Venture Capital

Web3 app Kresus raises $25M to bridge consumers to blockchain

Kresus’ SuperApp aims to bridge more everyday consumers to digital goods, NFTs and other Web3 products and services.

Web3 app developer Kresus has closed a $25 million funding round to support the development of its so-called SuperApp, potentially opening the door to broader consumer adoption of digital assets. 

The Series A funding round was led by Liberty City Ventures, with additional participation from JetBlue Ventures, Craft Ventures, Franklin Templeton, Marc Benioff and Cameron and Tyler Winklevoss. Kresus said the capital would go toward product development and hiring.

Kresus is currently developing SuperApp, a Web3 platform that enables crypto users to buy and sell digital goods such as nonfungible tokens, access financial services and create a universal identification for their internet activity.

The company said its forthcoming app would help users bridge the gap to Web3 — a vague concept that refers to some future iteration of the internet powered by blockchain technology.

While Web3 as a concept remains underdeveloped, startups promising to deliver the first wave of Web3 products and services have attracted sizable investments from venture capital. According to Cointelegraph Research, Web3 was the focus of 182 venture funding deals in the fourth quarter. There were 616 individual Web3 deals in 2022 totaling $9.2 billion — only blockchain infrastructure projects garnered more interest in terms of funding.

Related: Deal Box launches $125M blockchain and Web3 venture fund

The latest high-profile Web3 partnership involved Google Cloud, which announced in February that it would become a validator for the Tezos blockchain. Google Cloud’s head Web3 engineer said that the Google subsidiary is working to provide “secure and reliable infrastructure for Web3 founders and developers to innovate and scale their applications.”

Blockchain Founders Fund raises $75M to encourage Web3 mass adoption

The fundraising round included Polygon, Ripple, Octava, NEO Global Capital, Appworks, Sebastien Borget of The Sandbox, GSR, LD Capital, Metavest Capital and others.

Blockchain Founders Fund, a venture capital fund supporting the adoption of Web3 and blockchain technology, has announced the close of a $75 million fundraising round from companies such as Polygon, Ripple, Octava, NEO Global Capital, Appworks, GSR, LD Capital, Metavest Capital and others, such as Sebastien Borget, chief operating officer of The Sandbox.

According to the announcement, the fund will focus on supporting high-potential early-stage pre-seed and seed projects that encourage the mass adoption of Web3 and blockchain technology. The fund has already invested in over 100 startups, including Altered State Machine, Splinterlands, GRID, Krayon and Magna. 

In an interview with Cointelegraph, Aly Madhavji, managing partner of Blockchain Founders Fund, shared that the venture capital fund will potentially be spread across more than 200 companies within the next 12 months. 

Speaking on the requirements and ways Web3 startups can seek funding from the Blockchain Founders Fund, Madhavji shared that it will focus on early-stage Web3 companies with strong teams and a demonstrated ability to execute their vision. In addition, the projects must offer products or services that solve real market needs and offer clear pathways for revenue generation or monetization over time. The projects must also have a clear, viable business plan that demonstrates a solid understanding of the target market and competitive landscape.

Discussing some of the major challenges in the crypto venture capitalist landscape and how the Blockchain Founders Fund is helping to address them, Madhavji shared: “There is a high level of competition for deals in the space, regulatory uncertainty, as well as a limited track record of successful projects. In order to address these challenges, we focus on making investments in high-quality startups that have strong fundamentals and demonstrate solid indications of traction.”

Madhavji also told Cointelegraph that the Blockchain Founders Fund takes a team-centric approach when evaluating investments to ensure that only well-rounded teams are chosen for funding. He added: 

“We take necessary precautions to navigate regulatory uncertainty by staying abreast with emerging trends in blockchain governance as they continue to evolve over time. Finally, we leverage our industry connections, including leading institutions and investors in the space to help our portfolio companies succeed.” 

Related: Angel investors vs. venture capitalists

On Feb. 24, Cointelegraph covered a report describing a pullback in venture capital spending by investors in Q4 2022. But despite the pullback, investors are still looking to bankroll blockchain-based technologies, applications and startups.

The report also suggests that venture capital investments are shifting toward “non-volatile innovations,” including cross-chain bridges, payments and remittances, lending, decentralized autonomous organizations, asset management and digital identity management.

VC blockchain and crypto funding drops off in Q4 2022: Report

2022 saw an overall decline in venture capital funding going into the blockchain and cryptocurrency space.

2022 will go down as a tough year for crypto, and the bleak market conditions were mirrored by a decline in venture capital (VC) funding flowing into the blockchain and crypto sectors.

A report from Blockdata highlights consecutive quarterly drops in funding through 2022, following booming VC funding into the wider Web3 space through 2021.

Analyzing data from CB Insights, Blockdata rounded off 2022’s final quarter of venture capital funding value, noting a 34% decline from Q3 2022. The last quarter of the year was down drastically compared with Q1 and Q2, dropping by 67% and 53%, respectively.

Data source: Blockdata/CB Insights

The subsequent drop in VC investment fell every quarter from an all-time high of $11 billion in investments and 692 deals in the first four months of 2022.

Blockdata points to several factors for the decline in crypto and blockchain-related VC funding last year. The $60 billion collapse of the Terra ecosystem in May 2022 is highlighted as a trigger event, leading to the subsequent bankruptcy of cryptocurrency lending firms Three Arrows Capital and Celsius.

The implosion of FTX in November 2022 further impacted volatility through the space, while global macro conditions in capital markets affected by rising interest rates and inflation also played a role in the decline of investments from venture capitalists.

As a result, Q4 2022 saw just $3.7 billion in funding from VCs — a 61% drop from the $9.6 billion in Q4 2021. The total funding from blockchain and crypto startups declined by 11% yearly, from $32 billion to $29 billion.

Related: Top crypto funding stories of 2022

Blockdata highlights the volume of deals in 2022 increasing by 35% compared with 2021 as a positive takeaway. The firm suggests that despite a pullback in venture capital spending, investors are still looking to bankroll blockchain-based technologies, applications and startups.

The report notes that venture capital investments are shifting toward “non-volatile innovations,” including cross-chain bridges, payments and remittances, lending, decentralized autonomous organizations, asset management and digital identity management.

Q4 still produced some sizeable VC investments. Amber Group netted the highest funding, raising $300 million in a Series C round in December 2022 to tackle drawdowns of specific products affected by the FTX debacle.

Nine “blockchain mega-rounds” occurred in Q4, where firms netted over $100 million in funding. Uniswap and Celestia were the only firms to reach unicorn status in Q4 last year, valued at $1.7 billion and $1 billion, respectively.

Coinbase Ventures was identified as one of the most active corporate VC investors through 2022, participating in 13 different funding rounds of blockchain and crypto startups.

Cointelegraph Research previously highlighted the drop in venture capital investments into blockchain and crypto firms in 2022. Web3 and infrastructure service providers received the highest share of VC funding, according to Cointelegraph’s in-house research.

Reddit co-founder bought 50,000 Ether during presale for $15K

Alexis Ohanian is extremely bullish on cryptocurrency, using the proceeds from his early Ether investment to start a crypto-focused venture capitalist firm.

The co-founder of the social media website Reddit, Alexis Ohanian, reportedly bought 50,000 Ether (ETH) for just $15,000 during the cryptocurrency’s presale in 2014, costing just 30 cents per coin.

Ohanian, who left the social media giant in 2020, told Forbes on Feb. 21 that he found the idea of a decentralized store of value very attractive, partly due to his Armenian heritage, prompting him to take an early gamble on Ethereum.

“Any group of people who have in their consciousness, or in their collective history, some idea of persecution, especially by a state, makes the idea of a store of value that is not controlled by any single state very attractive. And so, in some ways it was hardwired in me then, and made me in a way receptive to the idea of a decentralized currency.”

At current prices, this investment is worth a whopping $82.5 million, according to CoinMarketCap, representing an increase of 549,589%.

He continued to explain how Turkish soldiers seized his family’s inheritance of heirloom rugs during the Armenian genocide in World War I, which led to his interest in “unseizable property.”

Due to his aversion to seizable property, Ohanian is a big proponent of self-custody. He manages the private keys to some of his most valuable crypto-related investments, keeping them off exchanges that are more vulnerable to the prying arms of governments.

When he heard about Ethereum in a meeting with cryptocurrency exchange Coinbase, Ohanian claimed he saw the potential for developers to build a wide range of potentially unseizable assets on top of it, such as nonfungible tokens (NFTs).

As a result, he made his initial investment in Ether but noted in the interview that “in hindsight, I didn’t invest nearly as much as I should have.”

Related: Ethereum derivatives data suggests $1,700 might not remain a resistance level for long

Ohanian founded venture capitalist firm 776 in 2020 using the proceeds from his early investments in Ether and Coinbase. The firm has invested in 29 crypto-related startups and raised $500 million in February 2022 to finance similar investments.

In line with Ohanian’s views that bear markets allow investors to buy assets at discounted prices, the firm has regarded the latest market downturn as the perfect time to make long-term bets on the crypto industry.

The firm currently boasts over $750 million in assets under management.

Ohanian noted that although crypto is extremely volatile, “there are plenty of people who have that generational consciousness of seeing massive inflation,” which makes crypto’s volatility much more palatable.

Angel investors vs. venture capitalists

Angel investors are seed-stage financiers who offer mentorship to nascent businesses for equity, while venture capitalists inject substantial capital into later-stage firms.

Angel investors and venture capitalists are two types of private investors who provide funding for early-stage and growth-stage companies. However, there are some key differences between them that we will cover in this article.

Who are angel investors?

High-net-worth individuals who invest in companies at an early stage in exchange for equity in the business are known as angel investors. They frequently invest their own funds and take a more active approach to investment, offering advice and mentoring to the businesses they support. The well-known angel investors in the crypto world include:

  • Roger Ver — He is known as “Bitcoin Jesus” and is an early investor in Bitcoin (BTC) startups, such as Blockchain.info, BitPay and Kraken.
  • Barry Silbert — He is the founder and CEO of Digital Currency Group, which invests in and acquires cryptocurrency-related companies.
  • Naval Ravikant — He is the co-founder of AngelList and has invested in projects such as MetaStable, Algorand and others.
  • Charlie Lee — He is the creator of Litecoin and has invested in a number of other cryptocurrency-related startups.

Who are venture capitalists?

Investors who fund startups and early-stage businesses with significant room for growth are known as venture capitalists (VCs). They frequently belong to a professional investment firm or fund and typically make larger investments than angel investors.

Related: Venture capital financing: A beginner’s guide to VC funding in the crypto space

They obtain equity in the business in return for their investment, and they frequently have a say in how the business is operated. When the firm eventually goes public or is acquired, VCs hope to profit by selling their equity. Some well-known VC firms include:

  • Andreessen Horowitz
  • Blockchain Capital
  • Coinbase Ventures
  • Digital Currency Group
  • Polychain Capital
  • Pantera Capital.

Differences between angel investors and venture capitalists

Stage of investment

Angel investors frequently contribute seed money to startups by making investments in early-stage businesses. On the other hand, venture capitalists frequently make investments in later-stage businesses that have already demonstrated strong growth potential.

Size of investment

Compared to venture capitalists, angel investors often invest less money. Unlike venture capitalists, who might invest millions of dollars in a firm, angel investors often make investments between $10,000 and $100,000.

Involvement in the company

Angel investors frequently adopt a hands-off strategy and do not actively participate in the company’s operations. On the contrary, venture capitalists frequently support the management of the businesses they invest in, both strategically and operationally.

Exit strategy

Angel investors often have a longer investment horizon and can withdraw their money through an initial public offering (IPO), merger or acquisition. Conversely, venture investors often want to sell their investments within a period of five to seven years through an IPO or acquisition.

Source of funds

High-net-worth individuals who invest their own money are angel investors. On the other side, venture capitalists oversee money for high-net-worth individuals or institutional investors and use that money to make investments.

Risk tolerance

Angel investors are generally more willing to take on higher levels of risk than venture capitalists, who are more focused on minimizing risk.

Investment criteria

Angel investors may be more flexible in their investment criteria, while venture capitalists have more stringent criteria and require companies to meet specific milestones and targets.

Portfolio diversification

Angel investors tend to have a more diverse portfolio, while venture capitalists may have a more concentrated portfolio with a focus on a specific industry or sector.

Weaknesses of angel investment vs. venture capital

The above differences highlight the approaches and priorities of angel investors and venture capitalists in the cryptocurrency industry. Both have their own weaknesses, and startups may choose to work with both depending on their specific needs and goals.

The weaknesses of angel investments include:

  • Limited funds: Angel investors frequently invest less money than venture capitalists, which may restrict the size of firms they may support.
  • Lack of due diligence: When making investment decisions, angel investors may rely too heavily on instinct and personal relationships, which might raise the chance of failure.
  • Long-term commitment: Angel investments are typically made for the long term and may not offer an exit option for either the investor or the startup.

The weaknesses of venture capital include:

  • High expectations: Venture investors frequently have high standards for companies and may ask them to achieve particular benchmarks and goals.
  • Short-term focus: Venture capitalists are frequently driven to realize their investments within a specific time frame and often have a stated exit strategy.
  • Control: Venture capitalists may have little power to influence important decisions in the firms they fund.

Regardless of the above shortcomings, the process of securing funding from investors can help validate a startup’s business model and increase its visibility in the market.

Sequoia Capital, Paradigm among VCs facing ‘tricky’ FTX investor lawsuit

It’s a “tricky case,” as it is unknown what obligation these firms had to “completely separate investors,” suggests a crypto lawyer.

Users of bankrupt crypto exchange FTX have reportedly taken aim at financiers who promoted the platform, suggesting their efforts added an “air of legitimacy” to the now-defunct exchange in a case labeled as “tricky” by a crypto lawyer.

A Feb. 15 Bloomberg report revealed a class-action suit filed Feb. 14 by FTX investors against venture capital firm Sequoia Capital and private equity firms Thoma Bravo and Paradigm.

The investors accused the firms of touting “their own investments” of hundreds of millions of dollars in FTX.

It was alleged the firms were involved in a promotional marketing campaign in 2021, which the investors alleged added an “air of legitimacy” to the disgraced crypto exchange.

The three firms were all investors in FTX’s $900 million Series B round in July 2021, the largest raise in crypto history, in which various partners of the firms spoke highly of former FTX CEO Sam Bankman-Fried.

In a statement following the funding announcement in July 2021, Paradigm’s co-founder Matt Huang called Bankman-Fried a “special” founder who is “stunningly ambitious.”

Speaking to Cointelegraph, crypto lawyer Liam Hennessy, partner at Australian law firm Gadens, stated that it is a “tricky case,” and he questions “what obligation Sequoia and others” have to “completely separate investors.”

He added that despite the fact Sequoia’s due diligence wasn’t great, it doesn’t make it “liable to others.”

Hennessy believed it could be a case of “buyer beware,” as there is no suggestion that Sequoia wasn’t “playing within the regulatory rules.”

Cointelegraph contacted Sequoia Capital, Thoma Bravo and Paradigm for comment but did not receive an immediate response.

Related: Charity tied to former FTX exec made $150M from insider deal on FTT tokens: Report

A separate Feb. 15 Bloomberg report revealed that in the same court filing, Sam Bankman-Fried and his father, along with former FTX and Alameda Research executives Caroline Ellison, Nishad Singh and Gary Wang, were all issued with a subpoena — an order for a person to attend court — to provide further evidence.

It was stated that Joseph Bankman, Ellison, Wang and Singh are due to attend court on Feb. 16, while Sam Bankman-Fried is expected to attend on Feb. 17.

Deutsche Bank’s DWS eyes 2 German crypto firms for investment: Report

Companies negotiating with DWS Group include Deutsche Digital Assets, a crypto exchange-traded products provider, and market maker Tradias.

Deutsche Bank’s asset management arm is reportedly in discussions to invest in two German crypto companies.

According to a Feb. 8 Bloomberg report citing “people familiar with the matter,” DWS Group CEO Stefan Hoops is currently in talks to buy a minority stake in Deutsche Digital Assets, a crypto exchange-traded products provider. It’s also in talks with Tradias, a market maker firm owned by Bankhaus Scheich — a traditional finance market maker.

Hoops has been bullish about the opportunities presented in the digital assets space.

During a recent earnings call, the executive said that DWS has “started to assess strategic partners and commence due diligence on potential targets” where it expects to gain a foothold, including digital assets.

The downturn in digital asset prices could result in “interesting opportunities” for DWS, he said.

Speaking about the bank’s strategy for the crypto industry, Hoops mentioned a plan to build or acquire “various specific blockchain-related services.”

According to Deutsche Digital Assets’ website, the firm offers investors exposure to crypto assets through a variety of investment vehicles, ranging from passive to actively managed funds, as well as white-labeling services for asset managers. 

Tradias is an over-the-counter (OTC) trading platform for cryptocurrencies and security tokens created by Bankhaus Scheich in 2020, providing crypto loans and liquidity services.

Related: Euro-pegged stablecoin powered by Ethereum launches in Finland

The crypto investment play is reportedly amid efforts by DWS to revive growth and regain reputation after tax fraud and greenwashing allegations led to probes in Germany and the United States.

DWS and Deutsche Bank offices were raided in May 2022 by Frankfurt prosecutors, after they found “sufficient evidence” that ESG standards were applied only to a minority of assets, contrary to their marketing claims.

Germany is considered to have one of the friendliest tax regimes for long-term crypto holders, as the country charges zero capital gains tax on the sale of crypto held for over a year.

According to an October crypto ranking that evaluates factors such as crypto outlook, clear crypto tax rules, and more transparent regulatory communication, Germany ranks among the most favorable crypto economies.

VC Roundup: ZK proofs, DeFi protocol and longevity DAO attract investment

Venture capital deals slowed in the second half of 2022 amid the bear market. However, behind the scenes, blockchain startups continue to build.

2023 is off to a tepid start for crypto venture capital, as the industry continues to emerge from a prolonged bear market. But that doesn’t mean there aren’t deals. In January, Cointelegraph reported a $125 million raise from Blockstream, a $60 million allocation to QuickNode and pair of ecosystem funds from Injective and SSV worth $150 million and $50 million, respectively. 

The latest edition of VC Roundup brings you seven smaller venture deals that may have slipped through the cracks.

Related: Venture capital investments into blockchain continue to free-fall: Report

=nil; Foundation closes $22M fundraise

In January, Polygon Capital led a $22 million funding round for =nil; Foundation, an Ethereum development company focused on zero-knowledge (ZK) proofs. The capital raise valued =nil; Foundation at $220 million and will be used to help the firm expand its ZK proofs marketplace. The company’s Proof Market is a data accessibility protocol that enables layer-1 and layer-2 blockchains to generate ZK proofs on demand without relying on centralized intermediaries. Proof Market has been developed to provide secure data transfer between Ethereum and public protocols, according to =nil; Foundation co-founder Konstantin Lomashuk.

Related: Top crypto funding stories of 2022

Ethereum infrastructure provider Blocknative raises $15M

Web3 infrastructure company Blocknative has raised $15 million to support its continued growth in the Ethereum and public blockchain marketplace. The company, which provides real-time transaction monitoring that enables validators to optimize staking rewards, is positioning itself as a block builder for post-Merge Ethereum. The funding round involved several venture firms, including Blockchain Capital, Foundry Group, Fenbushi Capital, Hack VC and IOSG Ventures. Blocknative has raised $34 million in cumulative funding to date.

Web3 startup Nillion raises $20 million

Web3 infrastructure platform Nillion closed a strategic funding round valued at $20 million as part of its ongoing efforts to promote decentralization without blockchain technology. Over 150 investors participated in the round, including Big Brain Holdings, Chapter One, GSR, Hashkey and SALT Fund. Nillion’s founding team includes former executives of Uber, Hedera Hashgraph and Indiegogo. The company has also recruited executives formerly of Coinbase and Nike. While Nillion promotes decentralization without blockchains, its technology offers a multi-chain wallet compatible with existing blockchains.

Hack VC leads Archimedes’ $4.9M seed round

Decentralized finance (DeFi) lending marketplace Archimedes launched in February with a $4.9 million seed round backed by venture firms Hack VC, Uncorrelated Venture, Psalion, Truffle Ventures and others. Archimedes’ marketplace uses nonfungible tokens to facilitate borrowing and lending, where leverage takers receive an NFT representing a yield-generating stablecoin. The platform provides leverage up to 10 times the principal collateral amount.

The DeFi sector held up to scrutiny during the centralized finance contagion of 2022. As reported by Cointelegraph, DeFi filled an important credit gap for the market in the wake of CeFi’s apparent failures.

Related: DeFi’s Next Big Thing: Liquid Staking Derivatives

Ethos Wallet receives venture backing

Sui Blockchain’s Ethos Wallet closed a $4.2 million seed round in January led by Boldstart Ventures and gumi Cryptos Capital. Ethos is a digital wallet that allows users to store their crypto and NFTs using a Chrome extension. The wallet also provides access to decentralized applications on the Sui blockchain, which was founded by Mysten Labs. In 2022, Mysten Labs raised $300 million in support of Sui, with backers that included Coinbase Ventures, Jump Crypto, Andreessen Horowitz and the now-defunct FTX Ventures.

VitaDAO raises $4.1M

The market for decentralized autonomous organizations, or DAOs, appears to be ramping up amid new use cases for the novel entity structure. In January, the longevity science research organization VitaDAO raised $4.1 million from contributors such as Pfizer Ventures, Shine Capital, L1 Digital and Web3-natives Beaker DAO and Spaceship DAO. VitaDAO said the capital raisewould fund longevity research and spin off a new biotechnology startup later this quarter. The funds will also be used to promote the commercialization and licensing of VitaDAO’s IP-NFT assets, which are NFTs representing intellectual property and patents to therapeutic research projects.

Hyper Oracle closes pre-seed funding backed by Sequoia China

Hyper Oracle, another ZK-focused company, has raised $3 million in a pre-seed funding round led by Sequoia China and Dao5. The company has developed blockchain indexing and automation protocols for integrating ZK-proof systems — something Hyper Oracle says will make middleware run faster and more securely. Hyper Oracle will use the funding to expand its research and development and hire additional personnel.

Long-standing crypto project vs. scam: Ava Labs CEO shares key difference

Ava Labs’ CEO has condemned players that jump into every single new coin offering or token in the hopes that they will go up.

Emin Gün Sirer, creator of the Avalanche Consensus protocol and CEO of Ava Labs, believes that there is one very straightforward method to spot a long-standing cryptocurrency project.

On Feb. 7 ​​Sirer discussed blockchain venture capital and crypto regulation in a fireside chat with MarketAcross chief operations officer Itai Elizur at the Web3 builder-focused event, Building Blocks 23.

During the discussion, the Avalanche founder pointed out the crucial role of “staying power” in the crypto industry, condemning players who run from one project to another or jump into “every single new coin offering” in the hopes that they will go up. According to ​​Sirer, the desire to reap quick profits from crypto will only turn the space into a terrible thing, and VCs are not to blame.

“I will tell you who’s to blame — it’s us,” ​​Sirer declared, urging the community to support solid crypto initiatives and avoid scammy projects with a short life span. He then shared his “very simple test” of how to spot long-standing projects in crypto and stay away from those who make grand promises and then disappear.

Ava Labs founder and CEO Emin Gün Sirer (right) with MarketAcross chief operating officer Itai Elizur (left). Source: Cointelegraph 

“So, look at the team behind any project; look at their staying power,” the Ava Labs CEO said, adding that the regulating jurisdiction of a cryptocurrency firm provides one of the most important hints about its long-term capabilities. He stated:

“If a project is headquartered outside the United States, you know that it’s — some kind of a Cayman, Bahamas, etc. — some kind of a tax haven, or Austin, Texas etc. They are there to sell points and disappear. They have no staying power.”

Crypto firms headquartered in Silicon Valley are likely to do “pure tech play,” Sirer argued. “They will do the one-tech-trick pony, then they will disappear,” he noted.

The Ava Labs CEO went on to say that long-lasting crypto projects are more likely to be headquartered in New York, “where the assets are” and that are integrated with financial institutions. “That’s where we need to go,” Sirer stated, stressing that there are some people who devote their lives and careers to making things work in crypto. “VCs, of course, love the short lifespan projects,” he added.

Related: New York Assembly introduces crypto payments bill for fines, taxes

Additionally, Sirer emphasized the importance of always growing the space, even during a bear market. “In fact, I happen to like bear markets more. It’s much more fun to be building when everyone is more rational,” the executive stated.

The latest remarks by Sirer add some new ideas about the executive’s view of the cryptocurrency market. In 2020, Sirer argued that more than 95% of cryptocurrencies were nothing but scams. He also criticized use cases of new crypto initiatives, stating that Bitcoin (BTC) was the first cryptocurrency to offer a peer-to-peer online payment method. 

a16z votes against proposal to deploy Uniswap v3 on BNB Chain

The venture firm used its 15 million UNI holding to vote against the deployment using the Wormhole bridge.

Venture capital firm Andreessen Horowitz (a16z) voted against a final proposal to deploy Uniswap v3 on the BNB Chain using the Wormhole bridge, the Uniswap DAO forum shows. 

The governance proposal to deploy the latest Uniswap iteration on the BNB Chain was submitted on Feb. 2 by 0xPlasma Labs on behalf of the Uniswap Community, after it passed a temperature check with 20 million (80.28%) votes for yes, and 4.9 million (19.72%) votes for no. On Feb. 5, the venture firm used its 15 million UNI holding to vote against the move.

At the time of publication, only 3% of UNI tokens had cast a vote, resulting in 23.4 million votes. The voting period is scheduled to end on Feb. 10.

Uniswap DAO – Proposal to deploy Uniswap V3 on BNB Chain using the Wormhole bridge. Source: Tally

Behind the disagreement is the cross-chain bridge chosen for the deployment. The proposal uses the Wormhole bridge, while a16z supports the use of LayerZero as the interoperability protocol.

Partners of the venture firm expressed their intention to vote for LayerZero as the deployment bridge during the temperature check. Eddy Lazzarin, head of engineering at a16z, commented in the proposal discussion on Jan. 31:

“To be totally unambiguous, we at a16z would have voted 15m tokens toward LayerZero if we were technically able to. And we will be able in future Snapshot votes. So, for the purposes of a “temperature check”, please count us this way.”

In the proposal, 0xPlasma Labs notes that stakeholders within the Uniswap ecosystem “have expressed a desire to see trust-minimized bridges used for governance for the new Uniswap v3 deployment on BNB Chain.”

Based on technical assessments of four bridges and “a very complex discussion and voting on the Snapshot, the community chose the Wormhole bridge for the Uniswap v3 deployment on BNB Chain,” notes the proposal. The second position was held by the LayerZero team, with 17 million votes.

In 2022, the Wormhole protocol suffered one of the largest exploits targeting bridges, resulting in the loss of 120,000 Wrapped Ether (wETH) tokens, worth $321 million at the time. An attacker found a vulnerability in the protocol’s smart contract and was able to mint 120,000 wETH on Solana without collateral before swapping it for ETH

LayerZero Labs is part of a16z venture’s portfolio. In March, the protocol dedicated to omnichain decentralized applications raised $135 million in a funding round led by a16z and Sequoia, among other investors, earning unicorn status with a $1 billion valuation.