Getting Fit-for-Funding, real stories, how Gath3r de-risks as a web miner
How Gath3r de-risks as a web miner
Most entrepreneurs hungrily pursue the rewards of growing a business instead of mindfully averting the risks.
For this reason, de-risking a startup has become, at the very least, an indispensable perspective, and for some, a method of identifying and addressing the most impactful risks as they change through a company’s growth and search for a product-market-fit. The objective is to allow businesses to make educated decisions by systematically analyzing and addressing the most significant risks that stand in the way of their success at a given stage. In reducing the uncertainties of a venture, a startup will not only ease their progress, but better market themselves as an opportunity for investment.
The Fit-for-Funding series covers the de-risking of select blockchain startups and shares their survival stories to shed light on the process.
Gath3r, a Dubai startup building a self-optimizing, web-based cryptocurrency miner to monetize website and app user traffic unobtrusively, has shared some key insights into their development. This is how Gath3r de-risked in two key areas – product and business.
Developing a novel product
In a shifting industry, publishing startups inevitably have to address the problem of monetization, as most forms of advertising are often out of the question for a desirable user experience, whether native, contextual, or other. For Gath3r founder Raghav Reggie Jerath, prior experiments with a SaaS-based model point to the underlying issue: people are just not ready to pay for content.
Even with experienced team members able to make use of valuable contacts in the advertising industry, Gath3r’s web miner has to respect the fine line between UX, profitability, and privacy in order to partner with reputable publishers - a feat which current approaches overlook in favor of managing a smaller, crypto-friendly market.
De-risking Gath3r’s product means differentiating it among a growing range of cryptocurrency web miners and use cases. A crucial feature to this strategy is the smart miner, a feature which selects a coin to mine based on its hash rate and profitability. This limits Gath3r’s exposure to a coin’s volatility in case of a price or security issue, and enables the protocol to take advantage of positive price movements. By restricting mining targets to Monero (XMR) or similar variants, existing competitors hinder their returns in the case of market downtrends and do not optimize the mining feature of their product.
In a bid for an ecosystem-incentivized model, other competitors have opted to exclusively mine their own, native token. Although this is theoretically omni-beneficial, a downtrend in the token’s value threatens to push users out and perpetuate a cycle that collapses the model.
Building resilience in a business model
A "token first" approach is risky, as it links an entire business to market conditions. When combined with a pure, marketplace-based model (ex: SONM, or other fog computing applications with payouts in native assets), there is an unreasonable amount of exposure to volatility and excessive cash burn - the ingredients to a financial meltdown.
Web miners which exclusively mine their own token and build an ecosystem around it are a gamble for adopters, as native assets have to first substantiate an intrinsic value. Until supply and demand are somewhat stabilized - an especially daunting task in crypto - growth is a catch-22 situation. In any case, the abundance of Proof of Work tokens alone makes this marketplace model inadequate. Gath3r’s response is a simple, SaaS-based model, with slab-based commissions up to 15% - a mean rate which demonstrates their projected value in the market.
By mining established PoW coins instead and using a native token only as a form of exchange within the web miner’s ecosystem, Gath3r (GTH) simplifies marketing analysis or customized opt-ins and exists independent of a protocol’s performance and usage.
Thinking Beyond the Blockchain
Anyone involved in this space is keenly aware of the fact that cryptocurrency has yet to find public acceptance. Haughty technical lingo, a spotty history of security issues, and regulatory skepticism do little to encourage a future for blockchain technology.
Once Gath3r reached the MVP phase, it became clear that the most significant issue was not the model, the technology, or the market, but the perception of web-mining as a whole. And while the current state of affairs is partially attributed to negative media coverage, this pessimism is occasionally legitimized. Given the uncertain validity and ethical integrity of known players in the space, and the prevalence of silent miners, cryptojacking, and malware scams, it is unsurprising that medium to large publishers have been hesitant to become early adopters.
As cryptocurrency inches toward institutional adoption, compliance issues remain. As such, even businesses which choose to play ball face regulatory doubts, whether jurisdiction-specific or otherwise, from their potential adopters and backers. In order to mitigate this risk, Gath3r’s solution is simple: acquire credibility and build on it.
Publishers are held hostage by advertisers who jeopardize their own audience, and Gath3r aims to help reduce their dependence on existing monetization platforms by bringing back trust, ethics, and privacy into the equation.
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