Joseph Lubin, co-founder of Ethereum.
Adam Jeffrey | CNBC
Blockchain startup ConsenSys has raised $450 million in a new funding round, more than doubling its valuation to $7 billion.
ConsenSys said Tuesday that the cash injection was led by ParaFi Capital, with Microsoft, Japan’s SoftBank and Singapore’s Temasek also joining the company as new investors.
Headquartered in New York, ConsenSys was founded in 2014 by Joseph Lubin, co-founder of Ethereum. Ethereum is the blockchain platform behind Ethereum, the second largest cryptocurrency in the world.
While bitcoin is primarily used for transactions, Ethereum can be used to build decentralized applications or decentralized applications – like Facebook or TikTok, but on the blockchain, a common accounting system for cryptocurrency transactions. ConsenSys develops software that runs on the Ethereum network.
This is a rare Microsoft bet on cryptocurrency. The company previously invested in Palm NFT Studio, a startup co-founded by Lubin.
Microsoft’s involvement highlights the growing interest from the world’s largest technology companies in Web3, a loose term that refers to efforts to create a decentralized version of the Internet based on blockchain technology.
The term has generated a lot of talk — and money — in Silicon Valley. Blockchain startups raised a record $25 billion in venture capital financing last year, according to CB Insights. Other tech giants exploring Web3 include Meta and Twitter.
ConsenSys is being considered by investors as one of the companies that will support Web3. It has benefited from a flood of investments in emerging crypto trends such as decentralized finance or DeFi and non-fungible tokens, also known as NFTs.
The company’s most popular products include the MetaMask cryptocurrency wallet and Infura, a toolkit that helps developers build Ethereum applications.
MetaMask allows people to store and manage their tokens through a web browser extension or mobile app. People can also access popular blockchain-based applications like Uniswap and Axie Infinity. The bulk of ConsenSys’ income currently comes from trading fees for various tokens on MetaMask.
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MetaMask surpassed 30 million monthly active users in January, up 42% from the past four months, according to ConsenSys. The most active markets are the USA, Philippines, Brazil, Germany and Nigeria. Infura, meanwhile, is used by more than 430,000 developers, and its annual transaction volume recently topped $1 trillion.
ConsenSys stated that all proceeds from the latest round will be converted to Ether. The funds will be used to hire an additional 600 employees, upgrade MetaMask, which is scheduled for release later this year, and develop ConsenSys’ growing NFT business.
web3 advertising
In addition to generating a lot of hype, Web3 has also attracted some notable critics, including tech billionaires Elon Musk and Jack Dorsey.
Dorsey dismissed Web3 as a centralized technology owned by venture capitalists rather than the crypto community, while Musk says he sees it as more of a buzzword than a reality.
For his part, Labin doesn’t think so.
“What Jack might be worried about is how a small number of venture capitalists are grabbing the lion’s share of capital or tokens in many of the best projects,” ConsenSys CEO said. “It doesn’t bother me at all.”
“The technology of decentralized protocols is antifragile, as is its global community,” Lubin added. “The community will interpret centralization as a sub-optimal opportunity and will decentralize relentlessly.”
US regulation
The crypto world has also been keeping a close eye on legal changes outside of the US after President Joe Biden issued an executive order calling for a coordinated government response to industry oversight.
Bitcoin, Ethereum and other digital tokens initially reacted positively but subsequently turned south as investors were concerned about the lack of detail in Biden’s plan.
The US government “has an important policy decision in its hands,” Lubin said, adding that ConsenSys is “ready and committed to helping politicians in any way we can.”
“At the end of the day, unauthorized blockchain networks are global and will grow and change our daily lives, whether the US is in the lead or not,” he added.