Last weekend was very interesting for crypto speculators, with the price of bitcoin (BTC), ether (ETH) and other coins rising by double-digit percentages. Zoom in on that price chart and the picture becomes clearer: things aren’t looking so hot.
A year ago, every crypto reporter’s inbox was filled with fundraising announcements from upstart decentralized finance (DeFi) organizations and non-perishable (NFT) projects. From algorithmic stablecoins to production platforms land sales in the Metaverse, each new narrative seems to raise hundreds of millions of dollars from venture capitalists.
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Today, inboxes are empty and words are no longer enough to raise a $10 million seed. But things were not entirely quiet. Some groups continue to attract investors and crypto-Twitter in the market downturn. They generally seem to be more technical than the speculative lending platforms and infrastructure-oriented ones compared to the past Web3 projects.
In Ethereum-land, here are a few big spots for tech investment. .
Zero-knowledge and measurement
Zero Knowledge (ZK) technology continues to be one of the coolest sectors for investors. The technology is complicated, but the idea isn’t: ZK proofs use elegant cryptography to allow users to “prove” something is true without revealing how.
ZK proofs are widely used in blockchain privacy, security, and scalability, but they also have applications beyond crypto. Among the groups building ZK technology for Ethereum are Sroll, Matter Labs, and Polygon — each of which is building a package to measure Ethereum using ZK proofs. ZK packs are expected to eventually become the main way people access Ethereum.
Read more: Zero-Knowledge Cryptography in 2023: Privacy of the Year
Ethereum’s transition to proof-of-stake crypto miners will reward crypto validators, also called “stakers” — people who lock or “stake” into the network and help keep it secure.
EigenLayer is one of the most highly focused companies that continues to gain attention as the broader crypto market continues to falter. Billing itself as a “decentralized trust general purpose marketplace,” EigenLayer allows people to “recycle” the tokens they’ve locked to validate Ethereum — repurposing those tokens to help others secure the Ethereum middleware.
At the other Ethereum outlet is Obol Labs, which announced this week that it has raised $12.5 million in Series A funding to build its approach to distributed verification technology (DVT). Obol Labs says the technology will help validators work more securely and conform to the decentralized ethos of crypto.
Read more: Crypto Staking 101: What is Staking?
MEV: Maximum Extractable Value
Maximum Extractable Value (MEV) is the profit one can make by analyzing Ethereum’s pending transaction pool (“Mempool”) to find profitable trades. Initially seen as a scourge for the entire ecosystem, as MEV-optimizers frequently use strategies that feed off the profits of other traders, companies like Flashbots have been spreading MEV’s wealth across multiple stakeholders.
As MEV extraction continues to grow into a niche industry that is becoming more equitable, MEV-focused companies continue to receive attention and funding despite broader market conditions.
Flashbots, meanwhile, have grown in popularity since Ethereum turned into proof-of-stake in September. Today, 94% of the blocks (packets of transactions) written to the Ethereum ledger come from the MEV-Boost Flashbots middleware piece of pre-made, optimized blocks with the highest possible output value for validators who add them to the blockchain. Flashbots also made waves two months ago by announcing that it was building SUAVE – a new blockchain that works in parallel with other networks to provide a decentralized MEV market.
Read more: What is MEV, aka Maximum Extractable Value?