Institutional interest in the cryptocurrency and blockchain sector is experiencing a major resurgence. Nick van Eck launched Agora digital dollar (AUSD), a stablecoin that differentiates itself through a robust backing of cash, U.S. Treasury bills, and overnight repo agreements. Meanwhile, Paradigm plans to raise between $750 million to $850 million in what could be the crypto sector's largest fundraise since mid-2022. 1kx was also able to secure $75 million for a new fund focused on consumer applications in crypto.
Agora Digital Dollar
Nick van Eck, son of investment management expert Jan van Eck, is taking a bold step into the world of crypto with the launch of a new stablecoin called Agora digital dollar (AUSD), after a very successful $12 million funding round. Teaming up with crypto veterans Drake Evans and Joe McGrady, Nick plans to steer Agora as CEO. The AUSD will stand out by being fully backed by cash, U.S. Treasury bills, and overnight repo agreements, with the $90 billion asset management giant, VanEck, managing its reserves.
The endeavor is supported by a number of investors from the digital asset sphere, including Dragonfly, Robot Ventures, Wintermute, Breed, and General Catalyst, suggesting that there is a lot of confidence in this project. Agora's operational base will be outside the U.S., in selected markets, depending on the establishment of federal legislation for stablecoins in the country. This decision aligns with the company's goal to cater primarily to customers outside the U.S., with a focus on regions like Argentina and Southeast Asia.
Agora is stepping into a very competitive stablecoin market dominated by giants like Tether and Circle, yet Nick van Eck is still optimistic about carving out a niche. By focusing on building robust partnerships across the crypto ecosystem, Agora plans to establish a solid foundation for AUSD. Unlike some of its predecessors, AUSD will not offer income to holders, a decision which was influenced by the lessons learned from the collapse of TerraClassicUSD.
So far, it seems like Nick van Eck's vision for Agora transcends mere participation in the crypto market; it’s about improving the industry through transparency, trust, and strategic partnerships.
Crypto VC Paradigm Eyes Major Fundraise
Meanwhile, Paradigm, a well known crypto venture capital firm, is in discussions with investors to secure a funding round worth between $750 million and $850 million. This move comes as the crypto markets have shown some signs of revival over the past few months. According to Bloomberg, this funding round could be the biggest raise for the crypto sector since May of 2022, when Andreessen Horowitz decided to set a record with a $4.5 billion fund.
If successful, this would be Paradigm's largest fund since November 2021, when it raised $2.5 billion at the height of the crypto bull run, creating the largest cryptocurrency fund at that time.
Paradigm's investment portfolio includes some impressive Web3 and crypto projects, including Coinbase, Fireblocks, and Uniswap, among others. The firm played a pivotal role in elevating Merkle Manufactory, the company behind Farcaster, to unicorn status with a valuation surpassing $1 billion. However, Paradigm's journey in the crypto space has not been without its challenges. The firm invested $278 million in FTX before the exchange's dramatic collapse, leading to a complete write-down of the investment. Matt Huang, Paradigm's founder and managing partner is very regretful over the investment.
As with all things in life, the crypto fundraising landscape has seen its ups and downs, with a big low in October of 2023 when fundraising dipped to $445 million, the lowest since December 2020. However, the last few months have witnessed a resurgence, with March 2024 seeing a massive $1.16 billion in fundraising, according to RootData. So far, it seems like the infrastructure and decentralized finance (DeFi) sectors have been the primary beneficiaries of this funding wave in 2024.
The venture capital funding trend for non-fungible tokens (NFTs) also saw a major downturn last year, with a 92% decrease from 2022's $3.4 billion to $281.3 million. This decline mirrors the falling floor prices of major NFT collections, including CryptoPunks and the Bored Ape Yacht Club, which experienced drops of around 63% and 90%, respectively, from their peak prices.
1kx Secures $75 Million for New Crypto Fund
The increase in institutional investments in the crypto space is also very evident in the fact that 1kx, another crypto VC firm, successfully raised $75 million for its latest fund. This massive financial backing comes from a number of well known venture capitalists, including Marc Andreessen, Galaxy Digital, and Accolade Partners, with Chris Dixon from Andreessen Horowitz featuring as one of the limited partners. The announcement was made by Lasse Clausen, the founding partner of 1kx.
Accolade, a private equity firm, has taken the position of the anchor investor in this new fund. The fund will inject capital into consumer applications built on crypto technologies, and has already allocated investments to about five companies, although their names have not been released just yet.
This fundraising event happened at the perfect time as there is a renewed surge of interest in the crypto space, especially after the U.S. approval of spot Bitcoin exchange-traded funds (ETFs). According to PitchBook, venture capital funding for crypto startups experienced an uptick in the fourth quarter of 2023. This rise is seen as a reflection of growing institutional confidence in blockchain technologies, with huge investments flowing into various crypto startups.
Andreessen Horowitz announced a massive $100-million funding round for EigenLayer, Ethereum's leading restaking protocol. Other significant funding activities include Avail's $27 million seed funding round, led by Founder Fund and Dragonfly, which is aimed at enhancing Web3 data availability and consensus layer. Additionally, the blockchain game publisher Immutable, in partnership with King River Capital and Polygon Labs, launched a $100 million fund dedicated to investing in blockchain games. This fund, dubbed the "Inevitable Games Fund," has already commenced investments in several game titles native to ImmutableX or Polygon.
