How will the crowdfunding landscape look like after the EOS launch?
What are the latest topics in the crypto space in terms of technological adoption, regulation, and fundraising of blockchain projects?
These were the topics of the Disrupting Capital: Blockchain, Healthcare, and ICOs event in Berlin, taking place on May 17th. The event was organised by Iryo in partnership with Iconiqlab, Finlab AG, W Lounge and KPMG.
The aim was to present the Iryo Network to the Berlin startup ecosystem, meet the EOS Berlin community and have a high-level discussion around the latest issues in the blockchain space.
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Misconceptions About Blockchain in Healthcare
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Iryo’s CEO Vasja Bočko, gave a brief overview of the current healthcare market trends. Healthcare related expenses are skyrocketing, which is especially visible in the US, which spends over 17% of its GDP in healthcare (3 trillion USD), with an expected increase of up to 20% by 2025.
Healthcare is at the beginning of the digital transformation. The exponential growth of medical data requires a new solution to prevent an increase of the existing problems around data management The key issues that are known but still do not have an optimal solution, are:
- data-silos,
- slow to nonexistent data exchange,
- lack of interoperability,
- inadequate privacy & security allowing hacks,
- unauthorized access and ransomware installment.
Blockchain is often mentioned as a solution to most of the problems mentioned above. As Bočko quoted from what has been mentioned in prior presentations, articles or conferences, blockchain is described as “an ultra-secure magical database that makes all data compatible and easily discoverable”, and that “data can be secured by being put on the blockchain”. Both statements are untrue since blockchain is based on cryptography, it does not mean data on the blockchain is automatically encrypted. Further on, blockchain is a technology that enables decentralized, tamper-proof ledgers, however, security is not just about tamper resistance. “What blockchain can bring in a centralized system is to prevent data tampering through zero-knowledge proofs, as well as having the ability to prove the existence of data at a certain point in time. It can help prevent unauthorized access through a decentralized & immutable access control which will result in an order of magnitude increase in trust and transparency.”
With this in mind, Iryo Network is a blockchain based decentralized healthcare data management and storage protocol. It uses:
- zero-knowledge data encryption,
- decentralized storage on local nodes and end-user devices,
- decentralized access control on EOS public blockchain,
- end-user data ownership & control.
On a technical level, this would be achieved with standardized & open data formats (OpenEHR), clinical ontology (SNOMED-CT), standardized & open APIs (OpenAPI — Swagger), open-sourced software, permissionless (anyone who fulfills certain criteria can join), system built with patient centricity in mind.
This would provide the necessary foundation to bring healthcare into the 21st century with preventive treatment and personalized medicine.
A Turbulent ICO Market
One of the primary goals of the panel discussion was to get an overview of the current prerequisites needed to hold a successful ICO. With the help of the following speakers, a vibrant discussion took place regarding the current environment of VCs and their blockchain related funding.
- Stephan Schütze, Board member at FinLab AG, which manages a $100 million fund from block.one to support EOS projects in Europe,
- Lukasz Musialski, Co-founder of Iconiqlab, accelerator for ICO projects, already backed by Finlab AG,
- Thomas Cox, Blockchain Governance Expert working on the governance aspects of the EOS platform design,
- Mike Lobanov, General Partner at Target Global, an international traditional VC firm with offices in Moscow, Tel Aviv, Berlin and San Francisco, who already has blockchain projects in their portfolio,
- Florian Daniel, Senior Associate at DWF Legal law firm, working with traditional and blockchain startups, looking at raising money through an ICO.
2018 will be marking a shift towards a more regulated ICO market. Low-cap investors are becoming increasingly cautious, looking for projects that have support from institutional VCs as a positive sign of the project’s credibility. “It is becoming increasingly expected for the companies to have a working product, not just an idea,” said Florian Daniel from DWF Legal. Meanwhile, Lukasz Daniel from Iconiqlab emphasized: “It has become clear that not everything needs to be tokenized.”
Another change in the market points to that the amount needed for a successful ICO differs significantly based on where the company is based. Target Global has offices in Moscow, Tel Aviv, Berlin and San Francisco. Lobanov a general partner at Target Global, says that a successful ICO in the US requires a few million US dollars to perform an ICO. However, according to Target’s analysis, it can be significantly cheaper in other countries.
This is not an indication that ICOs are not worth investing in, only that the market is maturing. “The same way venture capital investments are here to stay, I believe ICOs are going to run in parallel among traditional fundraising options,” said Schütze.
GDPR and Regulations
Current legislation and GDPR were discussed at length. Senior Associate at DWF Legal Florian Daniel is convinced that companies that will face the least amount of complications with data regulation will be German entities, as the national legislation in Germany has been very restrictive for years and data officers have been a normal part of companies management structure. “The data protection law from Germany is the oldest data protection law worldwide,” commented Daniel.
On a broader level, Daniel mentioned some of the open-ended questions that will need to be answered: “We’ve been asked if a company needs a data protection officer, and the answer is not black and white, especially in the blockchain space a lot of questions are still unanswered. Blockchain like bitcoin, for example, does not have a controller of the processed data, so who can you ask what data is gathered about you? These are great problems, alongside the right to be forgotten etc.”
Expectations from the EOS Mainnet Launch
Will the launch of EOS Mainnet cause a new wave of blockchain projects seen with the likes of the Ethereum platform, or will regulation surrounding crowdsales become so rigorous, that the concern is unnecessary? Thomas Cox believes that the fast approaching decentralized future is undoubtedly going to cause an explosion of new ideas, with governance maturing from a nice to have, to a must-have component of new chains.
EOS is promising a new governance approach to transaction consensus thus creating a chain that significantly lowers the energy consumption needed to operate it. Unlike on the Ethereum chain, where transactions are currently governed by Proof of Work (POW), EOS will be implementing a Delegated Proof of Stake (DPoS) approach. After the launch of Mainnet, 21 block producers will be elected by the EOS token holders who will bear the responsibility of verifying transactions and testing a new form of governance.
Having political experience, Cox was asked about his expectations around the selection process of the block producers. Will the crypto “elections” be more or less polluted? “So far, we’ve seen scams, theft and exploitation in the crypto space. In Ethereum particularly, we’ve seen how the community struggles when there is no agreed-upon governance mechanism. If the code is not the law and if you don’t agree before the launch of a new chain how disputes are going to be resolved, you have a disaster waiting to happen,” Cox mentioned among other things.
“We’re only getting started with governance. On EOS the community will have a worker proposal fund and 80% of EOSIO inflation will go to a fund to support the system and improve enhancements. Some estimates state that the fund will be around $900 million per year. Token holders will have the decision making power on spending and that is a tremendous economic force,” said Cox.
Block.one, the company behind EOS, reserved $1 billion to support the future development of EOS projects. A $325 million fund is managed by Mike Novogratz & Galaxy Digital Asset Management. In Europe, $100 million was given out by Block.one that will be distributed and managed by Finlab AG. Stefan Schütze explained how 30 to 40 projects will be chosen in the next three to four years to receive support and help bring their ideas to life within the EOS ecosystem.
Traditional VCs Entering the Blockchain Space
So far Finlab AG has invested in three blockchain startups in the fintech space. One of them is Iconiqlab, an accelerator for ICO projects, a sort of due diligence as a service startup. Iconiqlab is currently working with five ICO projects, providing them all with the support needed to conduct a successful ICO. “For the next round, 400 projects submitted their interest and we are in the selection process.” — Musialski.
Despite Finlab AG being primarily focused on fintech projects, their EOS fund will not be limited to the finance sector. Investments will be made in equity and not tokens explained Schütze. Noting that the reason for this kind of investment approach derives from the fact that the valuations of tokens are very difficult to make. Moreover, traditional VCs have obligations to their own investors which binds them to agreements that have not been updated to the ICO market.
How are Blockchains Evolving?
After the panel discussion, Severin Deutschmann, founder of EOS Berlin, offered an overview of the evolution of blockchains. Using the progress of human society as a real-world example, Severin discussed the natural evolution of blockchains in terms of efficiency and scalability. Making a case for a new blockchain or protocol can sometimes be difficult given the lack of available use cases, however, due to the recent increase in demand, Severin made a case for why EOS is the clear front-runner in terms of efficiency and scalability compared to both the Bitcoin and Ethereum chains.
Severin also pointed to how the Bitcoin network has been increasingly more expensive to use over time and requires a large number of resources like electricity to operate. Ethereum, on the other hand, is more affordable and allows for the implementation of smart contracts yet still faces issues with scalability. According to the EOS community, using a Delegated Proof of Stake consensus model is the next evolution in terms of ensuring a decentralized yet highly scalable public blockchain.
