Ethereum co-founder Joe Lubin has formed an unusual partnership with DrumG, a stealth startup emerging today and founded by several senior level executives from R3, one of the ethereum blockchain’s most heavily funded competitors.
As part of the $6.5 million cash investment by Lubin’s ConsenSys blockchain startup, the company will take a minority stake in DrumG, and Lubin himself will join as the sole outside member of the board of directors.
The unusual partnership between individuals who have invested so much time and money to build competing platforms is a result of a series of equally unusual conditions in the rapidly evolving blockchain ecosystem.
In many cases, the creators of the open-source platforms designed to replace middlemen across industries with a shared, distributed ledger, are the same people helping enterprises build on those platforms.
To remove that potential conflict of interest, Bermuda-based DrumG is the latest of a new breed of companies founded by the people who helped build these blockchains, but who then left to help enterprises build real-world applications on a wide range of interconnected ledgers.
“The decentralized web future—web 3.0, linking corporations to public blockchains— that’s definitely an interledger future,” said Lubin, who in addition to being CEO of ConsenSys sits on a number of boards for the companies he’s helping build. “It’s going to be hundreds of thousands of decentralized protocols for trusted transactions and automated agreements.”
As part of the investment, for undisclosed terms, Lubin says that not only will he sit on DrumG’s board, but DrumG itself will have a “significant presence” within the ConsenSys financial technology ecosystem. There are currently more than 50 projects being managed by ConsenSys, many of which are in the financial sector.
Lubin says he first met DrumG co-founder Tim Grant when he was still the CEO of R3’s Lab and Research Center, helping build out business use cases for the nascent distributed ledger consortium. Over the years the two frequented many of the same events and about nine months ago the potential that they might work together first came to be seriously discussed.
Then, on August 27, 2017, DrumG was formally incorporated in Bermuda and the conversations started to get increasingly serious. As of today, DrumG—named after the street Grant grew up on in West Central Scotland—has 20 employees in London, New York, Singapore and Bermuda, and will use today’s investment to complete and expand multiple ongoing tools.
As a result of the close ties to ethereum and R3’s Corda distributed ledger, DrumG will initially focus on the two platforms with as many as 10 blockchains to be added soon.
To help enterprises better understand how such a wide range of blockchains might help them create the most efficient system in any given industry DrugG has built a database of what Grant calls 50 blockchain “dimensions.” The metrics of those dimension are then used to generate benchmarks that compare the potential value added or saved by different platforms.
DrumG also has a provisional U.S. patent on technology designed to standardize the way its clients talk about business workflows, turning those standardized processes into what Grant called “business protocols” that can then be sold at what he hopes will be a fraction of the total middlemen currently charge. DrumG isn’t currently generating revenue, and will also use the investment to finalize two projects nearing completing.
Specifically, DrumG is preparing to launch the Titanium Network, a decentralized and cryptographically secured database for information about over the counter (OTC) investment bank trading and valuations. Currently such OTC data-sharing requires that firms give their information to trusted third parties that then compare it to competing firms and generate insights based on the aggregated data. Those third party firms them sell the consensus insights back to very same companies that originally created the data.
Instead, the Titanium Network cuts out those middleman by moving anonymized transaction data to a permissioned version of the etherum blockchain and generating the same insights using automated processes. Built in partnership with Swiss banking giant Credit Suisse the platform will be demoed at this year’s Sibos conference in Australia and is expected to go live in Q2 of next year.
Grant says DrugG is also building a second unnamed platform for clients including large hedge funds, prime brokers and fund administrators looking to replace the complicated post-trade services they currently use to reconcile their portfolios. Instead, the DrugG solution will rely on R3’s Corda distributed ledger to nearly instantly record stock trades and more.
But either one of these project alone is only half a solution according to Grant. “The real goal for us, is that somewhere down the line those networks should be able to interoperate. They should be able to work together.”
Breaking down the borders behind the super-competitive blockchain landscape won’t be easy. Gone are the early days of blockchain idealism when competitors lived by the mantra “all ships rise” and focused almost exclusively on the current broken financial system as the biggest competitor.
As Grant puts it, the current system dominated by financial middlemen and centralized authorities is “ducktaped together” and if blockchain builders don’t figure out how to work together they run the risk of creating entirely new infrastructures with entirely different inefficiencies.
With traditional financial centers like the United States showing a reluctance to create new regulatory paradigms for the technology, Grant says he sought advice from global accounting giant EY before finally settling in Bermuda. To help blockchain innovaters work in multiple competing jurisdictions, the tiny British territory in the middle of the Atlantic Ocean earlier this year enacted the Digital Asset Business Act to explicitly frame regulatory requirements for a wide range of blockchain use cases.
Then, today, Bermuda Premier and Minister of Finance David Burt joined Grant and Lubin on stage at the Hamilton Princess’s Harbourview Ballroom in Bermuda to formally announce the partnership and discuss its potential impact on the global and local economies. A recent report by the Bermuda Business Development Agency estimated that $286,000 in value will be generated on the island by every blockchain job created.
“Bermuda is setting the standards for fintech businesses and offers a sophisticated, modern and well-regulated jurisdiction where innovators can bring their ideas to life,” said Premier Burt, in a statement sent to Forbes. “We look forward to following DrumG Technologies as it leads the way.”
While DrumG has certainly emerged from stealth in style with its Series A investment from a widley respected blockchain leader and two live projects approaching completion, it has some serious competition. Earlier this year former Ripple CTO Stefan Tual left Ripple to found Coil, another distributed ledger production house aimed at helping companies build using the Interledger blockchain interoperability tool and the XRP crytpocurrency.
Also this year, venture capital firm Boldstart Ventures helped launch mState to invest in enterprise blockchain projects. MState’s first investment in New York-based Blockdaemon is designed to give its clients point-and-click deployment of applications powered by Bitcoin, Ethereum, Stellar, Aion, Corda, Hyperledger Fabric, Multichain and Quorum.
Not only does Grant say he’s not worried about such competition, he says it’s a crucial aspect of replatforming the world’s financial infrastructure on a web of blockchain solutions. If the “all ships rise” mentality is left to the dust bins of blockchain history, Grant hopes a new one will emerge, “convergence.”
“Ultimately, this is all going to converge,” said Grant. “The tribalism will dissipate, the walled gardens will come down and a big question is who is going to remain and in what state? Now, nobody knows the answer to that, but we know that if you don’t look forward and start to prepare for it in some meaningful way the chances are you’ll be left behind.”