As blockchain technologies and cryptocurrencies
enter a more mature stage of development, the time has come to move away from
the “winner takes most”, philosophy where a dominant company tires to emerge in
the space. Recognize that, while attrition is beginning to occur, several
companies, each with their own unique solutions, are likely to remain.
With that in mind there is opportunity for platforms who have recognized this and are planning for it, platforms like AVA Labs. Cofounded by blockchain guru and Cornell professor Emin Gün Sirer and software engineer Kevin Sekniqi, AVA Labs aims to develop a “platform of platforms” for blockchain applications that challenges Ethereum and the other market leaders.
Most blockchain industry
participants I speak with tend to fall into one of two camps. Some recalled
taking a while to warm to blockchain technology. Once they studied it, they
became increasingly excited. Others immediately knew it was something special.
Mr. Sekniqi places himself in a third camp, where he saw blockchain’s potential but maintained a healthy level of scepticism. While he believed blockchain technology was a fantastic idea, among its problems in its original form were the lack of clear uses cases, especially in finance. Since then advances in technology have addressed those issues, enough that Mr. Sekniqi and Mr. Sirer began developing their own solutions. The results were promising enough that AVA Labs was spun into a company in February, soon to attract funding from Andreesen Horowitz, A16Z, Polychain, Metastable, Initialized, Abstract Ventures, Naval Ravikant, and Balaji Srinivasan.
“We’ll release our public testnet
soon and then expand as much as we possibly can,” Mr. Sekniqi said. “We’re reinventing the tech stack and how consensus protocols
AVA Labs’ work
establishes a brand new consensus protocol called Avalanche, Mr. Sekniqi
explained. With Nakamoto Consensus the longest chain is the most valid. Then
there is the classical voting structure. Avalanche protocol mixes the best of
both; it provides high throughput and scalability while offering the security
required for decentralized systems.
What is most unique
about the Avalanche protocol is it allows nodes across the system to utilize
different scripting languages. That in turn makes true decentralization
possible, Mr. Sekniqi explained. In many cases, when only one scripting
language is used it limits the possible number of validators available to
participate. That increases the chances of system manipulation.
“Now we can globally
distribute validators across jurisdictions,” Mr. Sekniqi said.
By linking different
scripting languages, AVA Labs is acknowledging the natural, that there is more
than one strong solution in the marketplace. Different participants will have
their own preference, so by developing techniques where all of those systems
can be in play there is complete inclusion.
Now we have clear
applicability to financial services, where transactions need to occur across
jurisdictions. Before Avalanche Mr. Sekniqi worked in deep cryptography with
fully homorphic encryption, a process allowing for computation on ciphertexts.
Those calculations produce encrypted results which, when decrypted, matches the
results that would have been achieved had they been completed on plaintext.
It allows financial
institutions to deploy and compute sensitive data on servers and ensures data
is kept within jurisdictional boundaries.
“This is a legal
problem too,” Mr. Sekniqi said.
I asked about the applicability of zero knowledge proofs, and while Mr. Sekniqi said he is impressed by the technology he does not believe it is necessarily the correct approach. Something more pragmatic is required to address the level of regulation financial institutions operate under and the network privacy they must maintain. Fully homorphic encryption does just that while keeping data on private chains.
AVA Labs takes a more
practical approach to the blockchain space than many projects led by academics
do, Mr. Sekniqi acknowledged. Many startups developed by college students and
technicians have wonderful ideas and creative technologies, but they are often
not based in the current technological reality where they avail themselves of
solutions that already exist that can solve problems that also exist. Too many
startups offer a solution in search of a problem.
“Beyond the platform itself,
as a team we looked at the general trend of where the space is going first and
then we built out the tech stack for that reality,” Mr. Sekniqi said.
That philosophy had AVA Labs targeting real needs of the financial industry from the beginning, and that approach is yielding fruit, he added.
“To address the use cases
like live trading you need the right platform but one that is rooted in
pragmatism. That is what we are building as a team.
“We have the ability
to truly scale to thousands of nodes, with the same TPS (transactions per
second) as classical protocols in a truly decentralized platform.”