; you were stuck with what the company gave you.
The iPhone’s dark horse was the tiny blue app that was default installed in the top left corner: the App Store. The App Store was the first consumer software marketplace ever deployed on a mobile phone. One of the key developments that Apple made while building the iPhone was building a powerful SDK for third-party and individual developers to build software for use on iOS. That meant that anyone––even if they didn’t know exactly how the iPhone operating system worked––could build apps for the phone using the abstractions that Apple released. This led to an influx of custom apps on the App store––from apps that did your math homework for you to social networking.
As users realized the value of these custom-designed apps, they became more and more dependent on the iPhone; the classic software released by BlackBerry and Motorola were no longer sufficient to satisfy their technological needs. They wanted to be able to use Facebook on their phone, to surf the web in the browser of their choice, to Venmo their friends, etc. In the time since that initial release, the iPhone has become the symbol of the smartphone market and millions of apps have been launched on the App Store.
This trend is observed across a variety of things: the way Android became the largest iPhone competitor via the open-sourcing of their operating system, the way software as a service has skyrocketed to help businesses power niche enterprise applications, the way cloud services like AWS and Azure have become the primary revenue streams for the world’s largest tech companies.
The comparative with blockchain
Like blockchain, many were wary of the iPhone when it launched––it seemed unnecessary and niche. When the abstractions for development emerged, it was no longer up to Apple to discover the brilliant use cases for the iPhone because they were no longer the only people who knew how to build apps. Everyone who had a brilliant idea, in theory, could build it.
Blockchain is an incredibly complex and rapidly growing technology. Even something as integral as running a node locally requires a nontrivial amount of technical knowledge. Building any dapp requires developers to understand the ins and outs of how the technology works, how to debug it, how to track analytics, etc. Running the nodes to power blockchain technology itself can cost companies millions annually in terms of engineering resources; poor management in things like load balancing across servers, sharding, etc. makes crashing and terrible 24/7 on-call cycles an even more prominent problem for blockchain applications. All these present difficult, costly tasks that disincentivize developers from exploring the power of blockchain. The key to discovering more use cases is to empower more people to engage with the technology––and that comes with the developer abstractions.
So, what’s the solution?
Meet Alchemy. It’s sort of like what Apple did for iOS, what Microsoft did for the personal computer, and what AWS did for the cloud––it makes a blockchain developer’s life much easier by providing infrastructure and tools that developers need to maintain robust decentralized applications, for whatever use case they can come up with. It replaces the convoluted node architectures that companies needed in the past to facilitate dapps with a much simpler, traditional-programming experience to reduce barriers to entry. One key to this is a new distributed blockchain client architecture––greatly improving speed and reliability issues.
What specifically does the platform offer?
Infrastructure: Alchemy currently offers infrastructure and tools across Bitcoin, Ethereum, and Litecoin and is building out support for Libra, Polkadot, Dfinity, Cosmos, and Tezos. The infrastructure offers a simplification of the core-level code that was previously used to program applications on these chains (i.e., op codes on the Bitcoin stack machine or barebones Solidity on Ethereum), as well as a replacement for having to build and maintain complicated in-house blockchain infrastructure. For the developers in the audience, one of the most important offerings here is the classic JSON-RPC API, powered by a new architecture that makes the API an order of magnitude more reliable, scalable, and consistent in returning blockchain data. Their Web API takes literally 3 minutes to plug into their application, no new code required, which saves engineering teams lots of developer time and costs. Additionally, Alchemy also touts no down-time and incredible speed for their infrastructure and requests handling, making the solution reliable and well-tested.
Enhanced API: In addition to the base-level infrastructure, Alchemy offers developers many tools to simplify the developer experience. A couple examples include simplified token querying, which makes it incredibly simple for developers to send requests to access to token balances instead of creating hundreds of complex JSON-RPC requests, and event infrastructure to listen for transactions, edge cases, reorgs, etc. to help developers understand where their dapps are being stretched thin and how they can fix it.
Developer Tools: Beyond pure application development, there’s tons of tools that developers need in order to build their app, track how it’s being used, maintain it, and understand how it’s being used. Alchemy makes it easy to do all these things. For example, Alchemy allows developers to debug failed transactions like they would in any other IDE, log requests to understand how users are engaging with dapps, and create their own aggregate metrics to detail data about dapp use.
Monitoring: Alchemy’s system has built-in infrastructure for developers to monitor production performance, including alerting on anomalies such as when transactions throw write errors and when clients read information they shouldn’t be able to access, through detailed, real-time reporting systems for developer teams.
Analytics: For any application, developers want to gain a quantitative understanding of who their users are, how they’re engaging with the application, and identify key ways that they can improve this experience and drive growth. Alchemy’s API allows developers to visualize various characteristics about their users and long-term trends in the dapp lifecycle.
App/Game APIs: Apps and games are two huge growing use cases for blockchain technologies. Alchemy’s identified some of the core problems within these domains and has specifically built out infrastructure, like custom infrastructure-backed API solutions.
The Alchemy suite already covers a variety of building challenges that developers might face when working with these blockchains. Being a growing company, Alchemy is also aggressively identifying further problems in this space, with a fully-supported developer program to empathize with their pain points and rapidly build out solutions.
Are developers already using the platform?
Alchemy is currently the industry leader in their space, powering many of the top (even at the scale of multi-billion dollar) companies and projects in the space. Their clients include exchanges, financial institutions, gaming, dapps, etc. Some prominent ones include 0x, Augur, CryptoKitties, Kyber Network, OpenSea, Bitfinex, Trust Wallet, Gods Unchained, the Opera Browser, and Funfair. In total, it’s already amassed a million users in 209 countries within 2 years of operation.
Many top projects have written case studies with Alchemy talking about the benefits they get from the platform. Augur noted that Alchemy fixed nearly all of their reliability issues and improved loading speeds for users by three-fold. AirSwap said onboarding their devs onto Alchemy instead of their node system brought back 25% of the developers they lost. Evidently, the tech works––and companies are getting excited about it.
What about the team?
Simply put, they’re brilliant––one of the best teams in the industry. Founders Nikil Viswanathan and Joe Lau both graduated from Stanford, having work experience at Microsoft, Facebook, Google, etc. and already having started the social media platform Down to Lunch, which hit #1 in App Store Rankings and made waves across the startup world. They have deep infrastructural and product experience with some of the companies that have defined the modern state of technology, and have brought that insight to blockchain with Alchemy. The engineering team is comprised of top AI and scalable systems engineers from the world’s largest tech companies and top engineering institutions. It’s backed by some of the most notable investors in the blockchain sphere and generally––like Pantera, Peter Thiel, John Hennessey, Reid Hoffman, and Jay-Z.
Alchemy may have launched last week, but that doesn’t mean blockchain is going to become the bread and butter of consumer technology within the next week. The space is still incredibly new but growing fast and with huge promise––with developers and researchers discovering new, impactful use cases every day.
What Alchemy does provide is a critical stepping stone for these developers and researchers to rapidly build out their various use cases and deploy them to consumers. Tech is hard to build, especially when it’s as new and complicated as blockchain and cryptocurrencies. Alchemy simplifies the entire process of blockchain development (running nodes, coordinating cross-chain information handling, convoluted server requests, and more) into a streamlined process for building, deploying, and maintaining decentralized applications––across decentralized finance, exchanges, financial institutions, gaming, etc. They’ve set up the framework; it’s now up to the next generation of blockchain developers to capitalize on Alchemy’s simplicity and build out the blockchain technologies that take the world by surprise.
In this final update from 2019, we are pleased to announce the biggest block explorer for Ethereum, https://beacon.etherscan.io, has launched official support for Eth2.0 using the Prysm API for our currently running test network.
Notable investors include Dr. Gary Ross, former Head of Global Oil Analytics and Chief Energy Economist at S&P Global Platts, as well as founder of PIRA Energy.
Bitcoin warehouse and Intercontinental Exchange subsidiary Bakkt officially has a new head.
🎅IN THE TWEETS🎅
The Securities and Exchange Commission voted to propose amendments to the definition of accredited investor, one of the principal tests for who is eligible to participate in our private capital markets.
🎅NEW PRODUCTS AND HOT DEALS🎅
This major milestone is a huge step closer to the Genesis Game and mainnet. Learn what’s next for secret nodes and Enigma!
Fenbushi has partnered with staking-as-a-service startup Staked for the initiative. Staked will provide staking infrastructure to Shanghai-based Fenbushi, which has a strong focus on the Asian market.
🎅MEET WITH ME🎅
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Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. The firm invests in equity, pre-sales/IEO rounds, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.
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