Cryptocurrency company Layer N announced on Wednesday the completion of a $5 million seed round of financing, co-led by Peter Thiel-backed Founders Fund and decentralized investment group dao5, as well as Kraken Ventures and former partner of cryptocurrency fund Variant Spencer Noon.
N-layer is layer 2, or a blockchain built on top of a different blockchain (in this case, Ethereum) to help increase speed and capacity. Founders Fund’s investment is the venture capital firm’s second foray into the cryptocurrency space since it hired new partner Joey Krug, the former co-chief investment officer of crypto-focused venture capital firm Pantera, in April.
One of the organizational partners of Founders Fund is Peter Thiel, founder of PayPal and has a strong interest in cryptocurrency. Thiel openly supports the industry’s ideology, touting Bitcoin’s advantages over fiat currencies at the 2022 Miami Bitcoin Conference, with the digital asset representing one of the company’s core positions.this Financial Times It was revealed that Founders Fund actually sold the vast majority of its holdings a month before Thiel appeared at the Miami Bitcoin Conference in anticipation of the coming “crypto winter.”
While Founders Fund remained silent on cryptocurrencies during the bear market, it announced the hiring of Krug in April, signaling its intention to re-enter the space. Layer N is its second blockchain investment, with an investment of US$1.8 million. backing DeFi protocol Maverick in June.
during an interview wealthKrug declined to comment on Founders Fund’s crypto strategy, but said the investment in Layer N is in line with its broader thesis of backing teams working in scalable niche markets.
As Layer 2 built on Ethereum, Layer N focuses on increasing transaction throughput and latency potential to replicate the speed of traditional financial markets on the blockchain. Its founders believe other Tier 1 and Tier 2 solutions are still too slow and bulky to attract the type of high-speed trading common on exchanges like Nasdaq.
Co-founders Dima Romanov and David Cao explained in an interview that the top priority now is attracting cryptocurrency traders and protocols such as decentralized exchanges. While other new Layer-1 blockchains such as Sei have similar hype, Romanov and Cao believe that Layer N offers the relative security and reliability of Ethereum as its underlying blockchain.
Another consideration is the reality that cryptocurrency trading volumes have declined significantly over the last year, with spot market trading last month Hit a 4.5-year low.kluger told wealth Founders Fund targets companies they believe have high technological innovation potential to capture future market share, even if the current market seems small.
“I don’t think the dollar number has to be huge,” he said. “It’s more important to make sure they are actually the dominant player in the market.”
The long-term goal of Layer N is to allow centralized exchanges such as Binance and Coinbase to build decentralized, non-custodial products on top of the blockchain – Coinbase previously showed interest when it acquired decentralized exchange Paradex in 2018 , the project Kruger continued to work on. He said it ultimately didn’t work out because the technology wasn’t good enough.
In the post-FTX world, centralized exchanges struggle to build trust with users, and Krug believes they can solve this problem by building a decentralized version on the N-layer that has the same interface that users are accustomed to from established exchanges such as Coinbase. Same type.
Layer N previously planned to build its blockchain on Solana, Announce In November, it received funding from FTX Ventures before the exchange collapsed. Romanov said the funds never materialized and the team decided to move to Ethereum after realizing that most institutional players and liquidity providers were coalescing around the blockchain.
Layer N plans to launch its testnet in one to two months. Cao said the company has not yet decided whether to launch the token like other Layer-2 tokens such as Optimism and Arbitrum due to regulatory uncertainty and the open question of whether the token will add value to users.
“There’s a sense that if you look at the DeFi space right now, it feels like it’s at a low point,” Krug said. wealth. “AI has sucked a lot of the oxygen out of the room, so I think investments like this feel contrarian.”
“I hope this is correct,” he added.
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