February 10, 2022
Why We’re Investing in Aleo
We’re excited to announce that Kora is leading the Series B investment round in Aleo, a platform that we believe can significantly advance the effectiveness of blockchain technology and expand its reach into the broader internet.
When blockchains were first introduced, they promised a completely new paradigm for computing — one that is often called “trustless” in part because of its intrinsic decentralization and transparency. However, nearly fifteen years after Bitcoin was conceived, blockchain-based applications (which collectively are often referred to as “Web3”) have yet to be adopted into mainstream internet (“Web2”), due in large part to the high transaction costs and cumbersome user interfaces that together limit scale and usability.
To date, most Web3 applications have been built on Ethereum, which functions as a system of decentralized computers (called nodes) whose open architecture creates trust through transparency. Despite its current incumbency, Ethereum has several inherent limitations. First, every node on the network is required to re-execute the same code in order to verify the legitimacy of transactions, which creates significant demands on the overall infrastructure. Second, the transparency central to Ethereum’s operations is a double-edged sword, creating trust but also significant data privacy concerns around transaction histories and financial balances that are viewable by anyone at any time.
While several blockchains have tried to address the problems of scalability and privacy that Ethereum presents, we believe Aleo can be the first to solve both. Aleo’s technology utilizes a mathematical method called zero-knowledge proof (“ZKP”) that has existed in academia since the 1980s but has only recently achieved commercial viability in applications such as the blockchain. The math underlying ZKPs enables one party to prove something is true to another party without revealing any additional information beyond the fact that the statement is true. The practical implications of ZKPs for efficiency and privacy are profound.
By implementing cryptographic solutions based on this math, Aleo should be able to ensure that complex computations for any application built on its blockchain can be validated in an elegant manner (currently in test phase). In a Web3 context, this means that the current constraints on application sizes and run times can be substantially removed, which is particularly interesting in use cases such as gaming and decentralized finance (DeFi). In a Web2 context, this technology can verify users (useful for example in social media) and their fund balances (useful for example in e-commerce) while allowing these same users and their data to remain completely private.
Altogether, this is an ambitious effort – Aleo is currently the only ZKP platform choosing to develop its own blockchain (as opposed to building on Ethereum) – but one that we think Aleo’s incredibly talented team is equipped to accomplish. In addition to building its own blockchain, Aleo has also developed its own program language (called Leo) that provides developers a suite of tools to create programs in an intuitive language, one that abstracts away the complex underlying zero-knowledge cryptography that will connect them to Aleo’s blockchain.
While it is early days, Aleo has shown significant initial traction, with 10,000 nodes helping to operate its testnet and generating millions of ZKPs (more than any platform in history), a growing community of 2,200 members, and dozens of programmers building applications in Leo.
We are thrilled to be partnering with Aleo as they execute on this vision of bringing a private internet to all users on the web.
Disclosures
The information presented in the above post is provided for informational purposes and is intended to provide an update concerning Kora Management LP (together with its affiliates, “Kora”) and an investment made by one of the funds Kora manages (the “Fund”) and does not constitute an offer to sell or the solicitation of an offer to purchase any securities, including those of the Fund. Any such offer or solicitation may be made only by means of the delivery of a confidential offering memorandum, which will contain material information not included herein regarding, among others, risks, and potential conflicts of interest.
The information presented above is confidential and may not be reproduced. The information contained in the above post is current only as of February 10, 2022, irrespective of the time of posting or of any investment, and does not purport to present a complete picture of the financial position, activities, results, actions, or plans of Aleo, Kora, or any fund or account managed by Kora. The discussion regarding Aleo is not intended to be, and should not be construed as, investment advice or a recommendation to purchase or sell any particular security.
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