Blocto: The traffic gateway that guides Web 2.0 users into the Web 3.0 world

Source: WaterdripCapital

Why We Invest in Blocto?

Industry Trends

The booming blockchain industry is constantly innovating. The DeFi Boom of 2020 introduced the concept of decentralized finance to the masses, with the continuously rising TVL (Total Value Locked) and APR (Annual Percentage Rate) far exceeding traditional finance, attracting a rush of interest and igniting a new wave of a spectacular bull market.

In 2021, the concept of the metaverse emerged, with numerous internet and gaming companies eagerly waving the metaverse banner, even venturing into the blockchain industry. By the summer of 2021, the Gamefi sector, which combines gaming and DeFi, became a new darling among investment institutions. With the soaring success of Axie Infinity, gold farming communities sprang up like mushrooms after rain…

The blockchain industry is increasingly appearing in the public eye amidst this wave of the times. Billions of users living in the Internet era of Web 2.0 are curious about the Web 3.0 world based on blockchain technology. How to successfully attract the massive user base of Web 2.0 into the Web 3.0 world and expand the incremental market of the blockchain industry has become a topic of great interest among various players in the blockchain world. Blocto is currently one of the most successful players.

Core Investment Logic

Blocto is a one-stop cross-chain smart contract wallet and a platform that provides users with a multi-functional interactive experience in the Web 3.0 era. It is well known that wallets are important infrastructure in the blockchain world and serve as traffic entry points, occupying a significant ecological niche. Waterdrip Capital has always had a strong interest in high-quality infrastructure projects, which is why we decided to invest in Blocto in the second quarter of 2021.

Compared to other blockchain wallets, Blocto has several notable advantages:

First, Blocto is dedicated to making it easier for users to enter the blockchain world. Therefore, it has made significant efforts to lower the barriers to using decentralized wallets, allowing users from the Web 2.0 world to easily navigate the blockchain world and try various Dapp applications without needing a private key, simply by registering with an email.

Second, one of Blocto's visions is to become the gateway to the metaverse. It supports NFT assets across multiple public chains and implements a unified points system to replace the gas fees of various public chains, allowing users to conveniently own or exchange various digital currency assets, including NFT assets.

For developers, Blocto is also a very convenient platform. The Blocto SDK it provides allows developers to easily integrate with various public chains, effectively reducing development costs and difficulties.

Furthermore, Blocto positions itself as the Steam of the dApp world. In addition to the wallet, the Blocto team has developed a series of foundational applications in the DeFi and NFT fields and has integrated a large number of high-quality cross-chain dApps. Blocto's native token, BLT, serves both utility and governance functions, becoming an important link between the Blocto wallet, Blocto ecosystem products, and users.

The unique and innovative product architecture of the Blocto ecosystem greatly enhances interoperability among products, leading to exponential expansion of the entire ecosystem and bringing the highly technical world of blockchain into the public eye, helping users achieve a seamless transition from the Web 2.0 to the Web 3.0 world, and acting as a dApp platform to drive traffic to various high-quality dApps, resulting in exponential user growth.

Based on our recognition of Blocto's design philosophy and our prediction that the blockchain industry will welcome more Web 2.0 users in the near future, we have decided to include Blocto in the Waterdrip Capital Portfolio family.

Potential Investment Risks

Investing in early-stage blockchain projects requires looking at the investment track, team strength, technical background, product progress, and also the team's market operation capabilities. When we discovered this project in February 2021, it was still in its early stages, with not much data support and product progress, thus carrying significant uncertainty.

At that time, it was an equity investment, and there was not yet a clear description of the token aspect. However, through multiple communications with the team and a series of background investigations, our project manager predicted that the Blocto team possesses considerable community-building, product promotion, and business collaboration capabilities, which the team later proved with tangible results.

Fundamental Analysis of Blocto

Product Features of Blocto

Blocto is a one-stop cross-chain smart contract wallet, which is more user-friendly for Web 2.0 users without blockchain experience compared to other decentralized wallets. Users can log in using just their email to obtain a wallet address and enjoy various DApps, with the gas fees incurred during the process being paid using "points," which can be obtained through system gifts or in-app purchases.

1. Although Blocto was closely linked to the Flow public chain at its inception, it actually supports multiple public chains including Flow, Solana, BSC, Polygon, Avalanche (c-chain), and Ethereum, making it convenient for users to manage digital assets and NFT assets across multiple public chains, and supports various cross-device applications, allowing users to easily navigate the blockchain world anytime, anywhere.

2. To lower the user entry barrier, Blocto wallet allows users to transact across various public chains without needing to use the respective public chain tokens as gas or other fees, instead converting these fees into points (Points) for payment. Regardless of which public chain the transaction is on, users only need to pay points or BLT as gas fees. This user-friendly setup not only provides convenience but also facilitates the free flow of users and assets across different chains.

3. Customized services provide users with convenient login methods: unlike traditional blockchain wallets that require users to remember private keys or mnemonic phrases, Blocto offers a simple email login method, allowing non-crypto users from the Web 2.0 world to enter the Web 3.0 world without barriers.

4. Advocating the concept of wallet-as-a-service. Blocto is not only a one-stop cross-chain smart contract wallet but also a platform that provides users with multi-functional interactive experiences in the Web 3.0 era. Centered around the core function of a decentralized wallet, Blocto also integrates features such as a cross-chain decentralized exchange (BloctoSwap), an IDO platform (Blocto IDO), and an NFT marketplace (BloctoBay).

Ecosystem Composition of Blocto

As mentioned earlier, to provide users with a one-stop service, Blocto has the following functional modules centered around the decentralized wallet:

1. Developer-friendly Blocto SDK

2. Embedded decentralized trading platform (DEX) BloctoSwap

3. IDO platform BloctoIDO centered around the token BLT

4. Non-custodial NFT marketplace BloctoBay

5. Decentralized ecological governance mechanism BloctoDAO

6. Decentralized asset sharing pool BloctoVault (product is still in planning)

Users can easily complete registration using their email within 30 seconds and enjoy all the services provided by Blocto.

• Blocto Wallet

Unique Login Model and Flexible Private Key Management

Blocto wallet is a cross-chain smart contract wallet, and its biggest distinguishing feature from other decentralized wallets is that users do not need to save private keys or mnemonic phrases; they only need to register and log in using their email. Specifically, when users create a wallet account in Blocto, it defaults to a custodial mode, meaning users do not need to save private keys or mnemonic phrases, just register with their email.

The private key corresponding to the user's wallet account is stored by default on the user's device and is also hosted by Blocto's backend server, which is built on Google Cloud. The management of private keys combines Google KMS, and Blocto is also collaborating with other multi-signature service providers to offer users a more secure custodial solution.

Additionally, users who wish to log in using a private key can choose the self-managed private key mode. In this mode, the system will create a new private key and send it to the user, and the smart contract will replace the old private key held by Blocto's backend server with the new holder's private key. This flexible management model of custodial and non-custodial private keys can meet the diverse preferences of users regarding security and convenience.

Support for Batch Transactions and Fiat Payment Channels

Blocto can achieve batch transactions, meaning it can merge multiple transactions into a single atomic transaction and facilitate interaction across devices, such as pushing information between mobile and desktop.

Moreover, Blocto supports various fiat payment channels. As early as January 2021, Blocto successfully integrated with Moonpay, becoming the first wallet globally to allow users to purchase FLOW/FUSD using credit cards/Apple Pay/Google Pay/Samsung Pay.

What makes it even more convenient for users is that when they first use Blocto for small purchases, they do not need to undergo KYC. If they need to make a large payment, they only need to spend a brief 5 minutes on KYC to complete the purchase, which is undoubtedly another strong measure to welcome Web 2.0 users into the blockchain world.

Using Unified Points to Replace Multi-chain Gas Fees

As a wallet supporting multiple public chains, another attempt Blocto has made to enhance user convenience is allowing users to transact across various public chains without needing to use the respective public chain tokens as gas or other fees, instead converting these fees into points (Points) for payment.

Regardless of which public chain the transaction is on, users only need to pay points or BLT as gas fees. This user-friendly setup not only provides convenience but also facilitates the free flow of users and assets across different chains.

• Blocto SDK

The Blocto SDK is an easy-to-integrate suite that allows developers to conveniently connect to various public chains, including Flow, Solana, and other EVM-compatible chains, effectively reducing development costs and difficulties. Currently, projects on the Flow chain such as Vault by CNN, MotoGP Ignition, and VIV3 have already integrated with the Blocto SDK, allowing developers to complete all integration work in just 2 to 8 hours.

• BloctoSwap

BloctoSwap is the decentralized trading platform of the Blocto ecosystem and is currently the only DEX in the Flow ecosystem. It bears the responsibility of on-chain asset trading within the Flow ecosystem and serves as a bridge for asset interaction between the Flow ecosystem and Ethereum, Solana, and BSC public chains. Currently, BloctoSwap's daily trading volume is in the millions of dollars. During the public offering of the Blocto token BLT, BloctoSwap also played an important role, ranking fifth in trading volume among all trading platforms.

• BloctoIDO (Blocto Launchpad)

BloctoIDO was launched in January 2021 and is the first and only IDO platform on the Flow public chain. It also plays an important role in the Blocto ecosystem, with its first launched project being Starly.

• BloctoBay

BloctoBay is the NFT marketplace of the Blocto ecosystem and is also the first NFT secondary trading market launched on the Flow public chain, supporting both web and mobile applications. Users can buy and sell various NFT assets on BloctoBay, including NBA Top Shot, Matrix World series, and more.

Additionally, Blocto now supports NBA Top Shot (legendary cards) and will support NFT trading across multiple public chains including Solana, BSC, Polygon, Avalanche, and Ethereum in the future, allowing users to directly purchase various NFT assets and collectibles using credit cards.

• BloctoDAO

BloctoDAO is the first decentralized autonomous organization on the Flow public chain, and it is an attempt by the Blocto team to build a more open, transparent, and democratic community culture. Every BLT token holder can become a member of BloctoDAO by staking tokens and participate in voting and governance activities within the Blocto ecosystem. The first voting participation occurred in early January 2022.

• Blocto Vault

Blocto plans to create a decentralized asset sharing pool in the future, with specific product forms still in planning.

Blocto's Development Over the Past Year

2021 Major Events in the Blocto Ecosystem

December 28: The decentralized ecological governance mechanism BloctoDAO is announced to be established.

Team Overview

Blocto is a product developed by a senior team from Taiwan in the blockchain field. The company it belongs to is called Portto, which is dedicated to improving the user experience of blockchain applications and becoming the gateway for users to enter the decentralized world. The team consists of over 20 members, with the founders as follows:

Co-founder and CEO: Hsuan Lee (李玄)

A seasoned blockchain developer and entrepreneur, Hsuan has previously worked as a software engineer at Yahoo, Agoda, and 17LIVE, and has experience in developing cryptocurrency exchanges, having led the development team of Cobinhood / Dexon to complete fundraising.

Co-founder and COO: Edwin Yen (颜维佐)

Former CEO of DEXON Capital & Lab and Business Strategy Director at Cobinhood.

Both founders have been working in the blockchain industry for many years and possess rich industry experience and resources, which is one of the necessary conditions for a successful blockchain project.

Blocto's Data Overview

After the launch of various products in the Blocto ecosystem, their performance has been impressive. As of December 31, 2021:

• The number of registered users of the Blocto wallet reached 726,952.

• Among them, the number of registered users on the mobile app reached 498,667.

• The overall DAU (Daily Active Users) was 386,684.

• The total asset management amount (AUM) of Blocto reached $1B USD.

• The daily average trading volume of BloctoSwap was $1M USD.

• The ATH (All-Time High) trading volume of BloctoSwap was $22M USD.

• 80% of users staked Flow in Blocto nodes.

• The Unique Active Wallets (UAW) grew by 6,345% year-on-year, especially with a month-on-month growth of 274% in August 2021, reaching the peak growth rate for the year.

• Over 84% of Flow public chain token holders delegated their FLOW token staking to Blocto.

• BloctoBay, launched in October 2021, is the first non-custodial NFT secondary trading market on the Flow public chain, having listed over 11,400 NFTs and completed transactions exceeding $1.5 million within two months.

• BloctoSwap is the only DEX on Flow, with a trading volume of $403 million by the end of 2021, growing by 384% from Q2 to Q4.

Blocto's Investment Institutions

In May 2021, Blocto announced the completion of an $8 million private placement round. This round was led by Animoca Brands, and besides our participation at Waterdrip Capital, several well-known institutions also participated in the investment.

These include: Alameda Research, Dapper Labs CEO Roham Gharegozlou, 500 Global, Quantstamp CEO Richard Ma, CMS Holdings, Animal Ventures, EVG, SNZ, BTC12 Capital, Continue Capital, Divergence Ventures, Origin Capital, Altonomy, Versus, 7xVC, LD Capital, Axia8 Ventures, DoublePeak, and Dealean Capital, among others.

Investment Opportunity Outlook for Blocto

As the blockchain industry gradually enters the public eye, more and more overseas institutional investors are beginning to enter the digital currency field. The trends in the digital currency market have shown a correlation with global stock markets, heavily influenced by policy factors. At the end of 2021, the United States announced that its inflation rate for December reached 7%, the highest since 1982.

Under the impact of the pandemic, governments around the world have generally adopted loose monetary policies over the past two years, leading to severe inflation in major economies globally. Against this backdrop, expectations for interest rate hikes in the U.S. and major EU countries in 2022 will have negative impacts on both the stock and cryptocurrency markets.

However, our investment team at Waterdrip Capital has experienced two complete bull-bear cycles in the blockchain industry and believes that bear markets are precisely good time windows for investment layout. It is foreseeable that the hot sectors in the blockchain industry in 2022 will include the following three directions:

• Metaverse

• DeFi projects that can significantly attract Web 2.0 users through CeFi integration

• DAO

As an entry point to the metaverse supporting NFT assets across multiple public chains, Blocto aims to lower the entry barriers of blockchain and guide more Web 2.0 users into the blockchain world, while establishing the decentralized autonomous organization BloctoDAO within its ecosystem, perfectly aligning with the three industry hotspots of 2022. As the Blocto ecosystem becomes more refined, the project's valuation will receive stronger support.