Discord Live AMA with Portal Co-Founders Eric Martindale and Chandra Duggirala
What do you think about the situation?
Eric Martindale: There’s no question in my mind that Bitcoin remains as strong and resilient as it always has been; if not stronger. All the metrics are looking up, all the infrastructure and technology we are looking to incorporate, adoption increasing from lightning metrics to joinmarket yields, full node counts, the number of transactions sizes of blocks — all of the various metrics you might look at really point to the tech we’ve chosen being Bitcoin; Bitcoin being the ultimate for the financial future of humanity continues to be true. We’re bringing Portal to market to double down on the thesis of building more tech on top of Bitcoin.
It appears that you are selling shares of stock cheaper now than during your private rounds? Can you clear up that misconception?
Chandra Duggirala: We did notice there was a typo in the PPM, and one of the tables listed the share prices of SAFEs and convertible notes that converted at a valuation cap that was much higher; that gives 43 and 47 conversion price for the shares — but that isn’t true. If you look through your convertible notes that you’ve signed, and everyone should have a copy, in Section 1F it says the price is not in shares. It’s giving money that converts to shares later.
What is that price? Lesser than the valuation cap by the total number or price of shares in a qualified finance, Section 1F clarifies. However, when the legal draft of these happened, somehow we missed the number.
We have clarified this with legal today. There is no private investor that in SAFE or convertible note will be getting shares for a higher price than what’s being sold in the current offer. As our messages on telegram and emails said, it was a typo and it is being addressed. If you read through your convertible notes, there’s a strong protection from this happening; even if the typo exists.
I know people are used to downrounds. A lot of companies have done them, but the section 1F highlights & prevents that eventuality from happening to the investors. We have thought about this ahead of time.
Ron: This was not a downround. That cannot possibly be. If you have invested prior, check section 1F of your convertible note: that will confirm.
Chandra Duggirala: We would like to apologize for the confusion caused, and any anxiety and stress caused to any of the current investors because of the typo.
Ron: A personal thanks to the community for finding this. We should have found this initially.
Chandra Duggirala: Correct. Two or three legal teams missed it, but the community pulled through.
Ron: Thank goodness for our active community! We’re sure you guys will point out every single little bug in BETA, so we will have an extremely stable first release coming up.
Why the minimum investment is 5,016$
Eric Martindale: So it’s going to be slightly different depending on where you are in the world, by about 16 dollars, but there is a limited number of slots. Right now we’re trying to make sure the slots are filled with the dollar amounts we are trying to meet in the total raise. There is an absolute maximum number of slots. The folks we get in, we want to make sure to clear our particular target sizes.
Can we invest partly in crypto & partly in another form? Doesn’t say anything specific. It just gives you a choice of either entering card ( which will be instantly charged; or crypto or wire transfer
Eric Martindale: I think you’d have to direct that question to Republic for an accurate answer, but my intuition is that yes you can.. Please check with republic support.
Chandra Duggirala: As far as we understand, there is no restriction against investing partly in crypto and partly in another form, and if there are any more questions about that you’re better off checking with Republic support. Republic support is very responsive; and if they are not, please let us know. We will request that they are responsive, in the event they are not.
Ron: If you are not getting a response from Republic support, please email email@example.com .
Eric Martindale: It’s important to note: this is exclusively a private offering of equity through Republic. if there’s confusion about what’s going out on social platforms; for example Twitter vs Republic: always refer to republic. The public sale information is exclusively and accurately on the Republic.com platform. No other platforms or information sources should be utilized at any time. Always refer to Republic.com
Invested through a VC, how will I get my shares?
Eric Martindale: Unfortunately, that’s not advice that I (or the team) can give you. I can only speculate as to how that process might take place. I did see this question earlier on Discord — if you invested through another party, delivery of those assets is between you and that third party. Not your keys, not your coin; not your investment, not your shares. If you didn’t invest through Republic, we can only defer you to communicate with the party you invested with.
Why sell equity and not tokens?
Eric Martindale: I’d love to answer this question. We’re building a real business here. We’re not launching and shipping a token to deliver on retail and run off before contributing productively to the ecosystem. We’re here long term, building an ecosystem of apps that generate money for the company long term, and offer the opportunity for other apps and builds to rise up on the ecosystem of Bitcoin. It’s why we are taking on funding: It’s the best opportunity to build more.
We are focused on building a successful and sustainable long term company. One day we hope to be up there, heavy hitting with the biggest companies in the world, which is a long road to haul from today.
We’re buckling in, hiring the best engineering and design talent in the world, and polishing things up — and getting them as quickly as we can in the hands of users. Real product market fit, and then we can talk about all the fun things we can do with the app: funds, etfs, stake coins, and all sorts of other Fancy Smart Contracts.
Chandra Duggirala: To add, we don’t believe many of the offerings companies have made, SAFTS or with SAFEs or with tokens etc, none of those we believe are legal and compliant. We understand those to be selling security tokens, which is far from ownership, transfer, and tradability.
We wrote about the mechanism of why we chose equity. There is an article on medium that explains in detail why we chose this. It’s called “A compliant framework for fundraising from American investors and distributing newly issued cryptocurrency that is never considered a security”. We do understand that selling tokens is easy; a lot of companies and products have done that. We could have. We decided not to; to be fully compliant not just for us, but so users could truly participate in the network without vulnerability or arbitrary restriction. So, we had to be fully compliant. The article explains why we chose this mechanism, and it goes through all the details and shows our understanding of existing security laws.
If you’re following the news the SECC isn’t the sec of 2012 or 2017, and as a project with long term goals we want to stay in the target zone for that.
Eric Martindale: Take the risk this exposes to centralized exchanges, considering the regulatory. Coinbase, as of March, is staring down a lawsuit; a class action lawsuit is accusing them of enabling and facilitating over 25 individual unregistered securities. The arm of the law is long. If crypto and Bitcoin are here to protect us, we need to do things the right way from the beginning. Mitigate and remove centralized parties, mitigate and remove regulatory risk; which means acting by the rules 100%, as we are a legally registered company.
When do you think you can demo the portal app?
Eric Martindale: When it’s ready, we can open it up to a (probably) small group of beta users, and then very quickly turn into a public awareness app. Basic wallet, layer 2, some contract and channel management, and the initial work and setup for what is to be the exchange. When it’s ready is when you’ll get it.
It is absolutely essential we dot every single ‘i’ and cross every single ‘t’ with regards to the security aspect. We literally cannot allow software we write to lose anyone’s money due to a technical glitch. That is an unacceptable mechanism. How many friends of yours lost money because of backups not done right, or the restoration didn’t work, perhaps the multisig didn’t work the same way one time, or something only worked in a specific version 4 years ago. There are too many ways for software to fail if we aren’t careful and deliberate about the software we deliver being very secure, and all potential failure models have been considered.
There are 2 competing forces: desire to get to market as fast as possible, and the desire to solve real world problems. Real users solve real problems we talk about, and against the security make sure the software we write does not lose anyones any money that they didn’t (laughter) trade away themselves. These are two competing concerns. The best answer is, “When it’s ready”. I have a personal incentive to get it in the hands of the community as quickly as possible.
Eric: Tantalizingly close!
Ron: I can attest to that, having been in the product demos. Looking forward to having one of those demos be made public!
Will you use Mintlayer as the layer 2?
Chandra Duggirala: We support many layers of functionality, many different layers for application. Mintlayer is one of them. The cross-chain dex is its own layer. The plan was to support Mintlayer assets. Mintlayer is not what we depend on.
Eric Martindale: We can’t say we are built on Mintlayer at any capacity. We are aiming to support as many emergent L2 on Bitcoin as possible. Lighting L1 in terms of support from the technical side. Lightning, liquid, rootstock, Mintlayer, namecoin, or anything merge-mined is often considered a sort of sidechain. Yeah, we’re aiming to support as many things as possible- specifically around layer 2 on top of Bitcoin layerability and interoperability. That’s the reason the Fabric library exists; Fabric is not only the connective tissue between those systems, but also L1 assets.
We have stated in the past: for the exchange the primary goal is to demonstrate fully self sovereign, fully trustless Peer to Peer atomic swaps; from Bitcoin to Ethereum in the first exchange wallet release. wallet out the door so they can provision channels and liquidity pre launch of exchange. First, Bitcoin and ETH for exchange, and then any number of assets — as many as possible will be added to the index, as long as the target chain either has a L2 system like lighting where a secret can be used to unlock a channel, or it supports SHA-256 time lock so that the atomic swap transactions can be created on that corresponding chain. We are going to attend to technology that support is possible within the Portal application suite.
The beauty of these L2 systems, and why we are trying to bring L2 to as many blockchains as possible, is the fraction of a penny transaction fees. The future of p2p file distribution is paying per byte, per second. There are tons of really nice Lighting apps that do that. That’s really the future: no more ads, users paying to stream small amounts of content directly, and the money going to the person streaming to you; with a portion going direct to the artist.
Any resources on how that’s going to work together with lightning? Can’t find anything in the white paper about how a Bitcoin eth swap would work with portal With native Bitcoin
Eric Martindale: Depending on what you want to do on Lighting, there are a ton of resources. Yield, channel balance and node — it really depends on what you’re after.
If you’re a developer, I’d point you towards the lighting labs wiki — lightningdevkit.org. If you’re interested much more, in the preparation of your own lightning node such as getting core lightning up and running or even L and D, there are lots of services. lightningnetwork.plus easy operations for people to pair up and share liquidity and pool liquidity so that they can have enough either inbound or outbound liquidity for what they’re looking to do. Are you looking to make payments, or even order your groceries? El Salvador, I hear, is flawless in their ability for merchants to accept lighting, or receive it. Maybe you’re a developer or a shop of your own, and you want to enable lightning. There’s Bitcoin Pay as a drop in service; it’s open source, you can run it yourself. It will run your own lightning node for you, and let you set up all the invoicing. It will look like bitpay if you’d like, but host it on your own.
There are too many good resources to list. Ask in our channels! We’ve got a Bitcoin channel, we’ve got a lightning channel on grove. There are tons of knowledgeable folks in the community who can direct you where to go based on what you’re trying to do with lighting.
We will be Lightning compatible. We have exciting technology to expand lighting to other techs other than Bitcoin, and that’s not litecoin or dogecoin; but there is a fledgling lightning. Exciting developments coming down the pipeline in regards to more lightning features.
Litecoin is a copy of Bitcoin and shares a lot of things. I view lightning as the real world testnet for things that can and could be merged into Bitcoin in the future. Litecoin is famous for having segwit on the mainchain before Bitcoin. I think that will be the case for a few more technological developments moving forward, but this is definitely NOT investment advice. Like I said, I view litecoin as a testnet for things that could be merged into Bitcoin in the future.
Hello, may I know which network you will be using to enable ETH, USDT etc? So a completely new network, correct?
Eric Martindale: Strictly speaking, it is the Fabric Protocol. It is its own p2p communications protocol. The Portal application is the first swarm of users that will exist inside of that protocol on the public network. Other swarms of applications and application users will also exist, all speaking that same communications protocol. If some use Bitcoin, namecoin, etherium, or any number of other chains, it doesn’t particularly matter. It’s just what you opt into viewing; what swarms you seek to join. If that particular swarm, like in the case of Portal, will need to have connectivity to both Bitcoin and eth, then yes you will have a Portal node speaking Fabric Protocol communications using Bitcoin and ETH protocols to communicate with those networks.
As you can start to imagine and see, these little clusters of applications and mutually interested users aggregating towards one another eventually are mutually assisting one another in minimizing costs. The future we envision of Fabric, Portal is the initial gateway into what we think that world looks like.
There is so much coming down the pipeline to get hype about; things other than exchange. Recognize it’s an ecosystem of interoperable communication language protocols, maps or translators, to speak with other external networks — not just blockchains but the silo’d, the oracleized: twitter, facebook: servers can be spot checked and give different results to different people. The “reputation” game which can be played here with us (the users) as the swarm, the crowd being able to hold these large centralized entities accountable. Hopefully more and more exchanges start to do proof of reserve, building more interesting financial instruments. Maybe that’s why coinbase refuses to implement proof of reserves, maybe not: who knows.
How does the management plan to invest the funds raised?
Chandra Duggirala: Building the product; and when ready, marketing. Nothing unique. Building the product and marketing it. That’s it. Right users, right product feature space. The Crypto space has really seen a lot of lofty ideas and very poor execution. We come from traditional startups. We know how hard it is to build new things and find new market segments. We are excited.
Eric Martindale: This is the time for building out the infrastructure, building up the core tech, and finding that sweet spot of product market fit; and that doesn’t mean 1 product either. All the different services and things that need to exist in a new financial world that is digital in the way Bitcoin has brought to us, all of those things first. When a product is ready for marketing, then the marketing dollars are spent. We are not going down the path to promote a product that doesn’t yet exist. We are focused on the engineering, and building out the infrastructure, and finding product market fit that whatever suite of services that as a long term interested company, those services have to exist. The order of events right now: it is ALL ABOUT BUILDING.
What would you say is the biggest threat to Portal’s success, and how do you plan to overcome it?
Eric Martindale: The biggest threat is by far failure to find market fit . The challenge is to first get the product launched and two, market and to make sure users love the product. I think we’ve pretty much got most tech stuff in the bag. We still have to do the engineering work to build implementations of so many services, but most of the tech stuff has been technically solved. The hard part will be in finding product market fit, and we’ll need good communication with our community to make sure that happens.
Look at the internet in general: everything is broken. We have the tendency to rebuild everything. We have our work cut out! First, we focus on the exchange. The hardest problem is once in the market, making sure we retain that good communications line with the community, iterate the product on a rapid basis, and make sure everybody who uses it falls in love.