Paradigm leads $225 million spherical for Monad Labs, which is constructing a layer-1 blockchain to tackle Ethereum and Solana

A brand new participant on the scene, Monad Labs, finalized a $225 million spherical led by Paradigm with further funding by buyers together with Electrical Capital and Greenoaks to construct a layer-1 blockchain to problem rivals equivalent to Solana and Sui. (Fortune beforehand reported that Monad was in talks with Paradigm to boost cash at a $3 billion valuation in March.)

In an unique interview, Monad founder Keone Hon stated Monad’s innovation comes from rebuilding Ethereum’s blockchain from the bottom up—sustaining the power to execute sensible contracts whereas finishing transactions at sooner speeds, greater volumes, and decrease prices. Whereas different new blockchains have the same worth proposition, Monad is suitable with this system powering Ethereum, the Ethereum Digital Machine (EVM), that means builders can port over purposes constructed for Ethereum.

“We’re emerging from roughly two years of development,” Hon stated. “At a time when a lot of the research community was focused on roll-up, data availability, and other directions of scaling, Monad basically went really deep on the pure execution side.”

The crowded layer-1 panorama

For the reason that launch of Bitcoin in 2009, builders have launched new blockchains that promise an array of recent capabilities, from cheaper and sooner transactions to purposes like decentralized exchanges or lending protocols that may function on prime of a blockchain.

Though Ethereum launched in 2015 with the innovation of sensible contracts, it’s struggled to scale with elevated demand, that means transactions usually include excessive execution charges, often called “gas,” or are sluggish to be processed. Newer rivals—together with Solana, which launched in 2020—promised sooner speeds at decrease prices however nonetheless suffer from congestion points.

Hon labored for eight years at Leap Buying and selling, the secretive Chicago-based high-frequency buying and selling agency, constructing techniques that would course of massive numbers of transactions rapidly. He quickly branched out into Leap’s crypto arm, working alongside Monad cofounder James Hunsaker.

“We realized there was a huge need for a more performant EVM, and that in spite of this need, no one was really working on this problem,” Hon informed Fortune.

In contrast to many new blockchains, Monad can have full help for the EVM bytecode, the usual that many builders construct on when coding decentralized purposes. Hon described EVM because the Web3 equal of JavaScript within the early 2000s—it’s utilized by blockchains together with Ethereum, Polygon, Avalanche, Binance Sensible Chain, and Optimism. “Anyone who’s built an app for any of those blockchains can port it into Monad without any changes.”

Avichal Garg, managing accomplice of Electrical Capital, stated 90% of builders engaged on a number of crypto ecosystems are working solely in EVM chains, pointing to a recent report from his agency. Whereas that signifies that Monad doesn’t get the identical advantages of redesigning its whole programming language like different new blockchains equivalent to Aptos and Sui, Garg stated it nonetheless will get a lot of the advantages.

“The way you go to market is you hit the EVM compatibility and suck over a bunch of devs,” he informed Fortune. “To us, it felt like this is the playbook.”

‘A much more performant blockchain’

After raising a $19 million seed spherical introduced in 2023, Monad’s $225 million funding spherical represents the biggest crypto fundraise of 2024 to date, in accordance with Crunchbase’s Web3 Tracker, signaling that the sector’s bear market is starting to thaw. Paradigm, the crypto VC agency main the spherical, is reportedly raising a brand new fund over $750 million. The spherical additionally represents one of many first crypto offers for Greenoaks Capital, the VC agency led by veteran investor Neil Mehta, after a small wager on FTX.

Whereas Leap incubated quite a lot of crypto initiatives, together with Wormhole and Pyth Community, Hon stated Monad is totally separate from the buying and selling agency. Leap has been embroiled in scandal because of its function within the collapse of the so-called stablecoin challenge Terraform Labs led by Do Kwon, whose civil trial resulted in a responsible verdict in federal courtroom final week. Hunsaker testified on the proceedings, the place it was revealed that he filed a whistleblower grievance with the Securities and Change Fee towards his former employer.

Armed with its new spherical of funding, Hon stated that Monad goals to deploy its mainnet by the top of the 12 months, in addition to a testnet within the subsequent couple of months. Monad Labs presently has round 30 staff and plans for a local token, though Hon declined to touch upon whether or not it will launch with the mainnet.

Whereas crypto firms proceed to chase mainstream adoption, Hon stated Monad’s first use case will seemingly be for the kind of high-frequency buying and selling he carried out at Leap, citing that the most important inventory and futures exchanges on the planet course of between 500 million and 1 billion transactions per day.

“If we want the scale of an exchange, like NASDAQ or a CME, to be possible on the blockchain, we need a much more performant blockchain than what exists right now,” he informed Fortune.

Hon additionally pointed to different purposes that may very well be enabled by a blockchain with excessive transaction capability and low charges, equivalent to video games. A program like Runescape may need a participant choosing up 50 gadgets in an hour, that means {that a} blockchain-based recreation would want to replace their stats every time, with every replace representing a brand new transaction that must be low cost and quick sufficient to make financial sense on a blockchain.

Whereas VCs are betting huge on Monad, Garg stated his funding doesn’t preclude different blockchains from succeeding—simply in numerous capacities. “We think of these ecosystems in a non-zero-sum way,” Garg informed Fortune. “Just because Facebook exists doesn’t mean that Twitter and LinkedIn and Tiktok and Instagram and WhatsApp can’t exist.”