Blockchain startups may be slowly recovering from the 2018 slump.
Boston-based Nebulous, makers of the Sia network for decentralized data storage, recently closed a $3.5 million pre–Series A round led by Bain Capital Ventures, along with participants like Bessemer Venture Partners and Dragonfly Capital Partners.
Salil Deshpande of Bain Capital told CoinDesk that distributed, permissionless storage options are the cornerstone of decentralized apps (dapps) and that Nebulous is the only investable startup with a live solution that lacks glaring technical issues.
“If [dapps] use centralized storage, then they are not decentralized any more,” Deshpande said. “In the future, centralized apps will also be able to use decentralized storage.”
Nebulous CEO David Vorick told CoinDesk the company has now raised a total of $6.3 million since launching in 2014.
“Today we have about 450 terabytes of data that users are actively storing on the network,” Vorick said. “Our metrics suggest that’s between 500 and 1,000 people to date.”
According to the third party site SiaStats.info, this includes roughly 332 node operators, many of which are IT professionals running nodes from data centers.
Stepping back, Sia’s token model has set it apart since Sia Coin launched in 2015. The network’s native Sia Coin must be earned through mining. It wasn’t distributed as part of an initial coin offering. As such, Vorick said the Nebulous-owned hardware maker Obelisk sold $25 million worth of Sia miners, roughly 6,000 machines, before it ceased sales this month.
Both host node operators and storage space “renters” lock a little Sia Coin in a smart contract escrow, including the transaction fee, to ensure the operator gets paid for keeping data safe. If the host loses the encrypted data, he or she forfeits those tokens. Meanwhile, a small fraction of that transaction fees is automatically allocated to 10,000 Sia Fund wallets.
These wallets are the startup’s sole monetization strategy for the network, charging roughly $1 per Terabyte monthly. Plus, Nebulous sells fractional ownership of some wallets to investors as an additional capital source beyond equity.
“In the Sia protocol itself, in the blockchain code, there is a requirement that every time you make a file contract, 3.9 percent of the coins in that contract are distributed to the Sia Fund holders,” Vorick explained.
This fresh round will give the company fodder to double its team size from 12 to 24 by this time next year, he added. In part, these employees will help Nebulous focus on services related to media streaming and storage this summer.
People who have archival footage or indie films, plus a wide range of materials too niche for Hulu or Netflix, could store and stream the footage with Sia from anywhere in the world.
“You don’t have to be a host [node] in order to put data onto the Sia network,” Vorick said. “It will be a comparable experience to using something like Hulu.”
Plus, users could offer it to others through third-party Sia apps. One such independent app, Filebase, offers a portal for paid clients that want to use Sia without downloading software or buying cryptocurrency. When it comes to incumbent rivals like MaidSafe, the Filebase team said they chose the Sia network because it has fewer disruptions and less restructuring.
“We’ll allow you to generate a public URL or link that you can share and it will allow you to stream or share a picture, any number of those things,” the Filebase team said, adding they have more than 1,000 users so far. “Our goal is to grow Filebase into a subscription service.”
Indeed, Bain Capital’s Deshpande referred to such streaming as one of the leading use cases for decentralized storage systems.
“The idea is you hit ‘play’ and it starts streaming within a third of a second,” Deshpande said, speaking of Sia network updates on the horizon. “The question is always: Is the token necessary? I believe in this case that a token is actually necessary.”
While competitors like Filecoin slowly develop similar storage models, and newcomers like the startup Fluree enter the game, Nebulous is betting on its first-mover advantage.
Speaking to one perk the Sia model has over traditional data storage options, Nebulous CEO Vorick added:
“It’s possible to have nothing more than your wallet seed and use that to recover all of your data. That’s really powerful. Now with just private keys users can have global access to both data and money.”
Members of the Nebulous team – including CEO David Vorick (second from right) – at the Bitcoin 2019 conference in San Francisco. Photo via Twitter/Nebulous