Project Review: XION

Making Crypto Disappear

Published in

morningstar-ventures

9 min readMay 22, 2024

The cryptocurrency industry has hundreds of terms, nuances, technicalities, and products. No matter one’s proficiency, it is a space succumbed by technical difficulties and complicated jargon, hindering mainstream adoption and industry efficiency. Since the DeFi summer of 2022, when the industry saw an influx of new products and solutions for trading one’s crypto assets, the industry has been flooded with more chains, DEXs, liquidity protocols, and more — all again causing many intricacies, complications, and fragmentation. With the crypto space going through its fourth cycle, it is widely apparent that the blockchain industry needs user-friendly interfaces to increase adoption.

Because of this, many founders have started working on projects focused on chain abstraction integrations that seamlessly connect users, accounts, and ecosystems to combat crypto’s known intricacies and increase industry adoption. A project at the forefront of this is Morningstar Ventures portfolio company XION — a Layer 1 blockchain purpose-built for mainstream adoption through Generalized Abstraction.

This month’s review will cover everything from the founding team to fundraising, the Layer 1 blockchain solution, XION’s recent partnerships, and the upcoming roadmap. The review will conclude with an analysis of the project’s strengths and potential challenges.

What is XION, and How Did It All Begin?

Making Web3 more approachable and accessible is at the core of XION. Unlike other projects in the crypto space, the build-up to how XION is today is a unique story that sparked polarizing reactions. Burnt Banksy, the founder of XION, purchased a piece by renowned artist Banksy called “Morons.” The XION founder incinerated the piece via a live stream and created a 1-to-1 NFT representation of the artwork, selling it for approximately three times more than the price of the original artwork. The moral of his actions represented the concept of digital scarcity, as the digital item was valued more highly than the physical item. It is regarded as a pivotal movement for the industry and received acclaim from several leading publications, including CoinDesk, BBC, Bloomberg, The New Yorker, and more.

After this, the team built the early NFT standards on Solana and no-code products. In doing so, the team quickly realized that then-existing tools made reaching mass, everyday audiences a near-impossibility. The user experience was broken. People interacting with Web3 apps for the first time were forced to complete 15 complicated steps over several days to complete even one purchase. What started as a revolutionary story has now transformed into building a Layer 1 blockchain that abstracts the technical crypto barriers for all users.

Products & Toolkit: Generalized Abstraction Infrastructure, Meta Accounts, Signature Abstraction, and more

Over the years, XION has built a Layer 1 blockchain that simplifies Web3 for non-crypto natives through its Generalized Abstraction Infrastructure. The team’s approach to abstraction is built directly at the protocol level, simplifying the technology stack and solving key issues within the crypto space, such as fragmentation, cryptographic future-proofing, upgradeability, cost, and security. The project has built advanced UX features at the protocol level, including abstracted meta accounts, signature abstraction, and a parameterized fee layer to enhance interoperability and user accessibility.

Key Features of the Generalized Abstraction infrastructure:

1) Enhanced User Experience: XION’s infrastructure enables the development of user-friendly projects for mass adoption with features such as:

Simplified login methods like email
Seamless support across various devices
Fast, gasless transactions
Global direct credit/debit card purchasing
Familiar fiat denominations
Interoperability with over 50 networks

2) Generalized Abstraction Layer: This unique protocol-level abstraction covers several features aiming to make Web3 accessible to a broader audience. These include:

Account Abstraction: Supports easy login methods like email and biometrics, eliminating the need for complex private-public key systems and traditional crypto wallet management.
Signature Abstraction: Compatible with various cryptographic curves, allowing transactions to be signed using FaceID, Passkeys, EVM curve, Solana curve, and more.
Fee Abstraction: Transactions on XION are gasless from the user’s perspective, simplifying the experience by handling fees in the background and reducing entry barriers.
Payment Abstraction: Enables token and direct credit/debit card purchase transactions.
Device Abstraction: Ensures a consistent and secure user experience across all devices, enhancing usability without compromising security.
Chain Abstraction: This feature facilitates true cross-chain interoperability, extending the seamless user experience to all connected blockchains. It boosts the flexibility and reach of applications built on XION, enabling them to operate effortlessly across diverse blockchain ecosystems.

The infrastructure solution is live and has reached significant usage and ecosystem partners. Since the launch of the Testnet, the team has garnered over 2 million Meta Accounts, processed over 30 million transactions, and welcomed over 150+ projects to the ecosystem.

Use Cases

XION’s technical innovations enable various use cases that enhance user experiences across different sectors. Here are just a few of the many possibilities:

Digital banking: XION’s Meta Accounts enable advanced security parameters such as session keys and customizable transaction limits for heightened security.
Creator economy platforms: Onboarding non-crypto-native audiences to enable novel creator economy platforms.
Enhanced gaming experiences: Enabling smooth on-chain gameplay through many of the benefits of Generalized Abstraction, such as seamless onboarding, gasless transactions, cross-device usage, and more.
User-friendly DAOs: Allowing non-technical users to engage in decentralized governance seamlessly.

Token Economy — $XION

$XION is the main token used to power the XION ecosystem. The token utility includes;

Proof of Stake Security (Staking): $XION holders can stake their tokens to support the network’s security. In addition, unlike other ecosystems, inflation is only based on staked tokens, which helps reduce overall token inflation and makes the economics of the network more sustainable.
Network Usage Fees: $XION can be used to pay transaction fees. The network’s unique fee system allows users to transact using other tokens, with fees converted to $XION to offset inflation.
Governance (Voting): Holders can propose and vote on network changes.
Medium of Exchange: $XION facilitates transactions within the ecosystem.
Collateral & Liquidity: It serves as collateral and liquidity within the ecosystem.

For more details, please refer to the whitepaper: xion.burnt.com/whitepaper

In addition, XION is the first blockchain to integrate USDC as its primary transactional currency, which allows ecosystem users to have a predictable price across various protocol features.

Team and Fundraising

Burnt is the core contributor and team behind XION, led by the founder and CEO Anthony Anzalone (alias Burnt Banksy). Injective, a leading Layer 1 blockchain optimized for building Web3 finance applications, incubated Burnt and remains a critical strategic partner in powering the future of XION.

The team comprises seasoned crypto natives, full-stack engineers, and developers with accreditations from Morgan Stanley, Ubisoft, and Harvard University.

In April 2024, XION secured $25M in funding with backing from Multicoin Capital, Animoca Brands, Laser Digital, Mechanism Capital, The Spartan Group, and Morningstar Ventures. The new capital will allow XION to accelerate its development further and expand its global ecosystem. In addition to the above, the team raised $3M in its pre-seed round in May 2021 and $8M in January 2022, with participation from The Spartan Group, Multicoin Capital, HashKey, and Morningstar Ventures — raising a total of $36M since its inception.

Recent Announcements and Partnerships

XION recently introduced its novel chain abstraction technology to several key ecosystems, including Injective, BNB Chain, SAGA, and Avalanche. Through XION’s Generalized Abstraction, these integrations will enable users to seamlessly engage with applications across ecosystems without navigating complex Web3 processes like cross-chain bridging or browser plugins. By leveraging XION’s Meta Accounts on host and destination chains, users can onboard effortlessly through familiar methods like emails and across any device. At the same time, the integration handles complexities such as gas fees and transaction signing. The integrations are expected to enhance liquidity and user engagement and facilitate innovative cross-ecosystem applications.

XION has also amassed a large social media following, with over 650,000 Twitter followers and over 550,000 Discord members. In addition, its recent Chain Abstraction launch resulted in over 200,000 interchain accounts created in just a few days—the most ever recorded.

Our Analysis:

Strengths:

Generalized Abstraction improves the experience for both users and developers. The team’s strong mission to make crypto more accessible, seamless, and easy-to-understand technology is a great way to drive mainstream adoption and democratize crypto for non-natives. This is backed by the team’s extensive and expanding ecosystem, which has grown to over 660K+ followers on Twitter and 590K+ on Discord.
The project has strong backing from leading Web3 VCs such as Circle, Multicoin Capital, The Spartan Group, Arrington, and Animoca Brands, as well as close partnerships with top-tier crypto projects like Injective and Omni Network.
The project has an array of crucial features that help onboard users seamlessly. For example, XION’s Meta Accounts eliminate the complexity around key management and enable frictionless usage across devices. Through these solutions, XION solves major pain points for first-time Web3 users to enable mass adoption.
XION is the first blockchain project to integrate USDC as the primary transaction currency with backing from Circle Ventures. The collaboration allows XION to accelerate mainstream adoption and onboard users with a familiar currency. Read more about the partnership here.

Challenges:

Crypto continues to develop new products, L1s, and solutions. Staying up to date and ensuring all the issues are integrated into the product can take time and effort. They will need to target and acquire both users and developers; the question is which enables the other. On top of that, they compete with many other blockchains for liquidity and TVL. XION will need to build flagship apps on top of what they already have to bring adoption.
Compatibility with other products and ecosystems is key to achieving true scale.
To continue driving adoption, it is vital to attract quality projects that appeal to both Web3 and Web2 audiences.

What’s Next for XION

XION is live and has already reached significant usage and ecosystem partners. Since the launch of the Testnet, the team has garnered over 2 million Meta Accounts, processed over 30 million transactions, and welcomed over 150+ projects to the ecosystem

XION is transitioning into the mainnet shortly, and its ecosystem is expanding rapidly. Additional Abstractathons, an ecosystem fund, and an incubation program are on the horizon as it continues growing its large ecosystem of integrations, partners, and deployments. Furthermore, the team continues innovating with its Generalized Abstraction infrastructure developments as it aims to be the go-to L1 for consumer adoption and propels the industry toward true mainstream adoption.

Learn more about XION

🌐 Official website: xion.burnt.com

🐦 Official Twitter: twitter.com/burnt_xion

🕹️ Discord channel: discord.gg/burnt 📖 Whitepaper: https://xion.burnt.com/whitepaper.pdf

🔥 Join the Syndicate: Blaze Syndicate Community Program

🎓 Learn more about Chain Abstraction

About Morningstar Ventures

Morningstar Ventures is an investment firm backing ambitious ideas by early-stage founders. Based in Dubai, Morningstar Ventures focuses primarily on the blockchain and digital assets space and is led by CEO Danilo S. Carlucci. The firm is active in token and equity investments and has a particularly strong focus on the MultiversX ecosystem.