Notation hosted its second annual LP meeting a couple months ago, and as usual, we published our deck. In addition to the typical annual meeting topics such as fund performance and portfolio company reviews, we decided to do a few deep dives into specific areas of current interest. In particular, we've been investing and participating in the Blockchain space for a few years now. We have been deeply involved at the earliest stages with Livepeer, Bison Trails, Arwen and others - so we figured it might be interesting to go deep on what 'blockchain participation' really means to us from a venture perspective.

1. Blockchain Participation

2. 2
Active Blockchain
Participation at Notation
Agenda
• We've always been active builders and participants
• What participation means in the context of blockchain projects
• How to participate
• Why an investor would want to be an active blockchain participant
• How participation works for later-stage / liquid projects

3. 3
Blockchain participation
Active participation is in our DNA
We've always been active participants –– founders,
company builders, and the earliest, most involved
investors.

4. 4
Blockchain participation
Blockchain projects are a new way to
organize resources
The Firm The Blockchain
Governance
Security
Computation
Code
Storage
Bandwidth
Support
Documentation
Governance Security
Computation
CodeStorage
Documentation
Bandwidth
Support
Core team

5. 5
Blockchain participation
There are many forms of Blockchain
participation
Proof of stake
Delegation/Staking
Governance
Proof of Spacetime
Validators
Reputation
Full node operation
Proof of work
complexity

6. 6
Proof of Work
Bitcoin
Ethereum
Grin
Zcash
Litecoin
We’ve mined…
Privacy token
Privacy-protecting digital currency
Our participation
Our mining facility
The dominant consensus protocol for blockchains has been proof-of-work (PoW), which
solves reliability and security concerns by requiring mining nodes to solve
computationally intensive puzzles. This creates an environment of “essentially one-
CPU-one-vote” to achieve block consensus, making it nearly impossible for attackers to
acquire enough computational power to hack the network.
https://figment.network/resources/a-primer-on-proof-of-stake-and-why-it-matters-for-the-future-of-blockchains/

7. 7
Our participation
Proof of Stake
Decentralized live video streaming, built on
the Ethereum blockchain.
livepeer.org
We have been active
participants in the
LivePeer project in many
ways.
We've operated one of the top LivePeer transcoders since network launch in June 2018
Staking is the process of holding funds to support the operations of a blockchain
network through a reward-driven process. Mimicking passive-income strategies
in traditional finance, staking allows users to earn rewards directly on-chain for
holding a given currency.
https://info.binance.com/en/research/marketresearch/rise-of-staking.html

8. 8
Our participation
Proof of Stake
Our participation in the LivePeer
MerkleMine helped put many more
LPT tokens into circulation ... but it
also saturated the Ethereum
network, generating over 2x the
transaction volume of CryptoKitties.
This is the LivePeer MerkleMine smart contract address, shown being used for
28.72% of all transactions on the Ethereum network

9. 9
Our participation
Open-source and community
We've also contributed code and
documentation to the LivePeer
project to help people run their own
LivePeer transcoders on the
network.

10. 10
Our participation
The Future: Proof of Stake projects with upcoming
launches
Operating storage nodes
Status: future launch
Filecoin
Decentralized storage
OSCoin / Radicle
P2P code collaboration platform
Worklock + Operating nodes
Status: currently on testnet
Nucypher
P2P privacy infrastructure
Operating cache nodes
Status: future launch
CacheCash
Decentralized CDN
Governance - voting our MKR
Status: Later-stage, Liquid
MakerDAO
Decentralized credit platform
OpenZeppelin
Secure, smart contract platform
Reputation / Governance voting
Status: alpha release
Voting - vouching, reputation
Status: ZEP token private beta

11. 11
Why we participate
Active participation leads to better outcomes than
investing alone
May 2017 Jan 2018 July 2018 Oct 2019
Purchased EarnedLivePeer Token (LPT) holdings “The first few months of
validating on a network is likely
more profitable than many
years in aggregate after the
network has matured.”
June 2018
• LivePeer goes live on mainnet
• Notation launches transcoder
• Mining period begins
Source: Generalized Mining: the LP's
perspective, David Fauchier, Cambrial Capital
32%
72%

12. 12
Why we participate
Active participation gives us a
competitive edge
Our participation helps improve the
networks, we become stronger investors.
Our reputation leads to better access, our
participation leads to better
understanding.
Leads to
better access
Operating nodes
and mining
Operational expertise &
deeper understanding
Makes us better investors &
better partners to teams
Our work with early
software teams

13. 13
Why we participate
Active participation leads to key new
investments
x`
A robust and secure infrastructure platform for
blockchain operators.
Transparent and sustainable finance via decentralized
stablecoin, collateralized loans, and community
governance.
NuCypher's Proxy Re-encryption network provides
cryptographic access controls for distributed apps and
protocols. A peer-to-peer stack for code collaboration.
INFRASTRUCTURE
PRIVACY / SECURITY
DECENTRALIZED FINANCE
OPEN SOURCE

14. 14
Later-stage / liquid projects
Debt ceiling
Liquidation Ratio
Stability Fee
Price Feed
Sensitivity
Penalty Ratio
Dai Savings
Rate (DSR)
Extending our participation to later-stage projects:
MakerDao governance
Everything we've covered related to participation
has been mostly focused on early-stage projects,
but it applies across the ecosystem, including to
later stage projects. We've invested in MKR,
where we will participate by voting on
governance matters.

15. notation.vc