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As Ethereum’s scaling efforts heat up, one Israeli-based startup hopes a new $75 million funding round will position it as the infrastructure backbone across decentralized finance, non-fungible tokens, and security. 

StarkWare Industries, which provides scaling and security solutions to overcome the limitations of Ethereum’s existing technology, announced Wednesday a Series B fundraise led by crypto VC firm Paradigm. Paradigm previously led StarkWare’s $30 million fundraise in 2018.

Previous investors, including Sequoia, Founders Fund, and Pantera participated in the round alongside new investors like Three Arrows and Alameda Research.

The fresh funding comes on the heels of a period of growth, with headcount doubling in 2020 and demand for its services soaring “by every conceivable metric,” according to founders Uri Kolodny and Eli Ben-Sasson.

That stands to reason, given the market backdrop. As ether and other digital assets climbed to new heights, the Ethereum network itself has hit a scaling roadblock. This state of affairs has made it increasingly more expensive to transact on Ethereum, with the average transaction fee on Ethereum climbing above $18 this week compared to the roughly $0.08 it cost at the beginning of 2020. 

StarkWare’s Cairo is a service that leverages cryptography to boost transaction throughput by moving much of the heavy computational work off-chain without compromising the network’s security. Transaction throughput refers to the number of transactions per second that a network can handle at a given time.

The firm is currently working on the staged roll-out of StarkNet, its permissionless decentralized ZK-Rollup. 

“It will allow any developer the ability to scale their dApp using STARKs, in an Ethereum-like experience for both developers and users,” Kolodny described. 

ZK-Rollups are meant to be the be-all and end-all scaling solution in Ethereum. If StarkWare is successful in its deployment of StarkNet, then the firm would be among the most important technologies in the cryptocurrency market. 

But the firm has competition in another technology: Optimistic Rollups. The alternative layer 2 scaling solution is generally thought to enable applications to interact with each other directly — while in ZK-Rollups are siloed in their own environment.

With Optimistic Rollups, virtually anyone can connect to a “clone” of Ethereum that has more throughput whereas ZK-Rollup requires folks to have to connect their application with their own Rollup. With StarkNet, ZK-Rollups will have the same properties as Optimistic Rollups, according to StarkWare.

“StarkWare offers the lowest cost, highest throughput solution with privacy on Ethereum,” said Kyle Davies of Three Arrows. “Decentralized scalability is now.”

That’s good timing, considering the surge in activity across the market for non-fungible tokens. 

Over the last several months, the non-fungible token market–which runs the gamut of tokens tied to art, music, sports, and even food—has heated up, with artists selling their works for eye-watering prices. Digital artist Beeple recently sold his 5000-day collection for a staggering $69.4 million.  

Kolodny and Ben-Sasson said the firm has struck deals with “several high profile projects that we haven’t announced yet.” 

They said the scaling needs in the market are unique and more geared toward ZK-Rollups. 

“The benefit of ZK-Rollups is that they offer Ethereum’s security, which far exceeds that of sidechains. If users start trading NFTs in the [millions of dollars], the security of the underlying blockchain becomes a critical issue.”

Outside of the NFT space, StarkWare has announced partnerships with dYdX and Immutable. 

dYdX had over 100,000 signups to the alpha version of their ZK Rollup exchange.

Disclosure: Pantera is an investor in The Block.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

On the heels of its first ever bitcoin auction, U.S. General Services Administration (GSA) now plans to auction off 6.79 more bitcoin — a sum currently worth about $384,000.

The upcoming auction, which will begin on March 29, splits the Bitcoin into 10 lots. Bidding closes March 31 at 5 p.m. Eastern.

On March 17, GSA completed its first-ever crypto auction, selling 0.7501 Bitcoin at a nearly $9,000 premium. A total of 31 bidders made 204 total bids. A GSA representative told The Block that auction proceeds go to the Department of Treasury to be used for “other federal government missions.” 

Items sold via the GSA Auction platform are typically surplus federal property such as lab equipment, aircraft, real estate, seized property or gifts from foreign governments, according to the GSA representative.

The GSA declined to reveal how it obtained cryptocurrency, citing privacy concerns.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Coinbase disclosed Wednesday that its institutional business arm is working with Meitu, a Hong Kong-listed firm that recently made headlines with its crypto purchases. 

Meitu announced a pair of purchases earlier this month, accounting for some $90 million in bitcoin and ether buys. While the bitcoin was aimed at boosting its corporate treasury strategy, the ETH purchase is intended to fuel plans for work in the crypto space, though it’s not clear at this time what that strategy will entail.

“Coinbase Institutional was selected as the sole partner for both trade execution and custody on both their initial and second allocations, for a combined total of US$90m of BTC and ETH,” the crypto exchange firm said in a statement, going on to add:

“Meitu joins a long list of companies that Coinbase Institutional continues to help diversify with crypto including Microstrategy and other corporations. However, Meitu has made a unique case, not seen widely yet, on allocating a significant portion to ETH.”

The publicly-traded MicroStrategy is one of Coinbase’s known institutional customers, having allocated more than 91,000 BTC to its balance sheet as of its most recent purchase. 

Coinbase also worked with U.S. automaker Tesla on its $1.5 billion bitcoin buy, as The Block previously reported. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Blockchain data provider Covalent has raised $2 million in a strategic funding round.

It was a token round, Covalent founder Ganesh Swami told The Block. Hashed Ventures led the funding, with participation from Coinbase Ventures, Binance Labs, Delphi Ventures, and others.

With fresh capital at hand, Covalent plans to launch a decentralized version of its data query network. In other words, Covalent wants to be a “permissionless and unstoppable public utility,” said Swami.

Decentralization would make Covalent “faster and cheaper” for clients, Swami told The Block. “For us, it means now we can recruit a hundred more people from the community to work along-side us to further our mission,” he said.

Swami didn’t say which blockchain Covalent is using for the decentralized network but said it is “one of the existing faster blockchains.”

Founded in 2017, Covalent provides blockchain data in one place for six different blockchains — Ethereum, Binance Smart Chain, Polkadot, Avalanche, Polygon (formerly Matic), and Fantom. Until last October, Covalent only supported Ethereum.

Covalent now is in the process of supporting more blockchains networks, including Optimism, Moonbeam, Elrond, NEAR, xDAI, Compound Chain, and others “very soon,” Swami told The Block.

The firm’s top customers include Consensys, 0x, Balancer, Reef Finance, Zerion, and others, said Swami, adding that the project serves a total of over 100 customers.

Covalent’s decentralized query network is expected to go live “later this year,” and a testnet would launch “in a few months,” according to Swami.

There are currently 25 people working for Covalent, and Swami is looking to add 15 more people by the end of this year.

As for Covalent’s native token, Covalent Query Token (CQT), it is expected to launch in Q2 of this after a public sale.

“We have a public sale coming, but that’s more of a marketing or distribution event and not a fundraise perse,” said Swami.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin rewards provider Lolli has raised $5 million in a pre-Series A funding round.

A range of investors backed the round, including Seven Seven Six — the venture capital fund headed by Reddit co-founder Alexis Ohanian, Serena Ventures — led by Ohanian’s wife and professional tennis player Serena Williams, and multimedia talent management company Night Media.

Several social media influencers, including Casey Neistat, Cody Ko, Noel Miller, and Phil Defranco, also participated in the round.

With fresh capital at hand, Lolli plans to continue developing its mobile app and expand internationally. The firm hasn’t yet shortlisted any markets but is currently exploring where the most demand is, Lolli co-founder and CEO Alex Adelman told The Block.

To that end, Lolli has launched a waitlist for international users to know where it should expand next.

Lolli was launched in 2018 and gives its users free bitcoin when they shop at over 1,000 retailers, including Kroger, Microsoft, and Booking.com. Since launching, Adelman said the firm has provided over $3 million in merchant-funded bitcoin rewards. The rewards range from an average of 7% to up to 30%.

Lolli’s merchant partners pay it a cut of the sales it refers to them, and out of that cut, Lolli gives “the lion’s share” to its users, co-founder and CTO Matt Senter told The Block.

Senter did not comment on a specific percentage of the share and whether the firm is profitable yet. It is also unclear how many users Lolli has, but Senter said most users are new to bitcoin, meaning they got their first satoshis through Lolli.

Over the long-term, Lolli also plans to give its users the ability to trade bitcoin, earn interest on it, and eventually pay its merchant partners with the cryptocurrency, Adelman told The Block.

The pre-Series A round brings Lolli’s total funding to date to $10.25 million. The firm has previously raised $5.25 million in two rounds.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto firm Blockchain.com has raised $300 million in Series C funding at a post-money valuation of $5.2 billion.

The round was led by DST Global, Lightspeed Venture Partners, and VY Capital, with participation from other existing investors.

The Series C comes just a month after Blockchain.com raised $120 million from a group of macro investors in February.

With the fresh capital at hand, Blockchain.com plans to “aggressively expand” its products and services, grow its global team, as well as pursue merger and acquisition opportunities, said CEO Peter Smith.

The firm currently offers crypto wallets, as well as trading and other services for retail and institutional investors.

Smith said Blockchain.com is already “highly profitable” across its product lines but believes that new investors will help support its growing business. The firm surpassed all of its 2020 contribution margins in the first two months of 2021, said Smith.

Blockchain.com claims to have over 31 million verified users in over 200 countries and says it has seen a 3x increase in active users over the past 12 months.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

London-based fintech firm Wirex has temporarily halted signing up new customers in the United Kingdom following a “constructive dialogue” with the Financial Conduct Authority, the regulator.

“The FCA have, in dialogue with us, made suggestions on how we can implement changes to our operational procedures, which we welcome and intend to follow,” said Wirex’s co-founder and CEO Pavel Matveev. “We believe London is the capital of fintech and the FCA’s recommendations will help us create a stable environment to operate in.”

The pause in new sign-ups will be effective from March 24. Matveev told The Block that any U.K. residents who sign up from March 24 onwards will be placed on a waiting list.

Wirex, which allows some 3.5 million users globally to hold and spend both fiat and crypto, said in a press release that the decision to pause new sign-ups was voluntary. The startup aims to strengthen its compliance protocols, bringing them into line with the Fifth Anti-Money Laundering Directive (5AMLD).

The FCA began overseeing crypto firms’ adherence to 5AMLD rules in January 2020, at which time it rolled out a crypto-assets register.

The watchdog initially told crypto firms they had one year to get fully registered, but was later forced to roll out a temporary register after failing to process a flood of applications. To this day, there are still just four entities fully registered – a state of affairs which recently prompted CryptoUK, the trade body, to call on chancellor Rishi Sunak to intervene.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ethereum Layer 2 scaling solution Hermez Network that uses ZK-Rollups technology for scalability has gone live.

The development means Hermez’s mainnet has been launched, and users can now make transfers at lower gas costs.

“People should save around 90% of gas costs,” Hermez’s tech lead Jordi Baylina told The Block.

The current average gas fee is about $16 per transaction. With around 90% savings, the cost would come down to about $1.5 per transaction.

Besides lower fees, Hermez also has a higher throughput than Ethereum, i.e., it can process more transactions per second. Ethereum’s current throughput is about 15 transactions per second. Baylina said Hermez can multiply the capacity of Ethereum by 100 times.

Hermez uses ZK-Rollups for scalability. They help bundle hundreds of transfers into a single transaction, thereby reducing data storage and gas fees for validating transactions.

Ethereum creator Vitalik Buterin recently said that ZK-Rollups “will win out in all use cases” in the medium to long term as ZK-SNARK technology improves.

As for Optimistic Rollups, Buterin said they are likely to win in the short term for general-purpose computation. At the same time, ZK-Rollups are likely to win out for simple payments and other application-specific use cases, he said.

One of the first projects to integrate with Hermez is Tether, as The Bock reported earlier this year. With Hermez’s mainnet launch, Tether’s USDT stablecoin is available on the network.

Besides USDT, Hermez is initially also supporting ether (ETH), wrapped bitcoin (WBTC), Dai (DAI), and Hermez token (HEZ). That means anyone using these tokens can now use the Hermez network to make transfers.

“We will add many other tokens very soon,” Baylina told The Block. “Hermez is open to any ERC20 token.”

Hermez also expects “many exchanges and wallets” to integrate with the network “very soon,” he said.

While Hermez’s mainnet has launched, there is still a lot of work to do, said Baylina. That includes making Hermez “fully decentralized.”

Baylina said Hermez is now non-custodial but still has some centralization points. “During the upcoming weeks, we need to fine-tune some parameters, and we hope to have very soon a fully decentralized governance less system,” he said.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Chinese crypto mining pool Poolin has rolled out an Ethereum hash rate-backed token initially worth $30 million in its bid to lower down the entrance barrier for retail investors.

The firm said in a blog post on Wednesday that each unit of the so-called pETH18C ERC-20 token represents 1 megahashes per second (MH/s) of computing power on Ethash that’s running on Poolin’s facilities with a power efficiency of 1.8 watt per MH/s. 

The move comes amid an increasing level of difficulty for retail investors to participate in the crypto mining space due to what appears to be an unprecedented chip shortage at a global scale that has been having a ripple effect beyond crypto mining.

Poolin said it is selling 1 million pETH18C tokens at a preset price of $30 in USDT with the proceeds to reimburse the cost it prepaid for the mining equipment that’s powering up the hash rate.

In total, the tokens represent 1 terahashes second (TH/s) of hashing power on Ethereum, which accounts for 0.2% of the network’s total. As of press time, users had bought over a quarter of the supply in two hours since it went live.

The initial price of $30 factors in the base cost of Ethereum miners per 1 MH/s, Poolin’s one percent fee as well as a set electricity cost of $0.0750 per kWh.

In a similar fashion to Poolin’s recent issuance of 200,000 units of bitcoin hash rate token pBTC35A, the pETH18C can be staked to Poolin’s Mars Protocol to directly mine ETH proportionate to the underlying hash rate.

Poolin said it has no plan for a second batch at this stage as the supply of Ethereum mining equipment is running dry, as The Block reported previously.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Tesla’s founder and CEO Elon Musk has said the electronic car maker now accepts bitcoin as a payment method. 

Musk said in a Tweet early Wednesday UTC time that “You can now buy a Tesla with Bitcoin.”

His Tweet came shortly after Twitter users started to notice the support for bitcoin as payment option in Tesla’s U.S. stores for all models of its electronic cars. 

The Block has verified Tesla’s official pages and was able to see the bitcoin payment support at least in its U.S. store but as of press time, it appears the option was removed. 

The support for bitcoin as a payment method is not surprising as the electronic car maker said in its February filing that it was planning to accept bitcoin.

Tesla also made headlines last month with its announcement that it made a $1.5 billion investment in bitcoin in January as part of its treasury management policy. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.