Cross River Bank gets $620MM @$3B; LayerZero lands $135MM, launching $4B TVL Stargate; Axie's Ronin sidechain hacked for $622MM

Gm Fintech Futurists — our agenda for today is below.

1. BANKING:?Cross River Bank announces $620 million funding round led by Eldridge and a16z (link?here )
2. CRYPTO: LayerZero Labs Raises $135 Million to Create Omnichain Crypto Networks (link?here )
3. WEB3:?Hacker Drains $622M From Axie Infinity’s Ronin Ethereum Sidechain (link?here )
4. LONG TAKE: Is the CFO automation suite (Brex, Ramp, Jeeves, Digits) an SMB underwriting Trojan Horse? (link?here )
5. PODCAST: Stablecoins, Curve Wars, and Olympus as Reserve Currency, with DeFi Researcher Luca Prosperi (link?here ).?This one is a must-listen.

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Short Takes

BANKING : Cross River Bank announces $620 million funding round led by Eldridge and a16z (link?here )

Cross River Bank’s parent company, CRB Group, raised $620MM in their latest round of financing, led by Andreessen Horowitz and Eldrige, and joined by T. Rowe Price Investment Management, Whale Rock and Hanaco Ventures. The digital bank provides lending and payments infrastructure, including products for BaaS, on- and off-ramps for fiat and crypto, as well as lending.

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Since founding in 2008, the firm has 80 institutional partnerships, including Coinbase and Stripe, 800 employees, and has originated over $85 billion of loans. It’ll be using the funds to strengthen its roots in crypto, embedded payments, cards and lending. Crypto is a particular focus, highlighted by their?recent partnership with Chainalysis .

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The opportunity for Cross River is big — embedded crypto is a rapidly growing area, and there is a large gap in the interconnectivity with traditional and regulated financial systems. Cross River has been a fintech powerhouse for over a decade, and we are excited to see this funding come to fruition. For context, its $3B valuation should be contrasted with The Bancorp’s $1.6B private valuation.

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CRYPTO : LayerZero Labs Raises $135 Million to Create Omnichain Crypto Networks?(link?here )

LayerZero Labs raised $135MM in a round led by Sequoia Capital, FTX Ventures and Andreessen Horowitz (again, $pend $pend). The firm offers an omnichain interoperability protocol that enables connectivity between decentralised applications across disparate blockchains. Going across chains is often a complex, expensive and lengthy process, resulting in fragmented data, users and liquidity across blockchains. Not to mention lots of Rekt bridges.

LayerZero recently launched Stargate, a cross-chain liquidity transfer protocol that is built using LayerZero’s generic messaging. It claims to solve a key industry issue, worth billions in lost value, known as the Bridging Trilemma, by enabling the transfer of liquidity in native assets and an instant guarantee of finality. In less than 10 days the protocol has acquired over $3.4B in assets and has performed more than $264MM in transfers.

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Next on the roadmap is integrating LayerZero’s protocol with non-EVM blockchains like Solana and Terra, whilst also continuing to develop a cross-chain community of DeFi protocols and dApps powered by LayerZero and Stargate. There’s both a technology and community to solve with interoperability, and we think this one is hitting the spot with at least one of those.

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WEB3 : Hacker Drains $622M From Axie Infinity’s Ronin Ethereum Sidechain (link?here )

In yet another crypto hack, the Ronin chain, an Ethereum sidechain for Axie Infinity, has been exploited for $622MM worth of Ethereum and USDC. In total, 173,600 WETH (wrapped Ethereum) and 25.5M USDC were taken, with the majority still sitting in the hacker’s wallet and some transferred to centralised exchanges.

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Using hacked private keys the infiltrator was able to forge transactions via the bridge that connects Ronin to Ethereum’s mainnet to claim the funds. The attacker signed transactions from 5 of the 9 validator nodes, enabling consensus for the funds to be withdrawn. Interestingly, the validator key scheme was set up to be decentralised and to limit any attack vectors, but using the gas-free RPC node they were able to find a backdoor into the protocol.

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Sky Mavis, the creators of Axie Infinity, are working with law enforcement, forensic cryptographers at Chainalysis, and its investors to look into reclaiming the funds. The bridge that connects Ronin to Ethereum mainnet has been blocked, stopping any funds or assets from being sent between them. The Katana DEX has also been paused until the issues can be resolved.

There are good questions from situations like this that relate to social systems, the purpose of the law and law enforcement, and the danger of going it alone on everything (wallet & chain) rather than taking more battle-tested community assets that accrue value elsewhere. End of the day, risk capital takes risk.

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Is the CFO automation suite (Brex, Ramp, Jeeves, Digits) an SMB underwriting Trojan Horse??(link?here )

We think deeply about financial products embedded in other experiences, and the difference between a feature, a company, and a platform. We visit GroupMe, Slack, and Microsoft Teams for the analogy.

Thereafter, we try to discern how the recently valuable CFO-automation startups Brex, Ramp, Jeeves, and Digits position their product, and what asset class they are actually monetizing. The note finishes with a nod to credit cycles and underwriting exposure.

??Long Take

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Podcast Conversation: Stablecoins, Curve Wars, and Olympus as Reserve Currency, with DeFi Researcher Luca Prosperi (link?here )

In this conversation, we chat with?Luca Prosperi ,?is a MakerDAO believer and senior finance professional with 15 years of experience in banking and credit investments. Luca has a wide range of experience ranging from publishing a Substack newsletter on the evolution of banking and DeFi, to working for the likes of Ripplewood Advisors, Partners Capital, Morgan Stanley, Oliver Wyman.

More specifically, we touch on MakerDAO and its mechanics, Automatic Market Makers and Curve, the utility behind stablecoins, how Curve was born from the inefficiency of Uniswap, how Yearn and Convex stemmed from Curve, why Luca considered OlympusDAO to be a ponzi scheme at first, and so so much more….

??Listen on Apple Podcasts

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