Profit Pulse: Crypto

Our friends at Babylon Protocol take the cake with this week’s largest fundraise: an $18M Series A.

We composed a short TLDR on the project below, as we feel this is one to watch. The team is 1) working on a valuable solution and 2) supported by blue chip investors.

Said differently; we feel this team is establishing true staying power.

Table of Contents

• Profit Pulse: Crypto

  • Deal of the Week: Babylon’s $18M Fundraise

  • Weekly Deal Flow Takeaways

    • Private Fundraises

    • Public/Fund Financings

Deal of the Week: Babylon’s $18M Fundraise

• Babylon

  • Founded: January 2022

  • Team Size: 14

  • Location: Palo Alto, California

  • Chains: Bitcoin and 30+ Cosmos-SDK chains on testnet as of July 2023

Problem: The adoption of native Bitcoin staking faces challenges due to its limited and expensive block space. This constraint makes it unsustainable and unscalable for multiple Proof of Stake (PoS) chains to directly timestamp to Bitcoin.

Solution: Babylon has developed a secure Bitcoin timestamping protocol, implemented as a Cosmos-SDK based chain. This innovation allows for efficient timestamp aggregation for numerous Cosmos SDK chains through the standard Cosmos Inter-Blockchain Communication (IBC) protocol.

Core Differentiation: Babylon enables Bitcoin staking without the need to bridge bitcoins, a process often limited by the security risks associated with the locked asset value of the bridge project's issued token.

Key details include:

• Capital Utilization: Bitcoin, with a market value of ~$865 billion, is largely idle capital. Babylon proposes a trustless system for staking idle bitcoins to enhance the security of PoS chains and earn yield, all without the need for bridging the BTC to these chains.

• Modular Design: Babylon's architecture is designed as a modular plug-in compatible with various PoS consensus algorithms. This feature integrates BTC with the PoS economy efficiently.

• Technology Integration: Babylon's modular nature allows it to be used on top of all Byzantine Fault Tolerant (BFT) consensus protocols (such as the Ignite framework, formerly known as Tendermint) without altering the base protocols, making it adaptable across different PoS chains.

• Innovative Bitcoin Timestamping: Babylon introduces a method where PoS block hashes and the staker set voting for these blocks are recorded on the Bitcoin chain. This architecture places Babylon in a pivotal role by enabling remote staking of Bitcoin onto consumer PoS chains.

• Risk Mitigation: Current Bitcoin bridges face risks regarding the redeemability of wrapped Bitcoin tokens, often backed by less secure chains. Babylon addresses this by limiting spending operations on the locked Bitcoin solely to slashing safety violations.

Weekly Deal Flow Takeaways

Fundraises: 8 deals; $68M identified
Public / Funds: 2 deals; $115M identified

Private Fundraises

Babylon, a Bitcoin staking protocol focused on Cosmos-SDK chains, raised $18M from multiple investors, including Polychain Capital, Hack VC, Framework Ventures, Polygon Ventures, Castle Island Ventures, OKX Ventures, and Symbolic Capital.

QANPlatform, developer of a quantum-resistant layer-1 blockchain, raised $15M funding with participation from Qatar's MBK.

Grove, a decentralized physical infrastructure (DePIN) provider, raised $7.9M with participation from Avon Ventures, Placeholder Capital, and Druid Ventures.

Shadow, a crypto data platform startup, raised $9M with participation from Paradigm.

Sona, a web3 music startup, raised $6.9M with participation from Polychain Capital, Haun Ventures, Rogue Capital.

Sindri, a platform developing a zero-knowledge-based developer stack, raised $5M with participation from CoinFund.

Curvance, a DeFi platform planning to develop a comprehensive 'everything app' for DeFi services, raised $3.6M. Participants in the round include Offchain Labs; Wormhole; angel investors including Polygon co-founder Sandeep Nailwal, core contributors from crypto projects Scroll, Mantle, Eigenlayer, GMX, Curve Finance, Convex Finance, Balancer, Aura Finance and Pendle Finance; and DAOs, such as Frax Finance.

Versatus, a blockchain scaling startup currently focused on Ethereum, raised $2.3M with participation from NGC Ventures, Republic Crypto, and Hyperithm.

Public/Fund Financings

Meanwhile Group, a Sam Altman-backed crypto startup that aims to provide institutional investors access to bitcoin with an additional targeted 5% bitcoin-denominated yield, is raising a $100M fund from LP's.

Heartcore Capital, a Danish VC firm, raised €15M for its crypto fund.

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