Senior Shanghai government officials have agreed to help blockchain startup Conflux open a research institute and incubation center with millions of dollars, the firm’s co-founder said.
The Beijing-based firm counts Sequoia China and Huobi among several prominent backers, raising $35 million via a private token sale in December 2018.
The research institute will be open later in December at the earliest, while the incubation center could be launched in June 2020.
The move comes amid the city’s crackdown on crypto businesses.
A 10,000-square-foot working site, a sizable fund and an opening ceremony attended by city officials. That’s when you know the Chinese government has your back.
The Shanghai government has agreed to open a research institute with blockchain startup Conflux as early as the end of this December, while considering an incubation center that could be set up in June 2020, Fan Long, co-founder of Conflux, told CoinDesk.
While declining to disclose the exact amount of funding that Conflux is set to get from the local government, Long said it will be in the millions of dollars.
The Shanghai Science and Technology Committee, part of the municipal government, confirmed to CoinDesk it met with Conflux on Oct. 29 to discuss government support for the institute and the incubator. An official from the committee’s technology incubation office was unable to discuss the timeline or the funding for the projects.
The move comes as the government continues to crack down on cryptocurrency firms that had mushroomed after Chinese President Xi Jinping’s speech praising blockchain. The Shanghai bureau of China’s central bank went so far as to say it would “nip young crypto businesses in the bud.” Beijing is promoting innovation, but only the kind it thinks it can control.
Nevertheless, the Conflux Incubation Center aims to invite developers and entrepreneurs to build decentralized applications (dapps) on the public permissionless blockchain developed by the firm. Like bitcoin and ethereum, that blockchain is public, so anyone can participate, and it uses a similar proof-of-work mechanism to reach consensus on the state of the ledger and to secure the network.
“Our infrastructure for the dapps is different from ethereum and will have its own ecosystem,” said the firm’s global marketing manager, Christian Oertel, noting Conflux primarily focuses on improving its network’s scalability.
On top of the mandate to find venture capital firms for startups, the incubation center would develop dapps for the Shanghai government.
“We can have dapps to help the government track funds and documents to address some of the challenges it is facing in the process,” Oertel said.
Besides an office building in Hongqiao, one of the busiest business districts in the west of Shanghai, and the multi-million dollar funding, the city will dole out subsidies to support the research institute and incubation center, according to Oertel.
While declining to reveal who initiated the partnership, Oertel said Conflux has been in talks with the Shanghai government since July.
Young but well-funded
Formed in 2018, the budding company has raised $35 million from a slew of prominent investors in China, including private equity firm Sequoia China, Huobi Group, Shunwei Capital and Rong360.
“Conflux started as a research project. We initially were just trying to find a way to scale up blockchain that could make it faster and more secure,” Long said. “When the investors got interested, we felt it might be a good idea to bring the technologies out of our laboratory.”
The financing round took place through a private token sale, and Conflux will launch its mainnet, or live blockchain, in the first quarter of next year, allowing developers to mine the native token CFX, Oertel said.
One thing Conflux stressed to CoinDesk repeatedly in the interview is it will not launch an initial coin offering (ICO) or be involved in any form of centralized token sales. Oertel said it is up to token holders to decide if they want to trade them on exchanges such as Binance, outside the Conflux network.
The team has 24 people, including six founding members, 12 engineers and six on the global team, across the world.
The firm has been looking for talent with a mix of Chinese and international education, according to the firm. Most of the current employees went to top engineering schools in China and studied abroad for their graduate degrees, according to the firm’s website.
“Our Beijing office is close to Tsinghua University. It is convenient for us to recruit talent,” the spokesperson said.
At least 10 out of Conflux’ 18-member development team, including founders Fan Long and David Chow, have earned either bachelor or graduate degrees from Tsinghua University. Its research scientist Wei Xu and chief scientist Chi-Chih Yao, a Turing Aaward winner, are faculty members of the university.
“The Chinese government realizes public blockchain is im