Blockchain venture funds are shifting their focus to Web3 development and are placing greater emphasis on scalability.
Layer-2 scaling solution Polygon has raised $450 million in a funding round that was backed by some of blockchain’s biggest venture funds — offering further evidence that major investors are looking to support the future of Web3 development.
The investment round was led by Sequoia Capital India with participation from more than 40 venture capital funds, including SoftBank Vision Fund 2, Galaxy Digital, Tiger Global and Republic Capital. Billionaire investor Kevin O’Leary also participated in the raise.
Polygon will use the funding to expand its scaling solutions, which includes Polygon PoS, Polygon Edge and Polygon Avail, and support mainstream adoption of Web3 applications. The team will also continue to invest in zero-knowledge technology after committing over $1 billion to such initiatives in November 2021.
Polygon, which offers scaling and infrastructure support to Ethereum, has attracted considerable attention over the past year as the explosive growth of decentralized finance and nonfungible tokens raised concerns about Ethereum’s network capacity. In an interview with Cointelegraph in December 2021, Polygon co-founder Sandeep Nailwal said that Ethereum’s highly-anticipated upgrade is unlikely to provide enough scalability to meet demand. He explained:
“Even if 2.0 comes in here, that will not provide enough scalability. [In 2022], the proof-of-stake upgrade will keep everything the same; like Ethereum has 13 transactions per second [TPS] right now, maybe it will go to 20 TPS [after PoS], but not more than that. So that does not add anything to scalability.”
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On the topic of Web3, Polygon has been highly active in expanding its developer network to power the next generation of decentralized applications. As Cointelegraph reported, Polygon partnered with Seven Seven Six, a venture capital firm led by Reddit co-founder Alexis Ohanian, to launch a new $200 million Web3 fund.
In January, Silicon Valley venture fund Andreessen Horowitz announced it was committing another $1 billion to Web3 startups.