Avail: Avail is a venture-backed crypto startup with the goal of making chain-to-chain transactions on Web3 seamless with their primary product, Nexus. Avail is targeting DeFi protocols that struggle with cross-chain transactions. The reason this is so valuable is that moving crypto across chains can be cumbersome, time-consuming, and expensive for the user. However, leveraging Nexus takes the friction out of that process and allows a user to connect their wallet to a dApp and forget about what chain their funds are on versus what chain the protocol is on, because Avail handles the backend processes to facilitate the transaction. Pain points, caused by cross-chain compatibility, for users are especially negative for dApps because users drop off with each extra step or gas fee they have to pay, leading to lower transactions for the dApp.
Arcana: Arcana has a similar goal to Avail. They employ a method called chain abstraction, which hides underlying complexities for multi-chain transactions. In Arcana’s technical paper about Chain abstraction, it gives the use case example: “In my EoA, I have 10 USDC on Optimism and 20 USDC on Arbitrum, and I want to send 25 USDC to the Polygon address 0xnnn.” To further explain, imagine having a MetaMask wallet with 1 ETH on the Ethereum chain, 1 ETH on Arbitrum, and 1 ETH on Avalanche. Arcana enables you to unify all those funds onto a single chain to clean up your wallet. More importantly, it allows you to send 1.5 ETH to one address on a completely different chain and handles all the back-end work to make that transaction possible.
Acquisition Purpose: It is important to note that Avail is backed by powerhouse VC firms like Founders Fund and has raised $75 million, while Arcana is backed by a lesser-known firm and has raised a much smaller $5.5 million. The acquisition’s dollar amount is undisclosed, but it was structured with a 4:1 token swap of Arcana’s XAR token to Avail’s AVAIL, and Avail assumed 100% ownership of Arcana’s XAR supply. The acquisition seems to be a friendly combination of resources, with Avail being the clear big fish in the deal. Avail’s Twitter @AvailProject states, “Arcana’s proven infrastructure and core team are now part of Avail, bringing chain abstraction, wallets, auth, and MPC to supercharge Avail Nexus”. The combined team size is now 55, and further growth can be expected. The acquisition will give the Avail team the chain abstraction technology and brain power to accelerate their Nexus project. Arcana also has wallets and authentication frameworks that will be huge assets to Avail as they continue to grow.
Implications: The focus on simplifying Web3 processes is something that I am extremely bullish about. A sure-fire way for new companies to prove their value is by removing friction. This is what Amazon, Uber, Airbnb, and so many more did. Web3 has so much friction that the uncommitted person, who just wants to experiment and see if they could benefit from the ecosystem, is at a huge risk of stopping their usage after they have to go through the pain of bridging and the gas fees that come with it. Overall, I think removing pain points like this not only offers Avail a great business to grow at scale, but it also solves a huge problem that will encourage more people to adopt Web3. The development of L2 chains and great protocols is amazing, but making transactions seamless between the different chains is what will make the ecosystem thrive more than any great dApp. To be sure, this acquisition is extremely exciting for users and developers and positions Avail to rake in a lot of revenue from Web3 usage.