Paradigm invests $20 million in Ithaca, a spinoff building a Layer 2 blockchain 'from the future'

Prolific crypto venture capital firm Paradigm announced on Friday it has invested $20 million in a spinoff company that's building a new Layer 2 blockchain, which it hopes will accelerate blockchain development.

Paradigm Chief Technology Officer and General Partner, Georgios Konstantopoulos, will serve as Ithaca's CEO, according to Paradigm. Odyssey is the name of the Layer 2 that Ithaca will be building as part of a larger technology stack, the VC said.

The Layer 2, which is built with Reth and the OP Stack, is now live on testnet.

"Think of Ithaca as the company that is building the full stack of products and tools that developers need to ship faster and that consumers need to have less and less friction," Konstantopoulos told The Block.

While Konstantopoulos will remain as Paradigm's CTO, the new firm should be considered a Paradigm portfolio company, the two companies said. Paradigm co-founder Matt Huang will act as chairman of Ithaca, they also said.

Paradigm, a big investor in the crypto space with investments in companies and projects including Uniswap, Coinbase and Flashbots, has also been a developer of open-source tools like Reth and Foundry. Projects that have employed the use of Reth and Foundry include Optimism, Base and Worldcoin, Paradigm said.

Konstantopoulos told The Block that Ithaca and Odyssey are in many ways a continuation of the development work Paradigm and its engineers have been doing in recent years.

"Crypto must go faster," said Konstantopoulos. "The whole crypto industry needs to accelerate, and accelerate does not just mean higher transactions per second, it means higher innovation, it means iterating faster to ship exciting new things that we can only do with crypto."

Standing out among Layer 2s

When asked what will make Odyssey stand out from competing Layer 2s, Konstantopoulos called Ithaca's Odyssey a "Layer 2 from the future."

"What differentiates Odyssey is that it ships multiple features from the future of the Ethereum roadmap that haven't been built yet by any other team," he explained, adding that Odyssey will enable more robust smart wallet contracts. "More powerful, smart contract wallets means frictionless onboarding for crypto, which is solving one of the most important problems."

Layer 2 networks are built on top of Layer 1 blockchains in order to improve scalability, or the ability of a network to handle an increasing amount of transactions without compromising the speed or cost efficiency. Popular Layer 2 solutions include the Ethereum-based Polygon or the Bitcoin-based Lightning Network.

Konstantopoulos said that while Paradigm will continue to build and do research, the creation of a new company, as it has done with Ithaca, should not be considered a sign of more things to come. "We are by no means an accelerator or something like that," he said.