Internet Computer blockchain has raised $77M | Dfinity Foundation
Dfinity Foundation reports strong growth for the Internet Computer blockchain.
Image Credit: Dfinity Foundation
The Internet Computer Protocol is an ambitious blockchain project aimed at creating a world computer, and according to a new report from the shepherding nonprofit Dfinity Foundation, it has raised more than $77 million to date.
The Internet Computer Protocol (ICP) realizes the vision of a World Computer – an open and secure blockchain-based network that can host programs and data in the form of smart contracts, perform computations on smart contracts in a secure and trustworthy way, and scale infinitely.
Competing and coexisting with other blockchains like Bitcoin, Ethereum and Solana, the ICP has evolved into one of the first Bitcoin Layer-2s, with over $67 million in ckBTC (chain-key Bitcoin) transactions and 300-plus developers crafting Bitcoin-enabled decentralized apps (dApps).
“The ICP community has made tremendous strides this past year, from expanding the ICP Hubs Network globally to integrating Bitcoin at the protocol level directly on-chain to allow cryptocurrency to be used in everyday applications.” said Lomesh Dutta, vice president of growth at Dfinity Foundation. “The success of the SNS framework has been a big win for decentralized governance worldwide, and through its innovative tech stack and multiple network integrations, the ICP is unlocking access to a seamless, trustless multichain future for Web3.”
Dfinity Foundation role
I spoke with Dutta about the significance of the report.
As vice president of growth at the Dfinity Foundation, Dutta’s team is the one responsible to essentially help all the teams that are building on the Internet Computer.
One thing that is unique about the Internet Computer Protocol blockchain is that applications are developed fully on the chain itself.
“We may have no reliance on any third party. It’s like once someone builds a game and puts it on the blockchain, then it’s entirely owned in the world, by the community,” Dutta said. “And as a part of that process itself, that decentralization process, they also can choose to raise money for like continued development.”
The ICP authorizes token sales for developers, and they have raised $77 million in funding for their projects.
Dfinity Foundation has a team of 270 people, and it operates as a team that contributes to the development of the Internet Computer Protocol (ICP). The ICP is an open network where there are thousands of developers building their own applications on top of it. With 6.5 million tokens sold, there are a lot of people who have a say in how the ICP operates. A few million people have created an identity on top of the ICP, and they use that to interact with apps and systems on the network. The Dfinity Foundation has built a wallet on ICP, but so have other developers.
Right now, the ICP has about $4 billion in investments locked in the protocol, and hundreds of thousands of people participate in governance decisions. That’s why reports like the one the Dfinity Foundation is publishing today are important for the community.
A different kind of blockchain
The Internet Computer was started in 2014 by scientist and entrepreneur Dominic Williams. He had worked on distributed systems and built a game called Fight My Monster. As part of that, he was trying to scale the game, but he was dealing with all the different distributed databases.
That led him to distributed systems on the blockchain. Around that time, he was plugged into the Ethereum ecosystem. He had a lot of discussions with the Ethereum creator Vitalik Beterin. That led to the vision for creating a world computer, which would host an entire computer on the blockchain. The Zurich, Switzerland-based team did an initial coin offering in 2017, raising $160 million from A16z and other investors.
With a lot of cash, the team recruited a world-class team of crytographers and engineers. They went to work for more than four years of developing, launching the mainnet to begin transactions in May 2021.
The fundamental advantage is that a developer can be in control of their destiny, as they are not dependent on a third-party platform owner that changes the rules for the developer.
“Simultaneously, from a community perspective, the players are now co-owners. They feel that they are part of the mission, part of the game,” Dutta said. “Any one of them can submit a proposal and determine the futur eof the game as long as the community agrees with that decision. That’s basically how the game evolves. The game is fully controlled by like the community. No one can stop it.”
Because putting a whole set of applications can require a lot of computing power in a blockchain’s validation system, intensive applications like first-person shooters probably won’t work on the blockchain. But other games could easily be built on the blockchain, Dutta said.
One set of developers working on an ambitious game include some of the creators of Neopets. They sold off that successful pets game and have their own blockchain project where they are building a game, Dragginz, on the blockchain itself.
The Neopets creators working on Dragginz have a team of dozens and they’re hoping to launch in the fall. They’re building their full stack on the chain itself.
Lots of activity
The State of the Network report details how developers have enabled technological integrations between leading blockchain networks such as Bitcoin, Ethereum, and Solana. These integrations have come amid an unprecedented display of community support and growth in which the ICP ecosystem raised over 5.3 million ICP tokens through decentralized community fundraising initiatives, equivalent to over $77 million.
Despite the bear market’s macro effects, the ICP’s global impact expanded in 2023, with over $6.25 million in grants distributed to spur the development of 239 projects across 41 countries. As a result of continued building and an uptick in community engagement, ICP has seen its network usage more than double over the course of 2023 — a 121% increase.
Dutta said that the report has a wealth of material on ICP’s breadth and the different use cases being explored by those creating applications on top of the blockchain. Most are decentralized finance, but there are some building games, social networks, chat applications, search engines and more.
“The just sheer breadth of things that are being explored on ICP is very different than what you would see on any other blockchain. Because again, it’s not just about tokens. It’s about this entire full stack software,” Dutta said.
There’s a chat application on the network called Open Chat. It’s an app designed by community, which votes up or down on such proposals from individual developers. You can propose a project if you’re a token owner, and the community decides what to do.
A flourishing ecosystem
As a result, the ICP ecosystem is flourishing, underpinned by a mass of Bitcoin utility and innovation, thanks to the direct integration with the Bitcoin network last year. This direct integration allows ICP’s canister smart contracts to create Bitcoin addresses and execute transactions in a high-speed, low-cost environment without relying on risky external bridges or intermediaries.
Since this integration, numerous Bitcoin innovations have emerged within the ICP ecosystem. That includes the Chain-Key Bitcoin (ckBTC), a multi-chain Bitcoin twin allowing for Bitcoin transactions with near-instant finality and minimal fees, without the need for risky crosschain bridges. ckBTC operates on the ICRC-1 token standard and enables the flow of liquidity of Bitcoin assets anywhere within the ICP ecosystem.
And platforms like ICDex offer BTC trading pairs and enable Bitcoin as a funding currency. There is also a Web3 SocialFi, where DSCVR and OpenChat have incorporated ckBTC to enable Bitcoin to be sent via chat.
And there is decentralized Bitcoin mining. Loka Mining enables retail investors to acquire BTC at a lower than market price by providing liquidity to Bitcoin miners.
Especially notable is the emergence of the Bioniq marketplace, the first Layer-2 for Bitcoin Ordinals. Backed by Polychain Capital, Bioniq allows for more efficient trading, minting, and showcasing Bitcoin-based digital art and collectibles with negligible transaction fees and rapid finality.
These innovations have led to a significant uptick in Bitcoin activity on the platform, with ckBTC transactions in December alone totaling over $67 million.
The security advantage
ICP has the ability to connect with any blockchain without an intermediary. It connected first with the Bitcoin network, which means that if you build any smart contract into the computer, it can just send and receive and transfer Bitcoin. Similarly, ICP built the same functionality for Ethereum starting in December.
“In the next 60 days or so, we will have it so any Ethereum token can be just seamlessly connected with any open Internet Computer token and will then eventually seamlessly connect with any other blockchain without an intermediary. That’s what we’re trying to do, with no bridges.
He noted that security for blockchains has been a big problem, with people getting hacked and breaches happening. Billions of dollars has been lost, and it often happens where there is an intermediary, like the Ronin bridge in the $600 million hack against the Ronin network started by the creators of Axie Infinity. Blockchains can be secure on their own, but they exist as silos and have to use the bridges to be interoperable. Those bridges can be attacked.
“What we are saying is kill this entire bridge thing,” Dutta said. “You enable people to talk directly to each other.”
Many blockchains say that a non-fungible token (representing a digital object, like a collectible card) is published on a blockchain. But that’s often not fully true. It often means it has a URL which points to a JPG or a picture on the internet, but the image itself does not live on the blockchain. Those blockchains are designed more to be like token ledger, almost like a vast spreadsheet. That’s not how ICP works.
“What we started was a completely different paradigm where we said, ‘If you fundamentally think about what blockchain is, you can act as a blockchain. For example, you don’t need any firewalls to interact with the coin. Or you don’t need any system managers giving keys to people to do stuff. What we said was you actually build a blockchain which can run an entirety of the software fully on chain so that it is secure by default,” Dutta said.
A hacker could try to steal data from multiple machines that validate the blockchain. But if that hacker can’t attack more than 51% of the machines doing the validation, then the network is still secure, and it can’t be hacked. That’s the benefit of a secure blockchain.
“We started with a very different design where we created a blockchain that can be as performance as Amazon Web Services or Google Cloud. And it lets you host an entire software fully on the blockchain,” he said. “And then so each of our smart contracts, for example, can store 400 gigabytes of data. You can store all the game assets and everything on chain. So while it may cost, let’s say, $600,000 to store a single image on Ethereum because it was not designed for that. We store gigabytes and gigabytes of data on ICP. So there is no intermediary in that software.”
In ICP’s ecosystem, an entire world could be a single NFT.
Upcoming Ethereum and Solana integrations
Following the direct Bitcoin integration, the upcoming Ethereum and Solana integrations will leverage each blockchain’s ecosystem and smart contract capabilities to unlock new possibilities for cross-chain application development and increased liquidity flow.
2023 also saw the introduction of the Service Nervous System (SNS), an advanced form of a DAO that can govern any web3 app, such as a social network, in a fully decentralized way and fully on-chain. Through the SNS, entrepreneurs can hand over the control of their Web3 service to the community, allowing them to freely propose and vote on all changes made to a dapp, including code updates.
Through this model, 14 apps raised an impressive 5.3 million ICP through decentralized fundraising, equating to over $77 million.
The state of the network report also shows growth in gaming activity, free from the high gas fees and limited scalability of traditional platforms. Dragginz, launched by the creators of Neopets, grew to a community-driven market cap of over $8 million by offering an immersive world where every aspect of the gameplay is built directly on the blockchain.
A full copy of the Internet Computer’s State of the Network report is available here.
Challenge of the crypto winter
Times are better now for the crypto markets. But Dutta said the crypto winter of the last couple of years was “super challenging” for everyone.
“Thankfully, we had some luxury of the fact that we had money in the bank,” he said.
The token launches were well received, and the Dfinity Foundation has a treasury to continue funding operations. Developers approached the not-for-profit foundation to get grants. But Dutta said the foundation was careful about funding projects by developers. Instead, the developer activity is high but a lot of that activity is happening in an organic way, driven by the developers themselves. A lot of engineers quit jobs at places like Google to work on ICP.
“We had a little bit of luck because we had some money in the bank and our engineers were saved,” he said.
The initial user base for ICP has come from North America, Europe and some parts of Asia. And it has now evolved into sizable numbers of users in Indonesia, Kenya, Nigeria, Turkey and India.
“People in these places are basically seeing that blockchain is a thing. They first probably discovered Bitcoin and then they started realizing there is value to this entire thing. And we have a lot of developers now from these places” where they see governance problems and a lack of transparency from the government. The people in those places can understand that citizens should be on the blockchain and it should be visible for everyone. And so more ICP experiments are getting started.
