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Newman Research: Investing In Orb Labs – Scaling Web3 Efficiently

March 10, 2023

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We are delighted to announce that Newman Capital has invested in Orb Labs, a blockchain interoperability company building for an omnichain future. Founded upon the notion that current interoperable protocols are either too expensive, slow, or not secure, Orb Labs aims to solve these issues by creating gas-efficient, cross-chain solutions to scale web3 applications.

Upon meeting the founding team, Richard Adjei and Felix Madutsa, our team was keen to work with and invest in their vision. Having both graduated in Computer Science at Princeton and later co-founding a startup together, we are confident in the duo’s technical background and ability to deliver solutions based on their acute understanding of the crypto landscape and its pain points.

We believe that Orb Labs has the potential to support the bridging industry – a growing sector in decentralized finance (DeFi), and is well-positioned to gain market share over its competitors. As seen in the Dune Analytics dashboard below, at its peak, the bridging industry saw over $20 billion TVL. As long-term believers in the crypto space, we anticipate the next cycle will see sizable and sustainable volume bridged daily. For this reason, Orb Labs’ products are poised to capture this volume by providing cheaper, faster, and more secure solutions than their competitors.

Figure 1: ETH Bridges TVL Over Time, Dune Analytics

The Problem with Today’s Bridges

The future of web3 is multi-chain. With the rise of numerous L1s and L2s, bridges are the fulcrum connecting all layers, with cross-chain messaging protocols forming the cornerstone of these bridges in crypto.

In essence, cross-chain messaging protocols are the technology that allows blockchains to communicate with each other. Despite this task sounding deceptively simple, it cannot be further from the truth. When evaluating cross-chain messaging protocols, two main criteria should be considered:

1. Security

Security refers to the actions the protocol takes to avoid hacks. Protocols mainly do this by minimizing trust or implementing good code and good economic incentives to ensure there are as few points of weakness to exploit as possible.

2. Usability

Usability refers to factors that can promote or hinder a protocol’s usage. These factors typically include gas efficiency, speed, and extensibility. Currently, most bridges take up to 30 minutes to bridge assets – an incredibly long time if you compare the average transaction time for traditional finance.

Current solutions lack one or both of these capabilities resulting in expensive, exploitive, or slow experiences for the end-user.

Orb Labs’ Solution – Earlybird and MagicLane

Orb Labs plans to tackle the omnichain dilemma by introducing two key products enabling developers to build a wide range of products: Earlybird and MagicLane.

Earlybird is the core product that Orb Labs has been working on. Simply put, it is a cross-chain messaging protocol that is at least 10x cheaper compared to its competitors, boasting an unmatched level of security in the interoperability space. The protocol is designed to let developers choose security models from four different libraries, prioritizing different features to select the best-suited solution for their application.

In essence, Earlybird recognizes that there is no one-size-fits-all solution when it comes to cross-chain messaging and that all developers will need to prioritize cost, speed, and security differently depending on the nature of what they are building.

With that in mind, Earlybird will release four different libraries for developers to build with. If, for example, a game studio is building a cross-chain game, they might consider Thunderbird as it prioritizes gas efficiency. Conversely, a bridge that supports billions of dollars in transactions might choose to use Caladrius instead, given its trust-minimized system.

Table 1: Comparing attributes of Earlybird’s libraries

Of the four libraries, Griffin offers the most versatile solution. It toggles between libraries based on the nature and impact of the message being received. As such, it is expected to be the most heavily utilized library.

Concurrently, Orb Labs is building MagicLane, an efficient, secure, and composable omnichain token and messaging platform built on Earlybird, providing developers with a security model to interact on any blockchain using a single contract.

The Future Is Bright

Current cross-chain messaging solutions are best suited for specific use cases, and no single protocol on the market has the ability to be applied to such a wide range of use cases.

From cross-chain exchanges that are ~40% cheaper to use on Ethereum than exchanges like Uniswap to new L1/L2 developers building robust native bridges, allowing users to move funds securely and seamlessly between chains, there are a multitude of applications that can be built using Orb Labs’ solutions. The team is already seeing interest from builders who are excited to start experimenting. The company is in conversations with several DeFi platforms, L1/L2 developers, and other crypto dApps seeking Orb Labs’ tech to improve their own products.

We know true interoperability is just a matter of time and are excited to see the future Orb Labs is shaping. Our team is proud to support Orb Labs as they continue to build with this new round of fundraising and scale to become a leader in the cross-chain messaging space.

Disclaimer: This material has been shared solely for information purposes, and must not be relied upon for the purpose of entering into any transaction nor investment. Newman Capital is not an investment adviser, and is not purporting to provide you with investment, legal or tax advice. You are always advised to DO YOUR OWN RESEARCH before making any investment decision. Newman Capital is an investor in Orb Labs.

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