With a cumulative funding of $13.5 million, can Saga truly support a valuation of $130 million?
On November 20, 2023, Web3 game developer protocol Saga announced a $5 million seed funding round led by the venture capital firm Placeholder. This investment brings Saga’s total funding to $13.5 million. Below is an introduction to this project.
Saga Overview: Scalability Implemented on Cosmos Hub
Saga is a comprehensive Web3 platform designed for developers, dedicated to providing advanced tools and support for innovators in the blockchain space. As a first-layer protocol, Saga enables developers to autonomously launch parallelized and interoperable dedicated chains that can flexibly scale with the demands of their Web3 applications. The core philosophy of Saga is to drive the future of decentralization and collaboration, offering scalable, cost-effective, and highly configurable blockchain infrastructure for builders aiming to create the next generation of games, entertainment experiences, financial platforms, or communities.
Saga, built on the application chain model of Cosmos, introduces the concept of permissionless and automatically deployable application-specific chains, providing developers and end-users with increased flexibility.
Scalability: Rebecca Liao, Co-founder and CEO of Saga, emphasizes the scalability of the platform. She points out that Saga’s block space is theoretically unlimited, as any number of chains can be launched in parallel.
“Chainlets” Technology: Unlike traditional single-blockchain systems, Saga is designed to launch customizable parallel chains, called “chainlets,” dedicated to each application, enhancing the scalability crucial for developing high-performance applications, such as games. Currently, Saga has nearly 300 projects under construction on its testnet, Pegasus.
Unique Features of Chainlets, Saga’s Core
Chainlets, one of Saga’s most significant innovations, are independent blockchains running a single smart contract each. This design ensures resource specificity and scalability, as each Chainlet can be optimized and expanded without affecting other parts of the network. This architecture greatly enhances the efficiency and performance of the entire network by allowing customization and adjustments for each Chainlet based on its specific needs.
Definition: “Chainlets” are specialized blockchains developed by Saga to meet developers’ specific needs.
Goal: Addressing issues like network congestion, slow throughput, and high gas fees, especially in gaming and entertainment applications, the scalability of Chainlets is crucial for developing high-performance applications. Currently, Saga has nearly 300 projects under construction on its testnet, Pegasus.
Features: Each “chainlet” is verified by approximately 20 validators through a shared security model for transaction verification. Saga can support up to 1000 such chainlets.
In Saga, smart contract developers request a Saga Chainlet by interacting with the Saga mainnet. Each Saga Chainlet is an application-specific blockchain protected by Cosmos Interchain Security (ICS). Validators on the Saga mainnet also serve as validators for Chainlets, responsible for block generation and ensuring that other validators adhere to Service Level Agreements (SLA). If a validator violates the Chainlet’s SLA, other validators communicate evidence back to the Saga mainnet through Inter Blockchain Communication (IBC). The network then reduces the token staking of the non-compliant validator. Through ICS, each Chainlet inherits the security of the Saga mainnet without the need for separate local token staking.
Saga’s Chainlets can be flexibly configured using various Cosmos SDK modules, including different types of virtual machines (such as EVM, Cosmwasm, SolanaVM, MoveVM) and various versions (such as Juno’s Cosmwasm version, Osmosis’s Cosmwasm version, Aptos’s MoveVM). Each Chainlet is a single-tenant VM deployed on a dedicated chain. Developers only need to request a Chainlet from the Saga mainnet, and once the request is accepted, Saga validators configure the requested Chainlet. After configuration, developers can freely deploy their smart contracts on their Chainlet.
Shared Security Model: Saga adopts a shared security model, a key innovation that draws inspiration from the cross-chain staking model of Cosmos Hub, ensuring the security and stability of each Chainlet. In this model, multiple Chainlets can share a unified security layer, meaning even small or newly established Chainlets can enjoy the same security as large, mature Chainlets. This shared security model not only enhances the overall network security but also reduces the security maintenance costs for individual Chainlets.
Validator Orchestration Tools: To handle the complexity introduced by multiple Chainlets, Saga has developed a set of validator orchestration tools. These tools help validators simplify the deployment and maintenance processes, making the management of multiple Chainlets more efficient and straightforward. Designed with user-friendliness and automation in mind, these tools reduce the workload and potential errors for validators in the management process. Through these tools, validators can easily monitor and adjust the Chainlets they are responsible for, ensuring stable operation and high performance of the network.
Introduction of the founding team and funding situation: Saga has raised over $13 million in cumulative funding, with a valuation exceeding $130 million
Rebecca Liao: Co-founder and CEO, formerly co-founder, advisor, and COO of Skuchain, and a researcher at the Stanford Law, Science, and Technology Program.
Rebecca Liao
Jin Kwon: Co-founder and CSO, actively involved in the Cosmos ecosystem since 2018, formerly an executive at Tendermint.
Jacob McDorman: Co-founder and CTO.
Bogdan Alexandrescu: Co-founder and Vice President of Engineering, previously held engineering leadership roles at Apple and Twitter.
The team also includes experts in blockchain, software engineering, finance, and operations.
Total Funding: Saga’s total funding currently stands at $13.5 million. Raised $2 million in January 2021 as seed funding; raised $6.5 million in May 2022.
Funding Round: Saga completed a $6.5 million seed funding round in May 2022.
Valuation: After this funding round, Saga’s valuation reached $130 million.
Investors: Investors include Maven 11, Longhash Ventures, Hypersphere, Figment, Polygon Studios, Samsung NEXT, Chorus One, GSR, C2X, CRIT Ventures, Akash Network, Unanimous Capital, Strangelove Ventures, Tess Ventures, Merit Circle, Hustle Fund, Polymer, Zaki Manian, Jae Kwon, Garrette Furo, Alex Shin, Nick Tomaino, and others.
Use of Funds: Primarily for the development and promotion of its “chainlets” technology, and preparation for the mainnet and token launch in 2023.
Saga Ecosystem Highlights: Detailed explanation of token issuance and application scenarios
Advancing the Pegasus incentive testnet, Saga plans to launch its mainnet in January next year, initiating airdrops for developers participating in the testnet first and later for community members. Token Generation Event (TGE) is planned for Q1 2024.
Saga’s token will undergo TGE in Q1 next year. Understanding Saga’s token mechanism can be likened to a similar example in the Web2 space: Amazon. Amazon Web Services (AWS) provides computing resources, and as long as developers pay a specific price, AWS promises to provide automated computing as a service (CaaS) for a million customers. Developers using AWS are less concerned about how their computing is configured, as long as there is sufficient secure capacity. Through massive utilization, Amazon has commoditized computing resources.
Similarly, Saga provides developers with a dedicated chain as long as they pay a specific price. The goal is to achieve the commoditization of dedicated chains through large-scale utilization.
This model of providing block space is implemented in Saga through Chainlet fee deposits. To launch a Chainlet, developers need to fund an account with enough SAGA tokens. Developers can pre-fund according to their preferences. The Chainlet fee deposit is like a prepaid account used to pay for Saga Chainlet fees. Once the fee deposit is depleted, the Chainlet will close until the developer can fund the fee deposit again.
Although Chainlets are configured using SAGA tokens, it’s crucial to note that Chainlets can use any gas token when needed (e.g., the native token of Chainlet, ATOM, USDC, ETH).
1.Developer Payment Model:
In Saga, developers need to pay SAGA tokens as a subscription fee to instantiate and maintain their Chainlet. This model is similar to the Software as a Service (SaaS) model, where developers pay for resource usage on demand. This not only reduces the initial cost for developers but also provides a predictable fee structure, allowing developers to better plan their finances.
2.Validator Competition and Pricing Mechanism:
There is competition among validators in the Saga network, with them setting the lowest possible prices to attract developers to ensure the security of Chainlets. This market-driven pricing mechanism ensures efficient network operation while incentivizing validators to provide high-quality services. This mechanism is similar to an auction where prices are determined by market demand and supply.
3.Free Experience for End Users:
A unique aspect of the Saga network is that end users don’t need to pay any network fees. This differs from traditional blockchain networks that typically require users to pay fees for transactions. In Saga, developers can choose any monetization method that suits their application, providing greater flexibility for the business model of applications.
4.Incentive Mechanism for Stakers:
In the Saga network, stakers enhance the security of the network by staking SAGA tokens. In return, they receive inflation as a reward. This incentive mechanism encourages more users to participate in maintaining the network, enhancing overall network security and stability.
5.Chainlet Fee Deposit:
To launch a Chainlet, developers need to predeposit enough SAGA tokens in an account. This prepaid model is similar to cloud services in the Web2 era, such as AWS, where developers prepay for computing resources. This model provides flexibility for developers, allowing them to plan resource usage based on their needs and budget.
6.Diversified Payment Options for Chainlets:
Although Chainlets’ configuration is done using SAGA tokens, they can be transacted using any gas token (such as Chainlet’s native token, ATOM, USDC, ETH). This diversified payment option provides users with more flexibility to choose the payment method that best suits their needs.
7.Innovative Fundraising Mechanisms:
Saga also offers innovative fundraising mechanisms, such as allowing communities and DAOs to fund Chainlets or automatically converting other tokens into SAGA through IBC transactions with DEX in the ecosystem. These mechanisms provide additional flexibility and innovative fundraising avenues for developers.
8.Pricing Determination Mechanism:
Unlike AWS, the price of the Saga network is not determined by a single entity but by the network itself based on the profit margin target of validator businesses. This mechanism ensures fairness and market-driven pricing, promoting the health and sustainable development of the network.
In general, Saga’s token economic model, with its unique payment structure and incentive mechanisms, creates a mutually beneficial ecosystem for developers, validators, stakers, and end-users. This model not only enhances the network’s availability and flexibility but also paves the way for the widespread adoption of blockchain technology.
The market still holds significant potential for revolutionary breakthroughs in the application of blockchain technology, making Saga’s future worth observing
The success in Saga’s fundraising and rapid development indicates a growing demand in the market for this novel blockchain solution. It can provide dedicated “Chainlets” and a shared security model, addressing not only numerous challenges faced by traditional blockchains, such as network congestion and high fees, but also offering an ideal platform for developing high-performance applications.
However, as with any emerging technology, the long-term success of Saga will depend on various factors, including its ability to consistently attract a developer community, maintain the security and stability of the network, and ensure the sustainability of its business model. With Saga’s plans to launch its mainnet and token in the near future, the project will enter a new phase of development, presenting a critical test of its technological innovation and market strategy.
