Darren Kleine

The Ethereum scaling story tends to center around layer-2 rollups, but what about the EVM itself? Does the virtual machine suffer from limitations that are inherent to the execution layer of the system, or can developers overcome them?



While rollups take the computation load off the Ethereum mainchain, Blockworks co-founder Michael Ippolito wondered how the computation that occurs directly on Ethereum could be more “performant.”



“Do rollups solve all of our scalability challenges, or is there still work to be done on the execution layer?” he asked during the <a href="https://blockworks.co/event/permissionless-2023">Permissionless II</a> conference in Austin, Texas.



Monad Labs developer relations engineer Kevin Galler replied: “A lot of the current limitations of the <a href="https://blockworks.co/tag/evm">EVM</a> we know today are actually more of a side effect of how the backend computer of this EVM has been constructed up until now,” but are not inherent to the interface or the bytecode.



“You can actually design parallelism and stuff into this,” he said, acknowledging that “there&#8217;s stuff you have to work around to maintain backwards compatibility.”&nbsp;



“There&#8217;s like, 20 years of high performance computing research on how to do these things,” he said, “so, it’s a very solvable problem.”



Offchain Labs senior software engineer Raul Jordan admitted that the current implementation of the EVM is “fairly slow for many reasons,” adding “there are many things we can do to power that up.”



Jordan noted that developers are already accustomed to being able to build <a href="https://blockworks.co/tag/defi">DeFi</a> primitives and other “really cool applications” with the EVM as it stands today, but wondered “how can we give them superpowers to build something greater than they have before?”



“How can we empower them?” he asked. “Should we make the EVM faster, or can we introduce new constructs that allow them to do things that weren&#8217;t possible before?”



<h2 class="wp-block-heading">Can’t cheat physics</h2>



Somani expressed concerns with the possibility of an excess of layer-2 protocols. “The issue with the single threaded EVM…is that it results in a lot of rollups.”



“There&#8217;s people suggesting there should be millions of <a href="https://blockworks.co/tag/rollups">rollups</a> or something,” Somani continued. “That&#8217;s going to lead to a lot of issues with liquidity fragmentation and end-to-user experience.”



“Sufficiently advanced virtual machines” have local fee markets, Somani said, “so that if there&#8217;s a lot of activity on one app, it doesn&#8217;t congest all those.”



“So bringing that [virtual machine] to <a href="https://blockworks.co/tag/ethereum">Ethereum</a> can lead to this highly parallelized [<a href="https://blockworks.co/tag/layer-2-2">layer-2</a>] that doesn&#8217;t really need all these other robots to exist,” he said.



“You can’t cheat physics,” Galler interjected. “Bandwidth is fundamentally what limits how fast a lot of these blockchains can run.”



Reflecting on scaling challenges, Jordan referred to the example of Arbitrum Stylus, noting that the product allows developers to write code in common programming languages like Rust and C++, compiling to a special instruction format called WebAssembly. “You can actually execute this side by side with EVM <a href="https://blockworks.co/news/catalyst-smart-contract-rollups">smart contracts</a>.”



“So we ended up realizing that the EVM is not the ceiling,” he said, “it&#8217;s actually the floor.”&nbsp;



“You can do a lot more than you thought was possible while still maintaining the same guarantees.”



Scalability at the execution layer “has a long way to go,” Jordan added, “and we’re trying to get there.”



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Scaling Ethereum’s virtual machine is a ‘solvable problem,’ says Monad Labs’ Galler

Bessie Liu

Squid, a cross-chain liquidity routing and swap protocol, is expanding its one-click swap application to the Cosmos Ecosystem.



The protocol, built on the Axelar network, already powers one-click cross-chain swaps across 12 different EVM blockchains using Axelar&#8217;s General Message Passing (GMP).&nbsp;



Squid connects different decentralized exchanges between chains, co-founder Fig told Blockworks. On EVM-compatible chains, for example, this means connecting Uniswap and Quickswap.



In its expansion to Cosmos, Squid uses the DEX Osmosis to facilitate token swaps. This means users can swap tokens in one click between Uniswap and Osmosis. 



These assets are routed into the wider <a href="http://blockworks.co/tag/cosmos">Cosmos</a> ecosystem through the Inter-Blockchain Communication Protocol (IBC), which enables independent blockchains to communicate with each other.



Part of the reason why Squid made the investment to build this technology in the first place was driven by the <a href="https://app.blockworksresearch.com/research/dydx-into-the-cosmos">migration of dYdX to Cosmos</a>, Fig explained.



“They’re one of the best EVM teams and decided they needed their own app chain to scale their tech and be able to have their own environment, and they needed one click onboarding into that chain from anywhere,” Fig said.



With one-click swaps now available on Cosmos, Fig hopes that users will now have a more efficient and better experience sending transactions between <a href="https://blockworks.co/tag/evm">EVM</a>-compatible chains and Cosmos app chains. 



Are cross-chain swaps secure?



Fig and his team at Squid had spent a lot of time looking into security models and chose Axelar because it was one of the most generalizable interoperability layers, he said.



“We were comfortable building on <a href="https://blockworks.co/tag/axelar">Axelar</a>, and part of Axelar’s technology is that it has IBC built-in,” Fig said. “So we can now use all of IBC’s qualities in the Cosmos natively.”



Squid has contracts on every single chain they deploy on, Fig noted. This means that if there is a fault at any point of a transfer, users will receive their funds back into their account.



Token prices are checked across different chains, and users are provided with a quote before they execute a swap.



“If there’s been a significant slippage, instead of executing at a bad price, it’ll just stop,” Fig said.



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Squid enables one-click cross-chain swaps on Cosmos

James Cirrone

Nine crypto companies raised a collective $158 million in fresh funding this week, with ZetaChain being a top performer among them.&nbsp;



The blockchain developer put $27 million on the board with participants in the round including Blockchain.com, Jane Street Capital, Human Capital, Vy Capital, GSR.&nbsp;



ZetaChain is an Ethereum Virtual Machine-compatible layer-1 blockchain, and its team wants to get away from bridges and wrapped tokens. Instead, it wants to move towards a simpler, more interoperable future for crypto, according to a <a href="https://www.prnewswire.com/news-releases/zetachain-raises-27m-for-interoperable-layer-1-blockchain-that-connects-all-chains-including-bitcoin-cosmos-and-ethereum-301903593.html">press release</a>.&nbsp;&nbsp;



ZetaChain allows users to have access to their wallet’s assets and data on a single platform irrespective of the blockchain. Even <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> and Dogecoin are interoperable, despite being non-smart contract chains.&nbsp;



Read more: <a href="https://blockworks.co/news/zetachain-funding-dapp">ZetaChain announces $27M raise in latest funding round</a>



Another layer-1 blockchain, Linera, raised $6 million in its latest seed round, bringing the total raised to $12 million. Borderless Capital led the round with <a href="https://blockworks.co/tag/a16z">a16z</a>, Laser Digital Ventures, Matrixport, Flow Traders, and GSR Markets participating.&nbsp;



Linera was created in 2021 by former Meta engineer <a href="https://www.linkedin.com/in/mathieu-baudet-a526b09/">Mathieu Baudet</a>. Baudet is trying to increase scalability through “microchains.”



“The Linera system scales by adding chains, not by increasing the size or the production rate of blocks,” according to a <a href="https://chainwire.org/2023/08/16/linera-blockchain-raises-additional-6m-for-innovative-microchain-design-evolving-from-metas-novi-research/">press release</a>.&nbsp;



The microchain model “grants each individual user their own lightweight chains, which integrate into browser extensions or mobile devices for streamlined Web3 app interactions within their wallets.”



With the new funding, Linera has quite a few plans. The project expects to expand its team, launch a devnet and a testnet, and make their mark in the APAC region.&nbsp;



<h2 class="wp-block-heading">BitGo pulls nine figures</h2>



<a href="https://blockworks.co/tag/bitgo">BitGo</a> made a $100 million splash this week. The crypto custody firm is now valued at $1.75 billion after its series C round.



That valuation is significantly higher than the $1.2 billion Galaxy Digital almost shelled out to acquire BitGo before <a href="https://blockworks.co/news/galaxy-digital-ends-agreement-to-buy-bitgo">backing out of the deal in August 2022</a>.&nbsp;&nbsp;



Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-08-16/bitgo-bucks-crypto-downturn-to-raise-funding-at-1-75-billion-valuation">broke</a> the news first on Wednesday morning. While BitGo CEO Mike Belshe chose not to disclose the identities of the investors in this recent round, he did mention that the supporters were from both the US and Asia, with some having no ties to the crypto sector at all.



Bloomberg reported that BitGo’s previous investors included Goldman Sachs, DRW Holdings and Galaxy Digital Ventures.



<h2 class="wp-block-heading">Other notable fundraises</h2>



<ul>
<li>Metaverse creator ZTX <a href="https://finance.yahoo.com/news/ztx-attracts-13m-funding-propel-170000855.html">closed</a> a $13 million seed round led by Jump Crypto with participants Collab+Currency, Parataxis and others</li>



<li>Dinari <a href="https://www.dinari.com/post/7-5m-in-seed-investments-and-ex-us-launch-of-dshare-platform">secured</a> $7.5 million to build a decentralized trading platform for tokenized securities. The product will not be available in the US.</li>



<li>Electric Capital led a $3.3M seed round for Ellipsis Labs with contributions from Robot Ventures, Anagram and notable angel investors including Solana Labs CEO Anatoly Yakovenko, Polygon&#8217;s chief Marc Boiron and Keone Hon, CEO of Monad Labs.</li>



<li>Shuttle Labs <a href="https://twitter.com/Lore_Explore/status/1691879110698488093">raised</a> $2.3 million to build a blockchain explorer called Lore. Shuttle seeks to dethrone Etherscan as the most popular cataloguer of blockchain transactions.</li>



<li>JKLabs locked down $2 million in pre-seed funding to change how governance works in crypto.</li>
</ul>



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Crypto Funding: $158M week for layer-1 blockchains and a metaverse creator

Katherine Ross

ZetaChain announced Wednesday that it had raised $27 million as part of a recent funding round.&nbsp;



According to a blog post, Blockchain.com, Jane Street Capital, Human Capital, Vy Capital, GSR, amongst others participated in the round.&nbsp;



With the funding, ZetaChain will continue to build an Ethereum Virtual Machine-compatible layer-1 blockchain.&nbsp;



To put it simply, <a href="https://ethereum.org/en/developers/docs/evm/">EVM</a> is the runtime environment for executing smart contracts on the <a href="https://blockworks.co/tag/ethereum">Ethereum</a> blockchain.



“Since the beginning, along with our 150 contributors from all over the world, we have focused on providing the best possible experience for developers to build genre-defining services that go beyond Web3 and we will continue doing so,” a ZetaChain contributor told Blockworks.



It allows users to access assets and data from a wallet on one platform regardless of the blockchain, expanding this to even include chains such as the Bitcoin network and <a href="https://blockworks.co/tag/dogecoin">Dogecoin</a>, despite the fact that both are non-smart contract chains.



“ZetaChain’s Ethereum Virtual Machine compatible omnichain smart contract layer empowers developers to seamlessly implement Bitcoin smart contracts. This unlocks a whole world of users who were previously solely in Bitcoin, enabling them to utilize their Bitcoin within the broader DeFi ecosystem,” ZetaChain said in a blog post <a href="https://blog.zetachain.com/zetachain-raises-27m-for-interoperable-layer-1-blockchain-that-connects-all-chains-including-7584dc0c673">announcing</a> the raise.



According to the post, 1.7 million users have used the testnet, totaling over 13 million transactions.



“Our ecosystem counts more than 47,000 dapp contracts, with a diverse range of dapps including cross-chain <a href="http://blockworks.co/tag/defi">DeFi</a>, <a href="https://blockworks.co/tag/nfts">NFTs</a>, universal Web3 social, <a href="https://blockworks.co/tag/identity">identity</a> and <a href="https://blockworks.co/tag/gaming">gaming</a> protocols,” ZetaChain said.



Essentially, the blockchain allows end users to create apps and services “with reduced steps, slippage, fees, susceptibility to race conditions, and overall faster, more accessible and better user experience.”



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ZetaChain announces $27M raise in latest funding round

Arbitrum is where the action is, according to Vertex co-founder, Alwin Peng.



The decentralized trading platform has settled into its new home on the Ethereum-based layer-2 network, bidding farewell to the Cosmos appchain environment earlier this year.



Peng pulls no punches when asked about the decision to relocate. “From the perspective of a team trying to build a product that actually has users, “ he says, “Cosmos didn&#8217;t seem like it was going to make it.”



He points out that “all the top blockchains” run on the Ethereum Virtual Machine (<a href="https://blockworks.co/tag/ethereum-virtual-machine">EVM</a>) with the majority of total value locked (TVL) residing in the Ethereum ecosystem. Building on <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> has a “really good chance of being able to build on something and having that work matter,” according to Peng.



Speaking to Blockworks on the 0xResearch podcast (<a href="https://open.spotify.com/episode/09tVo8N7sjNo7rAejcSdRv">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/vertex-built-for-cross-margin-low-latency-trading-darius/id1651683074?i=1000624664334">Apple</a>), Peng explains that when the Vertex protocol transitioned to Ethereum, Arbitrum “happened to be the most performant EVM chain at that time that also had TVL.”



The Vertex decentralized exchange is “capital efficient” as well as fast and easy to use, he&nbsp; says. Users can trade on Vertex “as if you would trade on a centralized exchange,” according to Peng.



Vertex, he says, is “something that looks like a centralized exchange, feels like a centralized exchange, but just so happens to be decentralized.”



Peng emphasizes that while users maintain custody of their assets, the exchange does centralize certain aspects of its offering to ensure rapid trading performance. “We can process all trades and order placements optimistically on our own server and that way, you&#8217;re not waiting for a light to travel from different nodes to each other and all of them to reach consensus.”



“Centralized servers are fast — and we like that,” he says.



<h2 class="wp-block-heading">Cross-chain messaging for multi-chain trading</h2>



Vertex co-founder Darius Tabatabai says that the team would like to be able to provide assets across multiple chains at some point in the future. “Logically,” he says, “you want all your liquidity and trading to be happening in one place.”&nbsp;



“You want all your capital on each account to be accounted for in one place as well to keep the capital-efficiency.”



For this reason, Tabatabai rules out a <a href="https://blockworks.co/tag/uniswap">Uniswap</a>-style model “where you just fork the code and put a different version of the code on 20 different chains.” Instead, he anticipates using a cross-chain messaging service. <a href="https://blockworks.co/tag/wormhole">Wormhole</a> interoperability technology could bring in assets, take deposits on different chains, and bring them to Arbitrum, where user accounts would interact with the Arbitrum instance of the protocol, he explains.



“Any time they want to withdraw,” he says, “they withdraw to their home chain.”



“It&#8217;s quite a big piece of work,” Tabatabai admits, “but [Peng] is probably the guy to do it, given that he worked on Wormhole previously and has exposure to this from previous roles.”



“We haven&#8217;t got the exact plan mapped out, but we&#8217;re pretty confident we can do something decent in that space.” 



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG8645394583" width="100%"></iframe>







Peng explains how performance would be maintained in a cross-chain environment. “Most of the things that people sign don&#8217;t end up on-chain,” he explains. “It just goes to our matching engine directly.”



Peng uses an example of a user moving from the <a href="https://blockworks.co/tag/optimism">Optimism</a> chain to trade on Vertex, illustrating the “ideal user experience.”&nbsp; The user would send the transaction on Optimism to make a deposit and on the backend, it would be bridged to Arbitrum. “They are not exposed to the bridge in UX, at all.”



It might take around two minutes, according to Peng, for the assets to switch over to <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a>, “and then after that, they can just trade normally, <a href="https://blockworks.co/news/simplify-crypto-user-experience">as if it was a centralized exchange</a>.”



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Vertex protocol founders consider cross-chain trading solutions

Linea, a zero-knowledge Ethereum Virtual Machine (zkEVM) rollup solution, has finalized its mainnet launch with the deployment of an ERC-20 token bridge.&nbsp;



The deployment of this ERC-20 token bridge enables third-party bridges to integrate with the network, meaning that it will be open to a new wave of decentralized finance (DeFi) apps.&nbsp;



Over the next two weeks, users of MetaMask’s Buy crypto aggregator won’t be required to pay network fees to on-ramp USDC.e. USDC.e is a wrapped version of <a href="https://blockworks.co/tag/circle">Circle’s</a> dollar-backed stablecoin that has been bridged from Ethereum mainnet to rollups like Linea and Arbitrum.&nbsp;



<h2 class="wp-block-heading">Ethereum’s galaxy of rollups</h2>



Linea is one of the many rollups <a href="https://blockworks.co/news/another-zk-rollup-on-ethereum">now deployed on Ethereum</a>.&nbsp;



Since its launch in July, the network claims to have seen more than <a href="https://linea.build/apps">150 dApps</a> deploy on the network, with over 100,000 weekly active users returning to the network.&nbsp;



According to information published by <a href="https://l2beat.com/scaling/projects/linea">L2 Beat,</a> the network has processed roughly $2.7 million in the past 30 days. At the time of writing, it has a total value locked (TVL) of $31 million, or roughly 0.3% of the total market share among all Ethereum layer-2s today.



The layer-2 network is similar to Ethereum’s design but supports faster transaction speeds and lower costs. Declan Fox, Linea’s product lead, told Blockworks that because Linea is a “<a href="https://vitalik.ca/general/2022/08/04/zkevm.html">type 2</a>” zkEVM, it’s compatible all existing applications on <a href="https://blockworks.co/tag/ethereum">Ethereum</a>.



“If you’re a Solidity developer, building on Linea is exactly like building on Ethereum,” Fox said.



<h2 class="wp-block-heading">What’s next for Linea</h2>



The Linea team is working on a unique prover technology, called Vortex, that follows a unique two-step system using an inner proof and an outer proof, Fox explains.



“The inner proof uses lattice-based cryptography to be generated extremely fast. Then we use self-recursion to compress that proof over and over again, iteratively, until it’s small enough, and then we wrap it in an outer proof and settle that on Ethereum,” Fox said. “What that means is that we can produce proofs very fast, and they’re very cheap.”



Linea is also looking at ways to leverage <a href="https://github.com/hyperledger/besu">besu</a> as its execution client as it looks to decentralize its network nodes.



“Besu is the execution client on Ethereum which has been around for many years, it’s very battled tested, and we [want to] use the same software without any modifications for Linea,” Fox said. “It’s not there yet, but it’s going to be integrated very soon because it allows us to have a lot of reliability.”



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Linea completes final stage of mainnet launch

Web3’s social media landscape is pretty chaotic, Chase Chapman says.



“I have struggled to adopt almost all <a href="https://blockworks.co/tag/web3">Web3</a> social platforms because I don&#8217;t need five versions of Twitter.”



It’s especially a barrier for consumers who feel at home in well-established, massive Web2 communities like Twitter or Instagram.



Chapman, the host of the On the Other Side podcast (<a href="https://open.spotify.com/episode/2UG7WCxmd752XWoSMohFm9?si=q5H0Ihu4S_mqwE5_vqFFRw">Spotify</a> / <a href="https://podcasts.apple.com/us/podcast/74-monetizing-web3-social-w-nir-kabessa/id1570685120?i=1000615998401">Apple</a>), spoke with Nir Kabessa, the co-founder of Web3 social network aggregator Yup, about the problem — and interestingly, the advantages — of fragmentation in the nascent space.



“It&#8217;s exciting and unfortunate simultaneously,” he says. The enormous amount of experimentation taking place in Web3 is a huge positive, he says, but the fact that social media is highly dependent on the network effect tends to limit the user experience.



With the growing variety of decentralized social protocols, it can be difficult to settle comfortably into the Web3 neighborhood. “Not having all your friends on the same platform or having only some of them on those platforms” is a source of friction, he says.



The path to success, Kabessa says, is to recognize that the <a href="https://blockworks.co/tag/evm">EVM</a> — the Ethereum virtual machine — is the underlying social network, rather than any of the competing individual protocols operating on it. 



“Twitter is our core competitor, rather than each other.”



<h2 class="wp-block-heading">The EVM as the social network</h2>



Instead of expecting a singular decentralized social network to take on the Twitters and Instagrams of the Web2 world, Kabessa sees the EVM as a whole competing against centralized platforms.&nbsp;



“There&#8217;s an enormous advantage in adopting each other&#8217;s standards” to make this possible, he says, citing <a href="https://www.farcaster.xyz/">Farcaster</a> and <a href="https://blockworks.co/tag/lens-protocol">Lens Protocol</a> as examples of platforms that are adopting an EVM identity with a common social graph.



“You&#8217;re signing in with Ether addresses to those platforms,” he says. In Lens Protocol’s case, Kabessa explains, minting, posting and other social activities take place on-chain. “I see every additional experiment like this is growing the EVM pie.”



Yup’s approach as a Web3 social aggregator is to gather in the variety of protocols to a singular interface, where the experience “feels much more uniform,” he says. “It&#8217;s not fragmented. They&#8217;re not missing any content from their friends that are hopping on these individual platforms.”



But even more importantly, he adds, users are not starting from scratch with their social graph of friends, followers and interests. “We already know a lot about them based on their on-chain activity and their behavior on these other platforms. So you really get this compounding value of bringing it all together.”



Kabessa explains that Yup provides a set of feeds from protocols like Lens, Farcaster, Mirror, and even from <a href="https://blockworks.co/tag/nfts">NFTs</a> and the decentralized social media platform, Bluesky.



“You&#8217;re able to essentially post once and it&#8217;ll post to all those platforms,” he says, allowing for comments on posts and engagement with friends across protocols. “Not only is the content of your friends all in one place, but you&#8217;re actually able to engage with it.”



Whereas the walled gardens of Web2 social media would never allow for such an integrated experience between disparate platforms, Web3 has no such limitations, according to Kabessa.



“And that&#8217;s a massive advantage.”



<h2 class="wp-block-heading">Time for a social media renaissance?</h2>



With protocols like Lens and Bluesky open-sourcing their apps, Kabessa says they’re trying to make it “as easy as possible for new developers to start building clients on top of it.”



“That&#8217;s going to lead to a renaissance of very feature-specific clients that people are very eager to use,” he says.



One example of this shift in thinking is a retro-web project called “Old Instagram,” that “gave you version one of Instagram,” Kabessa says.



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG8457035718" width="100%"></iframe>







“It was doing really well on the app store until Facebook shut it down.”



“In this new world,” Kabessa says, “we&#8217;re gonna see a lot of examples of those things that I think will be really exciting. Like, give me the vintage version of Lens, or give me Farcaster with only the first thousand users, or give me a version of Bluesky that&#8217;s just videos.”



The ability to build at scale, he says, reliably knowing that the customized experiences won&#8217;t be restricted in some fashion “will incite people to build a lot of really exciting stuff.”



“And we&#8217;re already starting to see it a little bit.”



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Web3 Social Will Lead to a ‘Renaissance of Feature-specific’ Apps

Macauley Peterson

In the culinary world, a sommelier is a trained and knowledgeable professional, adept in food and wine pairing. In the <a href="https://www.blockworksresearch.com/glossary#inter-blockchain-communication-protocol-ibc" target="_blank" rel="noreferrer noopener">interchain</a> landscape, asset management protocol <a href="https://blockworks.co/tag/sommelier" target="_blank" rel="noreferrer noopener">Sommelier</a> mixes and matches DeFi yield opportunities selected by independent strategists.



The Cosmos-based chain launched its first “intelligent DeFi vaults” on Ethereum mainnet in January, and has since grown its total value locked (TVL) from about $1.4 million to $16.7 million.&nbsp;



Now, thanks to Axelar’s implementation of general message passing (GMP), Sommelier is expanding to additional EVM-compatible chains, starting with layer-2 rollup, Arbitrum One.



Sommelier took two years to build, co-founder Zaki Manian told Blockworks in an interview. But with the advent of <a href="https://blockworks.co/tag/axelar" target="_blank" rel="noreferrer noopener">Axelar</a>, if they were starting from scratch today, it could be done in 60 days, Manian said.



“The combination of the two is immensely powerful,” Manian said. “What Axelar has done is establish a transport system.” It brings the same level of composability as found natively in the Cosmos tech stack to other EVM-based <a href="https://blockworks.co/tag/layer-1" target="_blank" rel="noreferrer noopener">layer-1</a> chains and <a href="https://blockworks.co/tag/rollups" target="_blank" rel="noreferrer noopener">rollups</a>.



Axelar’s GMP for Cosmos recently went live on mainnet, and this will be its first production use once Sommelier&#8217;s Arbitrum vault launches.



“I think the [layer-1] war is going to start coming to an end soon,” said Manian. When decentralized application layers all fit together, “we’re gonna build amazing user experiences that are really able to onboard at a mass scale,” he said.



For instance, the protocol&#8217;s two main vault strategies — Real Yield USD and Real Yield ETH, which account for 97% of its TVL — couldn’t exist without the mechanisms of the Cosmos SDK. Non-custodial depositors on Ethereum mainnet are able to deploy capital into vaults managed by Sommelier’s strategists, approved by holders of its native token SOMM on its Cosmos chain.



But Ethereum mainnet — due to gas costs and performance constraints — lacks financial primitives, such as derivatives, that are enabled by other chains, including Arbitrum. The Axelar tie-up gives strategies access to Arbitrum dapps, while offloading the cross-chain infrastructure requirements to Axelar’s validators.



“Everything you can build with the Cosmos SDK is now going to be a lot more interoperable with Ethereum and other layer-1s that have EVM-support,” Axelar’s co-founder and engineering lead Sergey Gorbunov told Blockworks.



Previously, Sommelier would have had to run nodes, not only on Ethereum, but on any additional chains where it wants to offer its vaults. But now Axelar becomes a single point of contact for its future expansion.



“The Axelar network has been designed to support that type of activity on the economic side, on the incentive side,” Gorbunov said.



<h2 class="wp-block-heading">What are the risks?</h2>



Sommelier vaults on Arbitrum naturally will introduce some new trust assumptions and commensurate risks.



As before, users of its DeFi strategies have to trust SOMM validators to behave correctly, but now must trust the design of Axelar’s GMP and its validators as well. However, Manian said, “we have designed our smart contracts on Sommelier to make it so it would be difficult for validators to steal funds, even if Sommelier or Axelar is compromised.



There are also inherent risks of transacting on EVM alternatives, such as Arbitrum, including the need to trust its centralized sequencer. These scaling solutions are still comparatively new, and there could be flaws or bugs yet to be revealed, Manian said.



“There is a reason why 95% of the Defi TVL is on Ethereum, but there’s so many exciting applications being built on L-2s like derivatives that are very exciting for strategies that it’s impossible for us to ignore the possibilities,” he said.



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DeFi Strategies Get a Multichain Boost From Sommelier and Axelar

Web3 development platform Alchemy released a report Tuesday that found that decentralized exchanges (DEXs) saw a boost after Silicon Valley Bank crumbled on March 10.



Daily transaction volumes on DEXs nearly reached 25 billion on March 11, only to come back down to normal levels by around April, according to the <a href="https://alchemy.com/blog/web3-developer-report-q1-2023">report</a>. Uniswap, the largest DEX on Ethereum, hit a record volume of $11.8 billion. Uniswap liquidity providers also earned $77 million in fees in March, up from approximately $41 million in January and about $72 million in February, Alchemy told Blockworks.



While overall DEX trading volumes decreased 38% yearly, it rebounded 43% in the first quarter of 2023.



Jason Shah, Alchemy’s head of growth, told Blockworks what he thought was behind the brief Silicon Valley Bank-related spike in DEX activity.



“The general sense here is that with…moving funds into decentralized finance, you may very well have primarily needed [DEXs] once or twice or three times when the crisis is occurring,” Shah said. “But a user may not need to constantly be re-trading those tokens over time if they&#8217;ve already moved them into more of a self custodial capacity.”



Trading volume for NFTs also bounced back, up 126% year over year after a cold 2022, according to the report. This was helped in part by surging token prices for bitcoin, ether and solana throughout this year.&nbsp;



Gökçe Güven, co-founder and CEO of Web3 brand loyalty firm Kalder, told Blockworks that the practicality of NFTs is starting to become more known, which she said is partly driving <a href="https://blockworks.co/news/75-percent-crypto-holders-own-nfts">the recent increase in adoption</a>.



“There’s an incredibly wide variety of use cases for NFTs on the market right now, from collectibles to event tickets and loyalty programs, so it isn’t surprising that such a large portion of the crypto community has entered the space,” Güven said.&nbsp;



She continued, “While there is certainly a sentiment among some that NFTs lack utility and are primarily used for Twitter profile pictures, this is far from the truth.”



Additionally, layer-2 scaling solutions may be winning the most, the report found. Ethereum virtual machine smart contracts deployed on Ethereum, Arbitrum, Optimism and Polygon saw a 160% yearly increase.&nbsp;



Layer-2 bridge transactions also skyrocketed 518% year on year, despite three major crypto bridge hacks in 2022 that <a href="https://blockworks.co/news/after-latest-crypto-bridge-hack-industry-participants-call-for-tightened-security">totaled over $1.1 billion</a>.



The report also indicated that Web3 developer activity has been on the rise throughout the last year. Ethereum weekly SDK installs, including Ethers.js, Web3.js and Hardhat climbed 47% year on year to a total of 1.9 million.&nbsp;



Wallet SDK installs, on the other hand, snagged an all time high of nearly 439,000, surging 451% from last year.&nbsp;



“We’re continuing to see new milestones for Web3 builders. That goes counter to most of the narrative and most of what you might expect with the way that things have unfolded in the last year,” Shah said.&nbsp;



“The fact that builder momentum is still very strong and reached some new all time highs…that to us was the most salient and most important finding from the report,” he added.



Updated April 19, 2023 at 3:06 pm ET: Jason Shah is Alchemy’s head of growth. A previous version of this article listed his title as head of growth and product management.



The <a href="https://alchemy.com/blog/web3-developer-report-q1-2023">analysis</a> misreported DEX daily transaction volumes. Daily transaction volumes on DEXs reached nearly 25 billion on March 11, not 25 million.



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DeFi to Rebound After Crypto Winter, Says Web3 Report

Ethereum has a new scaling solution reaching public mainnet, going live Friday. ZkSync’s EVM-compatible zero-knowledge proof-based rollup is open to the public from 10:00 am ET.



The zkEVM, which <a href="https://blockworks.co/news/matter-labs-rebrands-zkevm">rebranded to zkSync Era</a> last month, has been open to developers-only <a href="https://blockworks.co/news/zksync-sharpens-role-ethereum-200m-funding">since October 2022</a>. But now the proverbial training wheels are coming off and the public will have their first chance to interact with dapps on the platform.



ZkSync Era was previously known as zkSync 2.0, and its 1.0 cousin, launched by developer Matter Labs in December 2020, remains live as zkSync Lite.



A rival zkEVM from Polygon was <a href="https://blockworks.co/news/polygon-zkevm-beta-live-on-ethereum">announced in mid-February</a> and its equivalent offering, which the team calls “Mainnet Beta,” is expected to go live on Monday, March 27.



So, the zkSync folks can lay claim to being “the world’s first zkEVM mainnet,” if only by a weekend.



Matter Labs’ co-founder and CEO Alex Gluchowski told Blockworks the timing is coincidental, and Era’s alpha launch milestone is arriving right on schedule, following the completion of a second public <a href="http://code4rena.com/contests/2023-03-zksync-era-system-contracts-contest">security contest</a> via Code4rena.



“Now we feel completely safe to launch,” Gluchowski said, stressing that the testing of the product has been extensive.



The developers spent $3.8 million on testing and auditing, according to a statement shared with Blockworks, including seven independent security audits — <a href="https://blog.openzeppelin.com/zksync-layer-1-audit/">one</a> with leading auditor OpenZeppelin — and an open-ended bug bounty program <a href="https://immunefi.com/bounty/zksyncera/">with Immunefi</a>.



“You really need this layered approach to security,” Gluchowski said, adding, “Now we feel comfortable, but I mean it’s still Alpha — people have to understand it’s still brand new technology.”



He pointed to the <a href="https://blockworks.co/news/euler-bounty-defi-flash-loan-attack">recent exploit of Euler Finance</a>, whose smart contracts were audited by a reputable firm and were live for the better part of a year, as an example of how audits alone aren’t enough.



The combination of external and internal audits, public security contests and bug bounties and a developer gated release, Gluchowki thinks should be industry standard practice.



The zkSync Era code is also fully <a href="https://github.com/matter-labs/zksync-era">open-source</a>, including the prover, which the team <a href="https://blockworks.co/news/zksync-sharpens-role-ethereum-200m-funding">sees as a competitive differentiator</a>.



“We open-sourced everything the moment we opened the network to developers — as we promised — under a permissive MIT Apache 2 License,” Gluchowski said, explaining the rationale is that they “believe it’s fundamental to crypto have the code open-source and forkable, because that’s tied to the ethos and values of Ethereum.”



Another key feature is native <a href="https://blockworks.co/news/what-are-smart-contract-wallets">account abstraction</a>, which will allow Era users to pay transaction fees in any token or even let dapp developers pay users’ fees.



<h2 class="wp-block-heading">Looking forward: Decentralization</h2>



There remain guardrails in place, such as a delay period for withdrawals, initially set to 24 hours, but which will be reduced gradually, Gluchowski said.



“In the initial phase, we will be still running the sequencer [and] we have the right to upgrade the contracts — it’s not yet fully decentralized,” he said.



The plan is to follow a similar approach to that of zkSync Lite, which has a <a href="https://blog.matter-labs.io/security-council-2-0-2337a555f17a" target="_blank" rel="noreferrer noopener">security council</a> that supervises protocol upgrades.



“We can’t guarantee that there are no problems, we encourage people to experiment slowly,” Gluchowski said.



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ZkSync’s zkEVM ‘Era’ Opens to the Public

<div id="highlights-block_629fb10800a8f" class="highlights">
 <ul>
 <li>No user funds were lost or stolen before the loophole was discovered</li>
 <li>Up to $200 million worth of Aurora users’ funds could have been hacked if this bug wasn’t fixed</li>
 </ul>
 
</div>



It was almost the next market-moving DeFi hack.&nbsp;



Aurora, an Ethereum Virtual machine built on the NEAR Protocol, recently paid a $6 million reward to a so-called white hat hacker for identifying a key bug. 



The hacker, known as pwning.eth, uncovered in April a critical vulnerability in Aurora’s system, which could have jeopardized up to $200 million of funds. Virtual machines power smart contracts, or transactions executed in code on the blockchain without intermediaries, on Ethereum. Aurora paid the bounty through the Immunefi platform. 



It marks one of the largest-ever known bounty payouts in DeFi (decentralized finance) history. Last month, crypto bridge Wormhole — which connects different blockchains — <a href="https://www.theblockcrypto.com/post/148085/wormhole-announces-10-million-bug-bounty-payout" target="_blank" rel="noreferrer noopener">paid</a> $10 million to an ethical security hacker that also discovered a bug through Immunefi’s platform.



<blockquote class="wp-block-quote">“Such a vulnerability should have been discovered at an earlier stage of the [defense] pipeline and we have already started improving our methods to achieve that in the future,” Frank Braun, Aurora’s head of security, said in a statement Tuesday. </blockquote>



Added Braun: “However this event ultimately proves that our security mechanisms work.”



The bug was initially flagged via Immunefi — crucially, before any funds were stolen. <a href="https://immunefi.com/bounty/aurora/" target="_blank" rel="noreferrer noopener">Aurora&#8217;s bounty program</a> with Immunefi was launched in April 2022, with rewards ranging from $1,000 to $6 million, depending on severity. 



Jonah Michaels, a spokesperson for Immunefi, told Blockworks that at “a time of distrust in the markets, it’s important more than ever for Web3 projects to show that they take security seriously.”



On Immunefi’s platform, security researchers review code and disclose vulnerabilities. Through its programs with DeFi projects, Immunefi said it paid over $40 million in bounties to friendly hackers — claiming to have prevented over $20 billion in potential damages.



Aurora’s goal is to provide application developers the means to operate on Ethereum-compatible platforms under the governance of the decentralized Aurora DAO. Aurora’s scaling solution is currently responsible for $373 million of NEAR’s $786 million in total value locked, <a href="https://defillama.com/chain/Aurora?currency=USD" target="_blank" rel="noreferrer noopener">according to data provider DefiLlama</a>.



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$6M Bounty Paid to White Hat Hacker Likely Averts Sizable DeFi Hack

Michael Bodley

<div id="highlights-block_a7a4bb5f1e5f523a41031b947c7b872c" class="highlights">
 <ul>
 <li>The company raised about $3 million at a valuation of about $30 million from a number of venture firms</li>
 <li>The startup has also partnered with a number of well-known gaming guilds, which it plans to tap in a bid to grow its market share</li>
 </ul>
 
</div>



Blockchain-based gaming platform <a href="https://docs.openblox.io/" target="_blank" rel="noreferrer noopener">OpenBlox</a> has raised its seed round as the company looks to ride a wave of interest in play-to-earn gaming in preparation of its first game launch later this year.



OpenBlox raised about $3 million at a valuation of about $30 million and plans to earmark the funds for product and business development, game design and additional staffers. The round was led by venture capital firm Shima Capital, a recently launched San Francisco firm helmed by veteran venture capitalist Yida Gao. Shima, after this story was published, reduced their contribution by an unspecified amount. 



Venture firms including 3Commas Capital, 100&#215;100 Venture Capital, Digital Strategies and MC Ventures were also set to participate in the seed round.



MC Ventures withdrew their commitment after publication, as did Digital Strategies. Representatives for the firms did not respond to a request for comment. 



OpenBlox, which employs ethereum virtual machine (EVM) technology in an effort to create a bridge between blockchains, also has an NFT marketplace in the works — and in the meantime has been partnering with a number of prominent gaming guilds.



The team plans to roll out three games — players can deploy blockchain applications, including NFT (non-fungible tokens), across the trio of metaverses. The gaming platform intends to create a Web3-powered community, as opposed to minting digital collectibles on a one-off basis — an approach that may deliver immediate profits, but one that rarely drives sustained user engagement.



It&#8217;s planning its first experience, dubbed RunBlox, to be released publicly in May on the Avalanche blockchain — along with an in-game token, $RUX. To play the game, users are required to hold a RunBlox shoes NFT, which will be partially distributed via an airdrop. 



Its digital universe is based on a collection of 7,998 genesis blox NFTs that can breed via in-game mechanics, similar to blockbuster play-to-earn giant Axie Infinity.



The fundraise comes as a growing number of top-tier traditional game-makers — including Ubisoft — are looking to employ blockchain elements.



Those blue-chip, so-called AAA developers have the leg up on game design and gameplay, industry participants say, but <a href="https://cms.blockworks.co/ubisoft-nft-efforts-are-off-to-a-rocky-start/" target="_blank" rel="noreferrer noopener">have faced a tough sell</a> from gamers wary of NFTs because of environmental concerns.



After starting with just Ethereum, the team has pivoted onto the Arbitrum blockchain, a side-chain, as it works to expand its decentralized finance (DeFi) dealings.



The startup plans to introduce an in-game token, which perhaps could convey governance features down the line. The longer-term plan is to create a decentralized autonomous organization (DAO) that would be controlled by game players.



Gao, who has previously backed other play-to-earn Web3 startups, said the team has “deep experience” in both traditional video games and as crypto natives. OpenBlox is also working with a number of top-tier developers and graphic designers, which helps, he said.



The challenge is to bridge avid traditional video gamers — accustomed to stunning graphics and engaging gameplay — with legions of crypto natives who may be less choosy on the gameplay front, but more particular when it comes to the blockchain technology in play and the potential to make money as a consumer in exchange for their time and loyalty.



“You want to basically have these new types of ways to play games, where the ownership is in the hands of the players, not the developers, and you&#8217;re able to bring in other users and bring in other counterparts to the space,” Gao said. “So, instead of having all the graphic designers and the people making the games in the studios control everything, you can bring in others.”



Elle Sia, a Web3-focused investment director at OpenBlox backer Digital Strategies, said the game&#8217;s graphics are significantly sharper than your average crypto-native game.&nbsp;



And the team, according to Sia, has been taking pains to ensure the gameplay is fun and engaging.



“It needs to be fun,” Sia said. “Otherwise, no one&#8217;s going to play it. Otherwise, it becomes a bit of a Ponzi, so far as you need new players to come in.”



The startup will also look to lean heavily on its partnerships with gaming guilds — including Real Deal Guilds (RDG), Ancient8, Good Games Guild and BreederDAO — to drum up interest in the metaverse venture and gain players worldwide.&nbsp;



Dr X, the pseudonymous OpenBlox founder, said in a statement that the startup’s incoming investors “bring a large network of stakeholders” to the venture.



Updated Dec. 14, 3:15 pm ET: Shima Capital reduced the size of its commitment after this story was published, and Digital Strategies, as well as MC Ventures, rescinded their capital pledges.



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Blockchain Gaming Startup Raises Round on Heels of Surging Play-to-earn Demand

<div id="highlights-block_6234c65660322" class="highlights">
 <ul>
 <li>Sushi has fallen out of the top 10 decentralized exchanges by volume, according to Coingecko</li>
 <li>Aave’s total value locked peaked at nearly $20 billion in October 2021</li>
 </ul>
 
</div>



As DeFi projects have lost their luster and trading volumes have tanked, two new blue-chip protocols are trying to once again catch the eye of big-money investors.&nbsp;



A new product from the DAO team at Sushi has launched its beta on the Polygon proof-of-stake blockchain. A new set of money Legos for the DeFi space, the project, dubbed Trident, is being billed as a “production framework for building and deploying AMMs.”



Aave V3, meanwhile, has launched on six different chains, enabling cross-chain transactions, among a host of new features.



The two protocols, well-regarded DeFi (decentralized finance) projects that originated from 2020’s “DeFi summer,” have a combined total value locked of around $16 billion — even though their DAO (decentralized autonomous organization) governance tokens have tanked.



SUSHI is down around 88% from its <a href="https://www.coingecko.com/en/coins/sushi" target="_blank" rel="noreferrer noopener">March 2021 peak</a> of $23.05, while AAVE has fallen 76% since a <a href="https://www.coingecko.com/en/coins/aave" target="_blank" rel="noreferrer noopener">May 2021 peak</a> of $631.26, per Coingecko.



As the hype around so-called <a href="https://cms.blockworks.co/the-investors-guide-to-defi-2-0/" target="_blank" rel="noreferrer noopener">DeFi 2.0</a> upstart projects such as OlympusDAO and Wonderland has faded in recent months, the product launches may signal a shift back to industry stalwarts.



<h3 class="wp-block-heading">A refreshed Sushi</h3>



The community of developers and Sushi adherents have been through a rough patch since a management shakeup last year, which saw <a href="https://cms.blockworks.co/sushiswap-swaps-out-co-founder-0xmaki/" target="_blank" rel="noreferrer noopener">Sushi’s co-founder depart</a> in September and <a href="https://cms.blockworks.co/update-cto-resigns-as-sushiswap-struggles-arca-submits-restructuring-proposal/" target="_blank" rel="noreferrer noopener">its chief technology officer resign</a> in December.



That inevitably led to delays in the progress toward Trident, but the DAO team announced the beta version rollout in <a href="https://sushichef.medium.com/launching-trident-phase-1-4e483fad0ae4" target="_blank" rel="noreferrer noopener">the group&#8217;s blog</a> Wednesday.



This system can be used for “creating any [automated market-maker] anyone would ever need,” according to the blog. Unlike the prior version, Trident allows anyone to create a liquidity pool, much like <a href="https://cms.blockworks.co/?s=Uniswap" target="_blank" rel="noreferrer noopener">Uniswap</a> does. Unlike Uniswap, the pools can have an imbalance of tokens rather than a 50-50 split — a feature of another rival decentralized exchange, <a href="https://balancer.fi/" target="_blank" rel="noreferrer noopener">Balancer</a>.



The full feature set is expected to be made available following the completion of security audits, and Trident will also eventually be pushed out to other chains, such as Ethereum’s mainnet.



<h3 class="wp-block-heading">Aave adds more Ethereum-compatible chains</h3>



Aave <a href="https://twitter.com/AaveAave/status/1504137636105043971" target="_blank" rel="noreferrer noopener">unveiled</a> its third-generation app this week. Aave’s DAO community approved deployments on Polygon, plus Ethereum layer-2s Arbitrum, Optimism, and other layer-1 networks compatible with the Ethereum virtual machine — Fantom, Avalanche and Harmony. Deployment to Ethereum’s mainnet is still in the works.



Among the goals of V3 are “greater capital efficiencies, increased security, and cross-chain functionality,” according to <a href="https://aave.mirror.xyz/2TnHYHQRnNhSG56Y4CcssulFArSVqrFbmAdYfU7Kxp0" target="_blank" rel="noreferrer noopener">the announcement</a>.



​​“This is a huge milestone for one of the most popular liquidity protocols in DeFi and furthers our mission to bring DeFi to the next hundreds of millions of people,” Polygon co-founder Sandeep Nailwal said in a statement.



A standout is the “Portals” feature, which allows DAO-approved bridging protocols to facilitate cross-chain transactions, so that assets within Aave can readily flow between disparate blockchains without a DeFi user having to withdraw, bridge and redeposit assets in separate transactions.



<blockquote class="wp-block-quote">&#8220;The cross-chain portal will enable users to port their own liquidity from one network to another, at their discretion. It will allow each iteration of the protocol on the various networks to scale quite quickly with the depth of capitalization,&#8221; Nicolo Stewen, Aave&#8217;s Director of Strategy, told Blockworks.</blockquote>



The app’s “High Efficiency Mode” allows borrowers to obtain greater buying power when using similar assets, such as stablecoins, as collateral.



“Isolation Mode” addresses one of the culprits behind many <a href="https://cms.blockworks.co/flash-loan-exploit-whips-cream-finance-for-130-million/" target="_blank" rel="noreferrer noopener">high-value exploits</a> — most recently the <a href="https://twitter.com/shegenerates/status/1503852338917908488" target="_blank" rel="noreferrer noopener">$11 million loss</a> on Agave, an Aave fork on the Gnosis Ethereum sidechain — having to do with the listing of new collateral assets that prove to be unsafe. By walling off certain categories of assets, V3 limits risk.



On the security front, Aave&#8217;s V3 code has been <a href="https://github.com/aave/aave-v3-core/tree/master/audits" target="_blank" rel="noreferrer noopener">audited by multiple firms</a>, such as Sigma Prime, Trail of Bits, Open Zeppelin, ABDK and PeckShield, and has undergone verification by Certora.



Its open-source code is released under a business license similar to that of Uniswap V3.



As with the predominant V2, Aave V3 will integrate with popular DeFi apps and dashboards, including 1Inch, Debank, DeFisaver, Instadapp, Paraswap, Zapper and Zerion.



“Incredibly excited for what this means for the future of the Aave Protocol and the Aave Community as a whole, both in terms of its scalability and its flexibility as the space continues to evolve,” Stewen <a href="https://twitter.com/coconidodev/status/1504173409743343620" target="_blank" rel="noreferrer noopener">said</a>.



This story was updated on March 21 at 3:15 a.m. ET with comments from Nicolo Stewen



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Can New Launches from Aave and Sushi Usher in DeFi’s Comeback?

Jacquelyn Melinek

<div id="highlights-block_6226535075d81" class="highlights">
 <ul>
 <li>The company will use the capital to grow the team and its products, including its Ethereum Virtual Machine application</li>
 <li>Espresso plans to create bridges between Ethereum and other major chains so the line between layer-1 and layer-2 can be “blurred,&#8221; its co-founder and CEO told Blockworks</li>
 </ul>
 
</div>



A scaling and privacy solution for Web3 applications, Espresso Systems, is making its debut to the public with a $32 million funding round.



“Scaling and privacy solutions are both evolving at a rapid pace, and we are excited to contribute to the progress,” Ben Fisch, co-founder and CEO at Espresso Systems, said to Blockworks.&nbsp;



The investment was led by <a href="https://greylock.com" target="_blank" rel="noreferrer noopener">Greylock Partners</a> and Electric Capital with participation from Sequoia Capital, Blockchain Capital and Slow Ventures. Other groups backing Espresso Systems include Polychain Capital, Alameda Research, Coinbase Ventures, Gemini Frontier Fund, Paxos and Terraform Labs.



Espresso is developing layer-1 blockchain infrastructure that will provide low-fee transactions through its integration of a proof-of-stake consensus protocol with a zero-knowledge (ZK) rollup mechanism, which can use ZK proofs to bundle transactions and lower resources to process them.



ZK-proof technology is among the leading candidates to scale the Ethereum blockchain through solutions such as StarkWare and zkSync. Espresso intends to keep interoperability at the core of its plans, for example, by creating bridges between Ethereum and other major chains so the line between layer-1 and layer-2 can be “blurred” and benefit from its scaling and privacy properties in the future, Fisch said.&nbsp;



The company will use the funding to grow the team and its products. Its first product to be released is an Ethereum Virtual Machine application, known as Configurable Asset Privacy for Ethereum (CAPE). It would enable creators of digital assets, such as ERC-20 tokens on Ethereum, to add a privacy-mode switch to their assets so transactions can be seen by select parties, Fisch said. 



“For example, a stablecoin provider could offer their users the option to hide their stablecoin transactions from public view in a way that still enables the provider to meet their reporting and risk management needs,” Fisch noted.



In general, scaling has already been a necessity for many Web3 applications as transaction demand has driven up prices on networks, Fisch said. But as traffic migrates to more scalable platforms that interoperate with ecosystems, such as Ethereum, fees for Web3 applications should drop, too, he added.&nbsp;



Separately, Electric Capital, one of the co-leads for Espresso’s funding round, raised a <a href="https://cms.blockworks.co/electric-capital-raises-1-billion-to-launch-crypto-venture-token-funds/" target="_blank" rel="noreferrer noopener">$1 billion fund</a> last week to invest in decentralized autonomous organizations (DAOs), non-fungible tokens (NFTs), decentralized finance (DeFi) and decentralized infrastructure and accessibility into Web3. This investment is symbolic of the venture capital firms’ commitment to the last point, as decentralized infrastructure ramps up across the crypto ecosystem. 



“Existing solutions make tradeoffs when it comes to decentralization, and we are excited to push the industry forward with an approach that achieves both low-fees as well as the properties of decentralization this industry is founded upon,” Fisch said.



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Espresso Systems Launches to Public Amid a $32M Raise

<div id="highlights-block_620fa964ea3d9" class="highlights">
 <ul>
 <li>On Friday, Ethereum-focused multichain network SKALE set up a $100 million grant program to fund the future of blockchain-based gaming</li>
 <li>Large funds announced this week include a $205 million ecosystem fund for The Graph and Sequoia Capital’s new crypto sub-fund for up to $600 million</li>
 </ul>
 
</div>



This week was busy, yet again, for the crypto funding space as a number of multi-million-dollar investments and mega funds were shared with the public.



On Friday, Ethereum-focused multichain network SKALE set up a <a href="https://cms.blockworks.co/ethereum-multi-chain-network-earmarks-100m-to-fuel-blockchain-gaming/" target="_blank" rel="noreferrer noopener">$100 million grant program</a> to fund the future of blockchain-based gaming. This launch is the latest step for the blockchain gaming space, which has grown exponentially over the past 12 months and is drawing attention from big investors and funds.



Meanwhile, Binance Labs, the venture capital arm of Binance, completed a strategic investment in a multichain liquidity protocol, Symbiosis Finance.



The funding will be used to support the company through its Mainnet launch and add support for more Ethereum virtual machine (EVM) and non-EVM networks, as well as integration with different wallets, services and dApps.



“The idea is simple; we strive to learn from the market leaders, adopt their best practices and this is the way we can create something in demand,” Nick Avramov, co-founder and chief marketing officer at Symbiosis Finance, said in a <a href="https://www.binance.com/en/blog/ecosystem/binance-labs-makes-strategic-investment-in-symbiosis-finance-421499824684903475" target="_blank" rel="noreferrer noopener">post</a>.



Significant new funds entered the space, including a <a href="https://cms.blockworks.co/investors-bolster-the-graph-with-205m-ecosystem-fund/" target="_blank" rel="noreferrer noopener">$205 million ecosystem fund</a> by six investors to help invest in projects building on The Graph protocol, an indexing layer for Web3 and blockchain data.



Sequoia Capital is also launching a new <a href="https://cms.blockworks.co/sequoia-capital-is-raising-up-to-600m-in-new-sub-fund-to-focus-on-tokens/" target="_blank" rel="noreferrer noopener">$500 million to $600 million</a> sub-fund, focusing primarily on liquid tokens and digital assets, a spokesperson confirmed with Blockworks on Thursday.



On a smaller scale, an alternative investment platform, Yieldstreet, announced its <a href="https://www.yieldstreet.com/offering/EaLf3g/pantera-early-stage-token-fund-i/" target="_blank" rel="noreferrer noopener">first crypto fund</a> through a partnership with Pantera Capital. The firm expects to raise about $20 million for the fund with minimum investments of $25,000, a spokesperson told Blockworks.



From Protocol Labs, the open-source decentralized storage network Filecoin and IPFS launched a $38 million fund focused on improving the internet and renewable energy throughout the US with Nelnet Renewable Energy Services.



The strategic investment will finance solar energy projects and aims to contribute more energy to the grid than is consumed by Filecoin’s network. Thus, enabling the “responsible growth” of Filecoin without taking from the domestic power grid, it said.&nbsp;



“Protocol Labs is committed to driving the next generation of the internet, Web3, toward net-zero emissions,” Head of Filecoin Green at Protocol Labs Alan Ransil said in a statement. “By investing in solar development with Nelnet, we are both building new generation capacity in this vital public infrastructure system and helping to push the renewable energy transition forward.”



Other notable capital raises this week include:&nbsp;



<ul><li>Animoca Brands and Brinc partnered to launch a <a href="https://cms.blockworks.co/animoca-brands-and-brinc-to-invest-up-to-30m-in-play-to-earn-ecosystem/" target="_blank" rel="noreferrer noopener">$30 million</a> guild accelerator program to grow the play-to-earn ecosystem</li><li>Crypto wallet Rainbow’s <a href="https://techcrunch.com/2022/02/15/web3-mobile-wallet-startup-rainbow-raises-18m-series-a-from-alexis-ohanians-fund/" target="_blank" rel="noreferrer noopener">$18 million Series A</a> led by Alexis Ohanian’s venture firm, Seven Seven Six</li><li>Fluence Labs <a href="https://twitter.com/fluence_project/status/1494423913471766533?s=20&amp;t=50dLcJ5qL4491Mjga3FhuA" target="_blank" rel="noreferrer noopener">$9 million</a> round led by MultiCoin Capital</li><li>DeFi lending protocol Minterest’s <a href="https://www.prnewswire.com/news-releases/defi-lending-protocol-minterest-closes-successful-5-52m-sale-of-mnt-token-301481699.html" target="_blank" rel="noreferrer noopener">$5.52 million</a> token sale</li><li>An open marketplace for Solana NFTs, Hyperspace’s $4.5 million seed round led by Dragonfly Capital and Pantera Capital</li><li>Solana-powered metaverse game MixMob’s <a href="https://smartliquidity.info/2022/02/18/mixmob-raises-7-million-in-latest-seed-funding-round/" target="_blank" rel="noreferrer noopener">$7 million</a> raise</li></ul>



Check back next week for more funding news.



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