What is Brave (BAT)

Project Background

In traditional markets, the advertising ecosystem is dominated by publishers, advertisers, and users. However, with the iterative development of internet applications, complexities such as diverse cross-platform user behavior data and the opaque sharing of data management platforms have given rise to “ad fraud.” Advertisers, due to a lack of precise data positioning, find their ad campaigns ineffective, leading to significant financial losses.

According to the World Advertisers Association, by 2025, ad fraud will cost advertisers $50 billion, describing this malpractice as “organized crime second only to drug trafficking.” Brave aims to fundamentally reduce ad fraud. By leveraging Web3 application logic and privacy protection technology, Brave has built a more efficient, transparent, and decentralized market system among publishers (content creators), advertisers, and users. This system is designed to reduce issues such as ad fraud, privacy breaches of user data, and malicious advertising.

Brave was established in 2017, co-founded by Brendan Eich and Brian Bondy. Brendan is the creator of JavaScript and a co-founder of Mozilla (the company behind the Firefox browser). The team currently consists of over 200 members, with core member details as follows:

Image Source: https://basicattentiontoken.org/zh/team/

In terms of financing, Brave raised $38 million in 2017 through an ICO. Participating investors included Founders Fund, Foundation Capital, Propel Venture Partners, Pantera Capital, DCG, Danhua Capital, and Huiyin Blockchain Venture. The token sale price was $0.038 per token.

Product Mechanism

At its core, the Brave product aims to shield users from third-party ad tracking. By integrating blockchain technology and using a token distribution method, it hopes to address the structural issues between the attention economy and programmatic advertising.

Specifically: By default, the browser blocks third-party ads. When Brave users engage with the browser and view high-quality content or ads, they are rewarded with BAT tokens for their attention. Similarly, if a website owner successfully captures the user’s attention through ads or quality content, they are also rewarded by the system. The BAT tokens awarded to users and website owners come from advertisers’ expenses.

Image source: https://basicattentiontoken.org/zh/

Brave, using the ANONIZE algorithm, quantifies user browsing behaviors, such as content clicks and website stay durations, using BAT tokens. This method has garnered a more precise measure of user attention. Leveraging zero-knowledge-proof technology, Brave ensures user privacy, allowing users to retain ownership of their data while offering advertisers more valuable attention metrics. Tokens serve as an intermediary, fostering a sustainable economic relationship between merchants, website owners, and users.

Advertisers can purchase Brave advertising resources using USD or BAT, including sponsored images (new tabs), push notifications, and Brave News ads. Brave’s revenue sources include ad resource sales, a 5% fee from user donations to publishers and creators, and fees from token transactions within the Brave wallet.

The USD revenue from Brave ads is used to repurchase BAT tokens from the market. 70% of Brave’s revenue is allocated to the User Growth Pool, set aside for redistributing Brave rewards. The remainder is used for infrastructure maintenance and product development, with specific allocations managed by the centralized Brave team.

On the other hand, as a Web3 application, Brave incorporates an integrated wallet within the browser, eliminating the need for extensions and allowing easy access to Web3. On June 22, 2022, Brave launched its Wallet Partnership Program, aiming to enhance the utility of the wallet and BAT by integrating with numerous DApps, further enriching Brave’s extensive product lineup.

Currently, over 167.4 million BAT (accounting for 11.16% of the total supply) is engaged in on-chain DeFi protocols. As of 2023, the top three DeFi protocols using BAT are Compound, Aave, and Uniswap.

Token Model

The total supply of BAT is 1.5 billion, of which 1 billion BAT were sold in the ICO. In addition to the tokens sold, the team set up a development team pool with 200 million tokens and a User Growth Pool (UGP) of 300 million BAT.

The multi-chain Brave wallet, launched in 2022, currently has a total of 489,340 on-chain wallet holders of BAT on Ethereum, Polygon, BNB Chain, Avalanche, and Solana.

Image Source:https://brave.com/state-of-the-bat-2023/

Image Source:https://basicattentiontoken.org/zh/team/

According to data from the official white paper, 58% of the tokens are used for team development; 12% of the tokens are allocated to marketing to increase brand awareness; 10% of the tokens are budgeted for legal, security, accounting, and other related administrative costs; 13% of the tokens are used for growth hacking, public relations, partnerships, alliance programs, etc.; the remaining 7% of tokens serve as a reserve fund.

Currently, the circulating supply of BAT is 1,489,852,086, which is close to 99.82% of the total supply. Meanwhile, according to data on Nance:

Currently, 170 million BAT tokens are held by whale users, and approximately 140 million tokens are stored in the Compound protocol. Additionally, Binance is the primary trading venue for BAT, with the official Binance address holding liquidity of about 50 million. Regarding the duration of holding, long-term holders still account for the majority: around 50% of the tokens are held in addresses that have held them for over 2 years, and another 30% of tokens are distributed among addresses that have held them for about a year.

Ecosystem Data

Brave announced in its blog that in 2022, Brave conducted 76 reviews of BAT tokens and secured 70% of the user revenue share from advertising campaigns paid in US dollars, totaling 27,169,302 BAT. 1,742,574 creators were verified through Brave and accepted BAT from Brave Rewards users, an increase of over 30% from 2022.

Additionally, according to official website data, the current monthly active users of the Brave browser are around 58.2 million, while daily active users are approximately 20 million.

Image Source: https://basicattentiontoken.org/growth/

Looking at historical active data, from September 2022 to the present, the monthly active users of the Brave browser have remained around 50 million. The overall data performance is stable.

Among the monthly active users, users from the United States are the core audience. Additionally, based on the data released in April by the official site, the top five countries/regions visiting Brave.com are The United States, contributing the most traffic to Brave.com, accounting for 37.52%; India, sending the second-highest traffic to Brave.com, with a share of 5.49%; France ranks third in sending traffic to Brave.com, with a share of 4.55%; Canada is in fourth place, contributing 4.53% of the traffic and; Mexico ranks fifth, accounting for 4.17% of the traffic to Brave.com.

Additionally, looking back at the BAT token rewards for users, this year an average of over 1 million BAT tokens are repurchased from the market each month to reward users, as shown in the chart below:

Future Development

In 2022, Brave launched its multi-chain wallet (Brave Wallet) and formed partnerships with over 80 DApps, opening more opportunities to position Brave in the market. The official goal for 2023 is to advance further the adoption of BAT, which includes adding and enhancing features to the BAT and Web3 reward ecosystem, and increasing the on-chain utility for users, creators, and advertisers.

Key focal points for 2023 include:

Collaboration with NFT Creators

After the upcoming release of the BAT x Adam Ape for Brave series, Sage minting, plans are in place to continuously align leading NFT creators and communities from various blockchains with the BAT and Brave communities, offering more minting opportunities through official programs. Every collaborative NFT mint will feature BAT as a minting option, aiming to have BAT as the primary pricing unit in NFT mints on networks like Solana and Ethereum. Currently, close collaboration with the community is underway to offer utility opportunities for NFT collectors who can benefit from utilities associated with all collaborative collections within the Brave ecosystem.

Advertisement Expansion

Following the announcement in January of the full rollout of Brave Rewards changes, there’s a plan to introduce Brave search ads support for Brave Rewards users, offering them another opportunity to earn BAT. The goal is to openly invite advertisers to the Brave Ads Self-Serve Beta program in the coming weeks, transitioning from the beta to a fully accessible self-serve Brave Ads product open to the public by the end of 2023. With the introduction of the NFT Gallery in the Brave Wallet, there’s a deeper collaboration with Brave Advertisers as technical partners to explore more utility combinations for BAT Collaboration NFT holders, as well as POAP and other NFT utility use cases.

Payment Applications

A “Pay with BAT” option is set to launch in 2023 to facilitate on-chain BAT payments and is initially slated for integration into Brave Premium products and services.

Expansion into the Gaming Arena

Brave has entered into a 12-month partnership with XBorg, endorsing the Brave wallet and BAT and integrating them into esports games and tournaments in 2023. This partnership explores and tests additional BAT utilities, tapping into potential use cases that encompass tournaments, prize pools, gaming quests, NFT minting, and a year-long content generation that promotes and involves Brave and BAT. Moreover, Brave is initiating a four-month sponsorship and promotional partnership with ev.io, currently the most popular game on Solana in terms of daily active users.

Conclusion

Brave uses the BAT token as an intermediary to establish an economic cycle among users, advertisers, and content creators. Since its launch, the Brave browser has demonstrated commendable user growth, establishing a stable user base in the market.

At present, the main issue with the BAT token is its lack of genuine interaction with other blockchain ecosystems. BAT’s primary function is to circulate between users and creators, serving as a channel for content monetization or viewing rewards. The use cases where users utilize BAT tokens for other scenarios are still being determined. However, this is a focal area for Brave in the future. As seen from their announced development priorities this year, BAT is expanding its partnerships with other DApps to enhance token utility. This development might improve and endow the BAT token with real-value applications, making it more appealing for users to hold.