Key Takeaways:
Crypto-focused venture capital firm Paradigm is spearheading a $225 million funding round into a new layer-1 blockchain developed by Monad Labs that is heralded as a formidable rival to leading decentralized protocols like Solana and Ethereum.
Panthera Leads $225 Million Funding Round for Highly Scalable Layer-1 Blockchain Monad
Monad Labs aims to build a novel layer-1 smart contract network with enhanced speed and lower costs than Ethereum. Monad is designed to be fully compatible with the Ethereum Virtual Machine (EVM) and is capable of processing up to 10,000 transactions per second (TPS).
Despite being the leading decentralized finance (DeFi) protocol, Ethereum has significant shortcomings, such as high gas fees during peak hours due to network congestion.
According to the project’s founder Keone Hon, Monad Labs seeks to improve the issues with an execution-focused Layer-1. He highlighted that Monad is the culmination of two years of meticulous research and innovation.
In an interview with Fortune magazine, Hon explained that while a lot of the crypto research community is focused on roll-up, data availability, and other forms of scaling prospects for their respective projects, Monad Labs realized the need for a more performant EVM and went all-in on the execution side of things.
He added that despite the need for a high-performing EVM, no one in the industry was working on solving the scalability issues.
The $225 million funding round was participated in by Electric Capital, Castle Island Ventures, Coinbase Ventures, Green Oaks, and Egirl Capital.
Venture Capital Interest In Web3-Focused Projects are at a Record High
The Paradigm-helmed investment round comes at a time when VC interest in crypto firms is at a high.
On April 9th, Panthera also completed a $21 million Series A funding round for Bitcoin-based L2 network Mezo. The project is described as a “Bitcoin Economic Layer” that introduces an innovative yield-earning mechanism based on the duration investors hold their tokens.
On April 3, it was reported that Paradigm is negotiating to raise $850 million for a new crypto-focused fund. The company is looking to source between $750 million and $850 million, setting the stage for what could be the largest fundraising endeavor in the market since May 2022.
The last time this happened was when Silicon Valley-based Web3 VC firm Andreessen Horowitz (a16z) raised a record-breaking $4.5 billion for its crypto investment fund. If Paradigm manages to complete the investor raise, it would be the largest for the company since it raised $2.5 billion at the peak of the last crypto bull run in November 2021.
Some of Paradigm’s most notable Web3-related investments include Coinbase, Optimism, Blast, Fireblocks, Uniswap, friend.tech, and Gitcoin. Recently, it tipped Merkle Manufactory – creators of the decentralized social media network Farcaster – into a unicorn status after its valuation surpassed the $1 billion mark in a funding round.
Paradigm had also invested in the now-defunct cryptocurrency exchange FTX. In November 2022, just days after the company founded by conman Sam Bankman-Fried announced bankruptcy, Paradigm wrote down its $278 million investment to zero.
There has been a pivotal shift in the VC-led investment landscape for crypto projects. The first quarter of 2024 witnessed three consecutive months of increases, with a record $1.16 billion raised in March.
This comes on the back of a two-year downtrend that saw monthly VC fundraising for crypto projects sink to a low of $445 million in October 2023, the lowest such figure since December 2020.
Investments in DeFi and Blockchain Infrastructure Projects Rising While NFT Continues to Slump
Projects in the DeFi and blockchain infrastructure sectors received the most funding this year at $459 million and $1.14 billion respectively. However, VC investments in non-fungible token (NFTs) projects dipped a whopping 92% from the $3.4 billion raised in 2022 to a measly $281.3 million last year.
This drop is in tandem with the falling floor prices of major NFT collections. As per data from NFT Price Floor, CryptoPunks and the Bored Ape Yacht Club – two of the largest NFT collections by market capitalization – saw their floor prices fall around 63% and 90% from the record highs set back in October 2021 and May 2022.
According to an analysis by Crypto Koyro, venture capital investment in the crypto sector surged by 38% in Q1 2024 compared to the fourth quarter of last year, heralding renewed optimism in cryptocurrency and blockchain-based projects.
