This week in Tales from the Crypto we look at the boom-induced traffic jam in crypto coin trading, new funding for a blockchain payment network in the developing world, and a pair of new crypto-friendly alums that demoed at FinovateEurope last month.
Base Backup as Bitcoin Booms
The renewed boom in bitcoin is not without its discontents. A spike in network activity on Coinbase’s layer-2 blockchain Base has resulted in service disruptions ranging from transaction fee increases leading to “stuck” transactions to the inability to cancel transactions.
Why does this matter? For crypto traders and investors, Base – launched in August 2023 – offers a way to transact on Ethereum at a lower cost, among other attractive features. But even more critically, the third largest layer-2 network on Ethereum has also seen its transaction volume surge by 3x over the past few weeks due something called “Base season.” This occurs as crypto influencers and traders promote a variety of Base tokens to their followers.
Most of these tokens are meme coins, but the volumes have been significant enough to serve as “stress tests” for a number of these systems – and for their users who have complained of transaction fees 5x normal levels. It should be pointed out that Base has not been the only network to have felt the impact of rising trading volumes for all forms of crypto – including the current meme coin mania. Layer-1 blockchain Solana has experienced service issues as well.
The traffic tie-ups are likely to be temporary, the company noted. It also encouraged users cancel and resubmit transactions where possible and to wait for the traffic to subside if cancellation was not possible. Most importantly, Coinbase assured customers that their funds are safe. There’s a saying that if you are sitting in your car complaining about traffic, it is worth remembering that you, too, are traffic. A new round of cryptocurrency traders and investors is learning that lesson as crypto winter turns toward crypto spring.
In other Coinbase news, the company announced the launch of its Prime Sweeper solution this week. Prime Sweeper is a reference app that automates digital asset transfer between trading balances and vault wallets in Coinbase Prime. The no-code solution is designed for institutional clients and provides robust logging and status updates at every stage of the transfer process.
African blockchain payment network raises seed funding
In an oversubscribed seed funding round, African blockchain payment network Zone has secured $8.5 million. VC firms Flourish Ventures and TLcom Capital led the investment. Other firms participating in the fundraising were blockchain-focused outfits Digital Currency Group, Verod-Kepple Africa Ventures, and Alter Global.
Zone is the first regulated blockchain network for payments in Africa. The company has already signed agreements with 15 of the largest banks and fintechs on the continent, and Zone CEO and co-founder Obi Emetarom said that funding will fuel expansion of the company’s network domestically. Zone will also leverage the new capital to support a cross-border payments pilot program scheduled for 2025.
“As we step into this new phase at Zone, we are re-energized and our commitment to transforming Africa’s payment infrastructure is renewed,” Emetarom said. He praised the firm’s new and existing investors not only for their financial support, but also for their “deep expertise.” Flourish Ventures, for example, will bring both a global perspective as well as a network of industry influencers and Africa fintech expertise to help Zone reach new markets. For its part, TLcom Capital will provide “essential local credibility” and an “understanding of the African tech space.”
Founded in 2022, Zone is headquartered in Lagos, Nigeria.
FinovateEurope: Bringing Compliance to Crypto and Web3 Gamification
FinovateEurope last month showcased two companies, FRNZX (pronounced “forensics”) and Tradelite Solutions, that are innovating in the crypto space.
Headquartered in Tel Aviv, Israel and founded by experts in cryptocurrencies, AML, and intelligence, FRNZX offers a way to achive AML compliance in cryptocurrency transactions. The company offers a holistic AML navigator that makes it easier to integrate cryptocurrency transactions into the bank’s existing AML framework. At FinovateEurope, FRNZX co-founder and CEO Nevo Lapidot demonstrated how the technology streamlines AML operations from onboarding to monitoring, reporting suspicious activity and helping ensure that financial institutions meet regulatory requirements. FRNZX was founded in 2022.
The other crypto-friendly demoing company from FinovateEurope this year was Tradelite Solutions. Dedicated to promoting financial inclusion, Tradelite Solutions offers a web3 financial education game called Mogaland. In addition to gamification, Mogaland leverages a token economy and data-driven financial behavioral IDs in order to make financial literacy accessible, enjoyable, and – courtesy of web3 – monetizable for all, as well. Founded in 2020 by Tracy Chang (CEO) and Matthias Kröner (CFO), Tradelite Solutions is headquartered in Munich, Germany.
ARK Invest’s Cathie Wood on Crypto in 2024
One of the biggest defenders of cryptocurrencies in mainstream finance is ARK Invest CEO and CIO Cathie Wood. In addition to her advocacy for emergent and disruptive technologies, Wood has also advocated on behalf of cryptocurrencies. Just six months ago, she explained why she believed that bitcoin is the currency for AI.
Above is a more recent interview with Cathie Wood, conducted by Schwab Network’s Oliver Renick. In this conversation, Wood discusses recent price gains for Bitcoin, the debut of spot Bitcoin ETFs, and more.
Figure Technologies launches crypto exchange
An “everything marketplace”? A sole platform where traders and investors can buy and sell a variety of blockchain-native assets including cryptocurrencies, alternative investments, and stocks? Figure Technologies is on it.
This week, the San Francisco, California-based company announced the launch of Figure Markets. The new entity will introduce a new decentralized custody crypto exchange and blockchain-native security marketplace. Importantly, the marketplace will incorporate Multi-Party Computation (MPC) technology. The use of MPC-based wallets, the company noted in a statement, will help avoid the single-point-of-failure risks common to centralized exchanges. MPC wallets use private keys that are distributed across a decentralized network and must be multi-party approved for each movement.
Figure Markets also announced raising more than $60 million in Series A funding. Jump Crypto, Pantera Capital, and Lightspeed Faction led the oversubscribed round. Distributed Global, Ribbit Capital, CMT Digital, among others, also participated.
“This funding validates our vision to redefine capital markets with blockchain technology,” Figure Markets CEO Mike Cagney said. “Figure Technologies is capturing real benefits by employing blockchain in its lending and capital markets operations. Our goal is to extend the benefits of blockchain to a broader range of assets – including crypto and securities. It’s ironic that the largest crypto exchanges aren’t on blockchain – we aim to change that.”