P0x, the cryptographic development team behind a blockchain network called Manta, has raised $25 million in equity for its Series A funding round.
Qiming Venture Partners, a traditional venture capital firm, and Polychain Capital, a blockchain investor, led the round, which values p0x at $500 million. Other investors include Alliance, CoinFund and SevenX Ventures.
The proceeds will go to expanding p0x’s work on zero-knowledge (ZK) proofs to Ethereum-based projects, as well as establish its presence in Asia with a Singapore domicile.
Equity versus token
The equity raise is a shift from the team’s previous reliance on raising money by issuing tokens linked to the products it builds in the realm of privacy and security.
“The equity investment goes to back the developer team, rather than projects or products,” Kenny Li, co-founder of p0x and Manta Networks, told DigFin.
Manta had previously raised $6.6 million via three rounds of token sales beginning in February 2021.
“Our early investors have always wanted skin in the game with the team, so an equity raise aligns that,” Li said.
He declined to detail governance issues such as the role equity investors play in the business, but said, “The team is still autonomous and the dynamic is hands-off. It’s about trust, and this gives us flexibility in how we build our services and products…equity means they own an interest in whatever the team does in the future.”
Manta Networks was set up to provide privacy for the transfer of crypto assets and non-fungible tokens.
For users, it’s meant to provide security and data protection; for developers, it’s to help them build apps. Both are meant to be achieved on a decentralized basis.
One use case of the company, which illustrates this point, is online poker. Manta developed ZK proofs for online Texas Hold’em. A traditional online game is run by a company. Players trust that company is treating them fairly – but sometimes companies will take advantage of that trust and use their software to harm the gambler.
Enter zero-knowledge proofs. These are cryptographic tools that allow one party to verify another party’s claim, without revealing the underlying information.
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In the case of the Texas Hold’em game, the ZK proof is meant to ensure the shuffle and the deal are honest, without having to reveal the underlying cards.
Li hopes the concept can be applied more broadly in the crypto space. For example, the company is working on payroll. Many blockchain businesses pay their developers or employees with crypto. It’s onchain, which means the transaction sizes are public. Anyone able to triangulate the addresses – be it a colleague or a competitor – can see how much people are getting paid.
The principle can extend to institutions wary of working on public blockchains lest they give away trading information or other secrets.
“ZK could onboard a substantial number of users through many applied use cases in the new Asia markets,” said Yi Tang, principal at Qiming, in a statement.
Drawing the line
Privacy does not always sit well with institutions and regulators. Some things, such as client identity, somewhere need to be verified. Criminals and North Korean hackers thrive where privacy reigns.
“But regulated entities also need onchain privacy,” Li said. “It’s about integrating privacy to enhance regulation.”
He did acknowledge that bad actors exploit privacy in blockchain transactions, and said the team is looking at know-your-customer applications.
To this end, the cryptography team is looking to do two things with its fresh proceeds, both of which will occur under the creation of a new unit called Manta Pacific.
First, it is now working to bring ZK proofs to developers in the Ethereum ecosystem, which is the largest blockchain community in the world. Ethereum software runs on a specialized computer language called Solidity. Solidity developers tend to be good at writing smart contracts, but don’t know much about cryptography, Li says (rather alarmingly).
He likens p0x’s ambitions to provide them with plug’n’play solutions to ‘ZK Proofs as a Service’. “Everyone needs similar security features,” Li noted, adding this is the first product aimed at bringing ZK proofs to the broader Ethereum world.
“We are excited to see Manta expanding into the Ethereum ecosystem,” said Luke Pearson of Polychain, in an announcement.
Manta Networks focuses on both layer-1 settlement-level blockchain and the layer-2 applications on top. The layer-2 level is where the team will be building KYC and private-identity solutions. Li explains these work best on Manta’s layer-1 blockchain, but can be used on Ethereum or other chains, albeit with less speed or scalability.
Second, the team is eager to expand its presence in Asia. “The sentiment in Asia is more positive,” Li said. “There’s more innovation, a bigger drive to build. This is where we see the developers that we want to be active in our layer-2 ecosystem.”
Although he spoke at length about the borderless nature of crypto and the developer community, he did say that an equity raise meant establishing a legal residence for p0x – which is Singapore.