Welcome to zero knowledge. A weekly newsletter breaking down where the top VCs are investing in web3/crypto.
Expect portfolio breakdowns (like this) every Tuesday. And other crypto topics, insights, and updates everywhere in between.
Here we go 💪
5 months ago, Paradigm announced its $2.5 billion venture fund, making it the largest crypto VC fund ever raised (one-upping a16z). The fund was founded in 2018 by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang.
Here's what to expect below 👇
- Recent funding news from Paradigm Capital.
- Paradigm's portfolio broken down by layer, blockchain, company type, and category.
- 🕵️♂️ The most interesting company in their portfolio.
- 💼 Entire Paradigm portfolio (in an Airtable sheet).
- 💰 Tokens available from Paradigm portfolio companies.
Recent funding news from Paradigm Capital
1. Twitch co-founder Raises $35M Seed round for Fractal, a new marketplace for gaming NFTs, from Paradigm and Multicoin Capital (equity 💵)
- Fractal, founded by Justin Kan, the co-founder of Twitch, announced a $35M seed round led by Paradigm and Multicoin Capital with participation from Andreessen Horowitz, Solana Labs, Animoca, Coinbase Ventures, Play Ventures, Position Ventures, Zynga founder Mark Pincus, Crossover, Shrug Capital, TerraForm CEO Do Kwon, Tim Ferriss, the founders of Ramp, and many more.
2. Solana’s top NFT marketplace Magic Eden announces $27M Series A Raise (equity 💵)
- “Magic Eden will be much more than a place for users to purchase NFTs. Our goal is to make a clear distinction between Web2 and Web3, allowing creators, collectors, and supporters to engage with each other and lead the direction of their online interactions.”
Below is a thematic view of Paradigm's investments by:
- Category (ex: infrastructure vs. finance companies)
- Company type (ex: payments vs. NFTs and digital ownership companies)
- Layer (ex: L1 vs. L2)
- Blockchain (ex: Eth vs. Solana)
#1 Investments by category
#2 Investments by company type
#3 Investments by layer
#4 Investments by blockchain
Most interesting portfolio company 📈
- Elevator ⚡️: Synthetix is a new financial primitive enabling the creation of synthetic assets, offering unique derivatives and exposure to real-world assets on the blockchain. In other words, allowing you to put any assets on-chain and make them tradeable.
- Synthetic assets: Tokenized representations (derivatives) that mimic the value of another asset. e.g. Putting USD on-chain as sUSD (synthetic USD).
- Key insight 🕵️♂️: DEX’s (decentralized exchanges) have issues with liquidity and slippage (the price of your trade increasing). When you trade on a DEX, you're depositing one token in the pool and withdrawing another. Large trades or high volumes of trades can drastically change the supply and demand of tokens, leading to you paying a higher price than expected (slippage). Synthetix's “pooled collateral model” collectively creates much more liquidity that negates the issues of slippage. Users can also convert between Synths directly, rather than having to withdraw their assets from one pool in order to trade those assets in another.
- Advantages 👍: Below is a snippet from Shrimpy's excerpt outlining a few of the advantages of synthetic assets vs traditional derivatives.
#1 Anyone can issue them: Blockchain-based synthetic assets can be minted by anyone using open-source protocols like Synthetix and Mirror.
#2 Worldwide liquidity: Synthetics can be traded on any crypto exchange in the world, including unstoppable decentralized exchanges.
#3 Borderless transfers: Synthetic assets are blockchain assets like ERC-20 tokens; you can send and receive them between standard cryptocurrency wallets.
#4 Frictionless movement: Switch between equities, synthetic silver/gold, and other assets without having to hold the underlying asset.
- More details for the interested 📜: Synthetix is a decentralized synthetic asset issuance protocol built on Ethereum and Optimistic Ethereum (a layer two scaling solution built on Ethereum). These synthetic assets are collateralized by the Synthetix Network Token (SNX) which when locked in the contract enables the issuance of synthetic assets (Synths). This pooled collateral model allows users to perform conversions between Synths directly with the smart contract, avoiding the need for counterparties. This mechanism solves the liquidity and slippage issues experienced by DEX’s. Synthetix currently supports synthetic fiat currencies, cryptocurrencies (long and short) and commodities.
Price of Synthetix over time
Total Value Locked (TVL) of Synthetix vs. competitors
TVL represents the number of assets that are currently being staked in a specific protocol. Aave and Synthetix both launched in 2017, and Aave is on another level. Aave introduced the flash loan which lets traders access almost infinite leverage (see Flash Loans under last week's Most Interesting Company, Furucombo).
Individual portfolio company data
Tokens available from Paradigm backed companies
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