Blueprint: Epic raises $2B and Mastercard files 15 trademarks for Metaverse commerce; DeFi infra BloXroute raises $70MM; Bolt buys Wyre for $1.5B
Gm Fintech Futurists — our agenda for today is below.
DEFI: SoftBank leads $70 million round for DeFi infrastructure firm BloXroute (link here)
PAYMENTS: Bolt buys Wyre to get crypto in its wallet (link here)
LONG TAKE: Deriving the benefits of tokenomics for Centralized Exchanges (link here)
PODCAST: Aggregating Decentralized Finance (DeFi) and structuring a DAO, with Sergej Kunz of 1inch (link here)
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METAVERSE: Epic Raises $2 Billion For Metaverse From Lego Investors & Sony (link here) and Mastercard Could Be Preparing To Enter The Metaverse (link here)
Building out the Metaverse continues to be one of the hottest funding trends of the past year — see running timeline of funding here. The latest is a $2B raise for Epic Games, a major video game and software developer, whose latest release is Unreal Engine 5, which performs a range of 3D creation tasks from film production to video games on PSVR 2. Unreal Engine 5 puts Epic in competition with many of the big tech players building out AR/VR/AI Metaverse capabilities, although Epic has the advantage of being able to set this as a core focus and a track record of rendering gaming worlds.
Mastercard also upped their Metaverse commitment with the trademark filing of 15 applications that looks to make them the largest payment facilitator in the digital world, with an emphasis on crypto and fintech functionality. Core to their plans are NFTs — in the form of marketplaces, music, and the development of online communities — as well as their bread and butter of processing virtual payment card transactions.
The key to understanding the appeal of this trend to a card network is to trace the direction of digital commerce, and its growth vectors.
There are lots of other trendy, fashionable symptoms. HSBC announced they’re closing 70 real-world branches in the UK to focus on building their digital twins in the Metaverse and opened a Metaverse Investment Portfolio. Already in 2022 the number of NFT trademark applications in the US has surpassed the number filed for last year, despite a cooldown in the NFT market. As of March 24th, the total for 2022 sits at 1967 apps filed vs 1965 in 2021, with a mere 23 apps in 2020.
We may be moving on to the next stage of NFTs; away from the focus on $400k PFPs of apes for the crypto rich, and into a world where NFTs are used as a means of authenticity, tracking, and membership for the mass market by mass market companies.
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BloXroute, a blockchain distribution network (BDN) and provider of DeFi trading tools, has raised $70MM in their Series B, which was led by SoftBank Vision Fund 2 and joined by ParaFi Capital, Lightspeed Venture Partners, Dragonfly Capital, GSR, and Jane Street. SoftBank’s investment director, Robert Kaplan, will join the board as part of the deal and no valuation has been publicly disclosed.
BloXroute’s key value proposition lies in being the “Flash Boys” of DeFi. For those needing a reminder, Flash Boys is the non-fiction book investigating high-frequency trading in the US financial market. Their BDN is a tool for helping users avoid network congestion and for receiving critical trade information rapidly, helping traders execute trades ahead of slower-acting rivals. BloXroute does this by aggregating DeFi data near instantaneously to provide information on buy and sell orders, arbitrage opportunities, and prices. Their solution also supports several networks, including Ethereum, BNB Chain, and Polygon.
All in, BloXroute has now raised $95MM in total, with the initial rounds raised via an agreement for future tokens (SAFT) sale. However, given the regulatory environment for security tokens not being the most hospitable investors have since been converted to regular equity holders until the legal frameworks become more accommodating.
Our takeaway is that the institutionalization of crypto capital markets is starting to look the same as elsewhere, with market makers chasing around exchanges and retail flows, and fighting for latency and privacy. Welcome to your new internet.
Checkout startup Bolt acquired crypto payments company Wyre in a deal worth around $1.5B, in a move that will look to bring consumer crypto purchases mainstream. The transaction marks Bolt’s largest acquisition to date and highlights a strategic focus on crypto. Bolt’s $355MM fundraise in January valued the firm at $11B, and likely helped finance the acquisition, with the fintech having raised $963MM to date.
Wyre provides APIs and infrastructure for merchants and developers, and has been dubbed the Stripe of crypto. With a fiat-to-crypto onramp and a check-out product that allows merchants to accept credit card payments that can be converted directly to crypto, it compliments Bolt’s existing product offering. By integrating Wyre, it will allow Bolt’s merchants to accept any form of crypto payment without having to build anything themselves and will open up the gateway for quick crypto payment processing for consumers.
The acquisition gives Bolt a crypto advantage against the likes of Shopify, who is also competing in the space with last week’s announcement that Strike had integrated with Shopify so that merchants can accept Bitcoin via the lightning network. And while we aren’t quite there with crypto payments being used for mainstream commerce, the increasing balances in stablecoins opens up the possibility of feasible widespread consumer use. This is also a useful comp for Wyre competitors, who are sitting on valuable onramps to be acquired by others.
Rest of the Best
Here are the rest of the updates hitting our radar. Note that DeFi and digital investing now have their own dedicated weekly emails, on Tuesday and Thursday respectively.
INVESTING: BrokerTec Stream Updates Platform
INVESTING: Wagestream raises $175 million
INVESTING: Emma raises $4.7 million
NEOBANK: EvolutionIQ raises $21 million
INSTITUTIONAL: EU Launches Digital Finance Platform
Deriving the benefits of tokenomics for Centralized Exchanges (link here)
In this analysis, we review the $4.5B valuation of Binance.US, the $14B valuation of Blockchain.com, and Meta’s old/new Zuck Bucks plans with the intention to understand progressive decentralization for centralized companies.
What does it do for a well organized, profitable entity to launch a token? What does it for it to “engage” with DAO and Web3 organizational structure. We explore a few approaches to think about answering such questions in terms of economics and incentives.
Podcast Conversation: Aggregating Decentralized Finance (DeFi) and structuring a DAO, with Sergej Kunz of 1inch (link here)
In this conversation, we chat with Sergej Kunz, the co-founder of the 1inch Network, a distributed network of decentralized protocols. From 2015 to 2019, Sergej worked for consulting firm Mimacom, running projects for major customers such as Bosch, Siemens and Porsche.
More specifically, we touch on how a passion for software development and coding lead Sergej to the web3 world, the concept of data aggregation and its value in a multitude of industries, all things surrounding the 1inch protocol and the tokens involved and the liquidity programs, and so so much more!
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