Coinbase Co-Founder Backs Blockchain Startup's $3 Million Seed Round

A startup that is developing a protocol based on the ethereum blockchain to allow users to validate information across different datasets has raised $3 million in seed funding.

Called DIRT, the San Francisco-based company said Wednesday that notable investment firms taking part in the round include Digital Currency Group, Pantera Capital, China-based Zhenfund and InBlockchain.

With the new financing finalized, DIRT's founder Yin Wu told CoinDesk in an interview that the protocol - also called DIRT - will be released in the next three to four months, together with a token that will be based on the ethereum standard ERC-20.

Wu said that the goal of the protocol is to serve as a platform where third-party decentralized application developers can create what is called a token curated registry - a similar concept to the way in which Wikipedia uses the community to update and verify its data.

In essence, a TRC is a distributed data list focused on a certain topic that allows users to propose and validate what information should be on the list, using tokens to vote and back up positions.

"If anyone in the network finds misinformation, they can also challenge the dataset and say this is incorrect. In order to initiate a challenge, you need a stake token. The challenge then begins with a vote. Anyone in the network can vote with tokens. ... Whoever wins the vote, wins the tokens; if you lose the vote or voted for the wrong side, then you are penalized."

The company has not yet decided how it will distribute its tokens, however - though it will seek to do so as widely as possible.

Wu did say the token should have a "Strong utility angle," since it is used to "Adjudicate whether information is correct."

The company said upon the protocol's release that it will also launch a decentralized application that is developed internally, but declined to disclose more information for now.

CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.