July 2023

Informal Systems (Titan Fund Investment)

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It was recently announced that CMCC Global, through our Titan Fund, was the lead investor in the oversubscribed first round of fundraising for Informal Systems. This was an extremely competitive deal, and we were thrilled to invest alongside other notable VCs and prominent crypto projects.

Informal Systems combines a rare mixture of highly technical researchers, creative product designers and proven operators. The company has been at the forefront of protocol design in the Cosmos ecosystem and its software has been used extensively through the Interchain. This month we will provide an overview of our investment rationale for Informal Systems, explaining the different business arms and why this company has the potential to grow into a billion-dollar business.

Team and company background

Informal Systems is a Canadian-based company comprised of expert software engineers, research engineers, infrastructure and security leads, principal scientists, and product managers. It is an immensely technical team boasting some of the best protocol designers and researchers in the world. The company has around 60 employees worldwide, with a presence in Toronto, Switzerland, Austria, the US, and the UK.

The founders of Informal Systems benefit from years of working closely together on previous endeavours and are closely tied to all aspects of the Cosmos and Interchain ecosystem. The CEO is Ethan Buchman, the co-founder of Cosmos. Ethan is well known and respected in the blockchain industry for his technical expertise, history of founding and leading blockchain companies, and passion for the space. He is fiercely philosophical and views blockchain technology as a means to bring greater economic sovereignty to communities around the globe.

Alongside Ethan is Arianne Flemming (COO) and Zarko Milosevic (CTO). After graduating from Princeton, Arianne founded multiple companies and became the Associate Director of Machine Learning at the Creative Destruction Lab in Toronto, where Ethan is a mentor. Zarko is a Doctor of Philosophy in Computer Science and Distributed and Fault Tolerant Systems from the highly regarded EPFL (École Polytechnique Fédérale de Lausanne). The three co-founders teamed up at Tendermint Inc (the original Cosmos development company) followed by the Interchain Foundation, before starting Informal Systems.

Informal Systems states that its mission is to transform the quality standards of three key institutions:

  • Software: How it is built and deployed
  • Money: How it is issued and distributed
  • Organizations: How they are owned and governed

The company has three core product verticals:

  • Informal Security
  • Informal Staking
  • New products (CoFi)

Core products

1. Informal Security

Production grade software needs to be audited for bugs and security vulnerabilities. While this is true for web2 applications it is especially true in web3. Applications that run on blockchain systems have the super-power of being able to move value in a purely digital setting, in the form of tokens. This means that exploitable software bugs in smart contracts have the potential to be catastrophic and extremely costly. As blockchain technology has matured, it has become easier to write smart contracts and the security auditing business has been exploding.

The DNA of Informal Systems is in designing the underlying blockchain protocols themselves. The team is deeply technical and understands protocol and smart contract design from an extremely low level. Informal has several products within its security product line and has a formidable security auditing business that, so far this year, has been fully booked and maxed out. The team works with the largest projects in the Cosmos ecosystem and is now expanding into new technologies and ecosystems.

Informal Security focuses on several areas including:

Cosmos network solutions: In addition to providing audits and security partnerships to some of the largest projects in the Cosmos Ecosystem, the team implements the same rigorous methods to critical core pieces of the Cosmos Network that they build and maintain. This includes:

Inter-Blockchain Communication (IBC) protocol:

  • IBC is the heart of the Cosmos ecosystem and is the interoperability protocol that allows chains to communicate with each other.
  • IBC permits arbitrary state machines to communicate arbitrary data, allowing heterogenous IBC-compatible chains to exchange value trustlessly – in other words, it handles the authentication and transportation of data between two blockchains.

The Cosmos Hub:

  • This is the largest decentralized blockchain in the Cosmos ecosystem and Informal is one of the leading developers for the Hub.


  • CometBFT is a fork of Tendermint and is a general purpose blockchain consensus engine that is used by chains in the Cosmos ecosystem to maintain their state.
  • It allows applications to securely replicate themselves on many machines.


  • An IBC relayer is a piece of software that monitors for updates on opens paths between sets of IBC enabled blockchains. The relayer submits these updates in the form of specific message types to the counterparty chain.
  • Hermes is an open-source Rust implementation of a relayer for the IBC protocol.

Formal Verification Tools: Informal is building modular and developer-friendly formal verification tools on TLA+, one of the most widely used specification languages. This software includes:


  • An industrial-scale formal verification engine; a Symbolic Model Checker for TLA+. Apalache has seen widespread adoption across the TLA+ community.

Model-Based Testing (MBT):

  • This is an extension of Apalache.
  • It is a methodology and set of tools that allow developers to auto-generate complex test cases for real software from simple TLA+ models.


  • An industrial-scale formal verification engine focused on Cosmos applications but generalizable.
  • This is based on Apalache and Model-Based Testing, Atomkraft provides lightweight end-to-end testing of Cosmos-SDK and CosmWasm blockchain applications.


  • An alternative surface syntax for TLA+ that is much more developer friendly and comes with 10x better developer UX, including a REPL, simulation mode, IDE plugins, code generation, and more

2. Informal Staking

Ethereum’s recent transition to a proof-of-stake blockchain system has brought increased attention to the growing importance and dominance of staking. Staking assets to secure blockchain networks only became prevalent around 5 years ago with the launch of Cosmos, the first system to use Tendermint consensus. From effectively zero five years ago, today there are over USD70bn of assets staked across multiple networks, offering an average yield of 10%. Staking is a rapidly growing multi-billion-dollar business.

Informal Systems operates Informal Staking, a proof-of-stake validator and IBC relayer that provides critical infrastructure in the Cosmos ecosystem. At the time of writing, there is over USD40m staked through Informal Staking, although this was closer to USD100m in the more buoyant market of early 2022. While market conditions have had an impact, previous highs suggest a healthy product market fit with huge potential to grow this product line.

Many of the team at Informal Systems worked at Tendermint Inc. and helped to design the Tendermint consensus mechanism, which is now used by nearly every modern proof-of-stake system. The Informal team recently forked Tendermint, and their new implementation is referred to as CometBFT. As a result, it is tough to think of any technical teams that can compete with Informal Staking in terms of understanding the low-level technology needed for a validator. On top of this, the team has been building out financial dashboards and performance tracking software that are a value-add to clients and should help propel Informal Staking up the leaderboards in terms of AUM delegated to the validator.

3. New products - CoFi

With the huge technical talent that Informal Systems boasts, it is natural that the team would have ideas for new innovative products. As an analogy, a firm like Consensys is a “company builder” that uses its technical teams to spin up new Ethereum focused products. Consensys has been successful at doing this and in 2022 raised money at a valuation of over USD7bn. Likewise, Informal Systems is starting to work on its own products that will spin out as chains within the Cosmos ecosystem. This is an exciting arm of the company and has the potential to drive significant value to the business.

The first product being worked on is Collaborative Finance (CoFi). CoFi works from the assumption that there are numerous closed financial loops in the economy that can be found and utilized. Significant liquidity savings and other positive externalities can be unleashed through the identification and clearing of debts and the mapping of payments graphs. CoFi is intended to have widespread applications in supply-chain financing and cash flow management, beginning with what Informal refers to as the “heart” of the real economy: trade credit. CoFi is bridging the gap between the blockchain ecosystem and real economy. The company has designed a Multilateral Trade Credit Set-off (MTCS) system, which clears debt with intelligent liquidity injection, inspired by the success of the Slovenian government's MTCS system. The team is currently working on a first iteration of the product which should be released later this year.


Informal Systems is a rare breed of company. The company is deeply technical, creatively inclined, philosophically driven and highly profitable. Each of its business lines has the potential to grow into a leading standalone company. On top of this, Informal is building out new products that each have huge upside potential. At CMCC Global, through our Titan Fund, we are thrilled to be investors in such a dynamic company. We are excited to see what new innovations, products, protocols, R&D, open-source tooling, organisational structures, and workflow primitives the team will release in the coming years. We also look forward to helping the company maximise its potential and navigate the growth that will come as it works to fulfil its mission of transforming software, money, and organisations.