Cata Labs, a blockchain infrastructure startup, has raised $4.2 million in seed funding at a “mid-eight figure valuation,” the company announced Wednesday.
The fundraising round, which closed in March, was led by crypto venture-capital firm Spartan Group and included participation from Robot Ventures, Maven 11, Alchemy Ventures, HashKey Capital, Circle Ventures and Superscrypt, among others.
Cata Labs is building Catalyst, a cross-chain bridge that aims to make it easier for blockchains to communicate with each other. At present, popular layer 1 blockchains such as Ethereum and Solana cannot easily transact with other blockchains, creating a spurt in bridging projects like the Jump Crypto-backed Wormhole and Andreessen Horowitz-backed LayerZero.
“It’s become stupidly easy to make new blockchains,” said Jim Chang, co-founder of Cata Labs. “There are ways where you can click a button and make a new blockchain. It doesn’t really make sense to have all these blockchains if they can’t talk to each other.”
Chang, who was previously a product manager at decentralized-finance protocol Aave, is working with Cata Labs co-founder Alexander Lindgren to launch Catalyst.
Catalyst is different from existing bridges in that it can come already integrated into blockchains that opt into its ecosystem, forgoing the laborious and manual integration process characteristic of bridges such as Wormhole.
Catalyst’s thesis is that the future will hold thousands of modular blockchains that will need to communicate with each other. Modular blockchains are easier to deploy than traditional blockchains and break down the core functions of a blockchain into several different specialized blockchains.
“With the proliferation of rollups and app-specific chains, liquidity fragmentation is becoming a significant pain point and we have yet to see a unified liquidity layer that allows users to trade native assets seamlessly and efficiently cross-chain,” said Kelvin Koh, managing director of Spartan Group. “We believe Catalyst is in a great position to solve this pain point.”
A major challenge for the modular thesis, however, is attracting user activity onto its blockchains. “At the end of the day, all of these bridges are in a winner-takes-all race to build network effects,” Chang said.
UPDATE (April 26, 2023, 17:34 UTC): Wormhole is backed by Jump Crypto, not Jump Capital.
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