Sequoia Backs StarkWare: Blockchain Scaling Startup Reaches $2 Billion Valuation

Ethereum Scaling Solutions Attract Significant Investment

As the cryptocurrency market expands, developers continue to utilize the Ethereum network, even with its ongoing challenges in handling global transaction volumes. To enhance transaction speed and reduce costs on Ethereum, developers are focusing on Layer-2 (L2) blockchains. These solutions are built upon the Ethereum network, alleviating computational strain while still recording transaction data on the primary chain.

StarkWare Secures $50 Million in Series C Funding

StarkWare, the company behind the Ethereum scaling solution StarkNet, has recently completed a $50 million Series C funding round, led by Sequoia Capital. This investment follows a $75 million Series B raise several months prior, which was spearheaded by Paradigm, a cryptocurrency venture capital firm co-founded by former Sequoia Capital partner Matt Huang.

This latest funding round has resulted in a valuation of $2 billion for the Israeli startup.

Growing Investment in Ethereum Scaling Infrastructure

Despite the emergence of competing blockchains offering greater efficiency, Ethereum’s popularity continues to rise. Consequently, investors are increasingly allocating capital to infrastructure startups focused on improving Ethereum’s scalability for a growing user base and higher transaction throughput. TechCrunch recently reported on Matter Labs’ Series B funding, backed by Andreessen Horowitz. Furthermore, Offchain Labs secured funding from Lightspeed in August, achieving a valuation of $1.2 billion.

While traditionally more cautious in the crypto space, Sequoia Capital is now demonstrating increased investment in blockchain startups. This represents a shift, allowing competitors like Andreessen Horowitz to establish a stronger foothold in the market. Sequoia initially invested in StarkWare in 2018, but this marks the first time leading a funding round for the company. A recent report indicated that blockchain startups now account for a quarter of Sequoia’s new investments this year.

StarkWare's Throughput and Transaction Volume

“What truly sets us apart within the L2 ecosystem is our current capacity to process the highest throughput, both in terms of transactions and overall volume, when compared to all other [L2] solutions,” explains co-founder Eli Ben-Sasson to TechCrunch. “We have already processed over $200 billion in transactions and completed more than 50 million transactions.”

Zero-Knowledge Rollups: A Secure Scaling Approach

StarkWare employs a zero-knowledge rollup as its scaling solution. This method involves processing transactions on its platform and then recording the consolidated data on the Ethereum network. In contrast to “optimistic rollups,” which rely on validators to verify data legitimacy after publication, zero-knowledge proofs utilize cryptography to mathematically guarantee data validity *before* it is published. While these cryptographic proofs demand greater computational resources, their enhanced security has convinced many developers that they represent the future of Ethereum scalability.

Notable StarkWare Clients and Upcoming Deployment

Among StarkWare’s clients are prominent names such as ConsenSys, Immutable, dYdX, and Sorare. The startup is preparing for the mainnet deployment of its StarkNet L2 on Ethereum later this month, following extensive public testing.

“Our valuation reflects the investment community’s strong expectations for the permissionless blockchain space and their understanding that scaling is a critical requirement that must be implemented and deployed,” states CEO Uri Kolodny to TechCrunch. “This is precisely what we are achieving in the coming two weeks.”