Funding Wrap: Monad Raises $225M, Berachain Bags $100M In Big Week For L1s

For venture capitalists looking for significant returns on their crypto investments, layer-1 blockchains that are compatible with Ethereum’s software are a pretty popular bet. 

This week, two layer-1 blockchains compatible with the Ethereum Virtual Machine (EVM) secured significant funding. Monad, which is developing a parallel EVM, raised $225 million in a round led by Paradigm.

Meanwhile, Berachain, an EVM-compatible layer-1 built with Cosmos’ software development kit (SDK), closed a $100 million Series B funding round co-led by Brevan Howard Digital’s Abu Dhabi branch and Framework Ventures.

Monad’s raise was the largest crypto venture round since cross-chain messaging protocol Wormhole secured $225 million in November. Monad’s valuation wasn’t disclosed, though Wormhole was valued at $2.5 billion when it raised the same amount in the fall. 

Monad justifies its lofty fundraising with the promise to deliver a much more performant EVM. For context, Monad hit 10,000 transactions per second in testing, while Ethereum often sits around 15 TPS.

The parallel EVM is yet to go to mainnet however, and as Solana experienced this week, the obstacles blockchains encounter in the real world can be unpredictable. 

Berachain, which also has not yet launched its mainnet, is set to introduce a “proof-of-liquidity” (PoL) consensus mechanism. This model aims to improve upon Ethereum’s proof-of-stake (PoS) by addressing limitations around liquidity and centralization.

Unlike PoS, where users delegate tokens to validators who lock them up as stakes, PoL incentivizes users to contribute liquidity to decentralized exchange pools. Users’ contributions are then rewarded with governance tokens, improving both the security and efficiency of the network.

Berachain’s PoL model separates its governance tokens (BGT) from its transactional gas tokens (BERA), to prevent the centralization of stake. This promotes a fairer distribution of rewards and influence among participants.

Notably, this proof-of-stake downside — the fact that too much of the liquidity supply can end up being staked — has been on the Ethereum Foundation’s mind as of late. With around a quarter of the ETH supply now staked, some EF researchers are proposing ways to discourage staking and keep ether liquid. 

And of course, Berachain’s active online community looks good to investors as crypto’s memecoin phase carries on. 

Source: blockworks.co