Today we are pleased to announce that we have, together with Coparion, invested in Fractal, a blockchain technology company based in Berlin. Fractal is behind the successful token launch of the Ocean Protocol, which raised over $20M in early 2018 and has a very exciting pipeline for the future.
Fractal builds identity and payment solutions for the decentralized web that are user-centric and compliant. It supports open source blockchain projects to fund the future ecosystem using an initial token launch. Fractal plays a major role in moving ICOs out of the regulatory grey area and helps make the ICO investment process frictionless.
How does Fractal fit into the investment strategy of the Machine Economy? Kerstin Eichmann, our Head of Investment Strategy explains in this post what building blocks are necessary to shape and grow a decentralized economy where not only humans but also devices can talk to each other and do business with each other.
Now, let’s dig deeper into how a company that supports token launches can be an enabler of the machine economy.
Fractal meets the needs of humans & machines
Initial token launches, are a format for companies to raise money in the market and engage their community from the beginning. How does that happen? Tokens hold value for anyone who acquires them either in the form of access to a certain platform/service, as a payment system within the platform (e.g. bitcoin), or as ownership to the company launching its token offering (i.e. security tokens).
Tokenizing company assets, or eventually any analog object, can lead to the right of access, usage, payment or ownership of this asset. What if a solar plant could be tokenized and an autonomous electric car could claim ownership of a fraction of it? Transactions between machines (M2M) could become seamless. A car would no longer need a human to meet its energy needs as it’d receive it directly from its solar plant tokens. The tokenization of every digital asset would enable the real-time exchange of goods and services among machines.
This paradigm shift into machines becoming an active part of the economy is what encouraged us to support Fractal. With tokenization, humans and machines could shape and grow entire new networks for trading goods and services with each other.
“Our investment in Fractal fully supports our Machine Economy strategy which envisions a global economy where every analog asset — solar plants, charging poles and patents can be tokenized and traded. We believe Fractal has the potential to enable this transition to a tokenized economy in a legal and safe way with their high-quality, end-to-end ICO Launchpad” — Kerstin Eichmann Head of Machine Economy at the innogy Innovation Hub.
Fractal’s track record and team
Though Fractal’s potential is vast, VCs want to see businesses that are able to show more than a good idea. A driven, high-performing team and existing market traction make a startup more attractive.
Fractal’s team has shown great development since its foundation. Its first customer that successfully launched a token offering was the Ocean Protocol, raising over 20M€ and engaging a powerful community around it. And this is all backed by a very experienced team. Fractal founders Julian Leitloff, a serial entrepreneur and one of the Forbes 30 under 30, and Júlio Santos an experienced engineer (Twitter, Disney, Sony, and HBO) and entrepreneur himself, have the necessary skills and experience to continue driving Fractal forward to more successes.
With this seed round, Fractal plans to invest deeper into its software solutions for ID and payment to better support open source blockchain projects receiving funding using an initial token launch.
“We want to serve entrepreneurs on their journey to build and fund open source decentralised protocols.”, says Fractal’s CEO Julian Leitloff. “The Seed Round lets us invest in better tools to help them”.
Fractal is already at work on a new effort partnering with two of our Machine Economy portfolio companies, ScanTrust and BigchainDB, as they raise support for a new project: the GoodChain Foundation. GoodChain is especially novel because it addresses problems surrounding trust between brands and consumers by making provenance data immutable. There are many endeavours looking to tackle the challenge of product transparency, but GoodChain also makes donating to worthy causes a primary function of the platform. The GoodChain Foundation is also notably open source by design and very inclusive of other, like-minded efforts and service providers.
The next project to be launched is the Fractal ID. Available as an open Authentication (oAuth) kit for web and app developers, it will allow users to log in with one click and instantly share a custom slice of their ID data with a trusted transaction partner. Fractal is also part of the recent ERC725 Alliance that aims to establish an OpenID standard.
We believe that in the future Machine Economy, everything will be tokenized and interoperable. Humans and machines will hold fractions of ownership claims to a building, a decentralized network, power plants, supply sources, etc. and with Fractal in the mix, we can facilitate a legal and safe transition to this tokenized economy.
🚀 If you’re looking into doing a safe and compliant ICO visit www.trustfractal.com
📧 If you’re a startup developing a solution that supports the machine economy thesis email firstname.lastname@example.org