Multicoin Capital, a crypto-focused investment firm, has played a leading role in the $2.3 million seed funding round for FastLane Labs, a maximal extractable value (MEV) protocol specifically tailored for the Polygon network. This marks the third time Multicoin has backed MEV infrastructure, a contentious concept that enables validators to earn more money by influencing the ordering of transactions in blockchain blocks.
MEV allows both miners and validators to gain profits based on the arrangement of pending blockchain transactions before they are added to a block. Although the approach to earning MEV does vary across different chains, it is regularly achieved via validators attempting a high volume of attempts or spamming the network in order to maximize potential profits.
Founded in March 2022, FastLane Labs offers an innovative auction system that rewards validators without resorting to spamming the blockchain. By using the native MATIC token, Polygon validators earn tips from traders who are vying for specific positions within the blocks. These auctions occur off-chain and externally, minimizing redundant transactions on the network. Additionally, FastLane distinguishes itself by enabling validators to participate using their current clients rather than having to download new proprietary clients.
FastLane co-founder and CEO Alex Watts revealed that they had not initially planned to seek investment. However, after being approached by Multicoin Capital and presented with several intriguing ideas, they realized that raising capital could help the company expand beyond its original vision.
Multicoin Capital’s connection with FastLane began in late August last year when neither a pitch deck nor a corporation was in existence for the startup. This provided adequate time for FastLane’s legal team to prepare all necessary infrastructure. The funding round witnessed the participation of Polygon Ventures, Shima Capital, Delphi Ventures, Everstake Ventures, a41 Ventures, and Symbolic Capital, the venture capital fund helmed by Polygon co-founder Sandeep Nailwal.
In September 2021, Multicoin Capital made its first investment in MEV-related infrastructure, leading a $17.4 million round for Eden Network, a multi-chain system aimed at diminishing the negative impacts of MEV on a network. They then co-led a $10 million round in August for Jito Labs, an infrastructure provider that specializes in Solana-based MEV solutions.
Shayon Sengupta, Investment Partner at Multicoin Capital, predicts that as DeFi continues to flourish on Polygon, more MEV opportunities will emerge. He highlights how Polygon FastLane currently represents the best way to gain exposure to DeFi activity within the Polygon ecosystem and emphasizes that MEV protocols do more than just generate additional revenue streams; they serve as crucial infrastructure that maintains stability and usability on any given network.
Source: Coindesk
