GCIBlue Star Capital’s SatoshiPay receives R&D grant from Stellar Development Foundation
Investment firm Blue Star holds a 27.7% stake in SatoshiPay, which supplies payment and money transfer infrastructure to digital industries and globally operating SMEs. Based on the value of SatoshiPay's last fund raise, Blue Star's investment is valued at around £4.9 million.
The R&D grant will be used to kickstart the development of the Pendulum network project which is a new second-layer blockchain that connects Stellar to the wider Deconstructed Finance (DeFi) ecosystem, and to develop a proof of concept implementation of Pendulum.
The Pendulum network works by adding smart contract support and bridges to Ethereum and Polkadot. After completing the initial proof of concept, Pendulum will be developed into 'a full-fledged decentralized layer 2 blockchain that will be accessible for everyone.'
The company said SatoshiPay is planning to build Pendulum, a suite of open, decentralized protocols on which smart contracts can be developed and executed ‘in order to bring more complex features to the Stellar network without sacrificing the network’s efficiency.’
The Pendulum chain acts as a second layer on top of Stellar, with additional bridges to two of the most popular smart contract platforms, Ethereum and Polkadot, the company highlighted.
Blue Star told investors that it believes the grant will further strengthen SatoshiPay’s position as a leading player in Decentralized Finance (DeFi) which has emerged in the past year.
It said the industry, which has grown over twentyfold in 2020 alone, and reached more than $60bn in Total Value Locked in smart contracts as of May 2021, is ‘positioned to profoundly disrupt traditional financial services like trading, credit/lending and yield-generating accounts.’
Derek Lew, Blue Star’s Executive Chairman, said: “The Stellar Foundation grant is yet another positive endorsement for Meinhard and the team at SatoshiPay as they continue to make inroads into this huge market. This is very exciting news for Blue Star and our shareholders.”
To date, the Company has invested around £1.9 million in SatoshiPay. Based on the value of SatoshiPay's last fund raise, Blue Star’s investment is valued at approximately £4.9 million.
Meinhard Benn, CEO of SatoshiPay, said the move into the protocol space will allow the company to “drive forward permissionless innovation and to increase its impact on the blockchain ecosystem.”
“With Pendulum, we aim to bring together the best of two worlds – combining DeFi applications as we know them from Ethereum with Stellar’s compliant fiat tokens.
It will also be exciting to see liquidity enclosed in Stellar’s $9 billion market cap and the $7 trillion foreign exchange market interact with the booming DeFi economy,” Benn added.
“SatoshiPay has a proven track record as a key Stellar network and ecosystem participant, and we couldn't be more excited that they are exploring an opportunity to connect Stellar to the thriving DeFi ecosystem,” said Justin Rice, VP of Ecosystem at Stellar Development Foundation.
He added, “With its unique tools for compliant connections to traditional banking networks, the Stellar network is well positioned to connect traditional finance with the innovative DeFi space. Pendulum has the potential to build bridges that increase Stellar's interoperability with other networks, which could enable new use cases and help unlock the world's economic potential by making money more fluid, markets more open, and people more empowered.”
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Blue Star disclosed back in January that the value of its investment portfolio had grown by c.78% in its final results for the year ended 30 September 2020, moving it into profitability.
In particular, the esports market is experiencing significant growth. In 2020 it was estimated at around 495m viewers and is projected to reach around 646m viewers by 2023. Blue has established a foothold within this space with stakes in Guild Esports and Dynasty eSports.
Blue’s investment here is expected to result in revenues growing over the same period from $950m to $1.60bn. Shares in Blue Star Capital Investments opened at 0.17p this morning.
Blue Star is an investing company with a focus on new technologies. Its investments include a 27.7% holding in SatoshiPay, a payments business using blockchain technology; investments in 6 early stage esports companies with shareholdings ranging from 5.9% to 13.6% and a 0.9% investment in Sthaler, an identity and payments technology business which enables a consumer to identify themselves and pay using just their finger.
The company provided an update in respect of its esports portfolio back in December 2020 as well as its investee companies - The Drops Esports Inc and Diemens Esports PTY Ltd.
Since the group’s initial £0.9m investment in six esports opportunities in November 2019, Blue Star has invested around £1.68m across seven companies. It has since invested in Guild Esports PLC, Dynasty eSports Pte Ltd and, most recently, in FORMATION Esports SaaS.
Based on the current valuation of Guild which was admitted to the standard segment of the LSE’s main market on 2 October 2020, and the higher valuation achieved by Dynasty in its subsequent fund raises, Blue Star's esports portfolio is now valued at £3.71m showing an unrealised gain of £2,035,890 and an increase of approximately 120%.
In its FY20 final results for the year ended 30 September 2020, which moved the group into profitability, the group said it had made a profit for the period of £1.7m compared with a loss in the corresponding period of £0.68m. The group cited the major contributor factor as ‘the uplift in valuation’ achieved on its investments in Guild Esports and Dynasty Esports.
The group hailed “an excellent year with strong performance” from its esports portfolio as well as “encouraging progress” from its tech payment businesses. It said its portfolio was successfully diversified with the move into esports which is now seen as its major focus.
Given the market growth and potential commercial opportunities, the Board ‘firmly believes’ that esports will eventually take up a significant proportion of the global sports industry.
Specifically, over the last twelve months, Blue’s esports portfolio has enjoyed two major successes and at the year end the valuation of the esports portfolio stood at around £3.8 million compared with an accumulated investment to date of approximately £1.7 million.
The board remains ‘highly confident’ in the strong underlying trends in esports and believes there is significant upside to be achieved moving forward from the esports portfolio.
Cash as at 30 September 2020 was £0.132m compared to £0.12m in the corresponding period. Post the year end the Company raised £0.095m through the exercise of warrants.
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