A startup with a novel method for moving value between layer 2s and other blockchains has raised $12 million in a round led by 1kx and ConsenSys Mesh.
"Our thesis as a company has really been that user experience is what's needed in the space," Arjun Bhuptani, the project lead, said in a phone interview.
With Ethereum periodically getting bogged down (and expensive to use) when something like non-fungible tokens or a new decentralized finance project cause a stir, there's been more and more of a push to move activity to chains connected to but not dependent on Ethereum. That creates a new problem of value stranded on the wrong network when a hot opportunity comes up.
An oracle will then verify the deposit on BSC and communicate that to the Polygon pool. Then the withdrawal can happen.
Liquidity providers (LPs) will earn 5 basis points right now for every transaction. That number could go up a bit but Bhuptani expects the product should be profitable for LPs at levels so low that users are likely to never really notice.
Other investors include: eGirl Capital, Ethereal Ventures, Coinbase Ventures, MetaCartel Ventures, Scalar Capital and others. The team says that more than 80 entities participated in the round.
The traditional approach up to this point has been the bridging approach, where one entity controls a pool that serves as an on- and off-ramp. This requires a high degree of trust in one entity and can also often makes for very slow withdrawals off chain back to Ethereum.
For some users, the chief advantage may be moving around different parts of the value stack without needing to pass through Ethereum, where gas fees can often make even routine transactions prohibitively expensive.
"We have a lot of users who call it the ETH-Floor Lava Game, trying to hop between all these systems without touching Ethereum," Bhuptani said.
"We think that's where the majority of usage is going to be at least for the next couple of years," Bhuptani said, though he added that others could also connect on their own. "It's not very difficult for people to plug in support for Polkadot, Cosmos, Solana. We expect it will happen," he added.
Lasse Clausen, a partner at 1kx, said in a statement.
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