12Feb 2019

Investment Highlight: Dfinity’s Internet Computer

by Henrik Andersson

In September 2018, the Apollo Capital Fund made a seed investment into Dfinity, which was described as “the most exciting project of 2018”. The foundation behind the Internet Computer (ICP), The Dfinity Foundation, has raised over US$200 million from top-tier crypto investors such as Andreessen Horowitz and Polychain Capital. After two and a half years of gruelling development, the ambitious project has successfully launched with their Internet Computer (ICP) token listing on top exchanges like Coinbase, Binance, and Huobi.

Internet Computer currently trades at US$112 with a market capitalisation of US$14 billion, representing a 23x return for the Capital Fund, and ranking ICP as the 11th largest crypto asset according to Coingecko.

Founder & Vision

The Internet Computer is spearheaded by Dfinity’s highly capable Founder and Chief Scientist, Dominic Williams. Dominic has had a distinguished career as a crypto theoretician and serial entrepreneur focused on the Internet and distributed systems. His scientific discoveries across Threshold Relay chains, PSC chains and many other innovations have pioneered new approaches to cryptography and blockchain technology.

A key underpinning of Domenic’s success is his unmistakably bold vision for the project. “Our mission is to push towards a blockchain singularity, where the majority of the world’s systems and services are created using smart contracts, and run entirely on chain, a transformation that will take years”. While Domenic’s slightly audacious claims about the potential of the project have received some scepticism from the wider crypto community, the attention grabbing valuation of ICP demonstrates that there is no shortage of big VC’s that share the vision and believe in Domenic.


The Protocol

The Internet Computer does not aim to directly compete with existing blockchains but instead break new ground by reinventing and decentralising the Web stack. If the project is successful, it will bring an abundance of viable new use cases to the blockchain ecosystem.

The problem Dfinity is addressing extends beyond just blockchain technology. It aims to build a decentralized, scalable cloud-like platform that can store data, perform computation, and support community-driven governance. Dfinity wants the internet itself to support software applications and data, rather than simply providing peer-to-peer connections and relying on proprietary cloud-hosting services to handle the rest.

The Internet Computer’s version of smart contracts (known as “canisters”) are very different to the smart contracts that existing blockchain communities are familiar with. Canisters run at web speed, can serve web experiences directly to end users providing end-to-end blockchain security, can be used to create scalable dapps, and can process and store data at relatively stable cost that is a tiny fraction of that on traditional blockchain.

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Protocol Interoperability

In a recent blog post, Dominic Williams explores the opportunities of direct interoperability between the Internet Computer and the Ethereum blockchain.

“For example, you can imagine that a DeFi system running on Ethereum might use smart contracts on the Internet Computer to securely serve user experience to end users, rather than using an insecure website hosted on the Amazon Web Services cloud — which forces end-users to trust the website operator is honest, that AWS is honest, and that the account has not been hacked, such that they can never really be sure they are even interacting with smart contracts. This simple potential application of integration hints at the possibilities. The combination of the two networks will be incredibly powerful.”

The potential for the Internet Computer to compliment existing blockchains through interoperability is an exciting development in the blockchain ecosystem. These inter-protocol synergies will enable innovative new decentralised application (dapp) structures to emerge that boost immutability, decentralisation and security.

In March 2021, two well known DeFi protocols operating on the Binance Smart Chain suffered domain name service (DNS) attacks, causing their websites to become inaccessible for hours. This event highlighted that decentralised finance is still reliant on many centralised entities and solutions that are a potential point of failure.

While we believe the current valuation of ICP is a relatively accurate representation of the protocol’s core value and potential, as a recently launched project it is also widely accepted that the Internet Computer has a long way to go until the underlying vision is achieved. We are excited to see how the Internet Computer develops over the coming years and believe that ICP compliments our layer 1 blockchain portfolio. Our successful investment into Dfinity in 2018 demonstrates the asymmetrical return potential of our ‘early stage investments’ portfolio.

Henrik Andersson

Henrik is the Chief Investment Officer at Apollo Crypto and is the fund manager for the Apollo Crypto Fund. He also acts as the fund advisor for the offshore Apollo Crypto investments funds, the Apollo Crypto Frontier Fund and the Apollo Crypto Market Neutral Fund. Henrik's expertise in traditional financial markets comes from spending a decade on Wall Street as a vice president in institutional equity sales. His exceptional understanding of DeFi comes from co-founding two successful DeFi protocols, mStable and dHEDGE.