Decentralized social network Bluesky announced Wednesday that it has raised $8 million in a seed round this summer to support its mission of building decentralized services and an open ecosystem.

The round was led by Neo, a community-led venture capital firm that has partners such as Code.org co-founder Ali Partovi and former director of product management Suzanne Xie. Joining them in the round angel investors included Joe Beda, co-creator of Kubernetes, Bob Young of Red Hat, Amjad Masad of Replit, Amir Shevat, Heather Meeker, Jeromy Johnson, Automattic Inc. and Protocol Labs Inc.

The company said it raised the funding at the same time it converted from a public benefit LLC to a public benefit C Corp in order to gain more independence.

Launched in 2019 by former Twitter Inc. Chief Executive Jack Dorsey, Bluesky has been developing its own decentralized alternative to Twitter using what it calls the Authenticated Transfer Protocol, or AT Protocol for short. The protocol is also an alternative to the similarly decentralized social network Mastodon, which has become more popular after Elon Musk took over Twitter as CEO.

Bluesky released a beta version of its app in the Apple App Store in March for testing.

Since then, the company has been working to expand its capabilities and it said that the new funding will allow it to expand its team, manage increasing its operation and infrastructure costs and grow the AT Protocol ecosystem. In an effort to support that ecosystem, the company also recently open-sourced the protocol and the client.

In order to support ongoing business costs, the Bluesky team announced that it did not intend to make money from its network with advertising, which turns its users into commodities. Instead, it plans to sell custom internet domain names with the AT protocol so that users could own their own usernames and handles.

“Bluesky’s business model must be fundamentally different — we are a public social network and our code is all open source, so we have no ‘moat’ when it comes to data,” the Bluesky team said in the announcement.  “We set out to build a protocol where users can own their data and always have the freedom to leave, and this approach means that advertising couldn’t be our dominant business model.”

Bluesky said that over 13,000 users have already repurposed domains that they already own as usernames or purchased a domain for use on Bluesky. Some of them have done so for identity and security reasons. For example, U.S. senators on the app have used the “senate.gov” domain to verify their identity without the involvement of Bluesky.

Users will also be able to purchase and use their own domain names via a partnership between Bluesky and domain name registrar Namecheap Inc., the company announced, which will allow domains to be used as usernames. That means that users will be able to use custom domains as usernames such as “bsky.team” or “alice.lol” and purchase them directly through the Bluesky interface. This partnership simplifies the process, but it’s not necessary to go through Namecheap.

The news came shortly after an announcement from Meta Platforms Inc. that it launched Threads, a Twitterlike microblogging and messaging app linked to Instagram. In this new platform, users can post text-based messages similar to Twitter conversations and share photos and videos via a web interface.

Troubles at Twitter have caused users of the popular platform reasons to seek out alternative social networks. At the beginning of July, Twitter limited the number of tweets and began blocking users not signed into the app, causing a surge in signups for Mastodon, and Bluesky was forced to suspend signups because of overwhelming demand.

Image: Bluesky