Monad Labs in talks to raise more than $200 million round led by Paradigm, valuing the Jump Crypto–linked startup at $3 billion

Ben Weiss

Leo Schwartz

<p>Massive crypto raises are back: Paradigm, the <a href="https://fortune.com/2023/06/29/paradigm-crypto-vc-pivot-ai-backlash/">venture firm</a> behind many of the industry’s top startups, is in talks to lead a round north of $200 million for Monad Labs, a startup that aims to build a faster competitor to the blockchain <a href="https://fortune.com/crypto/crash-course/ethereum/">Ethereum</a>, according to people familiar with the raise.</p><div class="paywall-selector"></div><div class="paywall">



<p>The round, which would follow Monad Labs’ $19 million seed round <a href="https://www.prnewswire.com/news-releases/monad-labs-closes-19m-seed-funding-round-led-by-dragonfly-capital-301746016.html">announced</a> in February 2023, values the startup at $3 billion, according to those familiar with the deal. Paradigm has signaled it will commit $150 million and has been reaching out to other investors to gauge their interest in joining the round since late 2023.</p>



<p>If closed, a raise of more than $200 million for Monad Labs would be the largest crypto fundraise of 2024 so far, according to <a href="https://www.crunchbase.com/lists/web-3-tracker/3133cad0-2f14-4294-b0c4-f0cfb9ca943f/funding_rounds">Crunchbase’s Web3 Tracker</a>, as Bitcoin <a href="https://fortune.com/crypto/2024/03/11/bitcoin-72000-coinbase-shares-top-listing-price/">continues</a> to <a href="https://fortune.com/crypto/2024/03/11/bitcoin-72000-coinbase-shares-top-listing-price/">surpass</a> all-time highs. And Monad Labs’ success with investors also signals the continued influence of Jump Crypto, which was once one of the industry’s top market makers and venture capital outfits but <a href="https://fortune.com/crypto/2024/01/10/jump-crypto-bitcoin-etf-kanav-kariya-blackrock-trading-jane-street/">retreated</a> after coming under <a href="https://www.bloomberg.com/news/articles/2023-12-28/terraform-labs-sec-headed-to-crypto-fraud-trial-in-january?sref=2jPYL79S">regulatory scrutiny</a> from the SEC. Two Jump alumni cofounded Monad in 2022, with a third cofounder coming from a non-crypto background.</p>



<p>A spokesperson for Paradigm declined to comment when contacted by <em>Fortune,</em> and Keone Hon, cofounder and CEO of Monad Labs, did not immediately respond to a request for comment.</p>



<h2 class="wp-block-heading">Jumping ship</h2>



<p>Unlike many venture capital and market-making outfits, Jump Crypto has incubated a series of in-house projects and employed Web3 developers as it financed some of the largest companies in the industry, including Do Kwon’s <a href="https://fortune.com/crypto/2023/07/19/terraform-labs-terrausd-do-kwon-chris-amani/">Terraform Labs</a>.</p>



<p>In May 2022, Terraform Labs collapsed after its so-called stablecoin, TerraUSD, <a href="https://decrypt.co/100402/how-terra-ust-luna-imploded-crypto-crash">plummeted</a> in value. Since then, court records have <a href="https://fortune.com/crypto/2023/05/15/jump-trading-billion-propping-up-terra-algorithmic-stablecoin-collapsed/">shown</a> Jump Crypto propped up TerraUSD and supported Do Kwon, whom the Securities and Exchange Commission <a href="https://fortune.com/2023/02/16/terrausd-do-kwon-terraform-labs-sec-lawsuit/">sued</a> for fraud in February 2023. One month later, the Department of Justice <a href="https://www.reuters.com/world/europe/montenegro-police-arrest-suspected-former-ceo-terraform-labs-interior-minister-2023-03-23/#:~:text=Thursday's%20indictment%20charges%20Kwon%2C%20a,fraud%2C%20commodities%20fraud%20and%20conspiracy.">indicted</a> the crypto founder, who is currently in the midst of an <a href="https://www.bloomberg.com/news/articles/2024-03-08/us-to-contest-do-kwon-extradition-to-south-korea-in-crypto-case">extradition battle</a> in Montenegro.</p>



<p>Jump Trading has since pulled back from the industry. It <a href="https://www.coindesk.com/business/2023/08/29/robinhood-and-jump-trading-no-longer-have-crypto-partnership-source/">ended</a> its partnership with Robinhood, <a href="https://fortune.com/crypto/2024/01/10/jump-crypto-bitcoin-etf-kanav-kariya-blackrock-trading-jane-street/">bowed</a> out of the Bitcoin ETF race, and cut ties with the projects incubated at the firm. In August, developers behind Pyth Network, a blockchain-supported financial feed, <a href="https://www.bloomberg.com/news/articles/2023-08-31/jump-crypto-s-specialists-depart-for-startup-that-will-work-with-pyth-network">parted</a> with Jump Crypto. And at the end of 2023, Wormhole, a messaging protocol that lets developers communicate across different blockchains, reportedly <a href="https://www.bloomberg.com/news/articles/2023-11-17/jump-spins-off-wormhole-project-shrinking-its-crypto-business">left</a> Jump as well.</p>



<p>Yet despite (or because of) their association with Jump Crypto, Pyth, Wormhole, and now Monad have all attracted substantial interest from investors. The market capitalization for Pyth’s token currently hovers around $1.27 billion, according to <a href="https://coinmarketcap.com/currencies/pyth-network/">CoinMarketCap</a>. And Wormhole announced that it had <a href="https://fortune.com/crypto/2023/11/29/wormhole-raises-225-million-2-5-billion-valuation-jump-crypto-split/amp">raised</a> $225 million at a $2.5 billion valuation last November.</p>



<p>Paradigm, the leader of Monad’s planned raise, is one of the most prolific venture firms in the crypto space, started by <a href="https://fortune.com/company/coinbase/" target="_blank">Coinbase</a> cofounder Fred Ehrsam and former Sequoia Capital partner Matt Huang in 2018. Paradigm has invested in the decentralized exchange dYdX, the Ethereum startup Flashbots, and the failed exchange FTX. Huang <a href="https://fortune.com/crypto/2023/10/11/ftx-sam-bankman-fried-venture-capitalists-paradigm-matt-huang-300-million/">testified</a> at the trial of Sam Bankman-Fried last October.&nbsp;&nbsp;</p>



<p>Paradigm drew scrutiny from the crypto industry when it <a href="https://fortune.com/crypto/2023/06/28/crypto-vc-paradigm-ai-investors-founders-frustrated/">changed</a> its homepage last May to remove any mention of Web3 or blockchain. It has since reversed course, with Huang <a href="https://twitter.com/matthuang/status/1673786399252955137?s=20">tweeting</a> in June that the firm “has never been more dedicated to crypto.”</p>



<h2 class="wp-block-heading">Crypto comeback</h2>



<p>The total market capitalization of all cryptocurrencies is over $2.8 trillion, according to <a href="https://www.coingecko.com/en/global-charts">CoinGecko</a>, nearing all-time highs of over $3 trillion in late 2021. The venture market hasn&#8217;t yet sped up accordingly, as there have been 219 fundraises from the beginning of 2024 to early March, according to Crunchbase’s Web3 tracker, compared with 571 in the same period a year ago.</p>



<p>However, EigenLayer, another crypto protocol, just <a href="https://www.coindesk.com/business/2024/02/22/eigen-labs-developer-behind-restaking-protocol-eigenlayer-raises-100m-from-a16z-crypto/">netted</a> a $100 million raise from Andreessen Horowitz’s crypto offshoot. And the expected $3 billion valuation of Monad Labs, whose blockchain aims  not only to surpass Ethereum&#8217;s speed but also be compatible with its applications, indicates a potential flood of investor cash amid the broader crypto bull market. </p>



<p>Monad’s fundraise also demonstrates continued investor interest in the development of layer 1 and layer 2 protocols, as the industry looks for blockchains that provide faster and more reliable transaction speeds amid an anticipated increase in demand. On Monday, the layer 2 blockchain Eclipse <a href="https://blockworks.co/news/eclipse-series-a-funding-mainnet-launch">announced</a> it had raised a $50 million Series A led by Placeholder and Hack VC.</p></div>

As the prices of digital assets skyrocket, the Monad round would be the largest in crypto so far in 2024.

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