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Will Solana become the base layer of Web3?

April 13, 2022, 3:12 PM UTC

Web3 will be the supposed new iteration of the internet. And it will be built on Solana blockchain if Anatoly Yakovenko has anything to do with it.

Yakovenko is the cofounder and CEO of Solana Labs, which created the eponymous blockchain popular among gamers and crypto Wall Street that stands to possibly challenge Ethereum—the long-standing (by crypto standards) blockchain of choice for builders in the crypto universe. That’s according to a recent profile on Yakovenko written by my finance desk colleagues Anne Sraders and Declan Harty. 

It’s not so much about the protocol as it is about the product, Yakovenko told Sraders, who last week flew out to Miami to attend one of their “Hacker House” events, the aura of which she writes was reminiscent of a hot new club. “If you have compelling applications, that’s where the users are gonna go,” Yakovenko told her.

Solana Co-Founders Anatoly Yakovenko and Raj Gokal photographed at Solana Miami on April 7, 2022.
Photograph by Alfonso Duran

Ethereum currently hosts the lion’s share of decentralized finance apps, exchanges, DAOs, and metaverse platforms. But will it remain that way? Transactions on Ethereum can be slow and expensive. It’s the reason that Ethereum is undergoing a structural transition (that and the titanic energy consumption currently required to validate transactions). And it’s a major reason why other blockchains, like Solana, have gained some traction.

Solana Labs, backed by the likes of Andreessen Horowitz, Ribbit Capital, and Lightspeed Venture Partners, claims its blockchain can manage more than 50,000 transactions per second (for now, it’s averaging only about 1,000 to 2,000 due to demand). It costs around $0.00025 per transaction, compared to Ethereum’s approximately $12. That’s partially because Solana has developed what it calls “proof of history”—where time is used as a data structure to order transactions and events on the blockchain. Like Ethereum, Solana also uses Proof of Stake to validate transactions.

The Solana network, which is still in beta, is growing as developers assemble apps and projects on its blockchain. Its token SOL has surged over 6,500% in value since January 2021. There is approximately $6.6 billion in crypto deposited in DeFi projects on Solana, per DeFiLlama—though that’s down from $15 billion in December. “Solana had a big lead in terms of hype, in terms of traction, and it has definitely lost that momentum,” Arca’s CIO Jeff Dorman told Fortune, noting that it could go back the other way.

Solana was initially called Loom, but due to an Ethereum-based project sharing the same title, Yakovenko and his cofounders renamed it after a beach in California where they surfed. Yakovenko still surfs, and cycles, crediting those hobbies to helping him think through his problems. He is also an Ironman and an underwater hockey player. “In his prime, he claims he could swim three lengths of the pool with fins on without taking a breath,” writes Sraders.

Solana Labs may have its work cut out for it. Ethereum is building out its next version, which could be ready as soon as this summer, which will phase out crypto mining and make the platform more scalable. And Solana has been suffering from outages—including a 17-hour one in September, and several others in January, according to Bloomberg.

But Yakovenko is thinking big for Solana’s future.

“He’s a man chasing a dream. And he really just wants to create something cool and awesome and maybe, change the world a little bit,” Jump Crypto president Kanav Kariya told Fortune.

You can read the full story here.

Lessons learned… Fast, the now-defunct online login and checkout solutions company, had raised $120 million from investors only to abruptly shut its doors earlier this month, costing about 450 people their jobs and investors like Index Ventures and Stripe their capital. This week, angel Brian Rumao, who joined the company’s Series A round, took to Twitter to share some valuable lessons he had learned from the debacle, which include to trust your gut, not to rely on other investor signals, and be aware that employees have more to lose than investors. You can read the full thread here.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
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- Montonio, a Tallinn, Estonia-based finance platform for online merchants, raised €11 million ($11.9 million) in Series A funding led by Index Ventures

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- Scotch Porter, a Newark, N.J.-based grooming and wellness brand, raised $11 million in Series B funding led by Pendulum.

- Formations, a Bellevue, Wash.-based financial management solution for the self-employed, raised $8 million in Series A funding led by Arthur Ventures.

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- GoSolo, a London-based banking app for international founders and entrepreneurs, raised $1 million in funding led by SFC Capital, Menlo LLP, and Grammarly founders Max Lytvin and Alex Shevchenko.


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- KKR agreed to acquire Barracuda Networks, a Campbell, Calif.-based cloud security solutions provider, from Thoma Bravo. Financial terms were not disclosed. 


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- Omega, a portfolio company of Pfingsten, merged with ACE IT Solutions, an Elmwood Park, N.J.-based managed IT, cloud, and security services provider. Financial terms were not disclosed. 


- Excelerate Energy, a Woodlands, Tex.-based regasified natural gas delivery company, raised $384 million in an offering of 16 million shares priced at $24 per share. The company posted $888.6 million in total revenue for the year ending in 2021 and reported $41.2 million in net income.


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- White Star Capital, a New York-based investment platform, raised $120 million for a second fund focused on crypto-networks and early-stage blockchain-enabled Web3, DeFi and Gaming companies. 

- Leadout Capital, a Portola Valley, Calif.-based venture fund, raised $57.7 million for its second fund to invest in “resilient” founders, according to Fortune. 


- Genstar Capital, a San Francisco-based private equity firm, promoted Sid Ramakrishnan and Scott Niehaus to director and Dominic Martellaro to principal. 

- Turnspire Capital Partners, a New York-based private equity firm, hired Luther Gatewood as a principal. Formerly, he was with Athyrium Capital Partners.

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