FirstBlood Letter to Community on Switch to Tendermint

Dear FirstBlood Community,

On September 25, 2016, FirstBlood first made headlines by raising $5.5 million dollars in ninety seconds, in one of the first ICOs launched on Ethereum. We have since seen our token rise to highs of nearly three dollars, and lows of nearly two cents. From the outside, our story looks similar to many other early crypto projects. From within, however, our story is quite different. Although we faced many of the same obstacles as other US-based crypto projects, we focused on quietly building infrastructure rather than a market for an asset our users aren’t ready for. Now, with the launch of our 2.0 Tendermint-Based Blockchain, Dawn, we have solved the user-friction problems in esports wagering, and we believe the gaming world is ready for it.

The Journey Begins

When I founded FirstBlood, my goal was to use decentralized wagering and conflict resolution to solve issues facing the esports community. I wanted to harness Ethereum to create a decentralized platform for gamers, where they could meet and compete, and by January of 2017 had launched a fully decentralized alpha version of our project for Dota 2. At the time, Ethereum was worth $8 with a hash rate of around 6,000, and very few people, even tech-savvy gamers, understood how to use a decentralized platform like FirstBlood. Early users struggled to download and install MetaMask, purchase tokens on then obscure exchanges like Bittrex, and sign and clear multiple transactions during the matchmaking process. This serious user friction taught us what many others in the crypto space have come to realize since then: the value proposition of decentralization alone is not enough to build a successful platform. In order to succeed, we needed a “Killer dApp” that minimizes user friction and is enjoyable to interact with. So we set out to build one.

Throughout 2017, FirstBlood focused on discreetly designing a dApp that reduced the friction experienced by our Dota 2 Alpha users. By the summer, however, we encountered two obstacles. First, Ethereum’s average daily hashrate had increased by more than 1,000% since January as its price ballooned from $8 to $250. Second, and perhaps more importantly for US projects, the SEC issued its “DAO” opinion which suggested that ICOs may be considered unregistered securities offerings, and thus crypto-asset projects may be covered by America’s all-encompassing securities laws.

Legal Hurdles

This left us with two options, either poke the bear and launch our beta anyway, or keep building and wait for more clarity. We chose a middle ground. We continued focusing primarily on building a frictionless esports-wagering dApp, without publicly releasing or publicizing it, while doubling down on our traditional esports tournament platform and introducing our PUBG Battle’s product that remains our most popular platform. This proved to be a critical decision. A year and a half later, we now have 250,000 users and are poised to integrate our Dawn Blockchain that will solve the user friction problem.

Technical Hurdles

By the end of 2018, Ethereum’s hash rate had risen by 10,000% from the rate at the time of our crowdsale. The popularity Ethereum had gained also created frequent network congestion that would delay settlements of transactions. For FirstBlood, this meant that the consistency of the duration it will take for our smart contracts to lock matches into our system and process results could be unpredictable, plus the yet-to-be-solved UX issue makes our model, and additionally our envisioned fully-decentralized product, not viable until Ethereum releases its long-awaited 2.0 upgrade.

Like many Ethereum based projects, we believe in the core team’s ability to build a scaling solution. However, waiting for that solution was not an option for us. We sought a scalable solution for our user-friction problem so that we can finally build the killer dApp. We found it in Tendermint.

Approaching the Finish Line

FirstBlood’s Tendermint blockchain, Dawn, currently being built using Cosmos SDK, solves multiple problems and puts our project in a position to deliver on a truly decentralized and friction-minimized platform for esports wagering. Here is how it works:

First, the Tendermint architecture allows Dawn to scale transactions-per-second well above the current Ethereum limit, and at a significantly lower cost to end-users, while keeping Ethereum as our top layer. This means that we can eliminate the scaling problems we encountered in building on Ethereum, without losing its credibility as a powerful, trusted platform for maintaining token ownership and transactions. To do this, we are building our new Dawn blockchain (Dawn) as a “Cosmos Zone” built on the Tendermint consensus, using a bridge contract deployed on the Ethereum mainnet. This way our existing tokens can be “received” by the “Cosmos Zone” to bootstrap the Dawn’s initial governance and staking mechanism. Additionally, other ERC-20 based stablecoins can also be safely moved into, and later withdrawn from, Dawn.

Second, we no longer need to tie the wagering function, which generally works better with stable-valued assets, to our deflationary FirstBlood token. In the new model laid out in our new whitepaper, the new Dawn token will act only as a staking and governance token, not as a chip to be wagered. Instead, users will be able to enter our “Cosmos Zone” to wager stablecoins and other crypto-assets, with a percentage of the fees collected floating up to Dawn token-holders via smart contracts. This will exponentially strengthen the value proposition of our underlying token that will ultimately allow holders to control the platform itself.

Third, the Dawn Cosmos Zone will allow for fairly frictionless user experience, finally allowing us to build a killer dApp. Users will be able to deposit stablecoins and other assets and take advantage of the far higher TPS rate on our new blockchain. We are working with Changelly and other payment partners to make this process quick and painless. Once you have funds on the platform, you will be able to set up matches quickly and easily.

Finally, our 2.0 opens up a world of possibilities ranging from launching new crypto-assets on our blockchain to integrating new asset classes into our Dawn Cosmos Zone. We intend to establish FirstBlood as the premier protocol for empowering and rewarding gamers. In achieving this, we will deliver on our promises and reward our early users and supporters.

Moving forward, you can expect clear and regular communication from myself and the team. I’d like to personally thank all of you for your support up until this point, and we hope that over the course of the next year, we can continue to earn your confidence and support. I would like to invite the entire community to become involved in this new beginning with us. The new “tokenomics” of the platform encourage community participation on every level, including operating nodes, staking your tokens, creating proposals and voting on them, esports gaming on Apps in Dawn’s ecosystem, and much more! Keep an eye out for additional updates as we prepare to launch Dawn, and be sure to follow all of our new social channels. Until next time.

Joe Zhou

Founder & CEO of FirstBlood,
And on behalf of the team at Dawn.org