Venture Trotter Weekly Review: A Liquid Staking Protocol Focused on Institutional Adoption

Alluvial, the company that is supporting the development of the Liquid Collective, raised a $12 million Series A round co-led by Ethereal Ventures and Variant. The Liquid Collective is a liquid staking protocol, and somewhat of a competitor to Lido, but with an institutional focus (Ruceto published a deep dive investor report on Lido here). Liquid staking exists to solve the problem of illiquidity that is associated with a token owner locking up their tokens by staking them in return for yield. For example, when a user deposits their ETH into the Liquid Collective protocol, they receive LsETH, a receipt token that verifies the ownership of the staked ETH and accrued staking rewards (net of protocol fees). This receipt is liquid because it can be transferred and/or traded, held to accrue rewards, or used as collateral for DeFi activities.

Alluvial seeks to differentiate the Liquid Collective from other liquid staking protocols by making it the easiest to adopt for institutional stakers. This is done via standardization (a single receipt token rather than many), high security and compliance standards, and native multichain access. The ecosystem is permissioned and operated by entities that have the legal obligation to perform KYC/AML checks on new participants. Variant shared their investment thesis here, which was primarily centered around their belief that the Liquid Collective is uniquely positioned to meet institutional demand for compliance-focused staking solutions.

Sound, a Web3 music streaming platform, raised a $20 million Series A led by a16z crypto. With Sound, any artist can sell directly to their fans at a price that they choose while receiving 100% of earnings and retaining 100% of master and publishing rights.

Web3 has an opportunity to disrupt the antiquated economic model of the music industry. a16z published its investment thesis for Sound here. The music industry made it difficult for most musicians to get discovered and earn significant money because streaming platform algorithms direct 90% of streams to the top 1% of artists. Add this problem of discoverability to the problem of music labels and publishers taking a significant amount of revenue from artists (major Web2 streaming options give musicians only $0.003 per stream), and it becomes extremely difficult for musicians to earn a living. Sound disrupts the economics of the traditional music industry, and makes it easier for fans to engage with their favorite musicians.

VC Investments into Crypto Projects

The full list of the institutional investments that Ruceto tracked last week is below. Links to the target company website, investment announcement, and token info are provided via hyperlinks on the Target Name, $ Raised, and Token columns respectively.

Target Name $ Raised Lead Investors Description Token
a16z Crypto
Company that challenges the economics of traditional music streaming platforms by allowing musical artists to sell directly to their fans at a price that they set
Ethereal Ventures, Variant
Supporting the development of the Liquid Collective protocol, "the enterprise-grade liquid staking standard"
An exchange that claims to be the most efficient Ethereum-based DEX because it is entirely run inside a single smart contract, and AMM pools are lightweight data-structures instead of separate smart contracts
Platform that allows NFT owners to earn a fixed rate in return for allowing borrowers to use their NFTs as collateral
Draper Round Table, INCE Capital
Platform that maps social media trends in the crypto market
Flow Ventures
NFT-powered event ticketing
Boldstart Ventures
Security firm for Web3 that uses AI to scan code as it is being written so security suggestions can be made and addressed in real time
Decentralized perpetuals exchange on BNB Chain where traders trade against a multi-asset pool containing 50% stablecoins and 50% blue-chip crypto assets such as BTC, ETH, BNB
Blocktower VC
Enables organizations to securely manage digital assets
Enables the transformation of machine learning models into smart contracts that are transferable and grant the model owners rights to fees per usage
North Island Ventures
AI-powered community management solutions for Web3
Portal Ventures, SevenX Ventures
Collateralized debt position issuer enabling users to deposit validator-backed assets like liquid staking tokens into collateral vaults

What’s happening at Ruceto

We just released the first of multiple reports explaining how several crypto companies are working to utilize blockchain technology to compensate people around the world for using their idle hardware to power the development of AI models. AI model development is extremely expensive, and there is a threat that AI will be dominated by a few massive firms that can afford the necessary hardware. This exciting Web3 use case could help make sure that AI development remains open and affordable. Read this and the rest of our investor reports for free with a 7-day trial! (“Founding Members”)

Disclaimer: The content presented is for informational purposes only and does not constitute financial, investment, tax, legal, or professional advice. Nothing contained in this report is a direct or indirect recommendation or suggestion to buy, sell, make, or hold any investment, loan, commodity, security, or token, or to undertake any investment or trading strategy with respect to any investment, loan, commodity, security, token, or any issuer. Ruceto does not guarantee the accuracy, completeness, sequence, or timeliness of any of this content. Please see our Terms of Service for more information.

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