5 Crypto Startups to Watch Right Now
Dear Bankless Nation,
Today's venture investors are backing tomorrow's crypto giants. While there's still plenty of noise out there, fewer startup rounds means it's easier to get a full picture of the coming opportunities.
We've been reviewing all of the venture rounds announced last month, and today we're digging into the five startup-built protocols that we're most excited about.
- Bankless team
Seizing early investment opportunities has historically been a cornerstone of achieving favorable financial returns within the realm of crypto investing.
Despite the inaccessibility of private markets to the general investing public, it remains vital for anyone active in crypto to keep an eye on the industry’s latest private funding rounds where the earliest stage investments are being made!
By staying apprised of private market investment trends, you can gain a significant investment edge and position yourself one step ahead of the meta every crypto Twitter influencooor is destined to shill in the not-so-distant future…
Today, we’re exploring five of the most interesting venture raises from the month of July to help you get a sense of what upcoming protocols you need to pay attention to in order to stay ahead of the curve!
💱 Ambient
Website | Twitter
Round size: $6.5M
Sector: Exchange
About:
Ambient (formerly known as CrocSwap) is a decentralized exchange that runs entirely through a single smart contract, unlocking numerous advantages over traditional DEX architectures.
Flash accounting, for example, allows trades to occur between pools in the Ambient smart contract with settlement of those trades delayed until the end of the trade. This translates into substantial gas savings for users and makes arbitrage more efficient, aiming to reduce toxic order flow while increasing the profitability of LPs.
Additionally, while alternative DEXs segregate concentrated and full range LPs into different pools (i.e.; Uniswap V3 and V2), all types of liquidity on Ambient are provided to the same pool on a single liquidity curve, increasing liquidity for swappers.
Why I’m watching:
Ambient’s fundraising announcement comes shortly after the protocol’s successful deployment to mainnet in June. Since then, Ambient’s TVL has been up-only and the DEX’s smart contracts now safeguard just shy of $9M in value.
Continued adoption of Ambient would be an indication that the single smart contract design does, in fact, increase LP profitability. This would bode well for Uniswap, whose upcoming V4 release will look to implement a similar architecture and house all pools within one “singleton” contract.
As a tokenless and recently deployed DEX, Ambient is an excellent candidate for a potential airdrop and its early users could easily find themselves with a token allocation in the future.
💸 Ethena
Website | Twitter
Round size: $6.5M
Sector: Stablecoin
About:
Ethena is building a delta-hedged stablecoin, USDe, alongside a globally accessible and permissionless dollar-denominated savings instrument that the protocol calls the “Internet Bond.”
USDe will be collateralized by ETH liquid staking derivatives – like Lido’s stETH – and Ethena will hedge out the price fluctuations of the underlying collateral on both centralized and decentralized trading venues. To minimize counterparty risk, user collateral is never held by centralized exchange servers and is instead held with custodians like Fireblocks and Fidelity in “off-exchange” secured custody accounts.
Beyond satisfying users’ needs for a store of value and means of transaction with USDe, Ethena will create the “Internet Bond” by generating and passing through to users an embedded yield earned from ETH staking rewards and basis on derivatives contracts. This will empower the creation of floating and fixed rate bonds products and enable the derivation of a crypto-native yield curve!
Why I’m watching:
While Ethena isn’t yet live, the protocol’s deployment to mainnet in Q4 is one that I eagerly await!
Because staked ETH collateral can be perfectly hedged with a short position of equivalent notional value, USDe obtains extreme capital efficiency and can be borrowed at a 1:1 collateralization ratio, making it a choice instrument for accessing leverage on ether.
Further, Ethena Labs has expressed a desire to see USDe utilized as a collateral asset for Synthetix’s sUSD. This partnership would create synergies for both protocols, helping sUSD achieve scale while solidifying USDe as a reserve asset for DeFi protocols.
💧 Conic Finance
Website | Twitter
Round size: $1M
Sector: Yield
Ticker: CNC (Liquid Token!)
About:
Conic Finance is a yield protocol on Ethereum built on top of Curve that introduced single asset liquidity pools called Omnipools. The deposited asset, say USDC, is allocated by Conic across one or more Curve pools that use the pool’s underlying token. A portion of the Curve pool LP tokens are restaked to Convex.
Holders of Conic native token, CNC, can lock it with the protocol to receive vlCNC to direct liquidity allocation weights of the Curve pools used by an Omnipool in bi-weekly liquidity allocation votes (LAV). CNC is emitted to boost yields for LPs that stake their Omnipool LP tokens and to incentivize deposits during a rebalance period, which occurs after an LAV.
Why I’m watching:
Last month, Conic found itself the victim of a 1.7k ETH hack. After this unfortunate exploit, the team announced its intention to further harden Omnipools against drainage attacks by prohibiting users from depositing and withdrawing in the same block and increasing the dynamism of Omnipools.
This $1M raise secures the additional runway needed for the Conic team to harden the Omnipools and (crucially) will cover their upcoming smart contract audit costs. With fundraising secured for Conic’s next iteration, now could be an opportune time to scoop a CNC bag at discounted prices in anticipation of the protocol’s relaunch.
🤖 Flashbots
Website
Round size: $60M
Sector: Infrastructure
About:
Flashbots is a research and development organization that was formed to mitigate the negative externalities posed by MEV.
MEV-Boost is the current core Flashbots product offering. It's a relay for proof-of-stake Ethereum that connects validators with block builders – specialized third parties who specialize in maximizing the economic value of a block. This effectively achieves out-of-protocol proposer-builder separation (PBS) and democratizes staking by allowing solo validators to earn similar staking yields to sophisticated staking providers.
Now that Flashbots has successfully decentralized access to MEV yields, their team is tackling its next challenge: decentralizing block building. To accomplish this goal, Flashbots is developing the Single Unifying Auction for Value Expression (SUAVE), a decentralized transaction ordering layer. Flashbots hopes to corner the decentralized sequencing market with SUAVE and sees it becoming the mempool and block building solution for all blockchains.
Why I’m watching:
With this $60M raise, Flashbots joins a prestigious list of crypto companies valued at $1B or greater, entitling it to unicorn status, and proceeds of this raise are funding the development of SUAVE.
SUAVE is shaping up to be a leading competitor in the nascent shared sequencing sector and its addition to Flashbots’ product line provides a much needed route to revenue for a developer whose core product – MEV-Boost – is free software.
At the blockchain level, SUAVE promises to maximally decentralize sequencing while unlocking cross-chain coordination for builders. For users, SUAVE will simplify their onchain experience by unlocking intents, preserve their privacy by routing order flow through a privacy-aware auction, and reduce transaction fees by entitling them to the MEV they generate.
💻 RISC Zero
Website | Twitter
Round size: $40M
Sector: Infrastructure
About:
RISC Zero aims to improve the security and trustworthiness of distributed applications by democratizing access to zero-knowledge (ZK) technology for developers and users everywhere. Zero-knowledge proofs (ZKPs) are a type of cryptographic primitive that allows for the output of the program to be checked for correctness by someone who cannot see its inputs.
RISC Zero’s general purpose zero-knowledge virtual machine (zkVM) removes barriers of crypto and makes the development of ZKPs compatible with existing programming languages, tools, and developer skills. This zkVM serves as the foundation for Bonsai, a ZKP network that allows any application to integrate ZKPs directly into its smart contracts without the need for custom circuits, allowing developers to focus on writing their application instead of worrying about their proofs and server infrastructure.
Why I’m watching:
The Optimism Foundation recently announced its decision to move forward with RISC Zero as one of two finalists commissioned to design a possible zero-knowledge proof system for the OP Stack.
Potential applications for RISC Zero’s zkVM don’t stop with crypto, however! RISC Zero has designed its zkVM for general usability, a decision that could help it become the go-to solution for enabling privacy-preserving computation solutions in traditional industries like healthcare and transportation.
Action steps
- 🔵 Read last week's report on 5 Investment Opps on Base
- 👁️ Review the State of Ethereum Q2 2023 Report