Making Moves: Hack VC’s Movement Investment Thesis

Hack VC

10 Dec 2024 • 7 min read

By Ed Roman, Co-founder and Managing Partner at Hack VC

Today marks an important milestone for one of our portfolio companies, Movement Labs, which today launched its mainnet beta and native token. At Hack VC, we co-led its Series A financing round. This post shares our investment thesis on Movement.

The Problem

Smart contract hacks have been a significant problem since the early days of Web3, and this problem remains largely unsolved. In 2022, there were over $3B in smart contract hacks.

Solving for smart contract hacks is a gating factor for Web3 and DeFi to be successful and scale mainstream. In traditional finance, systems are behind firewalls and codebases are private, so catastrophic incidents are rare. If one executes a Stripe transaction, a wire transfer, or a Venmo payment, one generally doesn't think about the code executing those transactions. This is because one doesn’t need to worry about the code behind those transactions being compromised.

Unfortunately, in the current state of Web3 you do have to worry about this, and that will continue to curtail mainstream adoption until these problems are solved for. Web3 systems exist on open networks, and codebases are open-source and public. This is effectively a treasure map that we’re handing to criminals. The treasure is above ground with the size and contents of the treasure chest readily visible.

This will continue to be the dynamic under the current state of Web3 dApp development. Ethereum dApps are generally written in Solidity, which we see as an unsafe language for developers. It is prone to developer mistakes as a result of the language not being type-safe, memory-safe, nor formally verifiable. This leads to re-entrancy attacks, which are a major contributor to the $3B in smart contract hacks mentioned earlier.

Hear directly from Movement Labs’ co-founder, Rushi Manche, at our AGM as he discusses the issues outlined above and how next-gen virtual machines like Move are paving the way for more scalable, secure, and developer-friendly blockchain solutions.

Background: The Move Language

The Move programming language helps solve these challenges and is a radical improvement for building Web3 dApps compared to the status quo. The language is strongly typed (leading to fewer errors). It’s also formally verifiable, reducing the potential for smart contract hacks and making it easier for developers to find bugs and fix them.

Sui and Aptos pioneered the usage of Move in Web3. They are attempts to disrupt Ethereum, as well as certain 2018-era chains, such as Avalanche, Hashgraph, Polkadot, and more. The Sui and Aptos teams have slightly different versions of virtual machines built using Move.

Movement’s Vision

Movement Labs is creating a network of modular chains based on the Move programming language. The goal is to increase the security, performance, and user experience in Web3. Its first product is a Move-based L2 on Ethereum, allowing dApps in the Ethereum ecosystem to leverage the Move language, using Celestia for data availability. Movement supports both Sui’s variant of Move, Aptos’ variant of Move, and also has a traditional EVM interpreter for backwards compatibility.

This has a few interesting value propositions:

New Move-based dApps can be built from scratch on an Ethereum L2 using Move, rather than Solidity. This is an improvement in comparison to EVM-native dApps, because Solidity isn’t type-safe or formally verifiable and is prone to bugs and attacks. Move shores up those issues by providing a safer environment for Ethereum ecosystem smart contracts.
Existing dApps that live today on Sui or Aptos can cross-deploy to Ethereum. This is huge since it gives those dApps access to higher liquidity/TVL that exists on Ethereum, while still existing on their original chains.
This "grows the Move pie.” Those same Move dApps above can hypothetically be easily ported to Aptos or Sui, giving those dApps access to users on multiple chains, and giving Aptos and Sui access to additional dApps.
This generally grows the usage of Move across the board, which is important since developer adoption of Move is still in its infancy and helps all Move-based chains.

Movement also supports Solidity as well, for backwards compatibility, so that legacy codebases can be embraced.

The Security Benefits of Movement

Movement has the following security advantages:

Movement has a built-in security mechanism - a “bytecode verifier.” This checks transaction data for resource safety, type safety, and memory safety. It uses a borrow checking scheme that only allows for one mutable reference to a value at any given time.
The bytecode interpreter executes the transaction only if all safety measures are met.
You can define a set of permissions for accessing modules and accounts, which allows one to have immutable (i.e., non-changeable) smart contracts outside of intended methods. This is also critical for safety.
The platform has built-in type-safety as well as memory-safety. This assists in preventing re-entrancy attacks, which are common in Solidity.
Verification tools can pinpoint target call state and use it to discern the effects of procedure calls.

Additional Benefits Beyond Security

Movement’s stack provides a number of benefits beyond security too:

Movement has created Fractal, an EVM interpreter. This allows one to transpile (convert) legacy Solidity code into a modern Move VM environment, allowing for backwards compatibility with existing codebases. This is an important innovation (relative to other Move environments such as Aptos or Sui) since developers can access liquidity on the EVM as well as have backwards compatibility with their existing dApp codebases. Since the code runs through a Move VM, it’s still formally verifiable since the code is (eventually) transformed into Move via the transpilation process.
Movement has its own decentralized shared sequencer, which they call M1. M1 is integrated with Movement’s Ethereum L2. This provides reorg protection and uptime guarantees via fast finality sequencing. This opens the door for parallel processing for 10-100x increased throughput. These performance gains make Movement ideally suited for high-performance use cases, such as gaming and low-latency DeFi. The low transaction costs also support fine-grained transactions such as rapid NFT minting.
There is a BTC bridge that’s built in via Snowman for access to additional liquidity.
Cosmos interoperability is included via IBC support.
Movement has a dual-staking model for financial incentives for decentralized sequencing.
There's built-in atomic composability between rollups within the Movement ecosystem, allowing for transactions such as atomic swaps.
Further increasing the developer pie, Movement supports Typescript (a variation of JavaScript, which is the most popular language for Web2 development). This gives an easy onboarding mechanism for Web2 developers to build in Web3.

Traction

At the time of this writing, Movement boasts impressive KPIs for launch:

Movement has over 200 teams building with their stack
There are 5+ Move Stack Networks: Lumio, Up Network, Lync, Nexio, and io.net (the latter is another Hack VC portfolio company)
7+ teams who are building natively on Movement have closed financing rounds
Over $150M+ in TVL commits
1.2M Galxe followers (#20 globally)
1.M active addresses
52+ regional Movement Twitter and Telegram groups
Movement meetups that span 5 continents
30M+ transactions occurred in their second week of testnet
Movement has raised over $30M for long-term financial stability
Graduates from its own accelerator for startups (called the “Move Collective”) have raised over $10M to date

Where Movement Is Headed in the Future

Movement ultimately aims to go much larger with their vision. The goal is to have an execution environment that supports Move on any chain, with any rollup framework, and with any DA layer. This is possible due to Movement having a fully decentralized shared sequencer (M1). These integrations would share a unified settlement layer. Through this vision, developers can have their own dApp chains specific to their use case. Furthermore, chains such as Avalanche, Polkadot, Hashgraph, and more would have access to the superior Move language. Through this, developers of Move-based dApps would have access to an even larger userbase and TVL.

Movement may have unforeseen challenges that could hinder them, including execution, performance, competition, and other unforeseen challenges.

Summary

At Hack VC, we believe that security is critical for Web3 to scale and thrive mainstream. Movement has a comprehensive vision that we feel can reduce, and potentially eliminate, smart contract hacks. While it starts with the Move language, the roadmap also includes plans to incorporate other security innovations into an eventual robust and comprehensive offering.

Movement combines mission critical security benefits with enhanced performance and user experience, which we see as a complete vision for transforming Web3. We’re grateful to have led Movement’s Series A, and we congratulate the team on its successful token launch today. We look forward to the journey together.

Learn more:

X: @movementlabsxyz

Web: https://movementlabs.xyz

Docs: https://docs.movementnetwork.xyz/

Disclosures

The information herein is for general information purposes only and does not, and is not intended to, constitute investment advice and should not be used in the evaluation of any investment decision. Such information should not be relied upon for accounting, legal, tax, business, investment, or other relevant advice. You should consult your own advisers, including your own counsel, for accounting, legal, tax, business, investment, or other relevant advice, including with respect to anything discussed herein.

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