Notes on Protocol Labs
Over the past couple of weeks I’ve been researching private, for-profit organizations that have successfully and intentionally pioneered advances in basic and applied science.
Bell Labs mastered the art of turning curiosity driven achievements in basic science into profitable commercial products. Xerox PARC successfully created an environment where scientific innovation flourished, but failed to emulate Bell’s success in commercialization.
Today I’m sharing my notes on Protocol Labs, a modern organization whose story is still being written.
Open Source Innovation
Protocol Labs was founded in 2014 by Juan Benet in order to improve the internet and computing. More specifically, Benet, who studied computer science at Stanford, wanted to develop new protocols that would decentralize the web and cloud storage. He received $120,000 from Y Combinator to execute on that vision.1
The first component was IPFS (InterPlanetary File System), launched in 2015. IPFS is a free and open-source software project that allows users and applications to directly share information without needing a central server.2
The second component was Filecoin, launched in 2020. Filecoin allows users to pay others, in peer-to-peer fashion, to store data they find valuable.3
Protocol Labs research was formed in 2018 in order to work on “peer-to-peer transports as an effort to safeguard freedom of speech and assembly in a digital age.” Their work spanned a broad array of categories with researchers bound by a general belief that the internet is humanity’s most important technology. 4 5
Over the span of the lab’s six year history, they published papers and code in areas ranging from abstract category theory to applied decentralized identity before closing down in 2024. 6 7
Directly inspired by the success of Bell Labs, Benet steered the organization towards actively bridging the gap between basic curiosity-driven research and applied science.8 9
While Protocol Lab’s broad vision of maintaining an open and decentralized internet might sound fuzzy and idealistic, their technology has been put to the test. When the Turkish and Spanish governments attempted to censor their citizens by blocking access to Wikipedia, IPFS was effectively used to ensure citizens maintained open access to information.10
Like Xerox PARC, Protocol Labs appeared to have had some success in using a broad shared vision of the future to drive fundamental real world innovation.
The Token-Powered Laboratory
While I admire Protocol Labs’ work on decentralized digital systems, I suspect their innovation around business models offers the most valuable lessons for modern systems scientists. With the desperate need for greater funding towards basic systems research, those passionate about this work would benefit from greater awareness of novel funding mechanisms.
By 2016, the success of IPFS and the vision for Filecoin had attracted traditional funding from prominent investors like Union Square Ventures.11 This set the stage for a Filecoin token sale in 2017 in which Protocol Labs raised over $205 million from over 2,100 investors in 50 different countries across the world. This effort required innovation on multiple fronts, from pioneering a new type of legal instrument (the SAFT) to building a new platform (Coinlist) for companies to do legally compliant token sales.12
The story of Filecoin’s token sale provides a fascinating glimpse into how cryptoeconomic tools can be used to raise money and facilitate new types of investing and business models.
In short, Protocol Labs accomplished:
Writing a whitepaper advancing an ambitious technical vision and developing prototypes to prove competence
Selling cryptotokens in a public fundraising process to raise money for that vision
Building and deploying the Filecoin protocol, allowing the token to trade freely on markets
Maintaining a treasury of tokens (or “market protocol assets”) with market-determined value derived from the protocol’s utility to fund broader organizational efforts.
But what does Filecoin actually do? Filecoin is what Protocol Labs describes as a “market protocol” — a system that mediates economic activity, and settles value exchanges using a cryptographic asset like bitcoin or ether. The Filecoin protocol lets people pay for storage or retrieval with the FIL token and make transactions in peer-to-peer fashion, without handing over control of their data or sacrificing privacy.
This represents a clear and compelling example of how we might develop new business models capable of advancing Internet protocols in more fair and privacy respecting ways. The current dominant business model involves users getting free services from corporations like Google and Facebook in exchange for their personal data, which companies then sell to advertisers — making users the product. Models like Filecoin could help fulfill the original vision for the web: a decentralized network respecting user rights and freedom.
A breakdown of how raised funds were allocated is publicly available.13
Filecoin isn’t just a theoretical toy — it’s being used for meaningful applications across various domains:
The Victor Chang Cardiac Research Institute in Australia is storing 137.439 TB of cardiac research data on the network 14
UC Berkeley’s Orebi Gann experimental physics group is using Filecoin to store neutrino data captured from black holes and stars with their novel detector 15
USC and Stanford have used Filecoin to cryptographically preserve evidence of war crimes, creating tamper-proof records16
The City of New York is piloting Filecoin to create a more reliable, more resilient, more secure, and cost-effective archive of the city’s public records17
Perhaps most impressive is that IPFS is now truly "interplanetary"—Lockheed Martin has integrated IPFS technology into satellite operations, allowing for mission updates to be uploaded to spacecraft in orbit. 18
The Innovation Network
While Protocol Labs started as a research, development, and deployment lab for network protocols, it has evolved into something much more ambitious — an innovation network.19 Today Protocol Labs “connects over 600 organizations developing breakthrough technologies across computing frontiers including web3, AI, AR, VR, BCI, and hardware.”
This transformation reflects Benet's vision, directly inspired by Bell Labs. In talks about Protocol Labs' evolution, Benet distinguishes between traditional companies like Google, Intel, and Apple and what he calls "innovation networks" like Silicon Valley, Stanford University, and Y Combinator. He identifies an "innovation chasm" between early academic work and technology development — a middle ground typically poorly funded where promising innovations often remain trapped in papers or incomplete implementations.
Benet argues that centralized companies struggle to sustain significant R&D across multiple domains. In contrast, innovation networks create resource-sharing structures that aren’t dependent on a single business model. If one venture fails, the network continues thriving. This approach allows teams to move across different efforts without catastrophic consequences, distributes risk, and offers capital efficiency through shared infrastructure.
Today Protocol Labs operates as a fully distributed organization with no physical offices. Its international staff spans over 36 countries, with employees working from locations as diverse as Siberia, New Zealand, Iceland, Nigeria, and Argentina—a truly global collaboration network united by shared purpose rather than physical proximity.
Lessons for Systems Science
Protocol Labs offers several valuable lessons for anyone working to advance systems science:
Open source approaches can drive meaningful innovation when paired with sustainable funding models
Novel economic mechanisms like token sales can provide substantial resources for long-term research initiatives
Distributed, networked organizations can effectively coordinate complex work across geographic and disciplinary boundaries
A shared vision and values can align diverse contributors despite the absence of traditional organizational structures
While Protocol Labs Research officially closed in 2024, the broader innovation network continues to evolve. This transition from centralized lab to distributed network will provide valuable insights about the future of scientific collaboration and technological development for observers.
Unlike Bell Labs' government-sponsored monopoly or Xerox PARC's corporate backing, Protocol Labs pioneered a new model for funding ambitious technical work—one that directly engages a global community of contributors and stakeholders. For systems scientists concerned with fostering innovation across traditional boundaries, this approach deserves serious consideration.
The continued development of systems science will likely require similar creativity in how we organize, fund, and coordinate complex research efforts spanning multiple domains of knowledge. Protocol Labs shows us one potential path forward.
About. (n.d.). Protocol Labs. Retrieved March 21, 2025, from https://protocol.ai/about/
IPFS and the problems it solves | IPFS Docs. (n.d.). Retrieved March 21, 2025, from https://docs.ipfs.tech/concepts/ipfs-solves/
Filecoin FAQs | Filecoin Docs. (2025, January 24). https://docs.filecoin.io/basics/project-and-community/filecoin-faqs
Introducing Protocol Labs Research and Grant Program. (2018, April 10). Protocol Labs. https://protocol.ai/blog/ann-research-rfp/
Research, P. L. (n.d.). About. Protocol Labs Research. Retrieved March 21, 2025, from https://research.protocol.ai/about/
Research, P. L. (n.d.). Publications. Protocol Labs Research. Retrieved March 21, 2025, from https://research.protocol.ai/publications/
protocol/research: Research at Protocol Labs. (n.d.). Retrieved March 21, 2025, from https://github.com/protocol/research
Protocol Labs (Director). (2022, November 11). Protocol Labs – Vision [Video recording]. https://www.youtube.com/watch?v=8lDwBnQ9Wuc
PL: Past, Present & Future. (2023, October 30). Protocol Labs. https://protocol.ai/blog/pl-past-present-future/
Protocol Labs: Advancing Technology for the Benefit of Humanity. (n.d.). Internet Society. Retrieved March 21, 2025, from https://www.internetsociety.org/about-internet-society/organization-members/stories/protocol-labs/
Burnham, B. (2017). Protocol Labs | Union Square Ventures. Retrieved March 21, 2025, from https://www.usv.com/writing/2017/05/protocol-labs/
Filecoin Sale Completed. (2017, September 13). Protocol Labs. https://protocol.ai/blog/filecoin-sale-completed/
Token Allocation. (n.d.). Retrieved March 21, 2025, from https://spec.filecoin.io/systems/filecoin_token/token_allocation/
Institute Partners with DSS to Store Critical Research Data—Victor Chang Cardiac Research Institute. (2023). The Victor Chang Cardiac Research Institute. Retrieved March 21, 2025, from https://www.victorchang.edu.au/news/data-storage
Seal Storage Technology Partners with Orebi Gann Group | Physics. (2022). Retrieved March 21, 2025, from https://physics.berkeley.edu/news-events/news/seal-storage-technology-partners-with-orebi-gann-group
Starling Lab and Hala Systems file Cryptographic Submission of Evidence of War Crimes in Ukraine to the International Criminal Court. (2022.). USC Shoah Foundation. Retrieved March 21, 2025, from https://sfi.usc.edu/news/2022/06/33571-starling-lab-and-hala-systems-file-cryptographic-submission-evidence-war-crimes
Filecoin Foundation and Protocol Labs Embark on Experimental Project to put New York City Open Data on the Filecoin Network. (2023). Retrieved March 21, 2025, from https://fil.org/blog/filecoin-foundation-and-protocol-labs-embark-on-experimental-project-to-put-new-york-city-open-data-on-the-filecoin-network
SmartSat-equipped Satellite Uploads New Mission On-Orbit. (2024.). Lockheed Martin. Retrieved March 21, 2025, from https://www.lockheedmartin.com/en-us/news/features/2024/smartsat-equipped-satellite-uploads-new-mission-on-orbit.html
Home | Protocol Labs Directory. (n.d.). Retrieved March 21, 2025, from https://directory.plnetwork.io/
Fabulous write up. Thank you so much.