As cryptocurrency markets return to the upswing, different blockchains are competing to become the solution that drives demand in the next wave, just as Bitcoin and Ethereum did in past cycles.
A new player on the scene, Monad Labs, has finalized a $225 million round led by Paradigm with additional funding from investors including Electric Capital and Greenoaks to build a layer-one blockchain to challenge competitors like Solana and Sui. (luck I previously reported that Monad was in talks with Paradigm to raise money at a $3 billion valuation in March.)
In an exclusive interview, Monad's founder, Keone Hon, said Monad's innovation comes from rebuilding Ethereum's blockchain from the ground up – maintaining the ability to execute smart contracts while completing transactions at faster speeds, larger volumes and lower costs. While other new blockchains have a similar value proposition, Monad is compatible with the software that runs Ethereum, the Ethereum Virtual Machine (EVM), meaning developers can port around applications built for Ethereum.
“We're coming out of almost two years of development,” Hohn said. “At a time when much of the research community was focused on clustering, data availability, and other scaling trends, Monad essentially delved into the pure implementation side.”
Crowded scene of tier 1
Since Bitcoin's launch in 2009, developers have introduced new blockchains that promise a range of new capabilities, from cheaper and faster transactions to applications like decentralized exchanges or lending protocols that can run on top of the blockchain.
Although Ethereum launched in 2015 with the innovation of smart contracts, it has struggled to scale as demand increases, meaning transactions often come with high execution fees, known as “gas,” or are slow to process. Newer competitors — including Solana, launched in 2020 — promise faster speeds at lower costs, but still suffer from congestion problems.
Hon worked for eight years at Jump Trading, a Chicago-based confidential high-frequency trading firm, where he built systems that could process large numbers of transactions quickly. He quickly branched out into Jump's cryptocurrency arm, working alongside James Hunsaker, one of the founders of Monad.
“We realized that there was a huge need for a more performant electronic device, and that despite this need, no one was really working on solving this problem,” Hohn said. luck.
Unlike many new blockchains, Monad will have full support for EVM bytecode, the standard that many developers rely on when coding decentralized applications. Hohn described EVM as the Web3 equivalent of JavaScript in the early 2000s, as it was used by blockchains including Ethereum, Polygon, Avalanche, Binance Smart Chain, and Optimism. “Anyone who has created an application for any of these blockchains can move it to Monad without any changes.”
Avishal Garg, managing partner of Electric Capital, said that 90% of developers working in multiple cryptocurrency ecosystems work only on EVM chains, pointing to a recent report from his company. While this means Monad doesn't get the same benefits from a complete programming language redesign as other new blockchains like Aptos and Sui, Garg said it still gets most of the benefits.
“The way you go to market is you reach EVM compatibility and attract a group of developers,” he said. luck. “For us, it seemed like this was the playbook.”
“The most performing blockchain”
After raising a $19 million seed round announced in 2023, Monad's $225 million funding round represents the largest cryptocurrency fundraising of 2024 to date, according to Crunchbase's Web3 Tracker, suggesting a bear market in the sector has begun. In melting. Paradigm, the leading crypto venture capital firm in the round, is reportedly raising a new fund of more than $750 million. The round also marks one of the first cryptocurrency deals for Greenoaks Capital, the venture capital firm led by veteran investor Neil Mehta, after a small bet on FTX.
While Jump has incubated a number of cryptocurrency projects, including Wormhole and the Pyth Network, Hohn said Monad is completely separate from the trading company. Jump has been embroiled in scandal over its role in the collapse of the so-called Terraform Labs stablecoin project led by Do Kwon, whose civil trial led to a guilty verdict in federal court last week. Hunsaker testified in the proceedings where he was open He filed a whistleblower complaint with the Securities and Exchange Commission against his former employer.
Armed with the new funding round, Monad aims to deploy its mainnet by the end of the year, as well as a testnet in the next two months, Hoon said. Monad Labs currently has about 30 employees and plans to release native token, though Hon declined to comment on whether it will launch with the mainnet.
As cryptocurrency companies continue to chase mainstream adoption, Hon said the first use case for Monad will likely be for the type of high-frequency trading he conducted at Jump, noting that the world's largest stock and futures exchanges process between 500 million and 1 billion transactions per day.
“If we want the scale of an exchange, like the NASDAQ or CME, to be possible on a blockchain, we need a much more performant blockchain than what exists now,” he said. luck.
Hon also pointed out other applications that could be enabled by blockchain technology with high transaction capacity and low fees, such as gaming. A program like Runescape might have a player pick up 50 items per hour, which means the blockchain-based game would need to update its statistics every time, with each update representing a new transaction that had to be cheap and fast enough to generate economic gain. Feeling on the blockchain.
While venture capital firms are betting big on Monad, Garg said his investment doesn't preclude the success of other blockchains, just in different capacities. “We think about these ecosystems in a non-zero-sum way,” Garg said. luck. “Just because Facebook exists doesn't mean Twitter, LinkedIn, TikTok, Instagram, and WhatsApp don't exist.”
