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Today, Opacity Network announced their $12 million seed round led by Archetype and Breyer Capital. In my opinion, well deserved. Opacity is quickly becoming a key player in the zkTLS vertical alongside Reclaim Protocol.

I wanted to spend today's post covering the implications of web proofs and why it should be a no brainer for any consumer crypto founder to be brainstorming how to incorporate zkTLS tech in their product and distribution strategy.

Sections Below

1. The rise and fall of APIs

2. One stone at a time

3. A new wardrobe for builders

Let's dive in.

The rise and fall of APIs

Before we get into zkTLS, let's first discuss APIs to get us in the right mindset.

The origin of APIs can be drawn back to computer scientists in the '50s printing out subroutines and saving them in a filing cabinet to be reused later. Then, in 1974, the "API" acronym was first introduced in a paper on relational databases.

The first API that resembles what we use today was launched by Salesforce in 2000 at the IDG conference! Salesforce had identified that customers needed to share data across their different business applications, and APIs were the way to do this.

Then, a few months later, eBay launched an API along with their developers program. By offering public APIs, eBay opened up its massive online marketplace to third-party developers. This strategic move allowed the creation of diverse applications that utilized eBay's platform, significantly expanding its reach and functionality.

And by 2002, Jeff Bezos issued a company wide API mandate that required all internal software teams are to only communicate with each other through APIs (check out #6 👀 ).

By the mid 2000s, pretty much all tech companies hopped onto the API wave. It wasn't really an option to be honest. APIs became an inevitable growth strategy for software platforms.

The strategy was simple:

1. Build initial content or service platform

2. Open up APIs to excited developers

3. Grow the network through the creativity of the developer community

But as most of us in crypto have heard countless times, the story doesn't end there.

As it became time for these platforms to go public and increase revenue / shareholder value, they suddenly had to limit API access and become competitive with builders in their own ecosystem. As the 2010s rolled around, there was a domino effect of growing web2 platforms going back on their API promises. Twitter in 2012, Facebook in 2014, LinkedIn in 2015, etc.

Heck, even last year, there was a massive showdown between the Reddit community and leadership...remember the Reddit Blackout? In a matter of 6 weeks, Christian Selig's business expenses went from $0 to $2 million / month because of the Reddit API cost changes.

The price they gave was $0.24 for 1,000 API calls. I quickly inputted this in my app, and saw that it was not far off Twitter's outstandingly high API prices, at $12,000, and with my current usage would cost almost $2 million dollars per month, or over $20 million per year. That is not an exaggeration, that is just multiplying the 7 billion requests Apollo made last month by the price per request.

Well, it's clear that though APIs are an amazing software primitive, it's not possible to rely on them if they're controlled by a single party.

The only governance process needed to change an API that could effect thousands of developers, businesses, and ecosystem economics is a room full of VPs in Mountain View.

Okay, so what's the point of bringing all this up?

Well, because of the model above that pretty much every big tech company followed, the internet basically looks like this now:

And because of this setup, it's been almost impossible to compete with any of these stage 3 companies.

• Builders can't depend on the APIs

• Getting users to start from scratch is a nightmare

• Data pipelines are only in place when it's economically strategic for big tech

And this point applies for not only the crypto upstarts but also the web2 underdogs.

So that's it? We're all screwed.

Well, maybe not.

One Stone at a Time

In 2016, Cornell researchers published a paper titled Town Crier: an authenticated data feed for smart contracts. The core idea was to scrape websites and broadcast trustworthy data through smart contracts.

However, from my understanding, the ZK research was not mature enough to fully bring this vision in a way that guaranteed privacy and scalability.

8 years later, as zero knowledge tech, validator slashing mechanisms (economic incentives), and smart contract development have gotten dramatically better, we're finally starting to see an ecosystem of web proof companies pop up.

The goto examples are "prove I have at least $5000 in my Chase bank account without giving up my credentials" or "prove that I've streamed Sabrina Carpenter's new album at least 20 times" without giving up my Spotify username".

I'm grossly oversimplifying here but the key things to understand about zkTLS:

1. TLS is the "s" in HTTPS

2. TLS so far on the internet uses symmetric encryption. This means you (an internet user) can know for a fact that you're on the real Chase bank website, but you can also tamper with any of the data that you receive from Chase. So it's possible for you to to lie about your bank balance if someone asks you for proof. That's why we have third parties and notaries today that verify requirements.

3. With zkTLS, there is effectively a "cryptographic third party" that can confirm the data you receive back from the Chase website wasn't manipulated but they won't have access to any of your personal information. And this can happen without needing to disrupt any of the internet user flow today. Think: normally browsing + adding a "zkTLS Chrome extension".

Because these web proofs are simply extensions of TLS (which 95% of websites use today), it's not possible for any institution or person to stop these proofs from being generated. In fact, for the most part, they won't even know the proofs are being generated.

Read that part in the bold again.

As the functionality, costs, and speed of zkTLS infra gets better, it'll be possible to break down the data walls one stone at at time. Developers will find countless ideas to start porting over niche data into the open garden.

These web proofs are reusable as well so over time the repository of onchain attested data will continue to grow at accelerated rates.

I won't get into technical details here, but there are three kinds of implementations being used: Proxy, MPC, & TEE. Each have their pros and cons, and this vertical in general is too nascent to know what will work in the long run.

Ecosystem wise, the two main players (based on customers and activity) seem to be Reclaim Protocol and Opacity.

In a separate post I'll get into the nuances and framework for which one to pick for your product. But right now, I want to provide the reasoning as to why every crypto founder should be trying to work with any of these services in the first place.

A New Wardrobe for Builders

Let's say I challenged you to impress a room full of models with your fashion sense.

But wait! The catch is that you can only wear basketball shorts and a t-shirt. Now, unless you have the body of Chris Hemsworth, I'd argue that it would be pretty damn hard to impress anyone.

That's where we're at right now in terms of impressing users with consumer crypto products. There's no reason for them to look at you and feel attracted...it's just basketball shorts right?

But now! With zkTLS, crypto founders have access to any wardrobe you can imagine. It's possible to dress your product with chinos, slacks, button downs, wool coats, scarves, watches, dress shoes, etc. All of a sudden, you've caught the attention of all the models in the room.

Of course, there's a bit of a caveat here. The person under all the clothes still has to be presentable. Meaning, the product idea still has to have merit. A suit on someone who exercises will naturally look better than the same suit on a couch potato.

Okay enough of that analogy.

Users in crypto only have so much onchain history and credentials. So far, founders in the space have relied on limited wallet data to find ways to appropriately market airdrops, create meaningful allowlists, etc.

But by using web proofs to bootstrap reputation, builders in the space can incentivize users through crypto native mechanisms.

For example, if you can prove that you're "Yelp elite" status, Blackbird can offer extra $FLY to start spending in their restaurant network.

Or let's say a brand was looking to sponsor established artists on Zora. They could have the users attest they have a verified badge on Instagram or that they've sold an art piece on Sothebys.

Telah VC put together a fun list of ideas showcasing how big the design space is for attracting new kinds of users to a product.

With that being said, I believe that as zkTLS becomes an increasingly lucrative strategy, we as an industry have no right to complain about not going mainstream anymore.

That's all for today's post!

See you all on Friday, hope everyone has a great rest of the week :)

- YB