Ethereum Scaling Company StarkWare Quadruples Valuation To $8 Billion Amid Bear Market

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Markets are down, but blockchain companies can still attract capital at high valuations.

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In the latest example, Ethereum developer Starkware has raised a $100M Series D round at a valuation of $8 billion. The round comes six months after the company’s Series C growth, led by Greenox Capital and Coteau, valued Starkware at $2 billion. Other investors include Tiger Global, Paradigm, Three Arrows Capital and Sequoia Capital.

“We closed this deal in a bear market for crypto, highlighting the strength of investor confidence in Starkware scalping,” says Uri Kolodny, cofounder and CEO of Starkware.

The Tel Aviv, Israel-based company uses zero-knowledge (ZK) rollup technology to improve the efficiency of Ethereum without sacrificing security or decentralization. It involves a computationally intensive process that, instead of adding transactions to the blockchain one by one, bundles thousands of transactions into a single batch away from Ethereum’s main layer.

It then writes the entire batch to the blockchain using a file of only 80 kilobytes—”much less than a smartphone photo”, as the company calls it—which serves as a “proof” of the content in the batch. This proof system belongs to a class of privacy-enhancing and scaling technologies called Stark, which was invented by Eli Ben-Sasson, Starkware’s co-founder and president, and other computer scientists.

Using this technology, Starkware has created StarkX, a scaling engine that helps companies use Ethereum more efficiently. Since its launch 18 months ago, StarkEx has handled 173 million transactions totaling $602 billion, significantly reducing the cost of using the network (called gas) for its customers. For example, dYdX for decentralized exchange can settle transactions on the main layer of Ethereum. cost 200,000 gas units (about $12 at current prices), will cost less than a quarter of that amount when using Starkware’s service. dydx passes According to dYdX co-founder and CEO Antonio Juliano, on these savings to its users in the form of lower trading fees. Starkware’s other big customers for the service include fantasy sports company Sorare and ImmutableX, a protocol for trading Ethereum NFTs.

Additionally, the company has launched Starknet, a scaling network that enables developers to deploy decentralized applications at a fraction of the cost of using Ethereum’s main network. StarkWare has seen over 100,000 downloads for its developer tools. “I have a pretty strong indication of developer interest only a few months after Alpha went live,” Kolodny says.

Traction is high, even as the market is calculating with the aftermath of the $50 billion collapse of algorithmic stablecoin TeraUSD and its sister token LUNA, and other macroeconomic uncertainties. The widespread sell-off resulted in double-digit declines in the prices of most major digital assets, including Ether. Ethereum’s native coin is down 32% over the past month, trading below ,000.
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As is the case for most developers, price fluctuations are of little concern for Starkware. “Investors coming into this round are certainly not investing because of the price of LUNA and obviously not because of the price of ETH and Bitcoin today, tomorrow or next week,” Kolodny says. “They are investing because of the vision we have for the next 5-10 years, which is what we think blockchain will mean for businesses and society in the years to come.”

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