Protocol Village: Crypto VC Funding in 3Q Down Nearly 75% From Year Earlier: FundStrat

Oct. 6: Venture capital funding for crypto projects in the third quarter totaled $1.4 billion, down nearly 75% from the same period a year earlier, according to a report Friday from the analysis firm FundStrat. According to the report, the funding level has declined for six straight quarters, and compares with $2.4 billion in the second quarter and $5.1 billion in the third quarter of 2022, “Deals remain concentrated in the early stages as there are likely fewer winners worth doubling down on at lofty valuations. Only 1% of deals were over $50 million, while 62% fell under $10 million, staying consistent with 1H 2023 levels,” according to the report. FundStrat’s numbers are directionally consistent with a separate report published earlier this week on crypto VC funding by another analysis firm, Messari.

Protocol Village is a regular feature of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Project teams can submit updates here.

Oct. 5: Burnt, a Web3 foundry, has announced the public launch of its testnet for XION, the first layer-1 blockchain built for consumer adoption. According to a message from the team: "The Company also announces a prior strategic investment from Circle Ventures, the venture capital arm of Circle, a global financial technology firm and issuer of USDC. XION will be the first blockchain to use USDC, a fully-reserved digital dollar, as its primary transactional currency. All products built on XION will display prices in USDC, eliminating one of the key technical barriers. In addition to this, all transactions on XION are gasless." $USDC

"The Sui Foundation, responsible for managing and developing the Sui blockchain, has announced a $51.3 million ecosystem fund to support its DeFi ecosystem and on-chain central limit order book-based platform, DeepBook," Decrypt reported. $SUI

Oct. 5: The Tezos Foundation Council announced Alexis Bonte as new president and Jean-Frédéric Mognetti as executive director effective Oct. 10. “Outgoing President Roman Schnider remains committed to the Tezos community and will stay on as a Foundation Council member,” according to a blog post. “Roman plans to start his own venture and so decided to step down as President to focus on his entrepreneurial ambitions.” $XTZ

Oct. 5: Bitcoin financial services firm Swan is introducing a "collaborative custody" service using Blockstream's hardware wallet Jade. The Swan and Blockstream tie-up will enable users to retain ultimate control of their bitcoin (BTC) while knowing that it is stored in a secure way offline, the two firms announced Thursday.

Oct. 5: IoTeX, an Ethereum-compatible blockchain, is collaborating with ARM Research, recently listed on the Nasdaq and world’s largest provider of hardware and chip technology IP, to add confidential computing to the IoTeX’s DePIN stack, “enabling privacy-preserving computation to deliver valuable insights without exposing sensitive data,” according to a blog post. “That means devices can pool their data to generate system-wide insights without revealing private information. It also means devices and their owners do not have to hand over their unencrypted data to manufacturers or cloud service providers.” DePIN stands for decentralized physical infrastructure networks.

Oct. 5: Phaver, a Helsinki-based startup, secured $7M in seed funding to expand its Web3 social ecosystem, according to a press release. Investors included Polygon Ventures, Nomad Capital and SwissBorg, which shared its allocation with community members. “Phaver is championing a future where users have full control over their social profiles, ensuring their data isn't siloed or controlled by a single entity.” Launched in May 2022, the Phaver app has seen over 250,000 downloads, with 50,000 daily posts, according to the team.

Oct. 5: Poolz Finance introduced “Poolz Boost, a quest-to-earn platform set to transform the cryptocurrency and NFT campaign system,” according to a press release. “This platform addresses the challenges faced by traditional project campaigns in reaching their target audience by rewarding users for task completion. It aims to transition from the problematic Web2 advertisement model, which has faced issues like privacy breaches and high costs, to a more secure Web3 model.”

Oct. 5: Nansen, blockchain analytics platform, has partnered with Slice Analytics, on-chain data analytics service provider specializing in creating custom dashboards, and reports for their clients, according to a message from the team. "Through their respective dashboards, they offer access to a wealth of valuable information about Friend.tech. This data encompasses key comparison metrics and a comprehensive analysis of the price mechanics underlying Friend.tech."

Oct. 5: Volcano Energy, a public-private partnership that contributes 23% of net income to the government of El Salvador, is working with the bitcoin mining specialist Luxor to launch Lava Pool, the first bitcoin mining pool to launch from the Central American country, according to a press release. Volcano will mine blocks exclusively through Lava Pool, the company said. "Additionally, Luxor's Hashrate Forward Marketplace equips Volcano Energy with hedging strategies."

Oct. 4: Monad, a high-performance layer-1 blockchain that is fully bytecode-compatible with the Ethereum Virtual Machine, announced that its project documentation is now available on the website. According to a message from the team: "Monad can run any Ethereum-compatible dapp approximately 1,000 times faster than Ethereum mainnet with no code changes. Monad is also fully compatible with the Ethereum RPC, so infrastructure like MetaMask and Etherscan work seamlessly. Through parallel pipelining, Monad processes 10K transactions per second with one-second block finality."

Oct. 4: Contango Protocol, a decentralized market specializing in "expirables," has "unveiled a new derivative product called cPerps (Contango perps)," according to a message from the team. "CPerps are built on top of Aave, the battle-tested lending market, and benefit from its deep liquidity - a staggering $4.6B - and its low borrowing rates. Contango uses no order book nor liquidity pools: when a trader opens a position on Contango, the protocol borrows the quote currency on the money market, swaps it for the base currency, then lends the base back on the money market - synthetizing the cash flow of a perp position."

Oct. 4: Nym, the a16z-backed pattern-protection privacy company, plans to “launch a privacy bootcamp, Shipyard,” according to a message from the team. It’s “a free six-week event packed with lectures and hands-on workshops designed to empower and equip the next generation of privacy activists, advocates, builders and visionaries. Starting Oct. 9, the bootcamp will offer participants the unique opportunity to learn from privacy leaders, with guest speakers including Harry Halpin, CEO and cofounder of Nym Technologies; activist and whistleblower Chelsea Manning; and Carmela Troncoso, Fortune ‘40 under 40’ in tech.”

Oct. 4: Solana Foundation released a “Validator Health Report” suggesting that the Solana network of nearly 2,000 block-producing validators is more decentralized – based on one indicator known as the Nakamoto Coefficient – than Ethereum, which has twice as many validators. The report noted that some 31% of validators are running an alternative client software known as Jito, while two additional clients, Firedancer and Sig, are under development.

Oct. 4: RFQ, a Solana-based trading platform under development, has raised $2.5M in a pre-seed funding round, The Block reported.

Oct. 4: A new decentralized finance data platform could underpin future regulation of crypto market actors, according to a study released by the Bank for International Settlements (BIS) Wednesday. Project Atlas has initially been used to map out significant international flows between crypto exchanges, said a proof-of-concept report issued jointly with the Dutch and German central banks.

Oct. 4: Cicada, an on-chain credit-risk management company, announced a $9.7 million funding round with equity and debt capital commitments, according to a press release. The round was led by Choppa Capital with participation from Bitscale, Bodhi Ventures, Shiliang Tang and others.

Oct. 4: Oasis Network, a privacy-enabled blockchain platform backed by the crypto-friendly VC firm Andreesen Horowitz (a16z), "is set to introduce syROSE, a synthetic version of its native ROSE token in Q4 2023," according to a message from the team. "Oasis will announce that it is working with SYNTHR to bring ROSE to six blockchain networks, including Ethereum, Arbitrum, Avalanche, Polygon and BNB Chain. By enabling seamless swapping, staking, lending, and more across various Web3 blockchain platforms, syROSE will give Oasis users the ability to transfer their tokens quickly and effortlessly to ecosystems beyond Oasis." $ROSE $ETH $ARB $AVAX $MATIC $BNB

Oct. 4: Tron DAO says in a press release that the Tron dataset has been added to Google Cloud's roster of public blockchain datasets. $TRON

Read More: The Protocol: Google Pushes Deeper into Blockchain

Oct. 3: Nomic, a layer-1 blockchain with a decentralized, non-custodial Bitcoin bridge, said its nBTC Interchain Upgrade "empowers users" to bring native bitcoin (BTC) to anywhere within the Cosmos ecosystem. “Currently there is a lack of decentralized methods that seamlessly bring BTC into Cosmos, and a lack of DeFi apps that can utilize BTC. The upgrade, scheduled for release on Oct. 27 and activation on Oct. 30, will enable users to deposit, withdraw and transfer BTC from any integrated Cosmos app, including Osmosis, Kujira and Levana, and then use BTC anywhere in the Cosmos ecosystem.” $ATOM $BTC

Oct. 3: OP Labs officials have repeatedly said that getting fault proofs into operation was a top priority – so much so that the project even had its own name, “Cannon.” On Tuesday, OP Labs took its first step toward addressing the concerns, launching fault proofs on a test network known as OP Goerli Testnet.

Oct. 3: Polybase, a state zk-rollup protocol that natively supports modular data storage and indexing, has launched Polylang, a programming language described as “TypeScript for Zero Knowledge.” According to a message from the team: “Polylang allows you to write smart contracts that compile down to zero knowledge programs verified using zk-STARKs with the ease of a JavaScript or TypeScript. Polylang is open-source and implemented in Rust, which makes it very accessible for many blockchain developers. It can be used as a CLI or as a library (or crate). Try it out at polylang.dev.”

Oct. 3: Decentralized orderbook exchange Bluefin’s upgraded version called “v2” went live on the Sui network, the company said Tuesday in a press release. The platform’s new iteration adds features such as sub-second, optimistic trades, spot and cross-margin capabilities and a privacy function to trade without a crypto wallet. The first version of the platform – Bluefin v1, which lets users trade perpetual swaps on Ethereum scaling network Arbitrum – will remain active, the company said. $ETH $ARB $SUI

Oct. 3: Huddle01, a platform for decentralized real-time communication, announces the launch of a new X (formerly Twitter) Streaming feature on the platform, enabling users to stream live events directly to X. According to the team: “Huddle01 will become the first platform to enable direct X streaming, as opposed to other tools, which use third-party services like OBS and Streamyard.”

Oct. 3: LayerZero Labs, the team that launched the leading omnichain messaging protocol LayerZero, has partnered with Conflux Network, the only regulatory-compliant public blockchain in China, to bring omnichain capabilities to China Telecom’s blockchain-based SIM card (BSIM), announced earlier this year, according to a message from the team: “This partnership will give BSIM users access to omnichain capabilities on LayerZero-supported blockchains, starting with Conflux mainnet.”

Oct. 3: ApeX protocol, a crypto derivatives DEX, is launching the ApeX Bot on Telegram, according to a message from the team. “This is the first-ever L2 DEX Telegram bot designed specifically for decentralized derivatives trading.”

Oct. 3: The crypto exchange Bybit unveiled a new "Futures Martingale" trading bot designed to "optimize trading strategies and lower average costs," according to a blog post. Features include automated position scaling and an "AI recommended strategy" that "analyzes historical data for 14 days to recommend the best trading approach."

Oct. 3: Wemade, a Korean blockchain gaming firm, has selected Chainlink’s Cross-Chain Interoperability Protocol as the "exclusive interoperability engine for unagi(x), the ineroperability engine for the omnichain initiative." The plan is to create “an interoperable Web3 ecosystem for games and other on-chain applications,” according to a press release.

Oct. 2: Babylon unveiled at Cosmoverse its “Bitcoin Staking Protocol MVP,” according to a message from the team. The release “aims to utilize the vast untapped potential of idle Bitcoins, allowing them to boost the economic security of Proof of Stake (PoS) chains and decentralized applications (dApps). Babylon's protocol connects decentralized trust to earn yield, gaining support from prominent Cosmos chains. It addresses the limitations of PoS chains by enabling them to stake bitcoin (BTC) instead of native tokens, enhancing security and reducing inflation pressure. Babylon's approach seamlessly integrates Bitcoin staking with various PoS protocols, expanding Bitcoin's utility. The MVP showcases this technology's first implementation, with plans for adoption in ecosystems like Cosmos, where the demand for Bitcoin staking is evident.” $BTC $ATOM

Losses from Web3 exploits, flash-loan attacks, oracle manipulation, private key compromise, exit scams and other security incidents surged to nearly $700 million in the third quarter, more than the first and second quarters of 2023 combined, according to Certik.

Oct. 2: Vechain, an enterprise-grade layer-1 public blockchain, "will host a hackathon at Harvard in partnership with Boston Consulting Group and Web3 educational mobile app, EasyA" on Oct. 7-8, according to a press release. "Developers will compete for a portion of the $40,000 in prize pool and the opportunity to access additional funding to develop their projects." Hackathon tracks will "encourage the use of vechain’s VORJ tool, which enables users to deploy smart contracts easily without knowing how to code or having to pay any transaction fees." $VET

Oct. 2: Namada, a layer-1 protocol specializing in multi-chain privacy, said it plans an “incentivized testnet” and an airdrop of NAM tokens to ATOM holders. "Within the current IBC-connected landscape, no existing solution allows for privacy between zones; there is no privacy across the Cosmos. Namada aims to fill this gap,” according to a press release. The size of the airdrop wasn’t disclosed. $ATOM

Oct. 2: Chainlink, the blockchain data oracle provider, has launched “Data Streams,” a new product designed to reduce network latency. The offering has now entered early access on layer 2 platform Arbitrum, the company said Monday in a press release. $LINK $ARB

Oct. 2: Web3Auth, a provider of crypto wallet infrastructure, announced the launch of its own Web3 extension on Firebase Extensions Hub, in collaboration with Google Cloud. According to a press release: “With Web3Auth’s multi-party computation (MPC) at the helm, existing app developers can now use Firebase authentication to securely generate a public-private key pair. This enables their users to own a fully self-custodial Web3 wallet with familiar social logins such as email, SMS OTPs, and biometric IDs.” Firebase is Google’s mobile and Web app development platform. $GOOGL

Oct. 2: Taurus, a platform for managing digital assets, has entered into strategic collaboration with Dfinity Foundation, a major contributor to Internet Computer Protocol (ICP), according to a message from the team. "Taurus will integrate Internet Computer Protocol to its custody platform. Taurus’ clients will be able to have custody of the Internet Computer’s native ICP token and collect staking rewards using Taurus-PROTECT. In addition, Taurus has expanded Taurus-EXPLORER, its blockchain connectivity infrastructure, to support the Internet Computer blockchain." $ICP

Oct. 2: Space and Time (SxT), a Web3 data warehouse, announced at Chainlink’s SmartCon conference this week that its “Proof of SQL, a zk-proof for SQL queries, will natively run its zk-Verifier on Chainlink nodes, enabling verifiable, zk-proven query results for smart contracts, AI models, and enterprises,” according to a message from the team. “SxT is now the preferred data warehouse solution for the Chainlink ecosystem, with this integration enhancing trustlessness and decentralization. The Proof of SQL Verifier will run natively on Chainlink nodes, allowing the Chainlink Network to reach consensus on untampered query results.” $LINK

Oct. 2: New Bitcoin City, which describes itself as "the first Bitcoin social app" or the "Friend.tech of Bitcoin," publicized last week on X (Twitter) that it was open to sign-ups.