a16z opening London crypto office citing ‘predictable’ environment

June 12, 2023 Coin Telegraph

A16Z

The expansion came following a “productive dialogue” with the United Kingdom’s prime minister and “months of constructive conversations” with U.K. policymakers, a16z’s general partner said.

Venture capital firm Andreessen Horowitz (a16z) is set to open its first office outside of the United States this year, adding to the backdrop of U.S.-based firms seeking greener pastures outside of the country.

Chris Dixon, a16z’s crypto founder and managing partner, cited a “predictable business environment” as one of the main factors behind its decision to expand. The move comes amid a slew of regulatory actions against crypto firms in the United States in recent months.

Big news to share: @a16z is expanding to the UK

We plan to open our first international office in London later this year, and will host the next Crypto Startup School there in 2024.

Why the UK? https://t.co/PQ7GuNEn77
— cdixon.eth (@cdixon) June 11, 2023

Dixon said the decision was finalized after a “productive dialogue” with the U.K. prime minister in addition to “months of constructive conversations” with HM Treasury, U.K. policymakers, and the Financial Conduct Authority. He added:

“We’re thrilled to open our first international office in a jurisdiction that welcomes blockchain technology and is committed to creating a predictable business environment by pursuing regulations that both embrace web3 and protect consumers.”

However, Dixon said the firm remains “heavily invested” in the U.S., and will continue to work with policymakers and regulators to push for more regulatory clarity for crypto start ups.

Rishi Sunak — the U.K.’s new pro-crypto prime minister — attributed the news of a16z’s expansion to having the “right regulation and guardrails” set in place to “foster innovation” while still protecting consumers.

Sunak said he was “thrilled” with a16z’s decision:

“That’s why I am thrilled world-leading investor, Andreessen Horowitz, has decided to open their first international office in the UK – which is testament to our world-class universities and talent and our strong competitive business environment.”

In addition to the new office, a16z has also announced its plan to launch a new “Crypto Startup School” (CSS) program in London in the spring (March to June) of 2024.

The CSS accelerator program will aim to attract U.K. and international entrepreneurs keen on forging a career in Web3.

The most recent CSS program received more than 8,000 applicants, with 26 companies receiving an investment from a16z.

Our next Crypto Startup School will be Spring 2024 in London, & we hope to attract great teams from the region to build web3 projects. Our recent CSS in LA included teams from the UK, US, India, Germany, France, Argentina, Ecuador, & Canada.https://t.co/vxBIPFuSPj
— cdixon.eth (@cdixon) June 11, 2023

The U.K. office will also “work closely with universities” in the U.K. to “provide talent and support” for blockchain-based clubs and to encourage blockchain technology to be taught more in the classroom.

General Partner Sriram Krishnan will be in charge of the new office in London.

Really excited for @a16z’s expanding to the UK with our first international office in London.

And personally excited to be moving there later this year. https://t.co/fJZSfEmHnO
— Sriram Krishnan - sriramk.eth (@sriramk) June 11, 2023

Andreessen Horowitz is the largest venture capital firm in the world, with over $35.8 billion in assets under management (AUM), according to the Sovereign Wealth Fund Institute.

On June 11, a16z led a $43 million Series A fundraise for London-based Gensyn, a blockchain-based marketplace connecting buyers and sellers of computing power.

Some of a16z’s most notable investments in the cryptocurrency space include Coinbase, Avalanche, Compound, Dapper Labs, Matter Labs, OpenSea, Optimism, PROOF, Solana, Uniswap and Yuga Labs.

Cointelegraph reached out to a16z for comment but did not receive an immediate response.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

A16z releases anonymous voting system for Ethereum

May 26, 2023 Coin Telegraph

A16Z

The system uses “time-lock puzzles” to encrypt the contents of votes, making them unreadable until balloting has finished.

Venture capital fund Andreessen Horowitz, also known as A16z, has released a Solidity library that can be used for anonymous voting on Ethereum. Called “Cicada,” the library prevents an individual voter’s choice from being known before polling ends. When combined with zero-knowledge group membership systems like Semaphore, it can also make the identity of the voter permanently unknowable, according to a May 24 blog post from A16z engineer Michael Zhu.

Excited to announce Cicada: a new building block for private on-chain voting. https://t.co/hxE4KL4Se6
— moodle zoup (@moodlezoup) May 24, 2023

Cicada relies on time-lock puzzles, a type of cryptography that allows users to encrypt secret values that can only be decrypted after a specific period of time has passed, Zhu stated.

These puzzles have been around since 1996. But before 2019, they would have required users to reveal their secret values once the time period had passed. In voting systems, this could have caused problems with users submitting votes and then going offline, preventing all the votes from being countable.

In 2019, the concept of “homomorphic” time-lock puzzles was proposed by cryptographers Giulio Malavolta and Aravind Thyagarajan. This allowed the puzzles to be added together to produce a final puzzle that was much easier to solve than the sum of the individual puzzles. The solution to the final puzzle reveals only the sum of the individual values without revealing the individual values making up this sum.

According to the A16z post, Cicada uses these homomorphic puzzles, allowing votes to be counted even if users go offline.

When attempting to transfer Malavolta and Thyagarajan’s system to the blockchain, A16z researchers ran into an obstacle to creating a fair voting system: Each choice needed to be encoded as a boolean value of “1” or “0.” This meant that attackers could try to increase their voting power by incorrectly encoding the vote — by encoding “100” as their value, for example.

To solve this problem, Cicada requires voters to submit a zero-knowledge proof of ballot validity along with each ballot, the post said. The proof shows that the vote was encoded correctly, but without revealing the contents of the vote.

Cicada only prevents votes from being known while the poll is being conducted. Once the “poll has closed” or the time-lock period has passed, any person can determine the contents of a vote by brute-forcing the solution to the puzzle. However, A16z suggested that this problem can be solved by combining Cicada with zero-knowledge group membership systems like Semaphore, Semacaulk or zero-knowledge state proofs. In this case, brute forcing the puzzle will only reveal that the vote was cast by an eligible voter but will not reveal the credentials used to prove the voter’s eligibility.

As an example, Zhu provided a link to a sample contract produced using Cicada that also relies on Semaphore to prove voter eligibility.

Voting systems have long been a component of decentralized autonomous organizations (DAOs), the governing bodies that often manage blockchain apps. But in most cases, DAOs use tokens to represent votes, which means that individual users can have an outsized influence if they hold a large number of tokens. For example, on May 22, an attacker took control of Tornado Cash by casting extra votes on a malicious proposal, using it to drain all of the governance contract’s funds. The attacker later offered to give back control to users.

Waves founder Sasha Ivanov has argued that DAOs must move to a more democratic voting system if governance attacks like these are to be avoided.

‘War on crypto’ — Newly filed letters lambast proposed SEC custody rules

May 9, 2023 Coin Telegraph

A16Z

Industry representatives have cast doubt on the legality and impact of the United States securities regulator’s proposal to expand custody rules.

A proposal by the United States securities regulator to tighten rules around crypto custody has been met with opposition from at least two proponents of the industry, according to recently filed letters.

On May 8 — the deadline for comments on the proposal — crypto industry advocacy body Blockchain Association filed its letter to the Securities and Exchange Commission (SEC) criticizing its proposal to amend its custody rule.

Three days earlier, a similar letter was sent by Web3 venture capital fund Andreessen Horowitz (a16z).

Marisa Tashman Coppel, a policy lawyer at the association, tweeted on May 8 that the rule would “drastically curtail investment in digital assets” and claimed that in its current form, the rule is “unlawful.”

1/ Today, @BlockchainAssn filed a comment letter to the SEC’s proposed custody rule. With recommendations, we explain how the rule would drastically curtail investment in digital assets and why finalizing the rule in its current form would be unlawful.https://t.co/zRrPkdiWn9
— Marisa Tashman Coppel (@MTCoppel) May 8, 2023

The same day, a16z general counsel Miles Jennings tweeted its letter, saying the firm “did not mince words” and called the SEC proposal a “misguided and transparent attempt to wage war on crypto.”

In its letter, the Blockchain Association provided over a dozen separate arguments to rebuff the SEC. Among other claims, it said the rule exceeds the SEC’s authority, would inhibit advisers from transacting with crypto exchanges and would leave investors’ assets at more risk.

A16z detailed similar arguments in its letter but focused more on its effects on registered investment advisers, namely that advisors would be prevented from using crypto and the rules could violate the duty of care the SEC requires of such firms.

On Friday, we filed a comment letter to the SEC's safeguarding custody rule. We did not mince words.

The proposal is another misguided and transparent attempt to wage war on crypto, and if passed it will result in investor harm, market inefficiencies and poor capital formation. pic.twitter.com/Z7S01Z8SOw
— miles jennings | milesjennings.eth (@milesjennings) May 8, 2023

It called the prohibition against advisors being able to trade crypto on centralized exchanges “illegal, unworkable and dangerous.”

Yet to be approved by the SEC, the February proposal would apply more stringent rules on investment advisers in the custody of assets, inclusive of crypto.

Firms would need to properly segregate assets and custodians will be required to have annual audits from public accountants among a raft of other transparency measures.

Gensler has specifically taken aim at crypto exchanges with the rule, and said some crypto trading platforms offering custody services are not actual “qualified custodians.”

The proposal even saw pushback from within the SEC. Commissioner Hester Pierce questioned the rule’s “workability and breadth” and its seeming targeting of crypto and crypto-related companies.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

SUI price drops 70% from market debut top amid excessive supply concerns

May 5, 2023 Coin Telegraph

A16Z

The circulating supply of SUI tokens will grow by nearly 15% by the end of 2023.

The price of Sui (SUI) has dropped sharply after its market debut across leading cryptocurrency exchanges.

On May 5, the SUI price was $1.26 per token, down about 70% from its record high of around $4, established two days ago on Binance.

Interestingly, on other exchanges like Kraken, the token’s market top was $1.60 or lower, suggesting it was in “price discovery” mode after the launch.

*SUI/USD daily price chart. Source: TradingView*

Still, SUI maintains its overall market gains, up nearly 1,200% from its market debut.

Early SUI price fundamentals

SUI’s initial uptrend drew support from traders who view Sui — a new entry into the long list of layer-1 blockchain projects — as potentially more scalable than its rivals.

Mysten Labs, Sui’s original contributor, asserts that it will become the first internet-scale programmable blockchain platform thanks to its claims of processing about 300,000 transactions per second. In comparison, Solana handles up to 10,000 transactions per second.

Venture capitalists led by Andreessen Horowitz and FTX Ventures have invested $336 million in the Sui project via two investment rounds in 2021 and 2022. Mysten Labs confirmed that the rounds gave investors access to its firm’s equities, not SUI tokens.

However, the project’s token economics shows that it has allocated 14% of its 10 billion SUI supply to investors. Mysten Labs has not yet revealed when it will distribute these tokens or any associated vesting schedule.

*SUI token distribution model as of May 1. Source: Messari*

Regarding FTX Ventures, a subsidiary of the now-defunct FTX crypto exchange, Mysten Labs repurchased the stake held by the firm in April 2023. Furthermore, it took back the rights to buy SUI tokens previously held by FTX for about $96 million.

SUI supply overload?

Traders and analysts have shown their conviction in the Sui project’s goals to become an attractive blockchain alternative. However, there are also concerns about SUI’s supply schedule.

Notably, the Sui Foundation plans to increase the SUI supply by approximately 15% by the end of 2023, which, according to analyst Dmitriy Lavrov, could prompt traders to wait for further price declines before entering the market.

Yes, it makes sense to wait for better prices.
— Dmitriy Lavrov (@thedlavrov) May 3, 2023

From a short-term technical perspective, the SUI price faces interim sell-off pressure near $1.31.

A pullback scenario could have the token eye $1.26 as its short-term downside target. And suppose the oversupply scenario prevails. Then, the price could drop to $1.21 on May 5 or over the weekend, down 7% from current prices.

*SUI/USD 15-minute price chart. Source: TradingView*

Conversely, analyst Ameba sees SUI rising toward $1.50 in May based on its decisive close above its descending trendline resistance. Fellow trader Crypto Mikey projects a similar uptrend for the Sui price.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

A16z’s hyped-up orange balls revealed to be an L2 rollup client

April 20, 2023 Coin Telegraph

A16Z

An earlier series of tweets sharing images of orange balls were the precursor to the announcement of a client for layer-2 solution Optimism.

A series of cryptic tweets depicting orange balls were revealed to be building up hype for a new rollup client for Optimism (OP) called “Magi” from the crypto arm of venture capital firm Andreessen Horowitz (A16z).

An April 19 Tweet from a16z engineer Noah Citron explained Magi is written in the programming language Rust and will “help improve the client diversity and resilience of the entire OP Stack ecosystem.”

Introducing Magi , our brand new OP Stack rollup client written in Rust.

We've been working on Magi to help improve the client diversity and resilience of the entire OP Stack ecosystem.

Lets dive in.

code: https://t.co/U8ER6v2SSe
blog: https://t.co/A4Tx8iaVOh pic.twitter.com/S5hDbx5Q4R
— ncitron.eth (@NoahCitron) April 19, 2023

The OP Stack refers to the set of software that powers the Ethereum layer-2 solution Optimism. Among the other benefits it provides, it helps simplify the process of creating layer-2 blockchains.

Citron explained Magi “takes the place of a consensus client (often called rollup client) in the OP Stack, and works alongside an execution client such as op-geth to sync,” meaning that it allows the Ethereum chain to advance by feeding new blocks to the execution client.

The lead engineer for Coinbase’s layer-2 solution Base, Jesse Pollak, also chimed in on the announcement, tweeting that “magi means more decentralization, security, and scale for the OP Stack.”

magi means more decentralization, security, and scale for the OP Stack.

excited to have @a16zcrypto contributing to the superchain alongside @BuildOnBase, @optimismFND, and more folks every day!

https://t.co/ffUOVM6eER
— Jesse Pollak (jesse.xyz) (@jessepollak) April 19, 2023

In an April 19 blog post, Citron opined that decentralization increases network security, which is “critically important for rollups” just as it is for the base layer of Ethereum.

A16z’s cryptic hype orange circle tweets echoed the way Coinbase hyped and introduced its own layering network called Base, which instead featured tweets of a blue circle.

Citron kicked off the hype train with a tweet of an orange circle on April 18 bearing the phrase “coming soon.”

Its similarity to the hype before the announcement of Base prompted the crypto community to theorize another Ethereum layer-2 solution was imminent before a16z’s chief technology officer, Eddy Lazzarin, quashed the rumors.

✨

(not an L2)
— Eddy Lazzarin (@eddylazzarin) April 18, 2023

Citron also noted that Magi is still currently in development, and while it can currently sync to the Optimism testnet it will be some months before it is production-ready.

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ConsenSys adds 7.03M votes to Uniswap BNB Chain migration proposal amid VC battle

February 8, 2023 Coin Telegraph

A16Z

Web3 developer ConsenSys has cast 7.03 million UNI votes in favor of Uniswap v3 deploying on BNB Chain.

Web3 infrastructure developer ConsenSys, the maker of the popular MetaMask digital wallet, has cast 7.03 million votes in favor of a proposal that would see decentralized exchange Uniswap’s v3 protocol deployed on BNB Chain, according to data from Tally. The votes are denominated by the number of underlying UNI owned by ConsenSys, which is worth an estimated $47.5 million. At the time of writing, 77.56% of participants were in favor of the proposal, with 22.07% against it. The week-long voting process will close on Feb. 10.

As Cointelegraph previously reported, venture capital firm Andreessen Horowitz cast a vote against the proposal. A16z, which reportedly holds 55 million UNI tokens, voted 15 million UNI against the move due to its reliance on the Wormhole bridge and instead supported using LayerZero as the interoperability protocol. LayerZero Labs is part of a16z’s portfolio and raised $135 million in a funding round in March, with a $1 billion valuation.

In January 2022, Wormhole suffered a major exploit resulting in the loss of $321 million worth of Wrapped Ether (wETH) tokens. Since then, Wormhole is now secured by 19 validators, has been audited 25-plus times by leading firms and has passed all security assessments.

A16z’s vote was in part controversial within the crypto community due to a voter turnout of less than 7% for the ongoing proposal, which still passed the necessary quorum. As a result, a16z was able to disproportionally influence the voting process with just 15 million UNI out of 762 million in UNI in circulation. Critics say that such measures disrupt the decentralized nature of Uniswap by concentrating voting power in VCs.

How can $UNI holders outside of a16z be sure there's no conditions or other hidden influences on these outside groups from a16z or related parties?

Is everyone supposed to just take your word for it? pic.twitter.com/4uGLJOsnjK
— DefiMoon (@DefiMoon) February 7, 2023

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A16Z

Early SUI price fundamentals

SUI supply overload?

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