With millions of dollars in investments from Aurora Capital, Boya Interactive, and others, how does RootData make Web3 investment simple?

Interview & Writing: flowie, ChainCatcher

Editing: Marco, ChainCatcher

In mid-September 2023, the Token2049 event, which had the highest participation in history, was held in Singapore. In hindsight, this moment marked a significant watershed: for the Web3 industry, the prices of mainstream cryptocurrencies like Bitcoin have continued to rise since then, officially opening the bull market channel; for RootData, nearly a year of data cultivation achieved value discovery under the dual effects of market stimulation and product iteration, with user recognition and engagement skyrocketing, leading to a more than tenfold increase in daily active users.

RootData's latest round of financing also originated at this time. During the event, RootData co-founder Pan and Tony, a senior partner at the well-known US venture capital firm Aurora, took a walk by the lake at Bedok Reservoir Park to discuss industry opportunities. Both parties agreed that data products are a significant pain point and a necessity in the Web3 industry.

Thus, when RootData launched its financing at the end of the year, it was only natural for Aurora to lead the investment. Other participants in the investment included the Hong Kong-listed company Boyaa Interactive (00434.HK), which is entering the Web3 industry by purchasing cryptocurrencies like Bitcoin, having completed the acquisition of $100 million worth of BTC, ETH, and other crypto assets.

In addition to these traditional funds, RootData's $1.25 million seed round financing included investments from Bonfire Union Ventures (a fund under Mask Network), Sending Labs, Skyland Ventures, GoPlus, Basics Capital, Rebase D.Ventures, UniSat, and See DAO. Gavin, the founder of Orbiter Finance, Shawn Shi, co-founder of Alchemy Pay, and Jackson, co-founder of 0xScope, also participated in this round of financing.

As a Web3 data company, RootData starts with off-chain data from the primary market of the Web3 industry, establishing a comprehensive project database that connects secondary market and on-chain data, becoming the data layer and new entry point for Web3 assets.

RootData has now attracted over 1.5 million independent users, with current monthly active users exceeding 300,000, of which 50% of the traffic comes from markets such as the United States, Singapore, Japan, the United Kingdom, and Vietnam. RootData's data has also been cited multiple times by mainstream media such as The Wall Street Journal, CoinDesk, Cointelegraph, and Decrypt.

1. Mainstream US Funds and Hong Kong-listed Companies Jointly Support the Creation of a New Entry Point for Web3 Assets

For traditional capital, Web3 has become an unavoidable field.

Aurora, which has succeeded in mobile internet and cutting-edge technology (with investment cases including Meituan and BGI), has also turned its attention to the Web3 field. Its previous investments in data companies like IT Orange and TalkingData have made it easy for Aurora to understand the potential value of data platforms, leading to its role as the lead investor in this round of financing for RootData.

RootData was founded in mid-2022 by co-founders Pan and QuanYu, who previously established the leading Chinese Web3 blockchain media ChainCatcher in 2018.

During the development of ChainCatcher, they realized that the Web3 industry has strong financial attributes, where users are both product users and investors, and accurate and timely project data holds immense value for Web3 users.

"The greatest value of data is to help quantify investment risks. Once the analytical support of data is lost, risks cannot be quantified, and the gambling nature of investment transactions emerges," Pan believes that ordinary investors also need a data product that meets the standards of institutional investors.

At that time, there were mainly three types of data products aimed at the C-end: the "data + research report" model represented by Messari and The Block; the "data + tools" model represented by Nansen and Dune; and the "data + trading" model represented by Debank and DexTools.

In Pan's view, there were two obvious pain points that had not been addressed. First, the readability of data is poor, requiring users to have sufficient industry background knowledge or understanding of technical language, which is too high a threshold for most Web3 users.

Second, on-chain and off-chain data are relatively fragmented. Users need to use multiple data products to obtain comprehensive asset data, leading to inefficiency. However, the rapid changes in crypto asset markets make efficiency critical to trading outcomes.

RootData chose to start with off-chain data at its inception, launching multiple functional modules, including financing, projects, investors, ecological maps, tag maps, tool navigation, and albums; presenting project tags, chains, teams, investment backgrounds, related news, parent/child organizations, etc., in a visual and structured manner to avoid users getting trapped in a complex "information vortex."

RootData has also enhanced the combinability of various charts, supporting users in locating chart content based on multi-dimensional information such as tags, ecology, time, track, and investors.

Pan revealed that after RootData 1.0 was launched for nine months, it achieved over three years of data performance compared to similar products. Currently, RootData presents highly structured data on nearly a decade of projects, financing, etc., in the Web3 field, and has expanded to tens of thousands of on-chain entity address data, processing over 3.4 million user search and inquiry requests each month.

After the market initially recognized off-chain data, RootData 2.0, which integrates on-chain data, was launched in January this year.

Currently, RootData integrates various types of on-chain data, including project treasury holdings, token flows, and top holding address distributions, helping users understand project token flows and treasury scales more timely, thereby better supporting investment clue discovery and trading decision-making.

"Currently, RootData has taken the lead in encapsulating on-chain and off-chain data for Web3 assets, becoming the data layer and new entry point for Web3 assets."

These achievements have also gained recognition from capital. Pan introduced that many investors in this round of financing are deep users of RootData, so the investment was confirmed after just one discussion.

The Hong Kong-listed company Boyaa Interactive has attracted market attention due to its announcement to purchase $200 million worth of BTC, ETH, and other crypto assets. According to Boyaa Interactive's founder David, the investment in RootData is because RootData's products have excellent data structuring and smooth user interaction experiences, which help improve investment decision efficiency and capture investment signals. At the same time, this is also part of Boyaa Interactive's layout in the Web3 ecosystem.

Suji, the founder of Mask Network, also stated that RootData has become an essential product for his daily work. As a seasoned user, he can see that the RootData team has strong product evolution capabilities and believes that RootData will ultimately become a new entry point for Web3 assets.

2. Establishing Data Network Advantages by Tackling Underestimated "Dumb" Tasks

Ten years ago, Y Combinator proposed an important creed for startups: "Do Things That Don't Scale." The core idea is that startups in the early stages must: 1) manually recruit users; 2) manually provide extraordinary experiences for users. These tasks are rarely undertaken by large companies and are thus considered "dumb" tasks that cannot be scaled.

This creed is also largely applicable in the cryptocurrency field, where some of the most successful startups have done extremely tedious work to acquire and serve users.

In building RootData's data model, Pan has also had deep insights. "In the past, we have seen some entrepreneurs from large companies working on data products, hoping to solve data sourcing and modeling issues through AI or by combining with ChatGPT right from the start. However, Web3 data has a lot of noise and a high degree of non-standardization, making it unrealistic to take shortcuts to achieve complete scalability."

Currently, RootData requires a professional team to "manually" ensure the value and accuracy of data information; at the same time, it is also improving the quality and efficiency of database construction through the development of intelligent data systems, introducing partners, and community co-construction.

For example, the characteristics of off-chain data in Web3 are high readability but low standardization and structuring, posing significant challenges for database model construction. How many categorical entries should be used to describe an asset's homepage, and whether various information and information sources are valuable and accurate, all require hard work to be "manually" processed.

Pan mentioned that currently, RootData has over 20 data elements to describe each asset.

On the other hand, the characteristics of on-chain data are high structuring but large data sample sizes and difficulties in cleaning and labeling, as users can have multiple wallet addresses and remain anonymous.

To address this, RootData is developing an intelligent data processing system for data collection and labeling, combining existing databases and partner databases for multi-party verification to achieve rapid and accurate verification of on-chain data information. Additionally, it is incentivizing users to participate in the co-construction of on-chain data through points, and in the future, it will further enrich the points rights system, introducing methods such as NFTs and reputation systems to filter different types of users for rewards. It is also collaborating with partners on API and data sharing.

Currently, RootData has established partnerships with over 50 projects, including TokenPocket, 0xScope, and GALXE. At the same time, RootData has packaged its rich and accurate data into APIs for external services, allowing third-party partners' pages to integrate RootData data, such as investors, financing amounts, detailed introductions, social media links, etc., avoiding the cumbersome processes and manpower investments of maintaining large amounts of project data while significantly enhancing user experience.

Next, RootData will also expand partnerships in scenarios such as Web3 recruitment, task bounty platforms, wallets, and exchanges to establish network advantages in data applications.

Pan believes that to create a successful Web3 data product, the team must first have experienced capabilities in processing and denoising Web3 information data and a professional knowledge background, and then compete in diligence and product interaction experience.

In the near future, RootData will also integrate Twitter data to further help users reduce noise and discover value. In the second half of the year, RootData will launch AI-based data products that will help users search for and interpret data information and improve investment decision quality based on existing massive structured data.

3. With a Million Users Accumulated, Global Market Expansion is Planned

In the year and a half since RootData was founded, it has hardly engaged in any proactive market promotion. Pan stated, "Over 95% of the team's time and energy is spent refining the product and building data."

Despite this, through word-of-mouth, RootData has attracted over 1.5 million independent users, with monthly active users exceeding 300,000. Regarding user distribution, Pan revealed that over 50% of RootData's traffic comes from markets such as the United States, Singapore, Japan, the United Kingdom, and Vietnam.

With the bull market of 2024 beginning, market trends have greatly stimulated users' demand for finding trading signals, which has led to a significant increase in RootData's data usage. "RootData's daily active user data has increased about tenfold compared to six months ago, with average browsing duration and average page clicks also significantly leading similar data products."

On the social platform X, top KOLs often share screenshots or links to RootData pages and recommend users to use it. Media outlets like The Wall Street Journal, Coindesk, and Decrypt frequently cite RootData's financing data. These phenomena indicate that RootData has become a trusted data source for various parties in the industry for research and trading.

In terms of monetization models, APIs, membership subscriptions, and advertising are common ways for data platforms to generate revenue. RootData has already begun exploring APIs, with over 30 paying users. Additionally, RootData will actively explore deeper monetization scenarios, such as launching primary and secondary market matching services and APIs.

Pan believes that the commercial value of Web3 data platforms will far exceed that of Web2 data platforms because the efficiency of combining capital flow and data flow in Web3 is unparalleled.

Moreover, there are still many new monetization opportunities in the creation, circulation, issuance, and trading of assets in the primary and secondary markets of Web3. "Recent products like Kickstarter, a fundraising platform backed by a16z Crypto, and Aevo, an options and derivatives trading platform, have business models worth RootData's reference."

After completing a million-dollar seed round of financing, in 2024, RootData will focus on building advantages in data sources and traffic growth, actively expanding into East Asia, Southeast Asia, and North America, and is committed to creating a more interactive Web3 asset data layer to make Web3 investment simpler.

"The Web3 industry is limited by regulation and has a high entry barrier, making the logic of 'traffic is king' still valid in the Web3 industry," Pan hopes that RootData will become a new entry point for Web3 assets, allowing Web3 users to more efficiently discover their investment opportunities through RootData, reducing anxiety and redirecting released productivity to more valuable areas.