Blockspaces is building the Auto-Reconciled Collateral Contracts platform or ARCC, a platform for institutions to manage Bitcoin collateral in financial contracts. Building on Bitcoin’s unique properties as both the valued asset and the settlement network, and integrating a novel construction around private lightning channels from a remote-signing node, BlockSpaces has created a “smart contracting” system with all the benefits of “defi” and none of the risks. It can be argued this is the optimal setup given i) the contract details and capital flows are private, rather than broadcast to the world as part of a synchronized global state, ii) the value is in Bitcoin, not some other privately issued quasi-security the value of which is circularly defined, and iii) while not entirely autonomous, amending the contract logic after the terms have been agreed to requires the cooperation of the counterparties. This means the execution is “centralized” to the extent the counterparties alone still control the flow of funds. But in terms of the commercial logic, it is really entirely as decentralized as it actually needs to be, as opposed to the Crypto template of being validated by the entire world.

In more practical terms, this means these tools can theoretically displace centralized clearing houses, removing counterparty risk altogether and bringing settlement from days down to milliseconds. The go-to-market product is facilitating collateral management for overcollateralized Bitcoin-backed loans, given the size of this market and its clear capital inefficiencies. Today ARCC supports a variety of high-volume Bitcoin backed contracts, Bitcoin forwards, and programmable instruments like BitBonds. The longer-term vision is to generalize this technology across a range of novel capital markets use cases. In theory, any way of programming Bitcoin flows within a financial contract between regulated institutions that, in a fiat analogue, would require a clearinghouse, can be automated with this technology.

But the ultimate goal, from which the name of the company is derived, is to create a marketplace for blockspace forwards. If we believe that blockspace is a valuable commodity, it stands to reason that as Bitcoin matures, that blockspace itself will be the subject of increasingly sophisticated capital markets products. The blockspace forward market could easily become one of the most valuable and important in the world. We are proud to back Blockspaces in developing and commercializing this technology.

Blockspaces is a holding in Axiom Venture Fund II and
Axiom GP Anders Larson sits on the board