Pantera Capital: Why did we invest in Worldcoin?

Author: Cosmo Jiang, Cody Poh

Compiled by: TechFlow

We have been looking at how blockchain can fit into a world where AI is rapidly becoming ubiquitous, with Proof-of-human being a prominent area. In a future where AI agents and AI-generated content are becoming increasingly common, differentiating humans from robots will become a pressing need. For many scenarios, we may accept or even prefer interacting with robots. However, in critical areas such as advertising, dating, or government services, authenticating unique real-person identities is particularly important. Using a permissionless blockchain to verify online "humanity" in a global and censorship-resistant way is undoubtedly one of the best options.

World (formerly Worldcoin) is a blockchain protocol that builds a privacy-preserving global identity and financial network through the concept of "Proof of Humanity". "Proof of Humanity" means proving that a person is both human and unique. World performs iris scanning through its biometric device "World Orb", authenticates users as unique real people, and issues a World ID to each user on its blockchain Worldchain. This technology, developed by Tools For Humanity (TFH), is being promoted worldwide. The native token of the World protocol, WLD, is designed as a global Internet currency and is used for protocol governance.

Sam Altman, CEO of OpenAI and co-founder of World, founded World to keep humans unique and central in an internet filled with AI-driven content. If World is widely adopted, it will provide a scalable and reliable global solution for distinguishing real people from AI while protecting user privacy. This capability has far-reaching implications, not only expanding economic opportunities, but also promoting global democracy.

Since investing last year, we have had the pleasure of meeting with Sam Altman, TFH CEO Alex Blania, and the team. World held its latest public event on April 30th, providing investors and industry insiders with an in-depth look at its product roadmap and growth strategy. Based on this, we thought it was a great time to share our investment rationale and look forward to the exciting progress that is coming.

Investment Logic Overview

We believe that World’s “Proof of Humanity” solution will become critical infrastructure in the future where humans and AI coexist. Our investment logic is mainly based on the following reasons:

• Proof of Humanity as a Critical Tool: With the proliferation of autonomous AI agents and AI-generated content, verifying unique human identities will be critical for commercial and government applications. In extreme cases where AI-driven productivity could replace human labor, governments may need to implement universal basic income (UBI) programs, and “Proof of Humanity” will become an indispensable tool.
• Superior Authentication: World’s biometric solution combined with blockchain technology surpasses existing government and private identity verification systems because it transcends jurisdictional boundaries and is censorship-resistant.
• Early signs of growth: Since its inception less than two years ago, the World Protocol has cumulatively authenticated over 12 million unique individuals. Worldchain adoption has also shown strong growth, with approximately 45,000 new wallets added every day.
• Experienced Leadership: World has benefited greatly from the involvement of OpenAI founder Sam Altman. Altman’s global reach and credibility are powerful tools for building trust and fostering strategic collaboration with international government agencies.

The vision of World is not only technological innovation, but also a profound reflection on the future social structure. At the intersection of AI and blockchain, it may become a key bridge connecting humans and technology.

World ID application scenarios and potential

We believe that "human proof" is critical for many use cases, and World ID may have significant potential in large-scale commercial applications. In particular, in the fields of advertising and government services, World ID can bring huge benefits. Given the size of these end markets - advertising is a trillion-dollar market and government services account for 25% of US GDP - even adding a small amount of value through unique human identity solutions represents a huge growth opportunity for World.

In the short term, World has identified gaming, dating and social networking as three core application scenarios that significantly improve the user experience by distinguishing unique humans from robots. The protocol has established partnerships in these areas:

• Gaming: Razer is working with World to launch Razer ID to verify the identity of real players and enhance the fairness of competitive games. Razer ID will debut in the game Tokyo Beast in the second quarter of 2025.
• Dating: World recently announced a partnership with Match Group, a global leader in online dating, to allow users to verify their profiles through World ID. This move is intended to reduce bots and fake accounts and improve user safety and trust.
• Social: World launched World Chat in the World App to help verified people connect and communicate securely. World is currently in cooperation negotiations with several large social media platforms.
• Advertising: Hakuhodo, Japan’s second-largest marketing agency, plans to use World ID to build a fraud-proof advertising network with the goal of eliminating robot-driven ad fraud.

World's Mini App ecosystem plays a key role in unlocking new possibilities and application scenarios for World ID. Currently, there are more than 300 Mini Apps on World App, all of which can leverage World ID and World App wallet to promote creative experiments and proof of concept. Although the potential for future application scenarios has not yet been fully developed, early experiments show good prospects:

• Kalshi: A prediction market Mini App that allows verified humans to bet on real-world events. As more verified users participate, the credibility of the platform increases, creating a deeper and more diverse market and helping the public better understand popular opinions.
• Aqua: This Mini App uses World ID to measure online interactions from verified humans, ensuring content creators are compensated based on real user interactions rather than bot activity.
• Worldle: This is a Wordle competition Mini App where certified humans can place bets and compete with each other.

The way World Chain itself is built provides a unique advantage to verified humans. The gas fees of verified humans are subsidized by the fees collected from non-verified humans (i.e. bots), which ensures that humans benefit from the increased commercial activity of on-chain agents.

Distribution strategy

World is a network, and the value of a network increases with the number of users. Currently, World's network is still in its infancy, with only 12 million verified users, so user acquisition is the top priority at the moment. The free token incentive mechanism is similar to PayPal's early "$10 growth hack" strategy. However, due to the need for in-person identity verification for initial verification, the current bottleneck is actually the physical distribution of the device. To expand World to the next 100 million users, the key is to improve the scalability of the Orb device in terms of manufacturing and distribution across jurisdictions.

To achieve this goal, World is accelerating the production of Orb, aiming to make its devices as popular and accessible as ATMs. The team has developed a self-service Orb that users can operate independently without staff assistance, enabling large-scale global deployment and reducing operating costs. At the same time, World is developing a more portable verification device, Orb Mini, which looks like a smartphone. Orb Mini is expected to be deployed in 2026 and is expected to be a key tool to expand the network to more than 100 million users.

After driving validation through physical distribution and economic incentives, the next challenge is to improve user retention by building real-world application scenarios. Expanding World's Mini App ecosystem is critical to user growth and engagement. As of now, World App has been downloaded more than 55 million times, and this ecosystem is gradually becoming the basis for users' daily interactions and provides scalable leverage for accelerating user acquisition. We have begun to see the emergence of some interesting applications, covering multiple fields from DeFi to games to social media.

We believe this year’s launch in the US is a key growth unlock. World announced its US launch in May, with an initial rollout of six cities (Atlanta, Austin, Los Angeles, Miami, Nashville, and San Francisco). World plans to deploy 7,500 Orb devices in the US alone by the end of 2025. They also anticipate making World devices available in high-density shopping locations across the country through marketing campaigns with retail partners.

World aims to verify 50 million people by the end of this year, with a long-term vision of signing up every unique human being. You can find a scanning location near you here.

Additionally, World recently launched its first commercial in the U.S., titled “Human and You Know It.” You can check out the ad here.

Government Relations

Many still believe that World circumvents privacy laws and government regulations, but the opposite is true. This misconception stems from past regulatory actions. Cautious government regulators have challenged World's expansion and required it to suspend operations in certain regions, such as Hong Kong, Kenya, Spain, and Portugal.

In recent years, regulatory attitudes have changed positively. This shift is attributed to a number of factors, including TFH (The Foundation for Humanity)'s increased education and communication with local governments, as well as the accelerated adoption of artificial intelligence, which has led to the need for all sectors to learn and adapt to the new world paradigm with an open mind.

Recently, World has made significant progress in working with local governments, especially in Southeast Asian markets that are rapidly developing digitalization, such as Thailand, the Philippines, and Indonesia. Before entering these markets, World actively engaged with government officials to ensure that they fully understood the platform's technology and its built-in privacy protections. To meet regulatory requirements for data privacy and storage, World has assembled a top-notch legal and public policy team.

A successful example is World’s collaboration with MyEG, a Malaysian government service provider. MyEG provides offline services such as driving license tests, identity card applications and renewals. Through the collaboration with MyEG, Orb’s verification service was integrated into its existing government infrastructure, which demonstrated the ability of World’s technology to be embedded in government services and set a model for similar collaborations in the future.

Commercialization and potential growth

In an event called "At Last", World began to initially elaborate on its plans for the commercialization of World ID. At the most basic level, the revenue sources include transaction fees on the World Chain. In addition, World ID Service Fees have been introduced, which will be charged to applications using World ID services. The fees are divided into two parts: Credential Fees, which are retained by the credential issuer; Protocol Fees, which belong to World ID. As a foundational investor, we are excited about the value accumulation plan announced by World because it shows that the World protocol has successfully created excess value for its stakeholders.

With reasonable assumptions, a compelling investment case can be constructed. If World can verify 5 billion unique users (about 60% of the world's total population), and each verified user can bring in $5 per year, the protocol will achieve an annualized revenue of $25 billion. This $5 is less than 0.005% of the global per capita GDP, which is reasonable considering the wide application of World technology in huge markets such as advertising.

At a reasonable growth multiple, this $25 billion in annualized revenue, combined with a free cash flow conversion rate of nearly 100%, has the potential to drive a market value of more than $250 billion. These data demonstrate World ID's global commercialization potential and huge future market value.

Conclusion

We are confident in the developments that the World team is making. The protocol uniquely addresses the critical challenge of verifying unique human identities in the rapidly evolving era of artificial intelligence. This opportunity is particularly timely, with shifting government attitudes toward digital identity, World’s recent entry into the U.S. market, and the growing adoption of World ID in different regions and diverse scenarios.

Of course, there is still a long way to go from the current situation to achieving World's long-term vision. Questions such as whether the protocol can achieve scale quickly enough, the effectiveness of its growth incentive mechanism, and the reflexive impact of its volatile cryptocurrency are still worth pondering. In addition, World is not the only institution that realizes the critical foundation of "human identity", and most large technology companies are also developing their own identity solutions. Although a decentralized and censorship-resistant solution is better in theory, it does not mean that it will necessarily win in practice.

As AI becomes more prevalent, people are increasingly aware that World’s mission to build a strong and secure identity verification solution is important and worthwhile. The Wall Street Journal and Time magazine have each featured World in the past few months, highlighting its important role in the context of a future where AI agents are becoming increasingly ubiquitous and indistinguishable, especially in the payment and social networking sectors. Blackrock also reiterated the strategic importance of “human identity verification” in its annual shareholder letter, especially in the context of the growing on-chain economy and asset tokenization.

While it is still early days for World, there is no doubt that this is an exceptional management team led by Sam Altman as Chairman of the Board. If successful, its "Big and Audacious Goals" (BHAGs) offer orders of magnitude growth potential. Looking ahead, we look forward to World's continued progress in geographic expansion, strategic partnerships, and strong growth of the Mini App ecosystem. We are extremely excited and honored to be an investor in this agreement.