In 2018, it was estimated that around $1B in value was lost in smart contracts. Thankfully Sagewise is the smart contract safety net that is helping to prevent big losses through its highly adaptive SDK. Its SDK provides the tools and infrastructure to handle smart contract disputes at any stage in development and execution, which allows either party to freeze contracts in place while disputes are being resolved.
LA TechWatch spoke with cofounder Amy Wan to learn the latest about the smart contract industry and the company’s recent funding round from some top notch investors.
Who were your investors and how much did you raise?
Our lead investor was Wavemaker Genesis, and notable investors include affiliates of Miko Matsumura (Gumi Crypto), Youbi Capital, Ari Paul (Blocktower Capital), Jordan Clifford (Scalar Capital), James Sowers and Terrence Yang (Yang Ventures). This was our seed round, and we raised $1.25M.
Tell us about Sagewise’s product or service.
Sagewise seeks to bring transactional confidence into the blockchain industry by building a smart contract safety net where smart contracts do not fulfill the original transactional intent.
The Sagewise safety net starts with an SDK paired with our Contract Canary, a smart contract notification and monitoring service. The SDK is analogous to an arbitration clause in code form – when the smart contract executes a function, that execution is delayed for a pre-set amount of time (i.e., 24 hrs) and users receive a text/email notification regarding the execution. If the execution is not the intent of the parties, they can freeze execution of the smart contract, giving them the luxury of time to fix whatever is wrong. Once frozen, parties can fix coding bugs, patch up security vulnerabilities, or amend/terminate the smart contract, or self-resolve a dispute. If a dispute cannot be self-resolved, parties then graduate to a dispute resolution marketplace of third party vendors. We take a marketplace approach because not all disputes are equal—the disputed amount and sensitivities change depending on the situation. After all, a $5 bar bet would be resolved differently from a $5M enterprise dispute. Thus, we are dispute process agnostic.
Following that, are enforcement and collections tools.
Can you give us some real-world scenarios with use of your platforms and the outcomes?
Let’s use financial services for example. Take the construction industry. This space is traditionally rife with inefficiencies, lack of transparency, fraud, and disputes. The reputation it has gained as a result acts as a further brake on its potential. But using blockchain, the lender to a construction project could enter into a smart contract with a borrower for a construction loan, to be distributed based on certain construction milestones. This smart contract could stipulate monthly interest only until payment is made in full, upon sale of a property, due in 12 months. In theory, these requirements are clear enough.
But there is always a risk that the borrower is unable to make an interest payment or needs an extension for the sale of the property. Technically speaking, this results in a violation of the smart contract and automatic withdrawal of any funds. But as anyone who has taken part in a real estate deal knows, things are rarely so black-and-white. Here, the parties can trigger the Sagewise SDK via a mobile app to freeze the impending default (and withdrawal of funds), and attempt to work out a deal to self-resolve the dispute. Once they reach self-resolution, they are able to update the terms of the smart contract. Mediation of this sort will be an essential feature of smart contract economies.
What inspired you to start Sagewise?
In spring 2017, there were frequent headlines about ICO hacks losing millions of dollars. Founders and investors seemed resigned to this instability and uncertainty. I thought this was a crazy way for the ecosystem to operate, and I decided that the industry needed dispute resolution infrastructure in order to become more stable and provide more transactional confidence.
How is Sagewise different?
We’ll, I’m certainly not aware of anyone else doing what we’re doing. Most other projects in the space are focusing on actually resolving disputes; we are building the layer that enables the resolution of disputes.
We are early. We are targeting the smart contract disputes market, which is still in its infancy. An estimated over $1B in value was lost in smart contracts in 2018, and that number is only increasing with smart contract adoption.
What’s your business model?
When disputes are resolved, we take a small infrastructure use fee.
What was the funding process like?
It was difficult. First, I was a pregnant, minority, non-technical female founder. Secondly, the crypto scene is rapidly evolving- people are crypto rich one day, and crypto poor the next. Lastly, lawyers and auditors still don’t quite know how to handle the legal aspect of blockchain, and the blockchain space is an industry heavily dominated by philosophy and dogma over what the technology is “supposed to be.”
What factors about your business led your investors to write the check?
I think investors really liked our concept and saw it as much needed infrastructure within the blockchain ecosystem, as well as having a strong executive team.
What are the milestones you plan to achieve in the next six months?
The major milestone is our plan to roll out the platform by the end of 2018. So keep your eyes peeled for that!
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
My advice for LA-based companies is simple: ABN- Always Be Networking.
Where do you see the company going now over the near term?
We hope to roll out revenue-generating pieces of the platform before the end of the year.
What’s your favorite outdoor activity in LA?
Easy, outdoor brunch.