Weekly Recap

Total funding rose 58% this week from $128 million to $203 million, while total deals ticked up to 29 compared to last week’s 26. Infrastructure was the dominant category, representing 64% of funding and 55% of deal count. There were five CeFi deals this week (including our DotW), one of the higher totals for the category in recent weeks. Seed rounds amassed a staggering $92 million in funding across 13 deals, with an average deal size of $7.1 million. For comparison, the average deal size across all 2023 Seed rounds was $5.6 million, potentially signaling increased appetite for early-stage projects. The $60 million in the Token Sale category came from a new fundraising method known as “node sales,” where projects auction off licenses to run network nodes in exchange for discounted future tokens, increasing network participation and generating capital. 

Funding by Category

Funding by Stage

Deal of the Week

Arbelos Markets, a crypto market maker, raised $28 million through seed equity and debt financing led by Dragonfly Capital. Other investors included Paxos, Circle Ventures, P2 Ventures, and others. Arbelos provides market liquidity and OTC trading, focusing on transparency through its proprietary Transparency Engine, providing clear and provable solvency. Arbelos was started by industry veterans Joshua Lim and Shiliang Tang. Lim was the Head of Trading Strategy at Galaxy Digital and Head of Derivatives at Genesis, and Tang was the CIO at LedgerPrime. 

Why is This Deal of the Week?

2022 and 2023 saw many centralized crypto entities fail including FTX, Alameda, Genesis, Silvergate, and others, creating a sense of distrust across all centralized firms. Despite the turmoil, institutional crypto interest has continued rising, creating an imbalance between the supply and demand of institutional-grade capital markets services. It’s clear that large financial institutions prefer regulated entities for business, as displayed by the CME’s increasing market share of open interest compared to other exchanges.

Arbelos is aiming to balance the market as a principal risk-taker, providing substantial liquidity across spot, derivative, and structured products, while avoiding the mishaps of other industry participants. Arbelos’ Transparency Engine is a proprietary technology offering real-time visibility into Arbelos’ risk profile, balance sheet, and counterparty exposure, giving investors the necessary transparency and trust to win their business and restore confidence in centralized entities. Arbelos’ business model appears to be working. In the six months since its launch, Arbelos has become one of the top five global liquidity providers in options block liquidity, with total derivatives trading volume surpassing $25 billion. With the additional funding, Arbelos will look to expand the team, product offerings, and market access.

Selected Deals

Sophon, a layer-2 network built with the ZK Stack, raised $60 million in a “node sale” from investors, including Maven 11, Paper Ventures, and the Spartan Group, SevenX Ventures, among others. $45 million came from private investors, while $15 million came from retail investors. Node sales involve selling node licenses that give investors exposure to future project tokens at a discounted price while participating in the network. Sophon has dedicated 20% of its total supply to be distributed to node license holders in the first 36 months after launching. Since its native token hasn’t launched yet, investors received NFTs representing their respective node licenses. Sophon is expected to launch its mainnet in the next few months at which point node license holders will be able to delegate their licenses to Sophon’s centralized sequencer (preliminary) to earn their share of network fees. 

Botanix Labs, an EVM bitcoin L2, raised $11.5 million in funding from Polychain Capital, Placeholder Capital, and others. The total includes an unannounced $3 million pre-seed round completed last year and an $8.5 million seed round. Spiderchain secures funds from Bitcoin mainnet via randomized decentralized multi-sigs resembling a spider web. It supports EVM-based contracts and withdrawals to centralized exchanges without leaving the Bitcoin network or using wrapped assets. The Spiderweb Testnet has seen 200k active addresses with 10,000 test-token launches, with mainnet expected to go live this summer. The funds will be used to accelerate Spiderchain development ahead of its mainnet launch. 

Lagrange, a hyper-parallel data processing protocol, secured $13.2 million in funding via a seed round led by Peter Thiel’s Founders Fund, with other investors including Archetype Ventures, 1kx, Maven 11, Volt Capital, and others. Lagrange is aiming to enhance crypto data encryption and protection and scale cross-chain interoperability. It is currently developing ZK Coprocessor, a data computation scaling solution. ZK Coprocessor pre-processes data into a SNARK-optimized structure and then leverages its prover network to complete large-scale SQL queries over the ZK data for a low cost. The processor is completely parallel, able to complete computations and proof generations simultaneously. ZK Coprocessor is planned to launch before the year ends.