The Funding: Why Monad's ecosystem is gaining VC interest

Three Monad-based projects announced their venture capital funding back-to-back on Thursday, signaling a surge of interest in the Monad ecosystem.

One standout, the Monad liquid staking platform aPriori, reached a token valuation of at least $100 million with its $8 million seed funding, as I  reported exclusively at the time. Achieving a nine-figure valuation before the Monad blockchain has even launched is quite surprising. The other two projects, the Monad liquid staking protocol Kintsu  and the Monad-based on-chain order book exchange  Kuru , raised $4 million and $2 million, respectively.

All three projects have attracted high-profile investors.  Brevan Howard Digital , the crypto division of the hedge fund giant, backed both Kintsu and Kuru, despite the fund's relatively low investment activity in the crypto space. CMS Holdings, on the other hand, invested in all three Monad projects. Other notable investors in these projects include Pantera Capital, Electric Capital and Castle Island Ventures.

This surge in project funding follows closely on the heels of Monad Labs, the developer of the Monad blockchain, raising  $225 million  in Series A funding in April, led by heavyweight Paradigm, reportedly at a $3 billion valuation.

So, what's driving VC interest in Monad and its ecosystem? I spoke to six of its investors, all highly bullish on Monad's prospects, particularly 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 APT -3.23% and Sui SUI -2.46% in designing its parallelized execution environment, while still maintaining compatibility with EVM," Aric Chang, general partner at Manifold Ventures and an investor in aPriori, told me.

Parallelized execution allows Monad to process multiple transactions simultaneously, enhancing throughput compared to traditional sequential methods. EVM compatibility, on the other hand, lets developers use their existing Ethereum ETH -0.30% projects on Monad without changes. The Ethereum and EVM developer community is the largest in crypto, Lauren Stephanian, general partner at Pantera Capital, which led aPriori's seed round, told me, citing Electric Capital's latest crypto developer report. "Due to Monad's differentiated high throughput, it enables the EVM developer community to build projects that could only exist in Solana SOL +1.18% today, e.g., high-fidelity DeFi, DePIN, payments, etc.," Stephanian said. "The bullish perspective on Monad is that with more developers innovating in these verticals, superior products will be built."

Jed Breed, founder and general partner of Breed VC and an investor in Kintsu and Kuru, told me Monad's parallelized execution and potential throughput of  up to 10,000 transactions per second  could unlock many on-chain activities that have not been possible before.

These investors see Monad pushing crypto adoption within the next 2-3 years. Matthew Walsh, founding partner of Castle Island Ventures and investor in Monad Labs and Kintsu, views Monad as a strong foundation for stablecoins, calling it "a killer application" that will continue to grow exponentially in the coming years.

Manifold's Chang said, "Monad can potentially surpass the growth trajectory of Solana, attracting a widely diverse ecosystem of DeFi and consumer-facing apps." Dan Matuszewski, co-founder and principal of CMS Holdings, noted that while Monad could eventually reach the level of Ethereum and Solana adoption, it will take "a number of years."

Robinson Burkey, co-founder of Wormhole Foundation and an early investor in Monad Labs, Kintsu, and aPriori, shared his thoughts on Monad's competitive edge, saying compared to other EVM blockchains, "Monad provides the promise of an extremely fast and reliable blockchain (supply) with a seemingly guaranteed influx of builders and users (demand) based on their ability to build so much momentum to date."

All six investors interviewed for this edition expressed their openness to investing in more Monad-based projects. "We've allocated a large portion of our fund to focus on Monad," Breed said.

Matuszewski of CMS Holdings mentioned that an increasing number of Monad projects have raised funding over the past few months. "They are all going to probably start being public from now on into the fall," Matuszewski said, hinting at another wave of Monad-based projects emerging just before the blockchain goes live on mainnet, planned for later this year.

Keone Hon, co-founder and CEO of Monad Labs, acknowledged the early stage of the Monad ecosystem and sees a significant opportunity for growth. "The number of people with crypto wallets using decentralized apps is still tiny," Hon told me. "Most crypto fans have only ever used a centralized exchange to trade crypto. There's a huge need and a huge opportunity."

With opportunities come risks and challenges.