While there has been a slight uptick in demand for non-fungible tokens amid the recent crypto boom, NFT-specific companies have yet to see renewed interest anywhere near what it was in 2021 when some tokens sold for millions of dollars.
One company that launched when the sector was hot four years ago is raising money, in part, by reinventing itself and building out its bridge technology. On Wednesday, Union Square Ventures announced it is leading a $14 million round into Reservoir, an NFT company that launched its bridge protocol last year.
Other investors in this round include Framework Ventures, Variant and Coinbase Ventures.
In an interview with Fortune, Reservoir CEO Peter Watts said that while the company’s origins are “very much in NFTs,” he has decided to change the company’s trajectory in lieu of the public’s shifting interests.
“We need to solve payments first, and then you can build an economy around on-chain payments,” Watts said. “In some ways, we tried to do it in the wrong order and it blew up, but I don’t think that means that NFTs are just fundamentally not going to work.”
Reservoir offers a suite of products including an NFT marketplace and a decentralized exchange that helps convert one token into another. In a bid to make to it easier for holders to trade cryptocurrencies and NFTs across multiple chains at once, Reservoir launched Relay last year.
Relay is a payments solution known as a bridge that helps two non-compatible blockchains communicate with each other. In exchange for a fee, a financial agent acts on behalf of the Relay user to execute the transaction and swap their tokens. Relay currently serves around 50,000 daily users, according to Watts.
There are plenty of other blockchain bridges, including Across and deBridge that Watts says compete with Relay. Watts says Relay differs because, instead of focusing on just a handful of blockchains, his system strives to support as many as possible. He also says that, unlike other bridges, his company is “vertically integrated,” offering other services in addition to Relay.
Reservoir produces revenue by charging a transaction fee on Relay and allowing blockchains to integrate its NFT and token swapping infrastructure. Watts declined to disclose the company’s annual revenue and overall valuation.
The CEO said he plans to use the funding raised in this round to expand his team and roll out new products to serve growing sectors like stablecoins.
