Ben Strack

<div id="highlights-block_61533f8603881" class="highlights">
 <ul>
 <li>Layer-1s competing with Ethereum “will take years to catch up if they ever do,” Nahmii spokesperson says</li>
 <li>Kavita Gupta, a former founding managing partner of ConsenSys Ventures that just launched the Delta Blockchain Fund, named Nahmii as one of its first investments</li>
 </ul>
 
</div>



Nahmii, a solution created to help make Ethereum accessible to institutions, is launching its mainnet with $8 million in funding.



Nahmii is a layer-2 scaling solution that allows developers of smart contract-based applications to build solutions with the performance required at institutional scale.



DARMA Partners, the general partner of investment fund <a href="https://darma.capital" target="_blank" rel="noreferrer noopener">DARMA Capital</a>, led the $8 million funding roundi. Other investors included Aligned Capital, CMT Digital, the Delta Blockchain Fund, Fourth Revolution Capital and Quantstamp.



Kavita Gupta, a former founding managing partner of ConsenSys Ventures that<a href="https://cms.blockworks.co/former-consensys-ventures-managing-partner-launches-blockchain-fund/" target="_blank" rel="noreferrer noopener"> just launched</a> the Delta Blockchain Fund, named Nahmii as one of its first investments.&nbsp;



“Nahmii as a layer-2 solution is aiming to be cross chain with a strong focus on institutional DeFi adoption, which differentiates it,” Gupta said.



The <a href="https://www.businesswire.com/news/home/20210928005227/en/Nahmii-Launches-Layer-2-Solution-Primed-for-Institutional-Scale-Raises-8M-from-Blockchain-Investing-Leaders" target="_blank" rel="noreferrer noopener">news</a> comes after Nahmii 1.0 launched what it says was the first layer-2 payment network on top of Ethereum in 2018. The team previously worked on Bitcoin’s Lightning Network and Plasma, as well as a content distribution platform that served 50 million users per day.



“Nahmii is the first Ethereum layer-2 scaling solution to achieve commercial viability because it is the first solution to provide instant finality with no latency and predictable fees that commercial users demand,” a spokesperson told Blockworks. “True scaling is holistic and includes finality and predictability, not just high transactions per second on a layer-2.&nbsp;



<h3>Nahmii’s security model</h3>



Layer-2 is a term for solutions built to scale a blockchain by handling transactions off the base layer (in this case Ethereum mainnet) while retaining the decentralized security model of that mainnet.



Other ​​layer-2 implementations built on top of Ethereum include like Optimism and Arbitrum, do so through the use of optimistic <a href="https://ethereum.org/en/developers/docs/scaling/layer-2-rollups/" target="_blank" rel="noreferrer noopener">rollups</a>.



Nahmii’s security model, which the company refers to in <a href="https://www.nahmii.io/public/file/nahmii.White.Paper.v2.0.pdf" target="_blank" rel="noreferrer noopener">their whitepaper</a> as “a hybrid ‘state pool’ model”, shares similarities with <a href="https://cms.blockworks.co/polygon-trust-crypto-economy-etf-hit-the-market/" target="_blank" rel="noreferrer noopener">sidechains like Polygon</a> as well as other layer-2 implementations on Ethereum.



Nahmii’s implementation, however, relies initially on a centralized Operator, run by the corporation Nahmii AS, which is slated to be supplemented by additional federated parties over time.&nbsp;



While acknowledging that “the protocol will not be fully trustless at first release,” the company cites oversight features in the form of governance, and technical features which limit the risk of fraud and abuse by a malicious Operator.



The emphasis in this approach is on speed — reaching consensus and achieving transaction finality quickly, which they argue is more important to users than decentralization. The Nahmii representative added that transactions are irreversible in milliseconds, a feature which matters for institutional operators and high-frequency traders, and one which may offer an edge versus competing protocols.



Other features Nahmii is expected to support are transparency of transaction fees and the option for financial institution to implement compliance with KYC/AML rules.



<h3>Layer-1 competition</h3>



The launch comes as more layer-1 protocols <a href="https://cms.blockworks.co/competition-in-layer-1-space-continues-to-heat-up/" target="_blank" rel="noreferrer noopener">have popped up</a> as demand increases for lower transaction prices and higher throughput than what the Ethereum network currently provides. Such platforms include Cardano, Solana, Polkadot and Avalanche.



John Wu, president of Ava Labs — the team behind the Avalanche blockchain — <a href="https://cms.blockworks.co/das-2021-ava-labs-wu-says-economies-will-depend-on-next-gen-layer-1s/" target="_blank" rel="noreferrer noopener">said at Blockworks’ Digital Asset Summit</a> (DAS) earlier this month that these next-generation layer-1 protocols “are where the economies will be.” 



Multicoin Capital managing partner Tushar Jain <a href="https://cms.blockworks.co/das-2021-are-layer-1s-better-than-layer-2s/" target="_blank" rel="noreferrer noopener">said during a separate panel</a> at DAS that layer-1 blockchains are currently more reliable than the layer-2s built on top of them, especially in times of high market volatility.



But Ethereum is where much of the blockchain technology innovation is taking place, a Nahmii spokesperson said.&nbsp;



“The reality is that Ethereum has a huge head start, and competing layer-1s will take years to catch up if they ever do,” the representative added. “As a layer-2, Nahmii leverages the security of Ethereum and has access to the largest community of blockchain developers and the most mature development tooling.”