Explained: The $450-million bet on web3 platform Polygon
In the biggest round of investments in an Indian blockchain venture, marquee investment firms including Sequoia Capital India, Softbank Vision Fund II and Tiger Global have infused $450 million in Polygon, a decentralised scaling platform for ethereum blockchain.
What is Polygon and what does it do?
Polygon was founded by Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic. The platform is essentially a “Layer 2” network built on the Ethereum blockchain to mitigate the traffic load on the main blockchain.
The Ethereum blockchain, which is waiting for an update to transition to a faster and more efficient stake-based network, has become congested with the addition of a large number of users. This prompted the creation of “Layer 2” networks like Polygon.
In addition to being a network, Polygon also has a native cryptocurrency token MATIC, with a market capitalisation of $15.6 billion.
Why have top investors bet on Polygon?
Sequoia Capital, Softbank, and Tiger Global are in a catchup game with venture capital fund Andreessen Horowitz, which has taken the lead in investments in the web3 ecosystem that comprises cryptocurrencies, non-fungible tokens (NFT), and metaverse applications.
The investors would have looked at Polygon’s aims to boost its presence in the gaming and NFT ecosystems. Polygon hired YouTube’s former head of gaming Ryan Wyatt earlier this year to lead these efforts.
What are the other big web3 investments in India?
Prior to the $450 million investment in Polygon, the biggest investment in the web3 or cryptocurrency space in India was made in the trading platform CoinSwitch Kuber, where Andreessen Horowitz and Coinbase Ventures led a $260 million round in October last year.
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On Tuesday (February 8), Bengaluru and San Francisco-based crypto trading platform Mudrex announced a $6.5 million pre-Series A fund raise from Arkam Ventures, Tribe Capital, and Bolt by QED Investors.