Paradigm leads $225 million round for Monad Labs, which is building a layer-1 blockchain to take on Ethereum and Solana

A new player on the scene, Monad Labs, finalized a $225 million round led by Paradigm with additional funding by investors including Electric Capital and Greenoaks to build a layer-1 blockchain to challenge competitors such as Solana and Sui. (Fortune previously reported that Monad was in talks with Paradigm to raise money at a $3 billion valuation in March.)

In an exclusive interview, Monad founder Keone Hon said Monad’s innovation comes from rebuilding Ethereum’s blockchain from the ground up—maintaining the ability to execute smart contracts while completing transactions at faster speeds, higher volumes, and lower costs. While other new blockchains have a similar value proposition, Monad is compatible with the program powering Ethereum, the Ethereum Virtual Machine (EVM), meaning developers can port over applications built for Ethereum.

“We’re emerging from roughly two years of development,” Hon said. “At a time when a lot of the research community was focused on roll-up, data availability, and other directions of scaling, Monad basically went really deep on the pure execution side.”

The crowded layer-1 landscape

Since the launch of Bitcoin in 2009, developers have introduced new blockchains that promise an array of new capabilities, from cheaper and faster transactions to applications like decentralized exchanges or lending protocols that can operate on top of a blockchain.

Although Ethereum launched in 2015 with the innovation of smart contracts, it’s struggled to scale with increased demand, meaning transactions often come with high execution fees, known as “gas,” or are slow to be processed. More recent competitors—including Solana, which launched in 2020—promised faster speeds at lower costs but still suffer from congestion issues.

Hon worked for eight years at Jump Trading, the secretive Chicago-based high-frequency trading firm, building systems that could process large numbers of transactions quickly. He soon branched out into Jump’s crypto arm, working alongside Monad cofounder James Hunsaker.

“We realized there was a huge need for a more performant EVM, and that in spite of this need, no one was really working on this problem,” Hon told Fortune.

Unlike many new blockchains, Monad will have full support for the EVM bytecode, the standard that many developers build on when coding decentralized applications. Hon described EVM as the Web3 equivalent of JavaScript in the early 2000s—it’s used by blockchains including Ethereum, Polygon, Avalanche, Binance Smart Chain, and Optimism. “Anyone who’s built an app for any of those blockchains can port it into Monad without any changes.”

Avichal Garg, managing partner of Electric Capital, said 90% of developers working on multiple crypto ecosystems are working only in EVM chains, pointing to a recent report from his firm. While that means that Monad doesn’t get the same benefits of redesigning its entire programming language like other new blockchains such as Aptos and Sui, Garg said it still gets most of the benefits.

“The way you go to market is you hit the EVM compatibility and suck over a bunch of devs,” he told Fortune. “To us, it felt like this is the playbook.”

‘A much more performant blockchain’

After raising a $19 million seed round announced in 2023, Monad’s $225 million funding round represents the largest crypto fundraise of 2024 so far, according to Crunchbase’s Web3 Tracker, signaling that the sector’s bear market is beginning to thaw. Paradigm, the crypto VC firm leading the round, is reportedly raising a new fund over $750 million. The round also represents one of the first crypto deals for Greenoaks Capital, the VC firm led by veteran investor Neil Mehta, after a small bet on FTX.

While Jump incubated a number of crypto projects, including Wormhole and Pyth Network, Hon said Monad is completely separate from the trading firm. Jump has been embroiled in scandal due to its role in the collapse of the so-called stablecoin project Terraform Labs led by Do Kwon, whose civil trial resulted in a guilty verdict in federal court last week. Hunsaker testified at the proceedings, where it was revealed that he filed a whistleblower complaint with the Securities and Exchange Commission against his former employer.

Armed with its new round of funding, Hon said that Monad aims to deploy its mainnet by the end of the year, as well as a testnet in the next couple of months. Monad Labs currently has around 30 employees and plans for a native token, although Hon declined to comment on whether it would launch with the mainnet.

While crypto companies continue to chase mainstream adoption, Hon said Monad’s first use case will likely be for the type of high-frequency trading he performed at Jump, citing that the biggest stock and futures exchanges in the world process between 500 million and 1 billion transactions per day.

“If we want the scale of an exchange, like NASDAQ or a CME, to be possible on the blockchain, we need a much more performant blockchain than what exists right now,” he told Fortune.

Hon also pointed to other applications that could be enabled by a blockchain with high transaction capacity and low fees, such as games. A program like Runescape might have a player picking up 50 items in an hour, meaning that a blockchain-based game would need to update their stats each time, with each update representing a new transaction that needs to be cheap and fast enough to make economic sense on a blockchain.

While VCs are betting big on Monad, Garg said his investment doesn’t preclude other blockchains from succeeding—just in different capacities. “We think of these ecosystems in a non-zero-sum way,” Garg told Fortune. “Just because Facebook exists doesn’t mean that Twitter and LinkedIn and Tiktok and Instagram and WhatsApp can’t exist.”