The Investment Case for Anoma

August 2021

Anoma is a revolutionary new blockchain platform that is reimagining how Layer 1 protocols can operate. It is looking to solve a new category of coordination problem through radical new technical designs. Most blockchain platforms today focus on unidirectional transactions, meaning that users execute direct swaps between two assets. For example, you can swap 1 ETH for one NFT. Anoma is looking to enable private transactions between multiple parties in any asset. For example, the protocol will automatically match 10 users looking to swap different assets so that each user is able to receive what they desire using Anoma’s digital bartering scheme. By doing so, the platform will enable users to make private payments with arbitrary assets.

This month we will dive into the unique design of Anoma. We will start by delving into the innovative philosophy behind the platform, before looking into its technical architecture. Anoma has several new concepts that are yet to be tried but could be revolutionary for the blockchain ecosystem and the world.


The philosophy behind Anoma

Money was created to solve coordination problems. If I run a farm and you thatch roofs, then we need some common form of payment so that you can buy my eggs once a week and I can pay for your skills to fix my roof once a year. Money facilitates exchange in the absence of a “double coincidence of wants”, a situation where two parties are happy to directly barter goods and services.

Using money rather than direct bartering has several drawbacks. The issuance of money by centralized authorities (such as governments) can be abused. Users of a currency become tied to the economic and political system of the currency issuer. While cash is relatively private, the electronic transfer of fiat money often faces friction, restrictions, surveillance and can be subject to censorship and privacy violations. This is where Anoma comes in:

Anoma aims to create a system that allows any digital asset to function as means of exchange or payment, enabling individuals to choose what asset or combination of digital assets are used in their transactions and what values they signify.

Unlike many financial platforms, the goal of Anoma is not to introduce a new asset intended to be used as money. XAN, the native token of Anoma, will be required to make transactions and will incentivise validators to secure the network.

Technical architecture

Anoma is a layer-1 blockchain protocol. While it shares many similarities to smart contract platforms, like Ethereum and Solana, it also has unique features. It has a state machine that does not rely on linear transaction executions and a matchmaking system that facilitates trades between different parties that have not previously been connected. It also has a novel scaling solution, privacy features and will interoperate with existing blockchain platforms.

The State Machine

Anoma is a proof-of-stake system that uses Tendermint consensus, originally implemented in the Cosmos network. Sitting on top of this consensus layer is the state machine, a ledger that holds the “state” of the network. As with the EVM (the Ethereum Virtual Machine), Anoma’s state machine contains accounts that have their own state subspace and code. However, unlike most smart contract platforms, execution of transactions does not proceed in a linear flow with contracts initiating calls to other contracts. Instead, transactions take place in an arbitrary order and then all accounts whose state was altered during a transaction decide whether to accept or reject the state change.

This transaction model has several advantages over linear step-based execution. Transactions are more efficient as state changes are not computed but are specified. The validation of transactions is also done in parallel, which speeds up the process.

The Matchmaking System

As a bartering platform, Anoma relies on users being able to discover trading partners. Were this to be done manually, there would be friction in the system as users try to find matching users to trade assets.Anoma incorporates a matchmaking system that allows users to “gossip”(broadcast) their trading intents. If two or more users have compatible intents, then nodes in the network known as matchmakers detect this compatibility and combine these intents into a transaction.

Anoma’s matchmaker nodes receive a portion of transaction fees for gossiping and matching intents. This encourages the system to matchmake as quickly as possible, making the process fast and efficient.


Scalability is a key topic for layer 1 protocols. Anoma uses a solution it calls “fractal scaling”, which was born out of the observation that commerce is heavily weighted to be done locally. There will be one global instance of Anoma (the main network), but outside of this, users of Anoma can create local instances of the network to facilitate local transactions. These local instances are interoperable with each other, making it possible for users to move assets to whichever instance they require.

Ethereum’s scaling approach is through sharding. In this approach, the design and security of each shard is known and rigid. With Anoma’s fractal scaling, each local instance is controlled by its users with the security and validator set configured by these users. This makes Anoma’s fractal scaling approach dynamic, with no restrictions on the number of local instances running and no restrictions on the size of these instances.


Privacy on Anoma is achieved through a multi-asset shielded pool. This privacy technique was pioneered by Zcash and relies on zero-knowledge proofs. In Zcash, users can send either transparent transactions or shielded transactions. In a shielded transaction, the sender, receiver, value, and memo field of a transaction are encrypted and not publicly visible without a dedicated key (a nice feature is that this key can be shared with trusted parties, such as auditors). While these transactions may be shielded, privacy also depends on the number of users transacting at the same time. If only 1 user on the network is using shielded transactions, then it will be obvious who this user is. It is optimal to have as many users and assets as possible in a single shielded pool to maximise privacy.

Anoma has created the concept of a multi-asset shielded pool (MASP). This is a privacy pool that can handle many users and asset types at once. By having a single pool with multiple assets and users, the anonymity set will be large enough to effectively shield users and transactions. The pool can incorporate both native Anoma tokens as well as non-native tokens (such as Bitcoin, Ether, etc), meaning that non-native assets can benefit from the privacy features of Anoma.

Anoma is pioneering a new type of blockchain platform. It is refreshing to see Anoma’s designs and philosophy against the backdrop of a homogenous group of layer 1 smart contract platforms. If Anoma achieves its vision of creating an automated bartering system, then it may end up achieving its slogan of “undefining money”.

At CMCC Global, we have known the Anoma founding team for some years. We are hugely impressed by the experience and technical caliber of the team. The originality of both the philosophy and design of Anoma make it a compelling investment. We are thrilled to be supporting Anoma with an investment through Fund 4. We look forward to working closely with the team and watching them build out the network and a strong community of developers and users for a new and exciting category of blockchain platform.

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