Our Investment in Sovereign

We’re excited to share our investment in Sovereign, a company led by our former partner at Plaintext, Cem Ozer. Sovereign raised $7.4 million led by Haun Ventures.

A year ago, Cem Ozer wrote Scalability and the Modular Blockchain Stack while working as a partner at Plaintext. Cem had previously worked on Ethereum 2.0 research at Consensys so the idea of scaling was very near and dear to him. If you couldn’t tell by reading the blog post, Cem became obsessed with the potential to scale blockchains using this modular framework described above. One month later, Cem left Plaintext to start Sovereign and pursue a burning passion to help scale blockchains.

Sovereign aims to make scaling simple by providing an SDK that will abstract away the details of zero-knowledge proofs and make rollups seamlessly interoperable. Importantly, rollups can chose their preferred VM and can communicate with other rollups with only a single block delay all while maintaining safety and liveness with ZK-proofs and DA guarantees.

Blockchain modularity, the idea of separating data availability, settlement, and execution became popular last year when Celestia’s approach to scaling the DA layer came into the spotlight. With the increased throughput of a dedicated DA layer, rollups can greatly improve scale and finality.

To onboard the rest of the world to crypto, it’s critical that blockchains can increase their throughput at a reasonable cost. Until now, most production-ready solutions increase throughput with faster consensus algorithms, optimized execution environments, or faster block propagation. But all of these approaches require increased hardware resources to improve scaling. Another approach may be to rely on specialized layers to fulfill each of the functions of a monolithic blockchain.

Currently, rollups derive security from smart contract chains like Ethereum, which handle execution, settlement, and data availability/consensus. Because smart contract chains have to handle all of these roles, scalability is limited. But with a trusted data availability layer, a rollup can dump all execution data, the DA layer can guarantee and order transactions, and then a single node can issue a ZK proof that the transactions are valid. Instead of scaling many nodes, we now just have to scale one node.

Using a ZK-rollup to prove a specialized DA layer is a big step forward for easily deploying and scaling rollups. However, up until now full equivalency with virtual machines such as EVM has been difficult to achieve. Additionally, activity across rollups will still face fragmented liquidity and difficulties in cross-chain messaging. This is where Sovereign comes in.

Sovereign is using RISC-Zero’s open-source ZK-VM which will allow them to take any execution client and turn it into a ZK-rollup. Developers will be able to write their applications in Rust and the SDK will compile the code to a ZK virtual machine. In other words, developers won’t need to have PhDs in cryptography to build a ZK-rollup.

This approach will dramatically improve the accessibility of building blockchain applications at scale. We’re thrilled to support Sovereign and excited to see the impact they have on scaling the crypto ecosystem.

The information herein was prepared by Plaintext Capital Management LLC (“Plaintext”) and is believed by Plaintext to be reliable and has been obtained from public sources believed to be reliable. Plaintext makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this presentation constitute the current judgment of Plaintext and are subject to change without notice. This is not an offering or the solicitation of an offer to purchase an interest in any fund managed by Plaintext (collectively, the “Fund”). Any such offer or solicitation will only be made to qualified investors by means of a confidential private placement memorandum and only in those jurisdictions where permitted by law. The identified investment does not represent or approximate all of the investments purchased, sold, or recommended for the Fund. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the identified investment. An investment in the Fund is speculative and involves a high degree of risk. Opportunities for withdrawal, redemption, and transferability of interests are restricted, so investors may not have access to capital when it is needed. There is no secondary market for the interests, and none is expected to develop. The fees and expenses charged in connection with this investment may be higher than the fees and expenses of other investment alternatives and may offset profits. No assurance can be given that the investment objective will be achieved or that an investor will receive a return of all or part of his or her investment. Investment results may vary substantially over any given time period.