Kate Irwin

This is a segment from The Drop newsletter. To read full editions, <a href="https://blockworks.co/newsletter/thedrop" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Crypto accelerator <a href="https://alliance.xyz/">Alliance</a> DAO has announced its latest cohort of 20 startups: the ALL14. They received over 1,700 applications this time around.&nbsp;



Accepted startups will join the three-month accelerator to further build their businesses. The first two weeks are in-person, and the remaining weeks occur remotely.



Typically, accelerators offer connections, networking and guidance in exchange for some equity in the startup that is accelerated. This accelerator includes lectures, one-to-one mentorship, weekly check–ins and a demo day.



Alliance DAO, formerly known as DeFi Alliance, counts other founders, lawyers, liquidity providers and auditors among its members.



“We only require a $450k investment in your company (at unparalleled, founder-friendly terms). We&#8217;ve learned that our best performing teams actually do want us to have skin-in-the-game,” the group’s website states.



Alliance says its median startup raises $3.5 million after the program. VCs like Paradigm, Dragonfly, and Multicoin have invested in Alliance-accelerated startups in the past.



<h2 class="wp-block-heading">About the cohort</h2>



Solana and Ethereum were the most-used chains by startups that applied to ALL14, and Base was the most-used L2.



35% of admitted teams are focused on AI, while 30% are focused on stablecoin innovations, a sign that both are continuing to trend in the startup world.



Alliance’s latest cohort offers an interesting glimpse into the future of crypto, AI, and where things might go from here.



Whet your appetite with some of these names:



<ul class="wp-block-list">
<li>Slop Club </li>



<li>Poof</li>



<li>Wootzapp</li>
</ul>



Some of the teams’ pedigrees are pretty impressive, though. Think founders that are also Stanford engineers, have had stints at billion-dollar firms, or have worked at prior startups with top Silicon Valley investors before starting their new thing.&nbsp;



A list of the crypto-focused:



<ul class="wp-block-list">
<li>8020 (Moonshot for Asia)</li>



<li>Zabio (P2P stablecoin exchange for LATAM)</li>



<li>Lemonade Payments (Crypto payments in Africa)</li>



<li>Zynk Labs (Instant crypto settlements)</li>



<li>Fido (DeFi-powered neobank)</li>



<li>Guess.best (opinion-based betting market)</li>



<li>Junction (cross-chain DeFi toolkit)</li>



<li>Ripe (stablecoin payments for Asia)</li>



<li>Orbit (AI assistant for DeFi trading)</li>



<li>Poof (vibe coding for dApps)</li>



<li>Seismic (encrypted blockchain)</li>



<li>Offline protocol (communication, payments without internet)</li>



<li>GrandmAIsters (AI agent chess arena game)</li>



<li>FactCheck (stablecoin-incentivized fact-checking)</li>
</ul>



Others in the cohort:



<ul class="wp-block-list">
<li>Slop Club (Tiktok for AI videos)</li>



<li>Freedom GPT (Pagerank for AI)</li>



<li>Wootzapp (Private data crowdsourcing for AI training)</li>



<li>Afterschool (AI tutor)</li>



<li>CollectiveScience (Academic peer review tool)</li>



<li>CreatorGen (AI avatar marketplace)</li>
</ul>



Alliance also hosted an IRL event this week:



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Yesterday was demo day at <a href="https://twitter.com/alliancedao?ref_src=twsrc%5Etfw">@alliancedao</a>. It’s been a pleasure to be part of ALL14 full of such incredible people with the best energy and vibes. Super grateful to <a href="https://twitter.com/QwQiao?ref_src=twsrc%5Etfw">@QwQiao</a>’s who’s original post of wanting to invest in subversive tech made me apply and his consequent vote of… <a href="https://t.co/K7pc2cjeux">pic.twitter.com/K7pc2cjeux</a>&mdash; satvik (@sxtvik) <a href="https://twitter.com/sxtvik/status/1917576094078640361?ref_src=twsrc%5Etfw">April 30, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The application window for the next cohort closes on May 28.



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DAOs

Alliance DAO unveils cohort of startups for 3-month accelerator

Macauley Peterson

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Blockchain networks have long styled themselves as “decentralized world computers” ever since Ethereum. But one key component of modern computing has been missing: memory.&nbsp;



Now, with the launch of its private testnet this week, MIT-incubated startup Optimum is taking a first step toward fixing that.



Founded by MIT professor and <a href="https://spectrum.ieee.org/universal-decoder-pioneer">renowned</a> network coding researcher Muriel Médard, <a href="https://www.getoptimum.xyz/">Optimum</a> aims to build a high-performance memory layer for blockchains. Starting with data propagation, and eventually tackling what amounts to decentralized RAM, its core innovation is based on <a href="https://en.wikipedia.org/wiki/Linear_network_coding#Random_Linear_Network_Coding">Random Linear Network Coding</a> (RLNC), a technique Médard has been refining for over two decades.



Unlike typical gossip-based peer-to-peer systems — where nodes redundantly forward packets — RLNC uses coded data packets that increase bandwidth efficiency and resilience. In private tests and academic research, the technique has shown up to 20x improvements in propagation bandwidth and 2x gains in speed, with flexible tradeoffs depending on application needs, according to the team.



The first tests with validator node operators are now underway, part of the team’s broader go-to-market strategy, Médard told Blockworks.



“We have signed multiple MOUs with large node operators,” Médard said. The private testnet is invite-only and an opportunity for operators to validate performance and help shape product direction.



OptimumP2P, the protocol&#8217;s first product, replaces traditional gossip protocols like <a href="https://libp2p.io/">libp2p</a> with a <a href="https://en.wikipedia.org/wiki/Publish%E2%80%93subscribe_pattern%20layer">pub-sub</a> (publish-subscribe) that functions more like a memory bus in traditional computing. The technique could have obvious advantages, such as faster block propagation, reduced mempool congestion, and better performance for validators, RPC providers and even DEX operators.



Some of these improvements go straight to an operator’s bottom line. But eventually, Optimum will be geared toward small players, too. It plans to introduce a utility token to reward nodes — called “flex nodes” — for contributing to data propagation and, eventually, memory access, with rewards proportional to the useful work they perform, regardless of uptime or stake.



“Almost all blockchain innovation has focused on compute and execution,” Médard said. “But without fast, reliable data access and propagation, blockchains can’t function as true high-speed computing networks.”



Optimum’s blockchain-agnostic approach has already attracted significant backing, most recently an $11 million seed round led by 1kx, and which included investors like Robot Ventures, CMT Digital, Spartan and Finality Capital.&nbsp;



That focus on practical performance improvements has caught the attention of other infrastructure teams, including data availability providers like Avail.



Prabal Banerjee, co-founder of <a href="https://blockworks.co/tag/avail">Avail</a>, noted the potential relevance of RLNC to its roadmap.



“RLNC and its application to optimizing P2P is interesting to us,” Banerjee told Blockworks, though adding it needs further review. “At this stage we are exploring multiple avenues to optimize the network for 10GB blocks based on the strategy outlined in our scaling roadmap.”



In principle, Avail’s data layer, which aims to scale horizontally to &#8220;infinity blocks,&#8221; could benefit from more efficient network-level coding strategies — something Optimum’s team is hoping to make broadly available.



Although not live yet, Médard says a memory layer (rather than just a bus) is coming later this year. It can be thought of as a decentralized RAM substrate with what are known in CS parlance as <a href="https://www.techtarget.com/searchdatamanagement/definition/ACID">ACID guarantees</a> (atomicity, consistency, durability) to significantly lower latency and replication cost over current DA or archival solutions.



For now, Optimum is focusing on perfecting its memory bus. And in an environment where even the fastest <a href="https://blockworks.co/tag/rollups">rollups</a> and L1s are still bottlenecked by propagation lag, that might be exactly what the world computer needs.



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0xResearch Newsletter

Optimum aims to deliver Web3’s missing memory layer

Donovan Choy

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About 11 months after its initial <a href="https://x.com/StaniKulechov/status/1790458663926219212">announcement</a>, the mainnet of Lens Chain goes live today with its V3 deployment.



Lens Protocol launched in February 2022 on the Polygon sidechain.&nbsp;



In May 2024, Lens announced that it was migrating off Polygon to its own L2 chain built within the zkSync Elastic Network. For the deal, Lens was <a href="https://www.dlnews.com/articles/defi/lens-promised-possibly-tens-of-millions-to-go-to-zksync/">reportedly</a> paid 0.5% of the total ZK token supply (worth about $6.5M today).



The shift to its own L2, however, was motivated primarily by costs and scalability.&nbsp;



Building Lens on the Polygon sidechain made sense in 2021, but once L2s were available, they provided a better cost basis for transactions, Lens founder Stani Kulechov told me last September at Token2049 Singapore.



“The costs on Polygon don&#8217;t scale to mainstream usage for social transactions. Compared to a rollup, the cost savings looks 30 to 50 times lower,” Kulechov said.



Rather than posting data to the Ethereum L1, Lens Chain is using <a href="https://blockworks.co/podcast/0xresearch/e91db748-d67d-11ee-8d92-8b61dd33eafb">Avail</a> as its data availability (DA) layer. That makes Lens Chain technically a <a href="https://ethereum.org/en/developers/docs/scaling/validium/">validium</a> rollup that also enjoys the security of Ethereum’s settlement.



Lens’ migration to its own chain is purportedly one of the largest. According to an official blog, the entire social graph to be migrated comes out to about 125GB of historical data and 12M+ content posts.



Users on Lens Chain will enjoy near-zero gas fees and can pay in Aave’s GHO stablecoin.



All content will also be stored onchain. This is thanks to <a href="https://lens.xyz/news/introducing-grove-onchain-controlled-storage">Grove</a>, Lens’ new storage infrastructure. Grove allows developers on Lens to have customizable access and control over user data. Platform data can be either permanent or deleted.



This makes all Lens’ social data fully onchain and decentralized, in contrast to competing Web3 social platforms like Farcaster, where only user profiles are onchain.



This, at its core, is what forms the foundation of Lens V3, what the team has termed a modular social protocol.



In addition, Grove also promises to deliver the “speed and cost-efficiency of leading Web2 solutions like AWS S3 and Cloudflare R2,” its blog says.



<h2 class="wp-block-heading">The state of Lens</h2>



Today, Lens boasts about 650,000 user profiles and 28 million social connections.



That is still a far cry from being a serious challenge to traditional social media platforms, but consider how far the promise of “social media on the blockchain” has come.



As far back as 2016, companies like Steem, a social project that was bought by the Tron Foundation in 2020 and subsequently hardforked by its original community into what is known today as the HIVE blockchain.



What does Lens do differently?



Recall that Lens is not a social media platform per se, but a protocol where apps can be built on top of it.



Lens&#8217; protocol is decidedly taking a builder-centric growth strategy. Lens wants to target app builders, in particular Web2 developers who have historically been deterred by the clunky UX and complexity of Web3.



“Our strategy focuses on social plus finance apps: projects where people connect, create and earn. Just like YouTube unlocked a new class of creators, Lens is unlocking a new class of SocialFi apps,” the Lens team told Blockworks.



In other words, the freedom to monetize on a permissionless infrastructure without gatekeepers.



Signature Lens apps since day one are migrating to Lens chains. These include the Twitter-like apps such as Orb and Hey, the AI launchpad Bonsai, Tape, a Tiktok-like short-form app, and more.



It’s hard to imagine Web3 socials ever toppling the incumbent Big Tech platforms today. But take heart in the fact that the mainstream media and experts of the 2000s felt just the <a href="https://www.theguardian.com/technology/2007/feb/08/business.comment">same</a> about competitors to MySpace.



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Lens launches mainnet today, bringing a potential new era to SocialFi

David Canellis

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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In this week&#8217;s roundup, David Canellis looks at a 13-year-old job post that transformed crypto, a Kenyan startup combining crypto mining with hydroelectric power, and Gamestop&#8217;s bitcoin buying spree.



<h2 class="wp-block-heading">Opportunity knocks</h2>



The year is 2012. Skrillex’s &#8220;Bangarang&#8221; is playing somewhere in the background, and you’re debating whether to see The Hunger Games or 21 Jump Street at the cinema.



You decide to scroll Hacker News instead. A new <a href="https://www.reddit.com/r/CryptoCurrency/comments/1jka50f/job_post_for_the_role_of_coinbase_cofounder/">post</a> catches your eye — “Apply with me to YC [Y Combinator] in the next 3 days and change the world.”



Brian Armstrong, pre-Coinbase, wrote this 13 years ago. “I’m throwing a hail mary here &#8211; because desperate times call for desperate measures.”



Armstrong had a prototype, “PayPal for bitcoin,” an open-source Android wallet called Bitbank that let users send bitcoin via email addresses. Y Combinator showed interest, Armstrong said, but he’d deferred the meeting until he’d found a ride-or-die co-founder.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdgW-seq22agzzS2DCIZX_InpnCZnHQYgEhFfx5O_f9eo_oRuFepMH4jLvLB_BuWCQJ0sqq2ZI-OPBXUWFBQ9wsgcdTj7tlNOolG-vxN0c7IfjPZ3pCDg_STJLZi8LQkZOwjatKSA?key=bBulffZfSB5fG7bmsTZGRzxR" alt=""/></figure>



“The killer app will be in disrupting transaction fees that are a tax on every transaction in our economy,” Armstrong wrote. “This is going to be super fucking hard, but the payoff is that we have a non-zero chance of really changing the world in big way. This isn&#8217;t another photo-sharing app.”



He wasn’t wrong. While Armstrong didn’t find co-founder Fred Ehrsam until after he’d graduated from Y Combinator, Bitbank did eventually become Coinbase, which is today a $48-billion stock trading on the Nasdaq.&nbsp;



Conviction clearly pays.



<h2 class="wp-block-heading">Remote work</h2>



Legendary Bitcoiners have famously gone to great lengths in pursuit of the network.



Kenya-based startup Gridless is no different: It’s been busy in northwest Zambia, hauling a shipping container full of 120 mining rigs “across bumpy narrow roads 14 hours from the nearest major city,” <a href="https://www.bbc.com/news/articles/cly4xe373p4o">reported</a> the BBC last week.



The goal was to hook those rigs — which are each making around $5 per day — directly to a hydroelectric power plant harnessing the might of the Zambezi river.&nbsp;



Bitcoin mining now makes up about 30% of the plant’s revenue, and a revenue-sharing agreement with the company that built the plant means cheap power for the machines and cheaper electricity for locals. 



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/wfwLy8MWbe4?si=9yt8C9iPCpxX3Z_2" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Increased revenue for the plant has also led to more reliable power for the people that live there — living proof that proof-of-work can turn stranded energy into real-world progress.



&#8220;Every day we were wasting over half of the energy we could generate, which also meant we [weren’t] earning from that to meet our operating expenses. We needed a major user of power in the area, and that&#8217;s where the game-changing partnership with Gridless came in,&#8221; plant operator Daniel Rea told the BBC.



<h2 class="wp-block-heading">Game-Start</h2>



GameStop gearing up to run the Strategy playbook is a turning point.



Ignore the mixed market reaction. The original meme stock will be the second large-scale firm to attempt an extreme bitcoin buying spree (mirroring Strategy), after Japanese holding company MetaPlanet.



And that includes issuing 0% convertible notes to the tune of $1.3 billion — cash it will use to buy bitcoin — the exact same move that Strategy has perfected over the past five years or so.&nbsp;



All while GameStop will continue closing its physical stores en masse.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">An announcement regarding Bitcoin <a href="https://t.co/gG8JRarIok">pic.twitter.com/gG8JRarIok</a>&mdash; GameStop (@gamestop) <a href="https://twitter.com/gamestop/status/1904628096705454308?ref_src=twsrc%5Etfw">March 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



GME initially jumped by about 10% after it announced its bitcoin plan, but then dropped 25% on details of the financing.



All noise. The stock might be a very different beast to Strategy and MetaPlanet, but the three will soon share one common denominator.&nbsp;



Forget Denzel — Bitcoin is the real equalizer.



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Coinbase

Bitbank to Coinbase: Brian Armstrong’s $48 billion job post

Darren Kleine

Blockworks co-founder Jason Yanowitz once worked at an Israeli tech startup called Sisense. Amid the outbreak of war between Israel and Hamas this past week, Yanowitz thought back to the many Israeli founders in the blockchain tech space who he knew would be affected.



“A lot of the employees are in the reserves,” he says. “A lot of folks are getting called up to the reserves right now,” resulting in an employment shortage for many companies that may be struggling to maintain operations amidst the conflict.



On the Empire podcast (<a href="https://open.spotify.com/episode/1TMe7A7UsX7iUCcfjCcHWh?si=mUOLHi3hSY-wXRXekAhOFg">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/how-vcs-cause-layoffs-and-blackrock-barclays-on/id1554930038?i=1000631203324">Apple</a>), Yanowitz points to a startup resources <a href="https://twitter.com/ShalvaGozland/status/1711938126111768852?s=20">effort</a> launched by Zoe and Michael Burian, who have lived and worked in Israel, in an effort to support startups in the region.&nbsp;



The form is posted on X, formerly Twitter, by Shalva Gozland, a healthcare investor at Insight Partners. She claims that more than 400 “talented professionals across various domains are volunteering their time and expertise” to help Israeli startups and venture capitalists while their employees are away for reserve duty.&nbsp;



Yanowitz mentions Chaos Labs, an Israel and New York-based startup that has some employees currently living in Tel Aviv. The business provides an “automated economic security system for crypto protocols,” according to a PR <a href="https://www.prnewswire.com/il/news-releases/chaos-labs-raises-20m-in-seed-funding-led-by-galaxy-and-paypal-ventures-to-automate-on-chain-risk-optimization-301751582.html">statement</a> released earlier this year.



“If you have a lot of employees in the reserves,” he says, “that means half your staff is gone and not working.”



Yanowitz explains that volunteers can provide their skill sets and other details via the form. “You can actually put in, you know, I&#8217;m a data analyst or I&#8217;m a salesperson. I&#8217;m willing to allocate five hours of my week to stepping in to basically fill the time gap for these folks in the reserve.”



“I know a lot of crypto companies who have been impacted, who have a lot of employees who are going <a href="https://blockworks.co/news/crypto-aid-israel-humanitarian-support-fundraise">to the reserves right now</a>,” he says.



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG9309858820" width="100%"></iframe>







Podcast co-host and Web3 investor Santiago Santos adds that a number of his portfolio companies are either directly based in Israel or have team members living and working there.



“It&#8217;s a thriving ecosystem,” particularly in the realm of cybersecurity, he says. “A lot of talent is there.”



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Empire

Israeli blockchain startups face employee crunch amid Hamas conflict

Former Andreessen-Horowitz executives Nassim Eddequiouaq and Riyaz Faizullabhoy founded Web3 startup Bastion with the express goal of overcoming long-standing barriers faced by businesses entering the industry.&nbsp;



Previously reported at Blockworks, the company successfully completed a recent funding round and plans to offer crypto custody, wallet management and digital asset trading, primarily to corporations.



Speaking to Blockworks on the Lightspeed podcast (<a href="https://open.spotify.com/episode/4jJqJ5OlzhUP3ILEcUGkp1?si=h6eqSB3gRty5qw2JEchZcw">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/solving-cryptos-onboarding-problem-arianna-simpson/id1697548240?i=1000630298700">Apple</a>), Faizullabhoy says the startup aims to address core issues that stand in the way of wider Web3 adoption. The first daunting challenge encountered by clients is the onboarding process, which “feels clunky and often unsafe,” he says. “It’s hard to get onto <a href="https://blockworks.co/tag/web3">Web3</a>.”



Read more: <a href="https://blockworks.co/news/crypto-funding-startups-gaming-custody-institutional-services">Crypto funding: Startups raise $115M across gaming, custody, and institutional services</a>



Even after onboarding, Faizullabhoy says, Web3 experiences are “known for having too much friction — whether it&#8217;s clicking a bunch of approvals or whatever it is for the user experience.” <a href="https://blockworks.co/news/binance-gas-fees-ethereum-account-consolidation">Gas fees</a> add to the friction, he says, making it difficult for businesses to understand and forecast their spending needs.



Importantly, Faizullabhoy adds, businesses that are getting into the space are often “flying blind.”&nbsp;



“They don&#8217;t understand what&#8217;s actually happening on their platform. They&#8217;re missing the data. They&#8217;re missing the analytics.”



Faizullabhoy says that even Web2 companies are encountering the same potential dearth of data, with third-party cookies anticipated to be leaving major operating systems and browsers in 2024.&nbsp;



“These customer insights are just so valuable to building the best products,” he says. “Businesses either don&#8217;t have them — or they&#8217;re going to lose them.”



<h2 class="wp-block-heading">Not everything has to be on-chain</h2>



The co-founder explains that Bastion aims to first make the Web3 onboarding experience as easy as possible. The company strives to then follow up with “the best user journey,” providing ways for clients to understand what’s happening on the platform.



To ensure a smooth onboarding experience, Bastion built a custodial wallet infrastructure that Faizullabhoy says “works seamlessly with any of our customers’ authentication methods.” The best onboarding experience, he says, is “no onboarding at all.”



“It should just be that you log into whatever experience you have,” he says, “And there happens to be a Bastion wallet behind the scenes.”



To address difficulties with friction and scalability, Bastion developed a “smart transaction routing system,” Faizullabhoy says. “Essentially, the system routes anywhere from 70 to 90 percent plus of all interactions to be off-chain.”



“Not everything has to be on-chain,” Faizullabhoy asserts. “There&#8217;s a place and a time for things to be on-chain, where there are amazing benefits.”



Read more: <a href="https://blockworks.co/news/account-abstraction-finding-balance">Account abstraction: Finding a balance between on- and off-chain activity</a>



Faizullabhoy adds that certain activities will remain off-chain “where it makes sense,” in order to save time and gas costs, while allowing the blockchain settlement layer to do the necessary work in the background.



To provide businesses with an ongoing flow of pertinent information, Bastion has developed a “data analytics and insights platform,” Faizullabhoy says. “There&#8217;s invaluable data, both on-chain and off-chain, about how assets are used or interacted with,” he says. “Giving that data back to our customers will help them build the best experiences and the best products in Web3.”



Andreessen Horowitz general partner Arianna Simpson sees Bastion as a potential solution to the as of yet unsolved problems of market fragmentation and accessibility. “There&#8217;s certainly a very strong need for better user experiences touching anything online. Tokens, NFTs. It&#8217;s just not easy.”



Deciding to work with co-founders Eddequiouaq and Faizullabhoy was an easy choice, Simpson says. “I wish it were always this easy. We had the chance to work with Nass and Riyaz super, super closely because they were literally on our team.”



Simpson says that the combination of a large fragmented market <a href="https://blockworks.co/news/synthetix-web3-tools-kain-warwick-lightspeed-engagement">and unsolved problems</a> with a team that demonstrates deep domain expertise, competency, and motivation made investment in Bastion “a pretty obvious yes from me.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG7240271873" width="100%"></iframe>







Simpson feels that the backgrounds of Eddequiouaq and Faizullabhoy “are exactly what&#8217;s needed to really be able to tackle this problem.”



“It brings together a number of very difficult subject areas,” she says. “Having to start from scratch would be nearly impossible.”



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Andreessen Horowitz

Bastion startup aims to make Web3 easy for businesses

Bart Hillerich

The margin for error in the crypto industry is exceptionally narrow. With shifting regulations introducing ambiguous rules to the game, security breaches and &#8220;black swan&#8221; events keeping participants on edge, and a proliferation of greed-fueled speculative trading, the stakes are high for both entrepreneurs and investors.



It’s easy to fail in this industry. Incredibly easy.



Yet, there is a right way and a wrong way to fail. As an industry, it&#8217;s crucial to evolve to ensure that if projects falter, they do so for the right reasons—those that pave the way for future growth and learning, rather than the ill-advised blunders we&#8217;ve grown all too familiar with. Indeed, we should strive to fail for the same reasons that other entrepreneurial endeavors typically do.



Addressing this will alleviate customer and founder concerns about inherent crypto risks and pave the way for future investment inflows. The solution? Tackling a long-standing, yet rarely discussed issue in the crypto world.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">The yin and yang of Web3 failure</h2>



In early 2014, the sky fell on the world of crypto. Mt. Gox, then the world’s largest Bitcoin exchange, lost over 850,000 Bitcoins (valued at over $450 million at the time) to hackers. The platform soon after declared bankruptcy, leaving a gaping hole in the shell-shocked industry.



Despite this infamous failure being etched in crypto history, nearly a decade later, the industry still grapples with routine company collapses that would be deemed exceptionally abnormal in any other industry.



In 2022 alone, crypto losses from cyber attacks <a href="https://www.bressler.com/publication-1310" target="_blank" rel="noreferrer noopener">exceeded a record-breaking $3.8 billion</a>, and we all bore witness to the downfall of FTX, a company once seen as crypto&#8217;s beacon of mainstream legitimacy. The recent <a href="https://www.bressler.com/publication-1310" target="_blank" rel="noreferrer noopener">SEC charges</a> against Hex founder Richard Heart, leading to a dramatic fall in HEX&#8217;s value, further underscores the industry&#8217;s challenges.&nbsp;



When will crypto mature and end this recurrent cycle of loss?



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">of course i’m a little sad. whatever tech fad comes after crypto can never be as funny <a href="https://t.co/7RUsJALCc6">pic.twitter.com/7RUsJALCc6</a>&mdash; rachel (@rachdele) <a href="https://twitter.com/rachdele/status/1697324019949928776?ref_src=twsrc%5Etfw">August 31, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> 
</div></figure>



While hacks, tech glitches, shady activities, and lawsuits are accepted as part of crypto’s way of life, they have no rightful place in an industry built upon founding principles of freedom, personal rights, and fairness. Instead, indicative of a mature industry fostering consumer-friendly competition, companies should fail for healthier reasons like these:



Product Market Fit&nbsp;



The company misread market demand, offering a product or service that wasn&#8217;t desired.



Scaling&nbsp;



The company succeeded in its initial niche but couldn’t scale into adjacent opportunities.



Strong Competition



Either a rival outpaced the company, or the company couldn’t stand out in a crowded market.



<h2 class="wp-block-heading">Preventing bad failures</h2>



Preventing bad failures in business comes down to three strategies: risk avoidance, risk management, and risk transfer.



Avoiding risk—especially risk the company doesn’t get paid to take—is often the best strategy for projects to employ. Proper legal entities can help shield founders from personal risk (<a href="https://www.cftc.gov/PressRoom/PressReleases/8715-23" target="_blank" rel="noreferrer noopener">a lesson the Ooki DAO learned the hard way</a>) and onboarding a KYC partner that handles and stores sensitive data helps avoid the liability associated with hacks.



Most risks can’t be entirely eliminated, leaving it up to founders to engage in proper risk management to minimize liabilities and build a strong operating system by hiring the right talent, retaining legal counsel that has crypto industry expertise, providing regular financial reports, securing a banking partner that provides consistent payments and financing access, etc.



Unfortunately, even the best risk management programs leave entrepreneurs with some residual risk. On/off ramps have anti-money laundering risk no matter how strong their compliance program. Custodians have digital asset loss risk. Decentralized exchanges have fat-fingered trade risk.



That’s why there’s risk transfer through business insurance, where projects can pay another company to take the risk on their balance sheet instead.



This is an area where the crypto industry has historically faltered, grappling with limited insurance availability, exorbitant premiums, and inadequate coverage—until <a href="https://www.vouch.us/web3" target="_blank" rel="noreferrer noopener">Vouch</a> stepped in.



Vouch is the first comprehensive insurance solution that caters to the unique needs of Web3 participants, featuring four core coverages:&nbsp;



<ul class="wp-block-list">
<li>Directors &amp; Officers Insurance</li>



<li>Errors &amp; Omissions Insurance</li>



<li>Cyber Insurance</li>



<li>Crime Insurance</li>
</ul>



Business insurance does more than protect the company. It boosts the confidence of investors by reducing the likelihood of company failure. It helps companies grow faster by unblocking large enterprise contracts that typically require insurance. It attracts more customers by creating another layer of trust where the customers know they’ll be made whole if something bad happens.



Vouch’s business insurance—enhanced with crypto-specific coverages—is more than just downside protection. It’s a cornerstone for greater upside.



<h2 class="wp-block-heading">Embracing maturity: the imperative of insurance in crypto&nbsp;</h2>



Facing impending regulations and institutional involvement by companies like Blackrock, it is time for the crypto industry to rise to the occasion and mature. Even the best companies suffer setbacks, but there’s no reason for them to turn into catastrophes. Failure should happen for the right reasons, not because of a risk that could’ve been transferred to an insurer.



Insurance is the key component that crypto is missing, and Vouch is leading the charge to make it happen.



To request an invitation to join Vouch’s Web3 protection policy private beta, <a href="https://www.vouch.us/web3/blockworks" target="_blank" rel="noreferrer noopener">visit this webpage</a> for Blockworks readers.



This content is sponsored by <a href="http://us" target="_blank" rel="noreferrer noopener">Vouch</a>



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cryptocurrency

How Web3 companies die: the right way

Ben Strack

Despite an influx of funding into various crypto projects in 2021, very few have reached “product to market fit” status — with certain segments such as DeFi lagging others in even getting offerings off the ground.



In a recent report, Lattice, a crypto venture fund, found that a mere 5% of crypto projects have achieved product-market fit (PMF) within approximately two years after their fundraising efforts. The company&#8217;s study involved an analysis of 780 publicly available crypto pre-seed and seed rounds that took place in 2021. The purpose of this investigation was to assess the influence of the $2.6 billion invested into these projects.



Lattice&#8217;s findings show that among the crypto projects outside the 5% that achieved product-market fit, 70% managed to successfully launch a product on the mainnet or reached an equivalent level of development. However, 20% of these projects either did not complete their product development or seemed to have ceased operations, possibly shutting down.



Though certain types of crypto projects showed success after taking in funding, following through on initiatives was harder to come by for others. The <a href="https://www.lattice.fund/writing-and-press/2021-seed-stage-retrospective">report</a> broke down the crypto sector into four categories: CeFi, DeFi, infrastructure and consumer/Web3.&nbsp;&nbsp;



Lattice found that nearly 90% of infrastructure projects delivered a product to mainnet, while less than 75% of DeFi projects did.



This came despite DeFi seeing the second-largest investment volume in 2021 of the four categories — amounting to $762 million — as investors saw traction in the sector. The consumer/Web3 segment gained $977 million of funding that year.



“The wrinkle though is that by 2021 it might have been too late,” the report states. “If we take the current top 10 DeFi tokens by market cap, all of them were seeded in 2019 or earlier.”



Wrapped bitcoin (WBTC), avalanche (AVAX) and dai (DAI) lead the way, <a href="https://coinmarketcap.com/view/defi/">according</a> to CoinGecko — each with market capitalizations greater than $4 billion. WBTC launched in 2019, while AVAX and DAI were introduced in 2020 and 2017, respectively.



Like projects involved in DeFi, gaming companies have also had trouble finding product-market fit. Despite that, 70% of those gaming projects have launched a token.



Read more: <a href="https://blockworks.co/news/blockchain-gaming-future">Q&amp;A: What is the path forward for blockchain gaming?</a>



Nine out of 10 funding rounds in the gaming segment came in the second half of 2021, well after Axie Infinity raised its seed round in 2019.



“Important lesson: be careful about chasing the hottest new trend,” the Lattice report notes.&nbsp;



One-third of the crypto projects that secured early-stage funding in 2021 went on to raise additional capital. Among these projects, those focusing on centralized finance and infrastructure experienced greater success in securing further funding. In contrast, the DeFi sector saw fewer projects, with less than 30% of them successfully raising additional funds.



Crypto private financings — for rounds at all stages — amounted to $5 billion during the first half of 2023, <a href="https://architectpartners.com/q2-crypto-ma-and-financing-report/">down</a> 75% from the $20 billion worth of funding during the first six months of last year, according to crypto advisory firm Architect Partners.



Read more: <a href="https://blockworks.co/news/web3-funding-lowest-levels-2020">Web3 VC Funding Hit Lowest Levels Since 2020</a>



According to the report, the “depressed” venture capital market poses challenges for companies that secured early-stage funding in 2021 and are seeking additional funding. The venture capital firm highlights that a considerable number of these teams are operating &#8220;on less than 12 months of runway.”



It added: “Given how challenging the early-stage fundraising market is today and how far valuations have fallen since 2021, we’d expect the shutdown percentage to begin increasing very rapidly.”



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blockchain gaming

Many crypto projects funded in 2021 still searching for success

Shalini Nagarajan

For women, navigating male-dominated industries has always been a struggle, but that doesn’t necessarily stop them from entering and attempting to build a successful brand.



The male-dominated world of “crypto bros” has a glaring gender gap, with <a href="https://www.ft.com/content/259734ca-0b95-11e8-839d-41ca06376bf2" target="_blank" rel="noreferrer noopener">data</a> suggesting early adopters were mostly men. Having more women on a founding team gives companies the benefits of better communication, a positive bottom-line, increased diligence in problem-solving and insight into female customers, according to <a href="https://www.womensleadershipfoundation.org/why-women-on-boards" target="_blank" rel="noreferrer noopener">research</a>.



Despite the benefits of women participation in this sector, significant cultural and structural obstacles still persist in crypto and Web3.&nbsp;



Boston Consulting Globe pointed out several inconsistencies between male and female employees in the crypto space, based on a study that used a Crunchbase database of nearly 2,800 participants.



Male-only founding teams typically trump all-female teams, as they’re able to raise four times as much capital, or about $30 million compared to just $8 million. And no company with an all-female team has managed to raise more than $100 million in funding. Even the investment teams focused on Web3 are male-dominated.



“All-male teams have the most success in attaining funding, mixed teams with men and women are in the middle, and all-female teams fare the worst,” the study found. “Given these results, it is understandable why many women are weary of joining or investing in tech startups.”



<figure class="wp-block-image"><img decoding="async" src="https://lh5.googleusercontent.com/L94QHW-3CJLib0p2RGSIsefma7YQHbnykmVw7MCXWo_oGg7mHRzD0Cw9cORGgeOPvhydfQFMSAkWUi89zxnZHTfykwkyfk_rfg8YH1Bx2_6OErPklC0wpwTrm80b8ag1AVnsqhH-Phx32JtE5HWx1dQ" alt=""/><figcaption class="wp-element-caption">Source: Boston Consulting Globe</figcaption></figure>



Female founders are included only in 13% of startups within the Web3 ecosystem. But even within this marginal group, 10% of founding teams have both men and women. Just 3% of companies have an exclusively female founding team.



It also noted that even among the overall workforce, women aren’t necessarily engaged in the development or technical aspects of the crypto ecosystem. Rather they are concentrated in roles like Human Resources and marketing. They’re also more likely to launch startups leaning towards creative and social segments of Web3, rather than the finance or blockchain sectors.



<h2 class="wp-block-heading">Steps to improve gender diversity</h2>



New projects and startups must actively seek out female co-founders and leaders, not just to fill a diversity quota, but to gain a valuable perspective and reach a massive target group that has yet to be fully tapped, according to Emelie Olsson, co-founder of Web3 music and fan engagement platform Corite.



“It&#8217;s time to challenge the gatekeeping mentality that dismisses women as &#8216;not understanding&#8217; or &#8216;not belonging,’” she told Blockworks. “These outdated attitudes limit our potential and holds back innovation.”



The study also notes that the Web3 ecosystem is still nascent and there’s time to sort out the problems of gender disparity.



Collecting data on the representation of women and tracking progress, ensuring women are represented on investment teams, designing inclusive brand experiences, summits that focus on sponsoring events that feature women among speakers and developing regulations that address gender makeup are some ways to increase participation.



To get more women involved in Web3, companies need to look more broadly at where they source talent or invest in startups, said Chao Cheng-Shorland, CEO of ShelterZoom.



“The method up until now was to focus on people who had come up through the tech ranks, but with the vast scope Web3 provides, we can find success by reaching out to broader networks and backgrounds, even those in education, medicine, real estate, and more,” she told Blockworks.



“As the world begins to apply new frameworks to old ideas, we need to look beyond the usual places to find the right woman for the job,” she said.



Updated Feb. 20, 2022 at 7:51 am ET: Corrected quote attribution.



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founders

Women-Led Web3 Startups Raise 4X Less Funding Than Those With Male Founders

<div id="highlights-block_628e315869ea5" class="highlights">
 <ul>
 <li>a16z has earmarked $1.5B for seed investments in Web3 startups</li>
 <li>It’s time for the “golden era” of Web3, the firm said</li>
 </ul>
 
</div>



Venture capital behemoth Andreessen Horowitz (a16z) has raised the largest-ever crypto venture fund: $4.5 billion.



The vehicle, the firm’s fourth, brings a16z’s total crypto and Web3 holdings to $7.6 billion.&nbsp;



The launch makes good on <a href="https://cms.blockworks.co/andreessen-horowitz-looking-to-raise-4-5b-for-new-crypto-funds/" target="_blank" rel="noreferrer noopener">a plan unveiled in January</a>, when the company published a now-updated <a href="https://a16zcrypto.com/#vertical-landing-investment-thesis" target="_blank" rel="noreferrer noopener">investment thesis</a> predicated on the “power of software” as “the encoding of human thought, and as such has an almost unbounded design space.”



“We think we are now entering the golden era of Web3,” general partner Chris Dixon said in a <a href="https://cms.blockworks.co/a16zs-chris-dixon-crypto-growth-is-consistent-despite-downturn/" target="_blank" rel="noreferrer noopener">blog post</a> announcing the new fund. “Programmable blockchains are sufficiently advanced, and a diverse range of apps have reached tens of millions of users. More importantly, a massive wave of world-class talent has entered [Web3] over the last year.”



Talent flocks to the industry during a bull market, Dixon <a href="https://cms.blockworks.co/a16zs-chris-dixon-crypto-growth-is-consistent-despite-downturn/" target="_blank" rel="noreferrer noopener">told the audience</a> at last week’s Permissionless conference in Palm Beach, adding that a bear market is the prime time for builders to focus on what comes next.



The fund will invest in Web3 startups that run the gamut from DeFi, to gaming, infrastructure, DAOs, NFTs, privacy, decentralized social media “and many other areas.”



The firm also plans to expand its in-house staff to meet the vetting needs of additional startup investments.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We will also keep expanding the a16z crypto operating teams that provide world-class support to our founders, spanning research and engineering, security, talent &amp; people, legal &amp; regulatory, go-to-market, and a lot more.&mdash; AriannaSimpson.eth (@AriannaSimpson) <a href="https://twitter.com/AriannaSimpson/status/1529419370534952960?ref_src=twsrc%5Etfw">May 25, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The crypto portfolio of a16z consists of several dozen companies, including big names like Dapper Labs, dYdX, OpenSea, Near, Solana, Phantom and Uniswap. The <a href="https://a16z.com/2022/05/24/investing-in-flowcarbon/" target="_blank" rel="noreferrer noopener">most recent addition</a> is Flowcarbon, which is building an on-chain carbon credit tokenization platform.



“Our frequent conversations with builders have given us the confidence to go big, and we’re grateful to be your partner,” Dixon wrote of the latest fund.



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a16z

Andreessen Horowitz Launches Largest Crypto Fund Ever With $4.5B

Sebastian Sinclair

<div id="highlights-block_6243b494784ac" class="highlights">
 <ul>
 <li>The venture capital firm is hoping to follow on the success of its gCC Fund I</li>
 <li>Up to 50 firms will be targeted by the fund, which will invest in both equity and tokens</li>
 </ul>
 
</div>



Venture capital firm gumi Cryptos Capital (gCC) said Wednesday it has set up a $110 million fund focused on the industry&#8217;s early-stage blockchain startups.



The firm&#8217;s second fund, gCC Fund II, is attempting to follow the success of its initial $21 million fund (gCC Fund I) by investing in startups building infrastructure, dev tools, gaming, metaverses, DAOs, guilds and Web3 apps, the company said.



Up to 50 global blockchain startups will be targeted by the firm&#8217;s second fund, which is expected to invest between $500,000 and $5 million per startup through initial and follow-up investments. The fund will invest in both equity and tokens.



The firm said its gCC Fund I, which backs early-stage seeds, grew from $21 million to a whopping $516 million in asset value, producing a return on capital exceeding 24 times its initial investment, according to a statement.



Fund II will target &#8220;exceptional&#8221; developers and projects at all layers during the earliest stage of a company&#8217;s lifecycle and is &#8220;chain-agnostic,&#8221; gCC said. Blockchain&nbsp;agnostic&nbsp;refers to a project providing solutions to be built or operated from the different underlying blockchains in the industry.



Hironao Kunimitsu, Rui Zhang and Miko Matsumura, the three partners from gCC&#8217;s initial fund, will lead gumi&#8217;s second fund. All three have founded and exited companies via mergers and acquisitions or initial public offerings, the statement reads. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;The existing institutions and infrastructure including social infrastructure, governance, financial services and big tech are demonstrably failing us,&#8221; Miko Matsumura, gCC managing partner, said. &#8220;Because the way forward is unknown, there’s a strong appetite for experimentation.&#8221;</blockquote>



Matsumura added that tokens represent &#8220;monetary experimentation&#8221; while Web3, DAOs (decentralized autonomous organizations) and guilds represent &#8220;governance experiments.&#8221;



The firm has invested in early-stage companies that saw explosive growth in recent years, including OpenSea, Yield Guild Gaming, Celsius Network and 1Inch Network.



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