Sequoia backs blockchain scaling startup StarkWare at $2 billion valuation

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As the crypto world continues to heat up, developers are clinging to the Ethereum network despite their usual struggle to meet the stress of the global network’s transaction loads. To speed up and cheapen transactions on Ethereum, developers are looking to so-called layer-2 (L2) blockchains, which are built on the Ethereum network, taking off the computational stress when writing transaction data to the main network.

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starkware, which makes an Ethereum scaling solution called Starknet, has closed a $50 million Series C led by Sequoia Capital. The increase comes several months after the firm raised a $75 million Series B led by Paradigm, a crypto VC firm co-led by former Sequoia Capital partner Matt Huang.

This latest increase values ​​the Israeli startup at $2 billion.

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As the Ethereum network continues to grow in popularity despite traction from competing blockchains with greater efficiency, investors begin dumping more money into infrastructure startups aimed at helping Ethereum scale to more users and greater transaction volume. are doing. Earlier this month, Nerdshala covered the Series B growth of Matter Labs backed by Andreessen Horowitz. In August, Lightspeed backed startup Offchain Labs, a blockchain scaling company valued at $1.2 billion.

Despite being one of the more well-known investment firms in the tech sector, Sequoia has been slow to fully adopt crypto startups, leaving competitors like Andreessen Horowitz to support more early players through dedicated funds. Is. Sequoia first backed Starkware in 2018, although it is leading a round for startups for the first time. a recent report Information Elaborate that a quarter of Sequoia’s new investments this year were in blockchain startups.

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“The main thing that separates us in the L2 ecosystem… [L2] Solutions are out there,” co-founder Eli Ben-Sasson tells Nerdshala. “We have settled over $200 billion and settled over 50 million transactions.”

StarkWare’s special scaling solution is called Zero-Knowledge Rollup; It processes multiple transactions on its platform and maps the bundled data to the Ethereum network. Unlike competing “optimistic rollups”, which rely on a network of validators to ensure that bundled data is valid after it is published, zero-knowledge proofs leverage cryptography to mathematically ensure that Everything has to be sniffed before publishing it. Those cryptographic proofs require more computational effort than other solutions, but their more secure architecture has led many developers to believe they are the future of scalability for the Ethereum network.

Some of StarkWare’s customers include Coneysys, Immutable, dYdX and Sorare. The startup is currently gearing up for an Ethereum mainnet deployment later this month of its StarkNet L2 after months in public testing.

,[Our valuation] indicates that the investment community expects great things from the permissionless blockchain space and understands that growing it is a really necessary capability that needs to be in place and deployed,” CEO Uri Kolodny tells Nerdshala. That’s what we’re going to do two weeks from now.”

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