Ethsign aims to weed out fraud with a crypto Crunchbase

In a world where fraud is a growing problem, getting accurate data is quickly becoming a necessity. At least one company thinks the solution lies on the blockchain.

EthSign, a blockchain startup headquartered in Singapore, aims to create a tokenized ecosystem based on the metadata contained in legal contracts.

EthSign employees (from left, back row) Lj Huang, Mike Ma, CEO and co-founder Xin Yan, Azer Maric, Claire Ma, co-founder Jack Xu, and Potter Li; (from left) John Wu and co-founder Tim Lee.

At its core, EthSign is a platform for creating smart contracts – a list of instructions written in code – that started as an e-signature service. Xin Yan, its co-founder and CEO, says the idea for EthSign was born when the founders started to look at how to write smart contracts that can execute a legal agreement.

That idea led to the firm raising US$12 million in seed funding earlier this year, which included investments from all three of Sequoia’s investment arms: Sequoia Capital, Sequoia Capital China, and Sequoia Capital India, which led the round with Mirana Ventures.

No money in contracts

Since its launch in 2021, EthSign has helped produce over 150,000 contracts. But surprisingly, there is no money to be made in them – Yan says that each contract that EthSign creates generates only US$0.000481 in revenue. This means that the firm has only made around US$72.15 in total from its contracts.

The real goal behind the project is tokenizing all of a company’s relevant data, or those that would be interesting to potential investors or partners. These include fundraising rounds, existing contracts, and cap tables.

The tokens could then be publicly accessed and verified by third parties. This would allow EthSign to build a real-time database of companies, which could be monetized.

“We want to build a crypto version of Crunchbase, which could tell you who invested and how much money a project actually raised over how many rounds, all through the information you can find on our platform,” explains Yan.

He also says that accurate financial data is going to become increasingly important for startups, especially those that want to raise cash.

“I believe in the future, more and more new startups – new high-tech startups – will issue tokens, maybe on Binance or Coinbase, instead of on Nasdaq,” he says. Getting the most from VCs will require an accurate and updated cap table.

Inclusion in the database is optional, but Yan says the underlying platform offers services that are attractive to startups and decentralized autonomous organizations (DAOs), ensuring the project will have new customers that can grow the database.

“It will allow multiple users who have never met and live in different countries to sign a smart contract that can trigger financial transactions, such as putting money in escrow or funding a DAO,” he adds.

While Yan doesn’t say how much he believes a blockchain-based database of startups would be worth, Crunchbase saw over US$38 million in revenue in 2021.

TokenTable

Combating fraud

Is it legal?