Ethereum Startup Optimism Hits $1.6 Billion Valuation After Raising $150M

EthereumEthereum scaling solution Optimism today announced it raised $150 million in a Series B funding round. In a Thursday blog post, the startup said the added cash now means the company has a valuation of $1.65 billion. 

Optimism is a startup that wants to make using Ethereum, the network behind the second largest cryptocurrency, easier and cheaper. This is because, right now, lots of people are using Ethereum to build things and make transactions with its native cryptocurrency (which is also usually referred to as Ethereum, but is strictly called Ether.) 

The Ethereum network is in high-demand, mainly because of the explosion of DeFiDeFi (peer-to-peer lending, borrowing and trading) and NFTs—unique tokens that represent ownership over digital items. It therefore suffers from high fees and, at times, sluggishness. Optimism is working to change this. 

“We cut fees by over 30% in the last year and continue to push enhancements to the protocol that slash fees even further,” the blog post said. “Sustainable, sub-dollar transactions are no longer a question of if, but when.” 

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Top crypto investment firms Paradigm and Andreessen Horowitz led Optimism’s Series B funding round, according to a press release. Venture capital firm Andreessen Horowitz is very focused on investing in crypto: In January, the firm announced it wanted to plug $4.5 billion in crypto projects. 

Chris Dixon, a general partner at Andreessen Horowitz, said in a tweet today: “Demand for Ethereum has continued to climb as NFTs, DAOs, DeFi and other types of apps take off, resulting in high gas fees,” referring to the fees involved in making Ethereum transactions and interacting with applications on the blockchainblockchain. “This is constraining growth, stifling innovation, and pricing out some users,” he tweeted.

Ethereum Builder ConsenSys Raises $450 Million at $7 Billion Valuation

Ethereum software company ConsenSys announced on Tuesday that it has raised a $450 million Series D round led by ParaFi Capital and a host of other prominent names, including Microsoft and Softbank. The new round values ConsenSys at more than $7 billion—double the valuation it received after a $200 million round just four months ago. Consensys launched in 2014 as a home for startups seeking to tap the potential of a then-new blockchain called Ethereum, and earned a reputation for both innovation...

While gas fees on Ethereum have historically been relatively high, since January they have been dipping. This is down to the NFT market cooling down—less NFT trading means less demand for the Ethereum network and therefore lower fees. Layer 2 solutions like Optimism also help. 

Still, despite the recent drop, transaction fees on Ethereum are significantly higher than on competing networks Avalanche, Terra, or Solana, which have all surged in value to land a spot in the top 10 cryptocurrencies by market cap. Other Ethereum scaling solutions, such as Artbitrum, are also proving popular and aim to cut fees and speed up the network.