Bitcoin DeFi Presents a Large Opportunity
Weekly Recap
Funding fell 27% from $282 million last week to $206 million this week across 34 deals. Triple-digit funding seems to be the new normal, as there has been a notable uptick in the private market in recent weeks. Despite the overall increase in activity, there has been a lack of CeFi-related projects in recent weeks, with just one deal in each of the last two weeks. Agora was the singular CeFi deal this week, which raised $12 million in a seed round led by DragonFly Capital. Agora’s first product is a fully collateralized and freely tradable stablecoin. Agora was co-founded by Nick VanEck (son of VanEck CEO), and Agora’s reserve fund will be managed by VanEck itself.
As private market activity is picking up, many companies are looking to raise large sums for new crypto funds. Over the past week, there have been reports of Paradigm looking to raise $750 million, Galaxy Digital and Hack VC each raising $100 million, and Hivemind Capital looking for $50 million. Additionally, Alliance raised $10 million from both Brevan Howard and Galaxy Digital and is seeking to raise an additional $80 million. The market is still far off from 2021 and 2022 peaks, but it is beginning to accelerate in that direction.
Funding by Category
Funding by Deal Stage
Deal of the Week
Zeus Network, a cross-chain communication network connecting Solana and Bitcoin, raised $8 million in an undisclosed round led by Mechanism Capital. Other investors included OKX Ventures, Animoca Brands, Lemniscap, and The Spartan Group. The fundraising process has been going on since September and there have been multiple tranches valuing Zeus from $30 million to $100 million with the majority coming in at the higher end of the range.
Why is this Deal of the Week?
As an asset class, crypto is worth approximately $2.7 trillion and there is only about $107 billion in DeFi TVL, according to Defillama. A large reason for such a small proportion is that about half of the $2.7 trillion is made up of Bitcoin, which mainly sits dormant. Part of Bitcoin’s utility is that it is a digital store of value, so it doesn’t need to be a productive asset. However, there’s no reason it can’t have the best of both worlds.
There has been a surge in Bitcoin DeFi development over the past year but interoperability between Bitcoin and other chains remains a major challenge. As an interoperability layer between Bitcoin and Solana, Zeus hopes to fuel the growth of Bitcoin denominated DeFi.
Zeus works in four main steps:
- Chain-agnostic transactions are proposed by Zeus Nodes and submitted to Zeus program states.
- Signatures are signed and aggregated on Zeus Layer.
- Zeus Nodes relay signed transactions to target chains.
- Secure cross-chain communication with fraud proofs.
Zeus harnesses the best of both worlds and allows developers to build and scale applications fluidly between Solana and Bitcoin, improving scalability, liquidity, speed, and security. Apollo is the first DeFi product build on Zeus, allowing users to seamlessly transfer BTC liquidity to Solana with zBTC. Additionally, the ZEUS token launched yesterday, opening at approximately $0.32 and rising to about $0.80, trading at an FDV of $800 million. Zeus’ mainnet launch is expected sometime in Q2.
Selected Deals
Ellipsis Labs, the development company behind Phoenix, an order book decentralized exchange on Solana, raised $20 million via a Series A round led by Paradigm. Electric Capital also participated in the investment round. Phoenix has facilitated over $20 billion in trading volume and claims to be the fastest on-chain order book exchange with average finality of half a second on Solana. The funding will be used to develop DeFi products that compete with traditional finance.
IoTeX, a DePIN modular infrastructure platform focused on the internet of things (IoT), raised $50 million in an undisclosed round from SNZ Capital, Foresight Ventures, Borderless Capital, Amber Group, and others. IoTex aims to connect smart devices and real-world data to blockchains, allowing Web3 technology to integrate into everyday life. IoTex has its own L1 chain, an off-chain compute middleware solution, and open hardware. Projects can select which modules to integrate and leverage ecosystem data. The IoTeX ecosystem already has over 228 projects spanning different devices, dApps, tokens, partners, and exchanges. The fresh funding will be used to accelerate DePIN growth and expand adoption.
SOAI, a project creating AI-generated soul mates, raised $5 million in an angel investment round from Archer Capital and X-Force Capital. SOAI recognizes the increasing digitization of our world and believes its AI companions will offer people deep emotional connections through precise emotional understanding and matching. By combining AI, Web3, and AR/VR, SOAI aims to redefine virtual social interaction and push the boundaries of virtual companionship. The funding will be used to expedite SOAI’s development and prepare its product for launch later this year.
Reports you may have missed
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