Our token investment and incubated company Composable Finance has officially secured the 8th Parachain on the Polkadot network by raising over 160 Million USD into their crowdloan.
We thank everyone who contributed their energy to achieve this fundamental accomplishment. Moving further, we will elaborate the technical details on how Composable Finance will move the ecosystem forward and accelerate other projects through its layer-1 like approach, initiating the new age of DeFi and cross-chain interoperability.
If you would like to educate yourself further on the financial background of the investment, please see the official corporate announcement, where we go into detail.
About the Parachain Auction
Polkadot will have 11 Parachains connected to its network upon Composable’s launch, whose users will all have access to the technology stack, giving parachains the power to operate as a layer 1 with its distinct ecosystem and deployment environment. The Polkadot network is set up for collaboration and interoperability, which means all participants can benefit from one another to scale and succeed.
What does a Polkadot Parachain mean for Composable Finance and Advanced Blockchain?
The secured Parachain slot provides Composable with the ability to utilize and interact with the entire Polkadot ecosystem. It now has gained the power to be a Layer 1 with its own distinct ecosystem and deployment environment. Another advantage of owning the parachain is that Composable benefits from continuously generated transaction fees from its growing Parachain until at least 2024.
These fees will accumulate to a significant flow of capital that will help accelerate and scale the development of Composable towards seamless usability on top of Polkadot. Composable will accumulate those fees in the protocol-owned treasury and continue supporting projects deployed on the Composable parachain.
This is an instrumental step towards unlocking the full potential of Composable Finance, as the value-capture will spread exponentially to all participants and participating projects in the Composable and Polkadot ecosystems. Building the foundation for interconnectivity and kickstarting the Polkadot and Kusama ecosystem.
How Composable Finance pushes the boundaries of cross-chain communication
The technology stack acts as a seamless gateway to base-level technical infrastructure enabling secure cross-chain communications. The product suite of Composable Finance is a prime example of value add initiatives. The applied technology is now evolving into a hub of DeFi and cross-chain interoperability connecting the Polkadot ecosystem with other chains. Builders and investors use Composable’s technology to develop new solutions by integrating them into the functioning cross-chain capable ecosystem.
One can visualize this much like the Layer 1 Cosmos, successfully enabling projects like Luna, with a flourishing ecosystem and a lot of traction on its own. In a similar way Composable generates value for projects built on top of them.
Furthermore, Composable intends to create a connection between the two Layer-1 ecosystems Polkadot and Cosmos, finally connecting two prominent cross-chain leaders being the infrastructure provider in between.
We expect that Composable will grow further and get adopted by partners and projects faster than blockchain projects of the past. We think this will be the case because projects integrating with Composable don't have a cost associated with this process but gain access to the growing ecosystem of projects that are built with the technology or are integrating it in their products. This forms a competitive advantage next to projects that didn't integrate the technology.
As an example:
→ One decentralized exchange decided to integrate Composable and now has the opportunity to be seamlessly provided with cross-chain liquidity from other projects that embedded Composable. One project that is currently working on this is Instrumental. Finance, which we will elaborate
→ According to this logic, another decentralized exchange that didn´t integrate composable now has less liquidity, leading to more slippage, which leads to users leaving for better liquidity
How can this be accomplished?
Since all chains are inherently siloed, Composable Finance is a much-needed unique infrastructure that operates as an API for projects to consistently create innovations that can be integrated or adopted seamlessly into the cross-chain ecosystem unified by composable.
In addition to its API-like infrastructure, Composable Finance enables communication between different layer-1s or individual projects on those layer-1s. Multiple projects are already taking advantage of deploying applications by building with and on top of Composable, making it a fundamental infrastructure.
"At the moment, Mosaic’s Proof of Concept (PoC) consists of Polygon, Arbitrum, Avalanche, Moonriver, and Mainnet. From here, Mosaic will grow significantly to incorporate more layer 2 (L2) platforms."
To simplify its integration, we build the Composable SDK, which is crucial to driving adoption, as it allows any developer to work with the infrastructure efficiently. The SDK makes Composable extremely developer-friendly since usability for developers has been a key focus since day one.
The fact that more projects begin to, directly and indirectly, utilize Composable’s technology for cross-chain communication also shows that the potential use cases go well beyond decentralized finance. This results in a strong network effect that will lead to accelerated growth of not only the value of the LAYR token but the compounded value add of the cross-chain capabilities of all projects building on top of the Composable ecosystem.
Furthermore, during the collaborative incubation work with Composable, we utilized our internal research team to build the primitives that fuel the technology further.
One of them is the Asset transferral system Mosaic, which connects and unifies all major DeFfi ecosystems, bringing them even further and adding missing pieces to Polkadots Infrastructure.
Our Collaboration with Composable Finance
“Advanced Blockchain’s development and research resources have been critical to our growth and expansion, particularly assisting with the creation of a holistic ecosystem of projects building on our technical stack. We are looking forward to a long-term relationship with Advanced Blockchain going forward.”
Since our initial seed investment into Polkadot (DOT) back in 2017, we have been firm believers in the need for cross-chain interoperability and frictionless cross-chain communications. Our Polkadot engagement and fundamental belief in the idea is the main reason Composable became our most significant investment. After the Composables founder 0xbrainjar approached us last summer, we instantly saw that we share aligned visions and purchased our share of the token supply. Accordingly, he initiated the formation of a small team and formulated the idea to kickstart further development.
We expect Composable to develop itself into one of the most prominent blockchain infrastructure projects, as we firmly believe in its ability to move cross-chain interoperability forward, making DeFi the first of many use cases to follow.
Therefore we currently assist with business development and our sizeable developer pool, introductions to relevant investors, and blockchain industry leaders. Furthermore, we helped Composable scale its business model by assisting in fundraising, creating growth marketing strategies, and much more.
Our global operating developer team of over 100 people is positioned particularly in cross-chain and DeFi projects. We contributed this valuable resource during the development of Composable, making us a reliable partner since we started gathering hands-on expertise in the Polkadot ecosystem in 2017, operating entirely under German compliance standards, as we are a publicly listed company based in Berlin.
Adoption of Composables Technology - The Incubation of new composable-based projects
Our Advanced Blockchain venture studio arm successfully positioned itself partnering with Composable labs as a lead incubator of projects building on top of Composable Finance, such as Instrumental Finance, or Bribe Protocol.
Instrumental, for example, provides automated cross-chain liquidity arbitrage. Enabling users with the ability to freely transfer assets to maximize their yield via automated cross-chain arbitrage leading to Instrumental consistently providing the highest returns possible in a decentralized fashion. Projects like this will drive substantial liquidity into Composable and by default into the Polkadot ecosystem, as well. All chains connected to composable can benefit from this liquidity, which can now move freely.
We ensure that we build towards our mission of bringing the basic fundamentals to kickstart a DeFi ecosystem to Polkadot and make our investment come full circle. Aiming to empower users, builders, and investors with our work and use our early-stage incubation expertise to create the basic infrastructure required to accomplish a sustainable DeFi ecosystem on top of Polkadot.
Composable Finance enables users to navigate the complexity of the blockchain space with frictionless design and usability through its cross-chain infrastructure, as with cross-chain communication comes ecosystem agnostic computation. This applies beyond just Defi itself but to the blockchain deployment considerations as a whole.
We aim for Composable’s technology to become a baselayer in the blockchain space, that is running smoothly in the background of many applications without requiring direct interaction from the user while improving the usability like the TCP IP-Protocol did for email and the internet.
Therefore, we will continue to showcase our support through investment and development of initiatives that are geared towards unlocking and expanding the potential of the Polkadot and Composable ecosystem enabling effortlessly interactions with any ecosystem. If you’d like to learn more about our work, you can find all of our Incubations and Portfolio Companies linked here.