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Multicoin Capital: Why did we invest in Fluence?

W3.Hitchhikerand others2Authors

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Fluence, from definition, value, practice to its multi-level meaning.

Composable Web3 Compute

By Kyle Samani

Evelyn, W3.Hitchhiker

Computers do three things, and only three things:

1. Store data.

2. Perform calculations on the data.

3. Send the data to other computers (which in turn store it, process it, send it back to other computers, and so on).

You can't compute without storage, so naturally, most of the earliest Web3 protocols focused on storage. This includesArweave(we are investors in it), Filecoin and Sia.

We've been thinking about Web3 computing for years and have made a number of investments.Livepeer,The Graph, andRender Network. It is worth noting that all three Web3 computing primitives are highly specialized around a very specific type of computing.

Today, we are pleased to announce our latest investment in this area:Fluence. We have recently worked with Alameda Ventures, Tiger Global, Protocol Labs, Arweave Capital, Polymorphic Capital, OP Crypto, Signum Capital and UOB Venture Management co-led a $9 million investment round.

A simple mental model for Fluence is a decentralized and unauthorized AWS Lambda. Fluence can read data from any public data source -- IPFS, Filecoin, Arweave, Ceramic, Ethereum, Polygon, Solana, Flow, etc. -- and perform calculations on it and store newly calculated data in any of these repositories.

Additionally, in contrast to a blockchain where all nodes copy the same data, Fluence executes through point-to-point (P2P) network management and customizes decentralization, fault tolerance, and cost by function.

Fluence is made by a species calledAquaIs supported by a custom programming language designed to build distributed systems in untrusted environments and manage the execution of entire P2P networks. Application developers can use Aqua to create custom P2P algorithms for data replication, calculation validation, failover, and load balancing. In addition to scalable computing, this makes the design space of P2P systems easier to build and can be combined seamlessly with each other.

What's the use of Fluence? At least one of the following calculations is required:

1. It needs to be validated in the public domain.

2. No single point of failure exists.

3. You need to resist censorship.

4. Too thick to be placed directly on the blockchain, but the output of the computation must be stored on a public ledger.

Here are some concrete examples of these applications in practice:

On-chain VotingUsers sign deals and send them to the Fluence network, which will tally and aggregate all votes and submit the final vote to the chain.

Mutable NFTs (Mutable NFTs)There is a large design space to design NFTs over time, or to allow reorganization and other mathematical relationships.

GamesAs more games leverage both homogeneous and non-homogeneous tokens to implement in-game mechanics, there will be more calculation between those states that the user sees and how the game is played. Today, many of these calculations are done in a centralized way (for example, at Axie). As more and more people make money from the crypto economy in games, we expect users to demand more and more transparency in these calculations, and they'll move from centralized locations to decentralized ones like Fluence.

Cross-chain ComputationsAutomatic transfer of assets from one chain to another requires a worker to detect events on the initial chain (for example, token transfer or NFT burning), generate the corresponding data, and send the resulting transaction to the other chain where the asset is minted.

Smart Contract AutomationFluence implements the full set of functionality required by DeFi and DAO, including limit order execution, automatic liquidity supply management, protected debt position clearing, DAO proposal execution, and software updates.

Oracle (Oracles)Since Fluence provides a fully functional framework for creating decentralized systems, it can be used to create sub-networks driven by consensus or any other data validation model. Developers can set up sub-networks to provide on-chain data sources and apply custom trust models.

Off-chain P2P Coordination and Multi-sig WalletsFluence provides a powerful foundation for threshold signature Settings and multi-party calculations.

Fluence embodies an extremely bold vision for the future: a logically centralized computer that canInfinite extension, and without permission to coordinate and process any number of functions across any data input.

This year, Fluence will launch an on-chain marketplace for hosting and computing resources as well as code. Code authors will share the hosting revenue based on the use of their code modules. This code is immutable when uploaded, preventing the later insertion of malware, and as long as the module is used and hosted, the dependency retains its functionality without the risk of being outlawed by the centralized party. As developers upload more code, all of which will naturally be combined using Aqua, the Fluence network becomes complicated.Composability is the greatest underlayer for facilitating composition.

In addition, Fluence fulfills the ultimate dream of open source: getting paid to write high-quality open source code that others can use. This monetization model is at the heart of the Fluence spirit and will help reshape the way we think about value capture in open source systems. Developers have dreamed of this kind of monetization model since the advent of open source 30 years ago; Fluence is making it possible.

nowSDKIt's been launched. There are thousands of themserviceRunning on the network. If you want to help build the infrastructure to scale Web3 computing, Fluence is working on itrecruitmentYou can meet the team at ETH Denver this week. Via @FluenceProject on Telegram andTwitterContact them.

Disclosure: Multicoin has established, maintained and implemented written policies and procedures to properly identify and effectively manage conflicts of interest in relation to its investment activities.