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- AWeb3VC - Funding Round Up #32
🗓️ Week of: Aug 6-12, 2023
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(See "Funding Rounds" section for the complete list of deals)
$99M+ was raised across 24 funding rounds in Web3. Once again, we're faced with another sluggish week for funding. I can't pinpoint the exact reason, but I suspect it's due to the typical summer seasonality. Many investors are only now beginning to re-engage ahead of the next wave of deal flow announcements. Nevertheless, over the past few weeks, Web3 security and liquid staking projects seem to be the niches attracting an increasing amount of venture capital.
Funding news aside, the overall Web3 ecosystem had much to celebrate this week. This includes the announcement of PayPal’s stablecoin PYUSD, as well as the launch of Coinbase’s Layer 2 network, Base, on August 9. While in the early days, both projects certain hold promise in sparking a new wave of development around these platforms and hopefully further adoption across Web3.
🏆 Largest Funding Round
➡️ Bazaars closed $15M in Seed funding led by a syndicate of angel investors including other entrepreneurs from the Middle East and Ripple’s former VP of Product. The deal closed on July 20, but was recently reported on this week.
Bazaars is a decentralized peer-to-peer marketplace for cryptocommerce. The platform allows users to buy, sell, and trade physical and digital assets using cryptocurrencies. Bazaars is also developing a peer-to-peer lending platform and a crypto-backed lending platform.
Why this matters?👉TBH, I can't speak extensively on the merits of the marketplace. It's apparently used to sell high-ticket items like property and vehicles, with payments processed via Coinbase, lending it a degree of credibility. It kind of feels like an attempt at creating a decentralized version of Facebook Marketplace. Nice attempt, although skeptical if the platform can obtain any meaningful volume and user adoption. This PFM skepticism aside, I find it notable to see another crypto company from the MENA region was able to raise an eight-figure funding round, highlighting the growing activity and "buidling" taking place in the region.
😎 Noteworthy Company
➡️ Cantina (aka. Spearbit) Cantina is an open marketplace for Web3 security audits. The platform aggregates both freelance security engineers and service providers, enabling organizations to effortlessly source and book security reviews. This spans from smart contract and code reviews to traditional penetration testing and cloud infrastructure audits. All freelance talent and firms undergo a KYC and evaluation process.
The platform offers two distinct services via the marketplace:
Cantina Managed Service: This aims to assist solo auditors in obtaining deal flow and conducting smart contract audits, with Cantina taking charge and assuming responsibility for team selection.
Cantina Guilds: This offers more tailored services, allowing small-to-medium audit firms that specialize in specific sectors to host their services as a “guild” for clients to select from. Cantina's founding organization, Spearbit DAO, is also featured as a guild option for clients.
The marketplace charges a 20% commission and processes all payments in USDC. To date, over 100 security professionals have been onboarded to the platform. Some of its most notable clients include Coinbase’s Base, OpenSea, Nouns DAO, and Polygon.
The company possesses extensive Web3 domain expertise. Three out of the five founders had previously worked for the Ethereum Foundation. Recently, the company raised $7M in a funding round led by Framework Ventures, with participation from Nascent, 1kx, Volt Capital, Breed VC, and Robot Ventures, resulting in a reported $48M post-money valuation.
Why this matters?👉A burgeoning cottage industry of smart contract audit services has emerged over the past few years. Many top audit firms charge tens to hundreds of thousands of dollars for engagements, with many generating millions in annual revenues, making them in many cases, highly profitable businesses. However, this profitability is partially attributed to the evolving Web3 security landscape and a prevailing lack of price discovery for these security services. Cantina’s marketplace looks to introduce greater price competition and transparency to the Web3 security market. Not only does it benefit clients, but also presents greater dealflow opportunities for new players entering the market. A potential win-win for all parties involved.
👀 Observations, Trends & Themes
➡️ On-Chain Summer
While the marketing team at Coinbase might have coined the term “On-Chain Summer,” things on-chain are definitely heating up. Last week saw the launch of both Coinbase’s Base and PayPal’s stablecoin, PYUSD. Between the crypto rally earlier this year and the potential for a Bitcoin spot ETF, Base and PYUSD stand out as some of the top developments in Web3 so far this year.
Base Launches
Base, the Ethereum layer-2 network built using Optimism’s OP stack, officially launched on August 9. At launch, more than 100 DApps and services began operating on the network. Thus far, over $200M in TVL has been bridged, with the network seeing over 100K daily active users. This already places it close to the top 10 chains by DeFi activity.
Why this matters?👉When Base was first announced, its association with brings the potential for some major scale. Given Coinbase’s fiat on-ramps, Base could easily become the go-to destination for users entering DeFi. Furthermore, Base has already attracted a robust community of projects and developers launching and building on the platform, setting the stage for promising adoption in the coming months and years.
PayPal PYUSD
Diving deeper into crypto, PayPal announced the launch of the PayPal USD (PYUSD) stablecoin. Similar to the models of USDT and USDC, PYUSD is a "fully backed" stablecoin, backed by U.S. dollar deposits, short-term U.S. treasuries, and similar cash equivalents. PayPal will use Paxos as its issuer, with the stablecoin represented as an ERC-20 token on the Ethereum network.
Why this matters?👉Given PayPal’s reach of over 400M users and its established distribution channels with merchants, the prospects for PYUSD adoption are certainly promising. If PayPal can position PYUSD with merchants as a means to reduce merchant fees at the point of sale (much like cash used to do), which can then be passed onto consumers, demand for PYUSD could rise swiftly. Furthermore, PYUSD might also see adoption outside of the U.S., as stablecoins are growing in popularity as a form of synthetic U.S. dollar deposits.
💸 Funding Rounds
Top 15 Rounds
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All Rounds
Moonbox - Seed ($1M) | Developer of an interactive digital asset protocol powered by AI and IP rights holder of renowned Hong Kong actor Stephen Chow's films in the form of NFTs: https://moonbox.co/
Juhnz - Seed ($1M) | Web3 lifestyle brand that elevates Chinese culture: https://twitter.com/JuhnzOfficial
Digital Entertainment Asset - Strategic (Not Disclosed) | Web3 entertainment company that specializes in the development of Play and Earn (P&E) games: https://dea.sg/
WISe.ART - Strategic (Not Disclosed) | NFT marketplace built on the Hedera network: https://platform.wise.art/
UnshETH - Seed ($3.3M) | Decentralized liquid staking protocol enabled by the unshETH token, an ERC-20 token backed a diversified basket of liquid staked ETH: https://unsheth.xyz/
Bazaars - Seed ($15M) | Decentralized peer-to-peer marketplace enabling users to exchange physical goods & assets for cryptocurrency: https://bazaars.io/
fxhash - Seed ($5M) | Open platform to mint, collect, buy, and sell generative art based NFTs: https://www.fxhash.xyz/
Puffer Finance - Seed ($5.5M) | Anti-slashing liquid staking protocol: https://www.puffer.fi/
Coin98 - Private Sale (Not Disclosed) | Open infrastructure financial services providing a gate and ecosystem of DeFi protocols, DApps, and NFTs on multiple blockchains: https://coin98.finance/
SphereX - Seed ($8.2M) | On-chain security solution at runtime for smart contracts: https://www.spherex.xyz/
Cube3.ai - Seed ($8.2M) | Web3 security platform providing real-time transactions and threat protection for smart contracts: https://www.cube3.ai/
Goldlink - Seed ($1.4M) | On-chain leveraged prime broker enabled by an undercollateralized lending protocol: https://www.goldlink.io/
Parcha - Seed ($5M) | Financial crimes compliance and operations software that leverages large language models (LLM’s) to handle fraud detection, know your business, and customer onboarding: https://www.parcha.ai/
Zeeve - Strategic ($1M) | Enterprise-grade, no-code, Blockchain node infrastructure and monitoring platform: https://www.zeeve.io/
Xverse (aka. Secret Key Labs) - Seed ($5M) | Bitcoin wallet for Web3, providing support for Ordinals, NFTs, DeFi and other DApps on the Bitcoin network: https://www.xverse.app/
Cantina (aka. Spearbit) - Seed ($7M) | Marketplace for Web3 security audits: https://cantina.xyz/
Curve - Private Sale ($5M) | Decentralized exchange and automate market maker (AMM) geared to ERC-20 tokens and stablecoins that provides higher liquidity, lower slippage, and lower-fee transactions: https://curve.fi/
Hello Protocol - Strategic ($10M) | Decentralized stablecoin (“Destablecoin”) protocol backed by over-collateralized digital asset lending and borrowing and multi-chain liquidity staked tokens: https://helio.money/
Rocket Pool - Strategic (Not Disclosed) | Decentralized Ethereum proof of stake (PoS) staking protocol and pool that also provides liquidity in the form of a liquid staking token: https://rocketpool.net/
Holdstation - Seed ($2M) | Smart contract based digital assets wallets tailored to on-chain futures trading: https://holdstation.com/
BubbleAI - Seed (Not Disclosed) | AI enabled digital assets trading signal aggregator leveraging off-chain data and intelligence: https://bubbleai.xyz/
Valega Chain Analytics - Seed (Not Disclosed) | Compliance and investigation tools used to analyze and prevent illicit crypto and blockchain related transactions: https://www.valegachain.com/
HypeLab - Seed ($4M) | Web3 digital advertising network that uses on-chain data to personalize and serve ads: https://www.hypelab.com/
Node40 - Seed ($12M) | Digital assets accounting and tax platform enabling transaction activity to be reconciled with verifiable audit trails: https://www.node40.com/
New Funds
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🐕 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.