AWeb3VC - Funding Round Up #18

🗓️ Week of: April 30-May 6, 2023

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💡Web3 Funding Snapshot

(See "Funding Rounds" section for the complete list of deals)

$89M+ was raised across 19 funding rounds in Web3. For the third week in a row, funding in Web3 has dropped. Ironically, this week, we're below the typical Series B round for a crypto company back during the exuberance era of 2021. Honestly, it's been weird watching this develop as I'm aware deals are getting done, but nothing is closing or being announced yet. Perhaps macro factors are also playing a role, with the Fed raising interest rates again, likely providing another reason for VCs to hold capital on the sidelines.

Despite the mediocre funding environment, we saw the launch of Sui's mainnet, introducing another noteworthy Layer 1 blockchain network and ecosystem. DeFi also continues the charge as one of the leading segments in Web3 that continues to attract investors. We'll see how the rest of May pans out across the industry.

🏆 Largest Funding Round

➡️ Fedi announced $17M in Series A financing. The round was led by Ego Death Capital and included participation from investors TBD (the digital asset unit of Block), Kingsway Capital, Trammell Venture Partners, and Timechain. Earlier seed round investors like Ten 31, Hivemind, and Recursive Capital also participated in the round.

Fedi's goal is to create the first federated operating system that enables individuals and communities to collaborate through "federations" across their money and data. The platform is built on the open-source Fedimint protocol, which helps maintain greater privacy and autonomy, and Bitcoin's Lightning Network. Fedi will initially focus on offering a wallet to help users securely store and transact with their bitcoin, while also serving as a gateway to future chat functionality, web browsing, and other decentralized applications.

Why this matters?👉 Fedi is one of the first applications built on the Fedimint protocol, which offers a new form of Bitcoin custody that aims to be more decentralized and censorship-resistant. The protocol has garnered much attention amongst the Bitcoin development community, as it makes operating community banking structures on Bitcoin even more possible - which is very relevant to the 100M+ unbanked populations in Africa, Latin America, the Middle East, and Southeast Asia who have already been using Bitcoin. Even more importantly, Fedimint offers a programmable smart contract layer that requires no further changes to Bitcoin core. Fedimint, along with a number of other protocols, has marked a new wave of DeFi and DApp development on the Bitcoin network. This has also recently set transactions on the largest blockchain network to an all-time high.

😎 Noteworthy Company 

➡️ Tristero is a startup that is building a trustless dark pool for cryptocurrency trading, where large trades can be made without alerting the market and moving prices dramatically. Tristero's dark pool will leverage smart contracts to facilitate and decentralize buy and sell orders, without relying on a central counterparty to execute the trades. The platform will also utilize existing cryptography to add additional privacy around each transaction. In addition, the platform aims to offer a liquidity venue for the top 150 tokens.

Tristero plans to launch its first dark pool later this year, but has already launched a non-dark proof-of-concept where traders can trade stablecoins on different blockchains using the bridge protocol, LayerZero. The company recently raised $4.8 million in a seed round led by General Catalyst and Steel Perlot. Tristero's founder, Sam Trautwein, had previously founded a stablecoin and payments company, Carbon, before it was sold to payment processor Wyre in 2020.

Why this matters?👉In traditional finance (TradFi), more than 40% of U.S. equity trading volume takes place in dark pools. It's no surprise that similar trading venues exist in the crypto markets, which played a role in the 2021 bull market. However, dark pools in crypto have mostly been centralized or conducted via OTC brokers. With the growth of liquidity in DeFi markets and the advancement of zero-knowledge (ZK) proof technology and cross-chain interoperability, there may be greater opportunities for players like Tristero to offer a truly decentralized dark pool for larger block trading. However, it remains to be seen whether greater transparency and automation could have unintended consequences in influencing overall price discovery and liquidity.

👀Observations, Trends & Themes

➡️ Sui Mainnet Goes Live

On May 3rd, the Sui blockchain launched its mainnet, making it the newest addition to the plethora of high-performance Layer 1 blockchains. Developed by Mysten Labs, Sui is a high-performance blockchain network designed for high transaction throughput and capable of supporting the development of decentralized applications. Sui also features Move, a new Rust-based programming language originally designed at Meta (formerly Facebook) as part of the infamous crypto project, Diem (formerly Libra).

After the mainnet launch, Sui's native cryptocurrency, SUI, started trading on major exchanges such as Binance, OKX, Bybit, and Kucoin, with a significant price jump in the first few days of trading.

Sui is also closely tied to the Aptos network. Both projects were founded by former Meta's Diem team members, and both leveraging similar technology stacks, using the Move programming language. Mysten Labs started developing Sui following the shutdown of Diem in early 2022. Aptos followed a similar path and launched their mainnet in October 2022. Its native cryptocurrency, APT, is currently ranked in the top 50 by market capitalization.

Why this matters?👉Sui brings another scalable Layer 1 blockchain, offering developers more options. Combined with the Move programming language, the network has already attracted a number of developers who have launched DApps now that the mainnet is live. Many of these projects have also been fundraising, with a number of Sui-based startups announcing funding rounds in the past two weeks. It also helps that its token has hit the market with good reception, setting the foundation for a potential future price-innovation flywheel. However, given its close association with Aptos, it will be interesting to see if any cannibalization occurs between these networks. Time will tell, but I think both networks and associated ecosystems have a promising future ahead.

💸Funding Rounds

Top 15 Rounds

Note: Array’s funding round has been refuted after investor, Temasek, denied making any investment

Want access to our complete dataset or propose an update? Contact: [email protected]

All Rounds

Coral Finance - Seed ($1.5M) | Decentralized derivatives trading platform on Nautilus Chain: https://coraldex.finance/

FARE Protocol - Private Sale ($6.2M) | Ecosystem is built on probability smart contracts, which are triggered by transparent on-chain events based on probability variables: https://fareprotocol.io/

Array - Refuted ($10M) | Omni-chain protocol for application-oriented decentralized asset management enabling algorithmic currency systems - not the round has since been refuted after investor, Tenmask, denied making any investment: https://arrayfi.io/

Entendre Finance - Seed ($4M) | Fully automated end-to-end accounting and bookkeeping solution for businesses operating in Web3: https://entendre.finance/

Nolus - Seed ($2.5M) | DeFi lease protocol utilizes a semi-permissioned PoS blockchain built using the Cosmos SDK: https://nolus.io/

Certif-ID - Seed ($1.6M) | Professional recruiting network based on digitized credentials anchored using blockchain for instant verification: https://certif-id.com/

Tangem - Seed+ ($8M) | Provider of secure hardware wallet solutions designed for the safekeeping and management of digital assets: https://tangem.com/

Cetus - Seed (Not Disclosed) | DEX and concentrated liquidity protocol built on Sui and Aptos blockchain networks: https://www.cetus.zone/

Swords of Blood - Private Sale ($1.2M) | Web3 hack’n’slash role-playing game: https://swordsofblood.com/

Nomiks - Seed ($1.1M) | Web 3 tech and analytics firm focused on Token Economics auditing and risk management: https://nomiks.io/

Fedi - Series A ($17M) | Federated operating system and ecosystem designed to empower community collaboration built on the Fedimint protocol and the Lightning Network: https://www.fedi.xyz/

Portals - Seed ($2M) | Yield and protocol aggregator for transaction bundling enabling any-to-any swaps: https://portals.fi/

AlienSwap - Private Sale ($12M) | Membership-based NFT marketplace where 100% of revenue is returned to the community: https://alienswap.xyz/

MovEX - Seed (Not Disclosed) | Decentralized Exchange (DEX) and automated market maker (AMM) built for the Sui network: https://www.movex.exchange/

ZKLink - Strategic ($10M) | Trading-focused multi-chain Layer 2 network with unified liquidity secured by zero knowledge (ZK) rollups: https://zk.link/

Vibe - Seed ($4M) | No-code platform lets creatives turn the NFTs into applications and products: https://www.vibe.xyz/

OpenTrade - Seed ($1.5M) | Provides Web3 treasurers and institutional investors access to on-chain structured financial products backed by investment grade financial assets: https://www.open-trade.io/

Tristero - Seed ($4.8M) | Developer of decentralized dark-pool technology: https://www.tristero.xyz/

Asset Layer - Strategic ($2.4M) | Platform to create digital assets, integrate them, and share them across applications: https://www.assetlayer.com/

New Funds

Credibly Neutral - Venture Fund 1 ($5.5M)

Cool Resources

BitcoinTreasuries lists and aggregates Bitcoin and crypto holdings across publicly traded companies. It also includes metrics like value of holdings as a % of market capitalization, which can serve useful for comp analysis, which can be helpful in valuations for private crypto startups.

About

AWeb3VC is a source for venture funding news, emerging startups and trends across Web3. I've been closely following cryptocurrencies and digital assets since 2013 and started working in space since 2018. Now I'm on a mission to build the most extensive venture ecosystem for BUIDLERS in Web3, starting first by tracking those BUIDLERS.