Multicoin Launches $100M Crypto Fund with Sights Set on Solana DeFi


  • Multicoin Capital says it is raised $100 million for its second enterprise fund.
  • It plans to make use of the cash to spend money on a spread of “open finance” and Web3 initiatives, with a significant deal with initiatives constructing on Solana.

When Kyle Samani and Tushar Jain launched Multicoin Capital’s first $10 million funding fund in late 2017, the mixed worth of the cryptocurrency market stood at simply $170 billion.

The crypto market has since ballooned to greater than $2.2 trillion, and Multicoin Capital will want a great deal greater than $10 million to fund its subsequent cohort of crypto entrepreneurs—10 instances extra.

The Austin-based funding agency immediately introduced the launch of a $100 million enterprise fund, which it plans to make use of to again corporations and token initiatives that match into its “Crypto Mega Theses” funding technique. It has additionally promoted three members of its six-person crew to the extent of accomplice to assist unfold that cash round: Matt Shapiro, Mable Jiang, and John Robert Reed.

Now armed with contemporary capital, which the agency says was largely raised from outdoors institutional traders, Multicoin has its sights set on the place it believes that proverbial crypto puck goes subsequent. And chief among the many agency’s massive bets is a lesser-known blockchain contender that’s rapidly develop into a compelled to be reckoned with: Solana.

“Solana is having a second that few initiatives ever expertise: the start of a brand new DeFi ecosystem,” Multicoin Managing Associate Tushar Jain informed Decrypt.

For anybody who’s been taking note of crypto for the previous 12 months, the truth that funding corporations are getting deep into DeFi received’t come as any shock. A catch-all time period for bankless bank-like companies, decentralized finance has been about as buzzy because it will get in crypto since mid-2020. Nevertheless it’s nearly at all times related to Ethereum, the blockchain community behind the second largest cryptocurrency by market cap immediately.

Jain believes that will not at all times be the case.

“The final word bull case for Solana is that it supplants Ethereum because the dominant Layer 1 sensible contract platform,” he mentioned. In different phrases, Solana goals to be the place that DeFi cash goes to play.

Inside the final 12 months, the DeFi trade has grown from beneath $1 million in “locked worth”—a metric that measures the sum of money flowing via varied monetary merchandise—to greater than $75 billion immediately, in accordance with DeFi Pulse. Practically all of that’s in Ethereum, with lending protocols Maker, Aave, and Compound main the way in which. (And that’s not together with the roughly $47 billion locked in initiatives on Binance Chain, per metrics web site Defistation.)

However the Ethereum community has at instances struggled to maintain up with the demand; its technical limits examined alongside the way in which. It’s develop into very costly to make use of, as transaction charges on the community soar, and it isn’t as quick as some merchants would really like. It’s why Ethereum is at present present process main upgrades to the community that builders count on will resolve all that.

In the meantime, nevertheless, there’s a rising group of second-generation, smart-contract blockchain platforms that say they’re readying now. And Multicoin is banking on Solana.

In July 2019, the agency led a $20 million funding in Solana, which it says has already paid off in a giant means. On the time, SOL—the token that powers the Solana community—was value lower than $1. It hit an all-time excessive of just below $50 earlier this month. It’d make sense then that agency is placing much more cash behind the undertaking now. Together with Helium and THORChain, Solana is already among the many three largest investments within the agency’s second fund up to now, which Multicoin says it’s already been pulling out of for a couple of months.

In line with Jain, there’s now greater than $1 billion locked in Solana DeFi, “and the ecosystem is simply getting began,” he mentioned. The concept is that, in time, the community will develop Makers, Aaves, and Compounds of its personal. It’s already host to Serum, the decentralized trade developed by billionaire FTX CEO Sam Bankman-Fried. Multicoin is an investor in Serum as properly.

The DeFi area could not essentially be a zero sum recreation, and Jain agrees that Ethereum and competing networks comparable to Solana “will completely coexist for a while.” Interoperability and cross-chain options are already within the works. However coexistence isn’t essentially peaceable both.

Mentioned Jain: “Over time, DeFi on Ethereum will naturally skew towards what it does greatest, simply as it can on Solana. The billion greenback query is, what do merchants need and who does that greatest?”

The race is on.


The views and opinions expressed by the writer are for informational functions solely and don’t represent monetary, funding, or different recommendation.

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