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GAINS Associates

Portal Finance — Telegram AMA — July 20

On Wednesday, July 20, we had the pleasure to welcome to our Telegram chat:

George Burke

We asked him questions about the development of Portal Finance.

Some sentences have been slightly edited for readability but the meaning has been conserved.

Introduction

Q — Ayeley from GAINS: Please introduce yourself. And tell us about your crypto journey and the inspiration behind the Portal project.

A — George from Portal Finance: My name is George Burke, a co-founder at Portal. Our team started working on this since 2018 but I’ve been involved in bitcoin since early 2013. Always a believer in censorship resistant, egalitarian technologies.

I built a bitcoin/altcoin exchange in 2013 which was sold. I later went on to build the first bitcoin debit card in the US called FreshPay.

Prior to crypto, I launched the first “netflix for books” subscription club.

I also currently run the first-ever bitcoin meetup — Silicon Valley Bitcoin — SVBTC.org — first started by Roger Ver and Andreas Antonopolous.

About Portal Finance

Q — Ayeley from GAINS: What is the Portal project about in a few simple sentences? What is the extent of the products that Portal offers?

A — George from Portal Finance: Our company Portal recently announced an ~$8.5M raise to give birth to DeFi built on Bitcoin.

We believe financial applications should be built on the protocol that is most likely to become the base money layer. Portal makes DeFi unstoppable with anonymous, zero-knowledge swaps via the first true cross-chain DEX that’s genuinely trustless. Unlike Uniswap/others, Portal eliminates minting wrapped coins (ie wBTC, wETH) or risky staking with intermediaries. Trading across incompatible blockchains is now just 1-click, trustless and private.

Fabric protocol, our layer 2 & 3 technology powering Portal, enables building censorship-resistant communications, media and one-click cross-chain swaps, all on Bitcoin (along with all its security advantages).

We’re building the first truly “cross-chain” DEX through the implementation of Layer 2 cross-chain atomic swaps. This is made easy and accessible through our self-sovereign multicurrency wallet.

DeFi contracts will be built out of a functioning atomic swaps DEX

Q — Telegram user Rock Kim: For what is there a “Invest in Portal” in the project ecosystem and what exactly problems does the Portal Finance project want to overcome?

A — George from Portal Finance: The problems of today’s DeFi and DEXs that we’re solving with Portal are:

1) High gas fees:

We utilize layer 2 for cross-chain swaps by which nodes can communicate hundreds or thousands of messages/transactions prior to settling on the main chain.

2) Poor UX:

We agree the user experience for DEX trading has been awful so far. We have a beautiful non-custodial wallet that is as easy to use as Coinbase but self-sovereign and trust-minimized, where you can store coins and trade from within the same interface. We’ve worked years on developing this.

3) Asset locking & asset replication:

The wrapping and locking of funds onto other chains by these so-called “cross-chain” DEXes/Bridges are neither trustless nor decentralized, nor are they even cross-chain! BitGo custodies the majority of the billions of locked up BTC. As we saw with the $600M Axie/Ronin hack and the recent $100M Harmony One hack, these Bridges are honeypots waiting to happen. Atomic swaps solves this. Wrapping tokens becomes a thing of the past since coins of incompatible chains can be traded natively and without a risky middle-man. Each party’s funds are only locked during trade execution and not re-bonded or replicated onto other chains for eternity.

Q — Telegram user Antonio: I see that Users need At least $5000 to become Stakeholder In Your Project, Why is that so? What Benefits this Stakeholder can get?

A — George from Portal Finance: $5,000 minimum due to SEC restrictions; the company is limited to 2,000 investors total in each share class.

The benefits are laid out here

Q — Telegram user Nazik: You said that Fabric, the underlying protocol that Portal uses, today extends the functionality of Bitcoin without requiring any BIP. Can you tell us how it works? How is this functionality guaranteed to the user? How reliable and secure is Portal?

A — George from Portal Finance: For some background, a layer 2 is a sequence of unsettled transations on the main chain done for a purpose. For example, Lightning Network is a layer 2 system for peer-to-peer micropayments. However, lightning transactions — until settled — are not broadcasted to the main chain.

We invented layer 2 zero knowledge swaps, which fix the Layer 1 tier nolan atomic swap incentive problems, and add speed and liquidity features. In addition, Fabric protocol (the protocol we use to build p2p ZK circuits for FHE), has been used to build peer to peer communication and other apps. Just like lightning is a layer 2 system for peer to peer micropayments, and is therefore fast because lightning transactions, until settled, are not broadcasted to the main chain. Portal is a layer two system for peer to peer cross-chain contracting. Because it’s layer 2, it’s fast.

Portal is building a true cross-chain method of trust-minimized exchange without a 3rd party. But because these chains do not natively interoperate or communicate with another, a layer must be built above the base layer for such communication. Portal is a layer 2 system for peer-to-peer cross-chain contracting. Cross-chain contracting facilitates a variety of in-demand DeFi activities, like spot-trading.

Fabric, the underlying technology Portal is built on, splits contracts into “ZK Swarms” — allowing all network participants to agree to contracts on their own terms. These are “multi party contracts”, with each peer earning Bitcoin for computing their part in the program. It does this at “layer 3”, which provides the privacy PLUS fungibility of transactions.

But why zero-knowledge? Why privacy?

How can a decentralized exchange layer be truly censorship-resistant if traders are known and addresses can be traced? So, Fabric technology enables ZK circuit creation which, when implemented, opens the door to a whole host of new methods of obfuscating transactions without losing verifiability.

For Bitcoin to become money, we need a censorship resistant, peer-to-peer trading system that crosses blockchains.

Q — Telegram user CHUKKY: Since Portal Finance functions as a DEX AMM, it is important to draw in liquidity and build a sizable pool because orders will have less slippage if the pool has more liquidity. So, what strategies will you employ to draw in sufficient liquidity and thwart order slippage?

A — George from Portal Finance: What we can reveal is that there are node operators or “facilitators” in our model. All facilitators get paid based on the value of trades they facilitate. Portal’s revenue, as well as the revenue of any facilitators, is tied to the growth of the network and userbase. Every wallet downloaded can be configured to run a facilitation node. The whitepaper goes into facilitators more extensively.

After the public sale on Republic is done, we can reveal more of the network design

Q — Telegram user Abumaleeq1: Can you explain more about the Cross-chain atomic Swaps Dex and the non-custodial multi-coin trading wallet and what makes you this willing to be a huge draw to adoption?

A — George from Portal Finance: Several blockchains are looking for bridges to swap between their token and bitcoin, but these don’t trustlessly exist (yet). We have a few blockchains wanting integration for near trustless swapping and bonding between their token and bitcoin (or other tokens of incompatible blockchains). This interoperability is the holy grail of the crypto space. Building support for all these blockchains and token issuers wanting to have a trustless onramp & offramp between their coin and BTC is a crucial component to widespread adoption. We could stop there, but we won’t.

Something I forgot to mention earlier in our roadmap is the product is not just the cross-chain atomic swaps DEX, but also a non-custodial multi-coin “trading wallet”. The software is in private alpha and allows users to trade on centralized exchanges such as Binance, Coinbase, and even DEXs like UniSwap in 1-click, right from within the wallet. It helps find the path of best execution (exchange with the best price and liquidity), sends your coins to the exchange from your wallet, executes the order, and withdraws back to the safety of your Portal wallet right after execution… all this in just 1 click.

This is a huge draw to adoption. Why? Because once atomic swaps goes live, the wallet can choose Portal as the best path of execution. For users of the wallet, instant adoption. Oh and it’s the only app in the Apple App Store approved for atomic swaps.

Token

Q — Twitter user @roberts58_t: Can you share about the ongoing Portal Offering on Republic, what are the benefits to investing in early, and can you share why Portal is selling Equity and not tokens?

A — George from Portal Finance: Instead of selling tokens, we have sold an equity stake in our company. The management team has a direct fiduciary responsibility to serve the shareholders.

Investors become shareholders and have a stronger financial relationship to the company than projects who sell tokens. You can read more about why we are selling equity instead of selling tokens here. Compound and Chia used a similar mechanism.

The sale will close within the next 20 days

Security

Q — Ayeley from GAINS: How secure is Portal Finance?

A — George from Portal Finance: 1) Building a secure layer 1 system is incredibly hard. We don’t want to do that; Fabric uses the layer 1 system that already exists and therefore we use Bitcoin as OUR layer 1.

In Portal’s DEX, the contracts don’t depend on anything other than the trading pairs’ native chains… say BTC<>ETH. We are harnessing the security already built into Bitcoin and into Ethereum; the atomic swap contracts are minimal. Independently audited and tested to the max by a truly decentralized network before going live over the course of the past 5 years.

Unlike wrappers and bridges, these coins are not re-bonded into Portal and are not honeypots. The community treasury does not contain exposed user’s funds. The exposure is limited only to the token which is being traded — NOT what is bonded. This is the main difference between the Portal project and other so-called false “cross-chain DEX” projects. The flaw in bonding/wrapping is double the exposure for a breach in security; be it theft, risk, hacking. It’s like making a duplicate -or a triplicate- of your house key. The Portal project is designed to protect your key- the reliance on simple and native atomic swaps means there isn’t anything to expose. This is possible through the use of Fabric Protocol technology, which is an internet built on the layer 1 blockchain of bitcoin — the timechain itself.

2) Bitcoin provides the security; no need to implement a new system and attempt to garner superior adoption. Bitcoin is the most decentralized and secure system and we think it is the monetary layer. If you want to build functionality, financial contracts, and beyond, it makes sense to build it on top of the monetary layer vs any other layer. More importantly, layers of functionality enable bitcoin to capture the value, but not the risk of a failure of a layer 2 system.

Partnerships

Q — Ayeley from GAINS: Are there some interesting partnerships you’ve gotten into so far you’d like to highlight?

A — George from Portal Finance: Several blockchains are looking for bridges to swap between their token and bitcoin, but these don’t trustlessly exist (yet). We have a few blockchains wanting integration for near trustless swapping and bonding between their token and bitcoin (or other tokens of incompatible blockchains). This interoperability is the holy grail of the crypto space. Building support for all these blockchains and token issuers wanting to have a trustless onramp & offramp between their coin and BTC is a crucial component of widespread adoption. We could stop there, but we won’t. The first partner we can name is Aeternity. Another partnership is with Ankr. Check it out here. Then there’s Polygon working with us to provide trustless bridging for their native stablecoin. We also just announced a partnership with Chainlink.

Funding

Q — Ayeley from GAINS: Have you raised funds so far? How are the funds going to be deployed? And are you planning to do any future raises?

A — George from Portal Finance: We have not publicly announced the full funding raised, but it’s large. This cash will be spent primarily on engineering and finding product-market fit. We’re thankful to have enough treasury to weather MANY bull/bear cycles 🙂

On the regulatory front, we have been seeing SEC lawsuits against various token projects for raising on unregistered security; potentially fraud. This can be as little as a fine of millions or as bad as going to jail. Any issuer who promises an investor tokens is irreparably tethering the network token to the fundraise and will forever make that token a security. We will see any tokens deemed securities be banned from trading on non-brokerage exchanges (which is pretty much all of them). Instead, Portal’s fundraising happening RIGHT NOW — through a compliant securities offering on the best launchpad in the world, REPUBLIC — is specifically designed to preserve the non-security nature of a digital asset that runs on the decentralized network, and therefore is never sold, given away, airdropped, etc. This way it can always be as freely transferrable as BTC itself. For more info on this, see the writeup we did on this compliant fundraising model here. Compound and Chia used a similar mechanism.

Competitive Advantage

Q — Ayeley from GAINS: What sets Portal apart from the competition?

A — George from Portal Finance: To answer this, you need to know what Portal is and its underlying technology, Fabric.

1) Fabric is the protocol, built ON BITCOIN, for peer-to-peer message passing and contracting using bitcoin as the security layer. All of the layered networks built using Fabric can use portal to exchange into Bitcoin and other assets. It is a natural fit to have the team unified and aligned.

2) Portal, built on Fabric, is enabling atomic swaps for coins across incompatible blockchains; trust-minimized trading using the security model of bitcoin.

3) Here’s what’s so exciting and unique about atomic swaps:

Atomic transaction means either the entire cross chain contract (typically updating of both ledgers) happens all in one piece. For example, if you “atomic swap” your Bitcoin with someone’s ETH, either you get their money and they get yours, or nothing happens. It provides guarantees of a secure execution of an exchange without a trusted third party.

To fix the problems that have made layer 1 “tier nolan” atomic swaps impractical until today — such as miner front-running, long transaction times, lockup griefing, and all-or-nothing order execution, first we are utilizing Layer 2 for fast communication and coordination, including the ability to recompose orders into smaller chunks to create execution that is fungible, and therefore scalable. It’s done through the Fabric protocol (the protocol we use to build p2p ZK circuits for FHE), has been used to build peer-to-peer communication and other apps. We utilize Fabric like a Lightning Network that is purpose-built for trading.

Second, we invented zero-knowledge swaps at layer 3. How can a decentralized exchange layer be truly censorship-resistant if traders are known and addresses can be traced? So, Fabric technology enables ZK circuit creation which, when implemented, opens the door to a whole host of new methods of obfuscating transactions without losing verifiability. With regards to revenue, all facilitators get paid based on the value of trades they facilitate. Our revenue is tied to the growth of the network and userbase. We are seeing a lot of interest from users and we expect it to only go higher.

Business Development

Q — Twitter user @lacey_jon: By when we can expect the beta launch or the demo of the Portal platform? And where can we catch the development updates from the team?

A — George from Portal Finance: Playnet is launching soon. Testnet should be up before the end of the year. Mainnet, however, is not under the company’s control. Instead, a self-sovereign federation will launch and control the Portal network. Investors will get regular detailed development private newsletters, but we will occasionally give some public announcements via Twitter

Q — Telegram user James: What’s Portal’s plans to build Censorship-Resistant DeFi?

A — George from Portal Finance: For examples of future vision, here are other future applications possible when zero-knowledge atomic swaps reach scale:

Imagine the ability to go anonymous with your payments on bitcoin. Coinjoin-like transaction obfuscation services, but much cheaper, quicker, and actually anonymous because it operates at layer 2 and layer 3 instead of several layer 1 burdensome transactions. Any coinjoin transaction is well-recognized by just looking at the wallet, and could be flagged. Instead, any layer 2/layer 3 obfuscation looks simply like a Lightning transaction despite maybe dozens of participants.

Several blockchains are looking for bridges to swap between their token and bitcoin, but these don’t trustlessly exist (yet). We have a few blockchains wanting integration for near trustless swapping and bonding between their token and bitcoin (or other tokens of incompatible blockchains). This interoperability is the holy grail of the crypto space.

Something cool that Fabric’s tech and Portal’s non-custodial atomic swaps wallet will enable is the ability to make a payment in one asset but the receiver receives a different asset, where it was automatically swapped in the same send transaction. Imagine only holding Chainlink but wanting to send someone Solana. Or only holding DOT and wanting to send someone BTC. Portal will enable this in the future. Can’t wait.

Thanks, George for coming into our community, and taking the time to answer our questions. — Ayeley Commodore-Mensah from GAINS

OK thanks, everyone! This was fun. Please remember to follow our Twitter, and if you wish to participate in the Republic sale happening NOW, visit — George Burke from Portal Finance

GAINS Associates is the World’s First Decentralized VC, allowing anyone that holds $GAINS to invest in the crypto unicorns of tomorrow. With over 3 years of experience and several ultra-high return deals, we are removing the barriers of entry to investing and changing the world, one deal at a time.

GAINS stands for Group Action Is Never Small, embodying the collaborative spirit that is the essence of blockchain and decentralization.

In addition, GAINS provides daily news, articles, video interviews as well as fun & educational events.

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