“We look at ethereum like AOL or Myspace.”
That’s how Mobius Network co-founder and CEO David Gobaud explains why his startup ran its initial coin offering (ICO) on the Stellar network instead of ethereum, the most popular blockchain for token sales.
The comment underscores the growing interest in some corners of the crypto community for faster and cheaper payment rails as ethereum, like bitcoin, struggles to scale.
Mobius announced Thursday that it has raised $39 million in the ICO — one of the larger recent token sales and the largest by far on the Stellar platform. The company accepted only Stellar’s native currency, lumens (XLM), in exchange for its own token, known as mobi.
According to Mobius, the sale hit its $39 million hard cap after only two hours, selling 35 percent of the total 888 million mobi tokens.
Participants in the round included China’s Angel Chain Capital, Nirvana Capital and WaltonChain, an internet of things (IoT) startup that is building devices to enable manufacturers and retailers to track supply chains, according to the firm’s website.
In addition to this backing, Gobaud emphasized that Mobius deployed its decentralized app (dapp) store alongside its ICO, saying it was important for the company to come out with live code early, to prove the project was real.
But what’s perhaps most striking about the sale was the choice of blockchain.
While latency or cost might not be a dealbreaker for some blockchain projects, they are for Mobius’ use case. Its thesis is that traditional tech companies will soon want to integrate with cryptocurrencies and, eventually, a decentralized web.
Mobius’ white paper compares the company’s work to that of Stripe, the Silicon Valley darling that took integration of credit card payments down to a few lines of code (and incubated Stellar in its early days). Mobius aims to do the same thing for cryptocurrency payments and, down the line, for publishing data to trade on decentralized marketplaces.
So the company needed an IoT-friendly network that could handle large amounts of transactions and data quickly, with low or no fees.
The goal is to “make it easy to connect every device, developer and data stream to the blockchain ecosystem,” Gobaud said.
Yet while the vast majority of ICO-funded projects have been run on top of ethereum, using the ERC-20 standard, that blockchain has suffered from transaction backlogs and pendulum-like swings in fees.
Hence, after beginning its project on ethereum, Mobius switched to Stellar, the protocol created by Ripple co-founder Jed McCaleb. Like Ripple before it, Stellar was designed specifically for frictionless payments.
Ethereum’s scaling challenges have become acute in recent months. The issue moved Kik to announce that it would move its kin token off ethereum in December 2017.
While the ethereum developers recognize and are working on the problem, the Mobius team couldn’t wait for a scaling solution, Gobaud said.
“We were building our dapp store on ethereum and then we connected with Jed,” he said adding:
“We realized there was no way that ethereum could handle our technology. It was too slow, too expensive and too insecure. … We see all these other projects with these immense problems”
Gobaud highlighted the problems with safely deploying smart contracts. “They are Turing complete programs, but they are really hard to write,” he said, pointing to the first and second multi-million-dollar ether losses on Parity. Solidity was not a language built with security in mind, Gobaud argued.
In Stellar, “we think we’ve uncovered this underutilized, really unknown technology,” Gobaud said.
For example, Stellar supports multi-signature wallets at the protocol level, making custodianship much easier for developers.
But Stellar has its downsides, Gobaud acknowledged. It’s not Turing complete, for example, but Mobius is happy to make that trade-off in exchange for vastly faster and cheaper transactions.
The white paper discusses a lot of use cases for the mobi token and its protocol, but the easiest one to explain is payments.
For anyone who believes that cryptocurrency will become more and more appealing to online businesses, the company that makes transacting in crypto easy the fastest stands to recoup benefits with a long tail.
If Mobius can make accepting crypto payments a matter of adding a few lines of code, that would be compelling if online companies begin accepting cryptocurrency more widely.
Talking to Gobaud, though, payments seems more like a way to sell the traditional internet on blockchain integration.
He’s most excited about the market that will come when firms start posting their data to decentralized marketplaces, selling it via secure, live auctions he calls the “NASDAQ for data.”
“More advanced or technical users are really excited about the data marketplace because they are aware that getting data into blockchain ecosystem is really complicated.”
Data generated on blockchain protocols is easy to verify because they are closed environments. But data from the real world can’t be verified on a blockchain without help.
That’s why Mobius is building a proof-of-stake oracle system, so that data streams with data from the real world can build up reputations as reliable sources over time. With the system, to put its data up for sale on the market, a company would have to prove it holds a certain amount of tokens.
If that marketplace catches on, the cost of staking should be more than paid for by revenue from selling data over time. This could be anything from data about road conditions from a smart vehicle or local weather from a sensor on top of a commercial building.
To reach the point where the decentralized web has a rich enough ecosystem to support these marketplaces, the team is also working to solve other small problems faced by developers on the way there. For example, it built a universal login protocol, where a website can verify that a device holds a token to let its user log on to a service.
Some sites might want to take this a step further and use tokens to integrate the level of access someone has to a site. So, on a platform like Reddit, a user might only need one token, while a moderator might need a few tokens to log in with more advanced permissions.
In the meantime, developers are already building dapps for Mobius’ store, but it’s small scale offerings so far, little video games or prediction games. That’s work at the experimental level, but Gobaud said he’s encouraged by the fact that people already want to work with it. The websites on Geocities were crude, too, but they were a stepping stone to the web we know today.
“It’s like the early days of the internet.”