Original title: The Funding: Why Monad’s ecosystem is gaining VC interest

Original author: Yogita Khatri

Original source: theblock

Compiled by: Mars Finance, Daisy

Three Monad-based projects announced venture capital funding in quick succession on Thursday, signaling a surge in interest in the Monad ecosystem.

Among them, Monad liquidity staking platform aPriori stood out, with its $8 million seed funding bringing the token valuation to at least $100 million, which I exclusively reported on at the time. Achieving a nine-figure valuation before the Monad blockchain even launched is quite amazing. Two other projects, Monad liquidity staking protocol Kintsu and Monad-based on-chain order book exchange Kuru, raised $4 million and $2 million respectively.

All three projects have attracted high-profile investors. The cryptocurrency arm of hedge fund giant Brevan Howard Digital backed Kintsu and Kuru, though the fund has relatively little investment activity in the crypto space. CMS Holdings, on the other hand, invested in all three of Monad’s projects. Other high-profile investors in these projects include Pantera Capital, Electric Capital, and Castle Island Ventures.

Close behind, Monad Labs, developer of the Monad Blockchain, raised $225 million in a Series A round in April, led by heavyweight firm Paradigm at a reported $3 billion valuation.

So what’s driving VC interest in Monad and its ecosystem? I spoke to six investors, all of whom were bullish on Monad’s prospects, especially its potential for high transactions per second and Ethereum Virtual Machine (EVM) compatibility. “What’s particularly interesting about Monad is that it draws significant inspiration from Aptos and sui in the design of its parallel execution environment, while still maintaining compatibility with the EVM,” Aric Chang, general partner at Manifold Ventures and an investor in aPriori, told me.

Parallel execution allows Monad to process multiple transactions at the same time, increasing throughput compared to traditional sequential methods. On the other hand, EVM compatibility allows developers to use their existing Ethereum to develop projects on Monad without any changes. Citing Electric Capital's latest crypto developer report, Lauren Stephanian, general partner at Pantera Capital, said that the Ethereum and EVM developer communities are the largest communities in the crypto field. Pantera Capital is the lead investor in aPriori's seed round. "Because Monad has differentiated high throughput, it enables the EVM developer community to build projects that can only exist in Solana, such as high-fidelity DeFi, DePIN, payments, etc.," said Stephanian. "The optimistic view on Monad is that as more developers innovate in these verticals, better products will be built."

Jed Breed, founder and general partner at Breed VC and an investor in Kintsu and Kuru, told me that Monad’s parallel execution and potential throughput of up to 10,000 transactions per second can unlock a lot of on-chain activities that were previously impossible.

These investors believe that Monad will drive the adoption of cryptocurrencies in the next 2-3 years. Matthew Walsh, founding partner of Castle Island Ventures, Monad Labs and Kintsu investor, believes that Monad is a solid foundation for stablecoins, calling it a "killer application" that will continue to grow exponentially in the next few years.

“Monad’s growth trajectory has the potential to extend beyond Solana, attracting a diverse ecosystem of DeFi and consumer-facing applications,” said Manifold’s Chang. Dan Matuszewski, co-founder and head of CMS Holdings, noted that while Monad could eventually reach Ethereum and Solana levels of adoption, it would take “years.”

Robinson Burkey, co-founder of the Wormhole Foundation and early investor in Monad Labs, Kintsu, and aPriori, shared his thoughts on Monad’s competitive advantages, saying that compared to other EVM blockchains, “Monad promises to deliver an extremely fast and reliable blockchain (supply), and based on its ability to build such strong momentum to date, an influx of builders and users (demand) seems guaranteed.”

All six investors interviewed for this issue expressed a willingness to invest in more Monad-based projects. “We have put most of our money into Monad,” Breed said.

CMS Holdings’ Matuszewski mentioned that a growing number of Monad projects have raised funding in the past few months. “Between now and the fall, they’ll probably start to go public,” Matuszewski said, hinting at another wave of Monad-based projects before the blockchain’s mainnet launch, scheduled for later this year.

Monad Labs co-founder and CEO Keone Hon acknowledges that the Monad ecosystem is still in its early stages and sees huge opportunities for growth. “The number of crypto wallet users using decentralized applications is still small,” Hon told me. “Most crypto enthusiasts have only ever used centralized exchanges to trade crypto. The demand is huge, and the opportunity is huge.”

Opportunities, risks and challenges coexist.

The Biggest Risk of Monads

Manifold Ventures’ Chang highlighted the two biggest risks facing Monad: the possibility of failing to deliver on its technical promises, and the challenge of attracting a wide range of applications after launch. “All of the Monad-native projects I’ve been involved with are built on Monad because they really need to run in a highly scalable environment, and if Monad can’t achieve the level of scalability it’s projected to achieve, its value proposition will fall apart,” Chang said. However, seeing the large ecosystem and community Monad has built “gives me a lot of confidence in its long-term success,” Chang added.

CMS Holdings’ Matuszewski echoed Chang’s sentiments, noting that Monad has to overcome significant technical hurdles. “Right now it’s kind of like a black box. You don’t know how it’s going to pan out,” Matuszewski said. But he also noted that Monad’s early adoption and community-building efforts suggest it could be “a very strong ecosystem right out of the gate.”

Breed VC’s Breed noted that Monad’s platform is still in its early stages, so the technology is unproven, which makes it one of the biggest risks.

Burkey of the Wormhole Foundation also agrees that it is important for Monad to deliver on its promises and has confidence in the project team. “With momentum comes responsibility to deliver on their promises in a timely manner,” Burkey said. “However, there is no reason to believe that they will not deliver on their promises.”

Pantera Capital’s Stephanian said Monad’s biggest risk is attracting developers from other EVM chains. Despite Monad’s potential high throughput, it will have to convince those currently working on Ethereum’s Layer 2 and Layer 3 to make the switch, Stephanian said.