Ethereum 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 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 DeFi (peer-to-peer lending, borrowing and trading) and —unique tokens that represent ownership over digital items. It therefore suffers from high fees and, at times, sluggishness. Optimism is working to change this.
After over a year on mainnet, our milestones keep adding up: $1B in gas fees saved for users, thousands of smart contracts deployed, three separate forks...
And now: funds raised to the tune of $150M, giving us runway to keep shipping rain or shine.https://t.co/pBC2jmXtnh
— Optimism 🔴✨ (@optimismPBC) March 17, 2022
“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.”
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 blockchain. “This is constraining growth, stifling innovation, and pricing out some users,” he tweeted.
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.