ConsenSys, an Ethereum developer and service provider, has concluded a $200 million round of fundraising at a $3.2 billion value. Marshall Wace, Third Point, ParaFi Capital, and Think Investments are among the new investors, who join existing investors such as Animoca Brands, Coinbase Ventures, and HSBC. This investment comes on the heels of a $65 million round announced in March 2021, which included JPMorgan, Mastercard, and UBS.
In the frothiness of today’s crypto industry, where total market valuation has approached $3 trillion and around $15 billion in venture money has been invested in 2021, a $200 million round may appear relatively ordinary. Particularly for a company launched in 2014.
However, according to Joe Lubin, CEO and Founder of ConsenSys and a co-founder of Ethereum, this ‘goldilocks’ round is precisely appropriate for the company at this juncture. Lubin told Forbes in an interview, “This rise might have been higher if we wanted it to be.”
This news comes as ConsenSys appeared to be hitting its stride. Lubin’s personal riches was reportedly used to bankroll the corporation, which spent up to $100 million every year. It had to undergo a significant reorganisation in 2018, which resulted in the departure of almost half of its personnel. According to Forbes at the time, the main reason for this abrupt jump was Lubin’s generosity in supporting a wide range of projects with minimal control or follow-up to verify that essential goals were accomplished. These Pokes’ generated relatively little direct revenue, and the majority of the revenues received by the corporation came from consulting services provided by another division of the company.
Lubin disagrees with this assessment. “I would argue that there was no ecology when ConsenSys began.” “Because the technology was so young, we did a lot of experiments,” he explains. “Some were tremendously successful and spun out as new firms, while many of those trials were cancelled.” We still learnt a lot from those experiments, and we’ve steadily gained traction along the road.” That burn rate, however, was unsustainable.
The result was a more focused, streamlined organisation with clear distinctions between development and consulting activities. It was also helped by a significant increase in the price of ether (Ethereum’s native asset), which has risen 489 percent year to date. Lubin claims that the company is now profitable, and that a number of its marquee initiatives are gaining traction.
Among these is MetaMask, a self-custodial wallet (where the user maintains the keys that protect their cryptocurrency rather than an exchange like Coinbase), which has become the industry standard for users to connect with Ethereum-based blockchain apps. The wallet now has 21 million monthly active users, a 38x increase from 2020, and has facilitated more than $10 billion in trade activity via a recently introduced token swap feature.
Infura is another technological stack and collection of developer tools that allows developers and apps to communicate with Ethereum. Infura is presently used by 350,000 developers, according to ConsenSys. It has grown so popular that some users are concerned that it has become ‘too big to fail,’ which runs against crypto’s decentralised ideal. Indeed, nearly a year ago, Infura experienced a brief outage, causing delays in crypto exchanges executing trades and even problems in MetaMask.
Although ConsenSys does not support those networks, Ethereum should become more competitive in terms of throughput once it completes its long-awaited shift to a more efficient proof of stake mechanism capable of supporting up to 100,000 transactions per second. It also supports various additional networks that are compatible with Ethereum, most notably Polygon and Avalanche, but have previously demonstrated better throughput.
Finally, Lubin emphasises that ConsenSys may not be finished raising funds, stating that “We’re really happy to close this raise, put capital to work, and potentially do something at some point in the not too distant future.”