Historically, startups have built their products on blockchains outside of the Bitcoin network to avoid its slow transaction speeds, high fees and inability to communicate cross-chain.
But thanks to efforts like the Lightning Network and Taproot Assets (formerly Taro), which have improved the Bitcoin network’s accessibility, speed and scalability, a number of enthusiasts are building on top of Bitcoin.
For reference, the Lightning Network is a layer-2 payment system that aims to enable faster transactions at a nominal cost for the blockchain. Separately, Taproot, which launched in April 2022, aims to help issue digital assets on Bitcoin’s blockchain that can then be transferred to Lightning Network instantly in low-fee transactions.
In Wolf’s Clothing (Wolf), a startup accelerator launched by asset management firm Stone Ridge, is a similar effort that wants to bolster Bitcoin-focused applications and use cases. Over 100 teams from 36 different countries applied to be a part of the flagship, exclusively nonremote cohort, based in New York City.
Its first cohort, Wolfpack 1, consisted of eight teams and 23 founders from 10 countries, and they presented their ideas on Wednesday during a demo day, exclusively covered by TechCrunch+.
All teams were provided seed capital by Wolf, the accelerator’s CEO, Kelly Brewster, said. NYDIG, a subsidiary of Stone Ridge, is also supporting the program, alongside mentorship and investments from Bitcoin-centric VC firms and operating companies.
Many of the startups presented real-world use cases that weren’t about improving the bitcoin ecosystem but rather were products and services people can use everyday, only powered by faster payment rails. The majority of the startups integrated the Lightning Network into their tech.
The program featured 30 guest speakers from Stone Ridge and NYDIG, among others, including Lightning Labs co-founder and CEO Elizabeth Stark; Alex Gladstein, chief strategy officer at the Human Rights Foundation; and Lyn Alden, who founded Lyn Alden Investment Strategy.
Company: 10101
What it does: Decentralized trading on Bitcoin
Founders: Philipp Hoenisch, Richard Holzeis, Lucas Soriano del Pino, Mariusz Klochowicz, Daniel Karzel
The pitch: 10101 (Ten Ten One) provides decentralized finance and bitcoin trading through its mobile application. The company is a self-custodial, on- and off-chain wallet that lets users trade perpetual futures without counterparty risks or third-party middlemen, like exchanges.
The application is fully open source and powered by the Bitcoin Dev Kit and the Lightning Dev Kit. The company plans to add synthetic stablecoins and other products like binary options, futures, structured products and prediction markets to its application in the long term, co-founder Philipp Hoenisch said during his pitch.
It is raising a $2.7 million seed round and plans to launch publicly in the third quarter of 2023.
Company: Arcade
What it does: Global peer-to-peer marketplace built on Nostr
Founders: Christopher David, Erik Aronesty
The pitch: Arcade is building a decentralized global marketplace for peer-to-peer commerce with an initial focus on expanding in the Nigerian market. It wants to build a global order book that allows people to buy any product or service globally. Peer-to-peer Bitcoin onramps have to be uncensorable, global, mobile and extensible, “so that’s what we’re building,” said co-founder and CEO Christopher David.
The marketplace hopes to claim the market share freed up by the recent closure of P2P marketplaces like LocalBitcoins. It builds on censorship-resistant open networks for payments like Bitcoin, Lightning and the data network Nostr. The application is live in beta mode with about 500 test users.
Arcade is currently raising $2 million in seed funding via YC SAFE.
Company: Agora
What it does: Social debate platform
Founders: James Pierog, Ruban Sundara Raj T
The Pitch: Agora is a gamified social debate platform where people can post ideas, argue their points in the comments and vote with satoshis, the smallest denomination of bitcoin, to determine which side wins. When the debate is over, the funds are split by those who voted for the winning side. The business takes about 5% of each prize pool. It has seen about 140,000 satoshis — or $36.98 — in payment volume across 1,085 transactions and 30 debates in the past two weeks, co-founder and CEO James Pierog said.
The platform plans to launch a mobile app by the end of 2023.
Company: Dustup
What is does: Streamlined tournament tools
Founders: Neil Woodfine, Richard Bensberg, Adam Woodfine
The Pitch: Dustup aims to improve the e-sports competition space through its streamlined tournament tools that integrate bitcoin payments, giving players the ability to pay entry fees and collect prize payouts quickly. The typical registration process for e-sports tournaments is extremely slow and requires a bunch of rerouting, said CEO and co-founder Neil Woodfine, but through the company’s tool, players can register directly in a Discord in less than 30 seconds. The startup also provides automated results and custom scoring, as well as a bot that can help manage battle royale tournaments.
It’s raising a pre-seed extension round of $350,000.
Company: ShockNet
What it does: Lightning-focused web infrastructure
Founders: Justin Hilton, Hatim Boufnichel
The Pitch: ShockNet provides infrastructure and tools to bridge web applications with the Lightning Network for quick payments. Its infrastructure connects Lightning micropayments to any app, so people can deliver content and have a means for monetization. The startup is also building its platform, Lightning.video, which uses its technology stack to give creators an opportunity to earn by publishing and monetizing their own content without having to post on platforms like YouTube.
Company: Route Finance
What it does: Corporate treasury operating system
Founders: Nate Castillo, Ramin Keene
The Pitch: Route is building an operating system for corporate treasuries that lets businesses automate cash management, analysis, forecasting, reconciliation and integrate payments directly into treasury workflows by pulling data from over 170 different integrations. The service provides a programmable financial data platform — with AI, ML and Bitcoin support — that will tailor support for advanced treasury workflows.
Over time, the startup wants to power payments through Lightning and Taproot technologies, and “essentially replace Swift” and “become the Stripe for treasury,” said Nate Castillo, the company’s co-founder. It has four customers — Amboss, StackHawk, Denali and Teachable — in its pilot program. However, after this story published, Amboss’s CFO, Asher Hopp, reached out to TechCrunch+ to clarify that Route pitched Amboss, but there is no formal agreement between them.
Likewise, StackHawk SVP Holly Hamann told us that StackHawk is not one of Route’s customers, either, and is not involved with its program.
When reached for comment, Route co-founder Nate Castillo replied, “None of the companies listed are Route customers, and we are working through the process to formalize our pilot program.”
Company: Zawda
What it does: Preserving paychecks
Founders: Oday Kamal, Javier Vargas
The Pitch: The Zawda platform helps employees in MENA, Lebanon, Turkey and Pakistan allocate portions of their paychecks to bitcoin and stablecoins directly through their employers to preserve the monetary value.
Countries in the Middle East face high inflation and rising costs, and people in those regions are seeing their local currencies and purchasing power diminish dramatically, said company co-founder Oday Kamal. Its platform requires no tech integration and aims to work with people to improve their ability to maintain currency and offer them a way to receive a small portion of their paycheck in bitcoin to preserve their funds.
It is starting its pilot phase with the United Arab Emirates and plans to finalize licenses with regulators in the country by the third quarter of 2023; it anticipates exiting that phase by end of year. It also wants to expand paycheck offerings into stablecoins, via Taproot Assets. It later plans to launch in Lebanon, Turkey, Pakistan, as well as add services like remittances, staking and lending.
Company: Zeus
What it does: Bitcoin wallet, node management
Founder: Evan Kaloudis
The Pitch: Zeus is an open source, noncustodial Bitcoin wallet and node management client that aims to provide a better option for lightning interfaces and node costs. The entire process to set up its wallet takes less than 30 seconds, founder Evan Kaloudis showed during his presentation. The wallet currently has about 10,000 users, making up over 10% of all Lightning Network users. It is also building Olympus by Zeus, a lightning service provider, that aims to offer easier connectivity to the lightning network. The wallet is supported by Eclair, LND and Core Lightning and is integrated by companies like BTC Pay, MyNode and Nodl, among others. It’s looking to raise $2 million to $3 million.
The TC+ takeaway
All in all, this demo day was unlike any other crypto demo day I’ve covered. Yes, I said crypto, which Bitcoin maximalists would argue the blockchain is not a part of. However, most crypto-focused demo days have startups that are aiming to grow the crypto ecosystem.
Wolf’s demo day was a refreshing change of pace given that a fair amount of the startups were looking to solve real-world problems that exist today. Instead of creating a project that only benefits the Bitcoin network, founders were launching innovations that integrated Bitcoin as a payment solution for something outside of the industry.
“There’s an explosion of creativity happening in Bitcoin today,” Wolf’s Kelly Brewster said. “People in crypto are building for crypto, but these [Bitcoin-focused] projects aim to build something faster and cheaper for the general public.”
With all this said, it’s still important for Bitcoin developers and founders alike to grow the ecosystem. As other blockchains progress further with subsectors like NFTs and gaming, Bitcoin is lagging behind.
But in recent months, the Bitcoin ecosystem has seen some renewed interest, with new initiatives like the launch of Ordinals, a Bitcoin-based NFT-like project. To date, over 9 million Bitcoin Ordinals have been inscribed — jargon for created (or minted) — according to Dune Analytics data. That amount is up 7,280% from 122,500 in mid-February, signaling explosive growth and demand for Bitcoin-based NFTs.
I’m curious to see whether Bitcoin-focused demo days moving forward will continue to be a mix of real-world projects building with Bitcoin, or if we’ll see an influx of new projects centered around growing the ecosystem, taking a page out of the Ethereum, Solana and Polygon playbooks.
Update: This story was updated on May 25 to clarify that Amboss is not one of Route’s current customers. This story was updated again to clarify that StackHawk is not one of Route’s current customers. This story was updated again on May 26 to include Nate Castillo’s comment.
Comment