LACChain, a space shuttle for startups. Submitting the “blockchain fat-protocol” to a weight-loss treatment.”

We just returned from our second FOROMIC as the LACChain global alliance, and we are pleased to have shown that our blockchain infrastructure is already technically available. The event’s attendees were able to verify the excellent standing of the LACChain network with real application demos already running on our network in the session named “A Day with LACChain”.

During this FOROMIC, our BID Lab CEO, Irene Arias, presented a study coordinated by the World Economic Forum called Digitizing Entrepreneurship for Impact. This paper points to three key elements for the promotion of entrepreneurship: (1) education, (2) responsible use of data, and finally (3) enabling digital platforms allowing entrepreneurs to share resources to speed up their startup businesses. For entrepreneurs from Latin America and the Caribbean, these elements are a critical need more today than ever, considering the demanding market context facing many countries of the region. Probably, more today than ever, entrepreneurship linked to innovation is a crucial supporting element for the economic progress of these countries by strengthening their digital evolution strategy and adapting them to the opportunities coming from this fourth industrial revolution. We believe that LACChain, as a shared infrastructure, a unique facility for entrepreneurs of all kinds and locations, is called to be one of the digital platforms that will enable this completely new wave of entrepreneurship.

In 2016, when the “fat protocol” concept was originally coined, it helped to single out one of the main defining factors for successful blockchain-based business models, soon becoming a classic valuating reference among business investors (Joel Montenegro, Union Square Ventures, 2016). This idea, though based on the crypto-economy vision of the time, is still useful to describe the contribution that the LACChain platform makes, as one of these “fat protocols” to entrepreneurs in the region, securing technical feasibility while minimizing risks of blockchain-based ventures.

Source: Joel Montenegro — Union Square Ventures

The thesis describes that in today’s internet age, the protocol TCP/IP on top of which the entrepreneur develops his venture has become “thin,” considering the value it captures as part of the digital business model. By contrast, under current market conditions the internet entrepreneur has to build in the application layer a complete solution, a “full-stack” solution, therefore subject to more considerable uncertainties about its viability and risks for its final launch. The entrepreneur’s effort includes developing an entire technical architecture to support operations and to enable the business to be able to test (POCs or MPVs) in the market the feasibility of his business proposal. All this translates into substantial dedicated resources and investment risks.

In the digital ecosystem that blockchain enables, everything happens differently. The relationship in terms of capturing the value of the protocol layer versus the application layer becomes “fat,”. Unlike “dot-com” ventures (.com), which must build an entire platform for their business model, the essential constraint for the development of “dot-io” (.io) blockchain-based has been that “fat protocol.” The protocol is, in this case, a much more complex, as it incorporates multiple techno-legal-operational functions. Moreover, this protocol layer requires normalizing solutions and fostering interoperability of applications, all crucial elements for business feasibility and mitigation of risks. By contrast, the application layer that the entrepreneur must solve is relatively simpler, affecting to a lesser extent the techno-productive viability of new business venture.

By enabling a standardized protocol with the characteristics of a common good, the LACChain initiative is submitting this “fat protocol” to an accelerated weight loss treatment, by freeing up as much value as possible towards the entrepreneur, thus enabling accelerated firm growth. How do we do that? In the environment enabled by LACChain, businesses are launched over standard pieces already developed. That configure this protocol (technology, identity, money), offering “by design” elements that would have to be built every time and for each venture, in a business-as-usual scenario. With LACChain, the investment effort in each new project tends to be marginal, the time-to-market accelerates, and the technological, operational, and regulatory risks are substantially mitigated. Even market risks are mitigated, as LACChain is also establishing a specialized marketplace which will facilitate access to the large clients involved in the initiative, thus providing early-stage entrepreneurs with the market traction of real business opportunities.

LACChain, therefore, substantially thins the layer of “fat protocol,” providing three main elements in a native fashion: (1) access to a blockchain platform that can be interconnected, secure, collaborative, feasible, and sustainable, (2) an identity system with a trusted framework, and (3) tokenized FIAT money that allows any value exchange transaction executing on the same network Layer. With these three elements, LACChain configures this enabling protocol for entrepreneurship, which will evolve with the dynamism already demonstrated while adapting to the different regulatory frameworks of every country in the region.

With this value proposition, an entrepreneur can find in LACChain a real propeller of his business idea. He will find an infrastructure, with some of the critical services natively incorporated into the protocol, thus reducing his investments tickets, avoiding costs and mitigating implementation and regulatory risks. Furthermore, a set of entrepreneurship support platforms are already being developed around LACChain, including not only the provision of the base protocol and infrastructure as a common good, but also technological advice, financing of new application prototypes and equity investment in those ventures with more significant business and impact potential. We, as LACChain team, are convinced that LACChain is a practical and real reference to these platforms that the World Economic Forum (WEF) points out as necessary elements to ensure the success of our entrepreneurs.

Here it is LACChain’s proposal for entrepreneurs, establishing this launchpad, a real space shuttle for startups, concentrating all our propelling strength to drive them as fast as possible to the “big business orbit.”

Authors: Alejandro Pardo Vegezzi and Moisés Menendez (BID Lab, LACChain)

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LACChain Alliance

LACChain Alliance

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LACChain is a global alliance led by the Innovation Lab of the Inter-American Development Bank (IDB Lab) to develop the blockchain ecosystem in LAC.