Blueprint: NEAR Protocol's new $350MM; UK embedded fintech Fidel API $65MM; Waves Blockchain growth and stablecoin de-pegging
Gm Fintech Futurists — our agenda for today is below.
WEB3: NEAR Protocol Raises $350 Million in New Funding (link here)
EMBEDDED FINANCE: London-based Fidel API lands $65M in Series B funding, proving fintech infrastructure is hotter than ever (link here)
STABLECOIN: Waves Blockchain Crashes and Neutrino USDN follows (link here)
LONG TAKE: Role of Central Banks in DeFi, Stablecoins, and the Web3 economy (link here)
PODCAST: Building an insurtech platform that scales from Fintech to DeFi, with Cover CEO Karn Saroya (link here)
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NEAR, a layer 1 protocol blockchain built for hosting decentralised applications raised $350MM in a round led by Tiger Global. The investment was joined by Republic Capital, FTX Ventures, Hashed, Dragonfly Capital, ParaFi Capital, Blockchange Ventures, and MetaWeb.vc. Prior funding includes a $22MM in May 2020 and $150MM raise in January 2022.
For context, total fully diluted market cap is about $15B and current value locked in the protocol floats around $350MM, a 2% ratio. For Ethereum, market cap is $370B with $133B in TVL, a 35% ratio.
But it isn’t an Ethereum competitor as much as another bridge to scalability and performance. The protocol offers a range of tools to help developers quickly spin up apps and built out the ecosystem, while using a proof-of-stake mechanism. The top projects on the platform currently are Paras 2.0, an NFT marketplace, NEAR Crowd, a service similar to Rabbithole where users can earn tokens for completing tasks, and Ref Finance, a community-led DeFi platform.
VCs have been making lots of investments in the NEAR ecosystem, including Aurora’s $12MM raise and Ref Finance’s $4.8MM raise. We like the project, and it has a reputation for technical excellence. We expect the fundraise to translate into lots of incentives for ecosystem building (see our Long Take on the topic here).
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EMBEDDED FINANCE: London-based Fidel API lands $65M in Series B funding, showing power of fintech infrastructure (link here)
Fidel API, a provider of identity, data and payments products, has raised $65MM in Series B funding led by Bain Capital Ventures. This latest round brings total funds raised to $88MM since inception, with previous backers including Citi Ventures, RBC Capital and Commerce Ventures. The company has 130 employees and was founded in 2018.
Fidel’s infrastructure enables developers to connect payment cards to a service or application whilst capturing consent permissions. In turn, this allows for event-driven user experiences at the point of purchase that can be used to develop features like expense management, personal finance management, loyalty and rewards and digital receipts. The most advertised differentiator “real time” connection to data from the major card networks — a tagged stream of transactions with accurate merchant and customer information.
Why can’t the card network build this out as a feature? Not super clear to us, other than having Fidel be a better, tighter go-to-market strategy for developers. Or alternately, card networks are optimizing around payments spread not data access. Another useful tidbit is the client base. The company targets (1) expense management players like Ramp by being a data layer, (2) merchant rewards plugged into the mobile experience, connecting physical with digital, and (3) more general attribution and data reporting needs. The company likely grew out of some particular strategic relationship — e.g., powering the Avios points program — and is working to generalize horisontally.
The Waves blockchain token has fallen by almost 50% recently, causing the ecosystem’s stablecoin USDN (Neutrino USD) to drastically depeg from a dollar – falling to below $0.70. We highlight this example as an interesting dynamic related to both recent geopolitics as well as decentralized money design.
Waves was founded in Russia by Ukrainian-born Alexander Ivanov, and gained traction since the beginning of the Russia-Ukraine war as the economics of the region destabilized. The protocol has been on a rally, growing sixfold, since the conflict began. Unfortunately for investors, prices crashed as certain claims, disseminated on Twitter by user 0xHamZ, suggested that the project has been using USDN and the Vires Finance protocol to artificially inflate the price of the WAVES token. When anon has a money printing machine, anon will likely print money, exchange money, and convert into other assets.
USDN is an algorithmic stablecoin, similar to Terra’s UST, that can only be minted by locking WAVES into the Neutrino smart contract. USDN was deposited through Vires Finance as collateral against borrowed stablecoins, which in turn were used to purchase more WAVES. The project’s native token was then swapped to mint USDN and the process repeated. This caused both a supply shortage of the WAVES token and the appearance of increased demand for USDN in DeFi.
The founders have since been on the offensive with suggestions that Alameda Research is manipulating the price through short-selling. That sure sounds like how Elon Musk or the GME community feel about short sellers. The stablecoin USDN has now recovered to $0.97, but the rollercoaster ride is unlikely to be over, ‘cause drama loves drama.
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.
CRYPTO: A Luca Prosperi production on Terra.
INSURTECH: Covr Financial raises $15 million
INSURTECH: Sigo Seguros raises $5.4 million
INVESTING: Ellevest raises $53 million
Role of Central Banks in DeFi, Stablecoins, and the Web3 economy (link here)
In this analysis, we describe the conversation at a DeFi conference hosted by the BIS Innovation Hub that we attended.
In particular, we list the most impactful ideas from its 4 panels, and highlight our own contribution. Those focus on correcting the mis-framing of payments and investment cash as the same thing in the context of CBDCs and stablecoins, as well as the shifting importance of the Web3 economy relative to the DeFi sector that supports it.
Podcast Conversation: Building an insurtech platform that scales from Fintech to DeFi, with Cover CEO Karn Saroya (link here)
In this conversation, we chat with Karn Saroya, the co-founder & CEO of Cover, a YC-backed insurance technology company that simplifies the process of getting property insurance and focuses on underserved communities. Karn is responsible for operations, business development, growth and investor relations. To date, Karn has raised $27M for the company through its seed, Series A and Series B rounds.
More specifically, we touch on the inefficiencies of the property insurance industry, introducing things like financial transaction history and elements of behavioral data results in a better risk segmentation, fair prices, and in many cases - access to the insurance in general. We also discuss how Karn left a career in finance for startups, and shares details of developing and selling StyleKick, a high-end fashion e-commerce business, to Shopify. Karn talks about the future of insurtech and how crypto plays a part, and so so much more!
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