As cryptocurrency markets recover, several blockchains are working to become the go-to solution for demand in the next wave, just as Bitcoin and Ethereum have done in past cycles.
A new player on the scene, Monad Labs, has finalized a $225 million round led by Paradigm with additional funding from investors including Electric Capital and Greenoaks to build a layer 1 blockchain to challenge competitors like Solana and Sui. (Fortune previously reported that Monad was in talks with Paradigm to raise money at a $3 billion valuation in March.)
In an exclusive interview, Monad founder Keone Hon said Monad’s innovation comes from rebuilding the Ethereum blockchain from the ground up, maintaining the ability to execute smart contracts by completing transactions at faster speeds, higher volumes and lower costs . While other new blockchains have a similar value proposition, Monad is compatible with the program that powers Ethereum, the Ethereum Virtual Machine (EVM), meaning developers can port applications built for Ethereum.
“We are emerging from about two years of development,” said the Hon. “At a time when much of the research community was focused on roll-up, data availability, and other scalability directions, Monad basically went very deep on the pure execution side.”
The crowded landscape of level 1
Since Bitcoin’s launch in 2009, developers have introduced new blockchains that promise a host of new features, from cheaper and faster transactions to applications like decentralized exchanges or lending protocols that can operate on a blockchain.
Although Ethereum launched in 2015 with the innovation of smart contracts, it has struggled to grow as demand has increased, meaning transactions often incur high execution fees, known as “gas”, or are slow to process . Newer competitors, including Solana, which launched in 2020, have promised faster speeds at lower costs, but still suffer from congestion issues.
Hon worked for eight years at Jump Trading, the secretive Chicago-based high-frequency trading firm, building systems that could quickly process large numbers of transactions. He soon branched out into Jump’s crypto arm, working alongside Monad co-founder James Hunsaker.
“We realized that there was a huge need for a higher-performance EVM and that, despite this need, no one was really working on this problem,” Hon said Fortune.
Unlike many new blockchains, Monad will have full support for EVM bytecode, the standard that many developers rely on when coding decentralized applications. Hon described EVM as the Web3 equivalent of JavaScript in the early 2000s: it is used by blockchains including Ethereum, Polygon, Avalanche, Binance Smart Chain, and Optimism. “Anyone who has built an app for any of these blockchains can port it to Monad without any modifications.”
Avichal Garg, managing partner at Electric Capital, said that 90% of developers working on multiple crypto ecosystems only work in EVM chains, citing a recent report from his firm. While this means Monad doesn’t get the same benefits from redesigning its entire programming language as other new blockchains like Aptos and Sui, Garg said it still gets most of the benefits.
“The way you get into the market is to hit EVM compatibility and suck up a bunch of developers,” he said Fortune. “For us, it felt like this was the playbook.”
“A much more performant blockchain”
After raising a $19 million seed round announced in 2023, Monad’s $225 million funding round represents the largest cryptocurrency fundraising of 2024 so far, according to Crunchbase’s Web3 Tracker, signaling bear market of the industry is starting to unravel. Paradigm, the leading cryptocurrency firm in the round, is reportedly raising a new fund of more than $750 million. The round also represents one of the first cryptocurrency deals for Greenoaks Capital, the venture capital firm led by veteran investor Neil Mehta, after a small bet on FTX.
While Jump has incubated a number of crypto projects, including Wormhole and Pyth Network, Hon said Monad is completely separate from the trading company. Jump has been embroiled in scandal over its role in the collapse of the so-called Terraform Labs stablecoin project led by Do Kwon, whose civil trial ended in a guilty verdict in federal court last week. Hunsaker testified at the proceeding, where he was revealed that he filed a complaint with the Securities and Exchange Commission against his former employer.
Bolstered by the new round of funding, Hon said Monad aims to deploy its mainnet by the end of the year, as well as a testnet in the next couple of months. Monad Labs currently has about 30 employees and plans a native token, though Hon declined to comment on whether it will launch with the mainnet.
As cryptocurrency companies continue to chase mainstream adoption, Hon said Monad’s first use case will likely be for the type of high-frequency trading performed on Jump, citing that the world’s largest stock and futures exchanges they process between 500 million and 1 billion transactions per day.
“If we want the scale of an exchange, like the NASDAQ or a CME, to be possible on the blockchain, we need a much more performant blockchain than exists right now,” he said Fortune.
Hon also pointed to other applications that could be enabled by a blockchain with high transaction capacity and low fees, such as gaming. A program like Runescape could have a player collect 50 items in an hour, meaning a blockchain-based game would have to update its statistics every time, with each update representing a new transaction that needs to be cheap and fast enough to make economic sense on a blockchain.
While VCs are betting big on Monad, Garg said his investment doesn’t prevent other blockchains from succeeding, just in different capabilities. “We think about these ecosystems in a non-zero-sum way,” Garg said Fortune. “Just because Facebook exists doesn’t mean Twitter, LinkedIn, Tiktok, Instagram and WhatsApp can’t exist.”