Nischal Shetty Led L1 Blockchain Startup Shardeum Bags $18.2 Mn Seed Funding

Nearly eight months after its launch, Layer-1 blockchain startup Shardeum has raised $18.2 Mn (INR 149.5 Cr) as part of its first seed funding round.

The round saw participation from as many as 50 institutional and angel investors including names such as Jane Street, Struck Crypto, The Spartan Group, Big Brain Holdings, DFG, Ghaf Capital Partners and Foresight Ventures. Other strategic investors also included CoinGecko Ventures, Wemade, ZebPay, Jsquare, MH Ventures, Nestcoin, Veris Ventures, Tupix Capital, Mapleblock Capital and NetZero Capital. 

The angel investors that took part in the funding round included ex-Coinbase CTO Balaji Srinivasan, Kraken CMO Mayur Gupta, Resy cofounder Michael Montero, Coibase’s vice president of engineering Pankaj Gupta, Push Protocol cofounder Harsh Rajat, senior executive at Coinbase Nakul Gupta, Reflexical founder Ajeet Khurana, Elevation Capital’s Ravi Adusumalli, executive at Hudson River Trading Rohan Chauhan, Covalent cofounder Ganesh Swami and Bitinning founder Kashif Raza, among others. 

The funding will be used to shore up hiring across multiple verticals including tech, product development, finance and marketing. Besides, the investment will also be deployed to scale up the startup’s marketing efforts as well as research and development efforts. 

Speaking to Inc42, Sharedeum cofounder Nischal Shetty said that the startup plans to increase its headcount to 50-60, up from about 30 currently. He further added that the startup will continue to hire globally for talent acquisition.

“Firstly, we plan on expanding the team. Secondly, We intend to spend a part of funding on ecosystem development and will use the funds to help build the applications through third-party developers… Third focus of the funding will be with regards to branding and distribution, so everyone knows and understands what Shardeum is,” added Shetty.

Building The Project, Brick By Brick

Unveiled in February this year, Shardeum is the brainchild of crypto exchange WazirX cofounder Nischal Shetty and US-based blockchain architect Omar Syed. The startup is a proof-of-stake smart contract platform that essentially incorporates sharding and auto-scaling to provide high throughput, low latency, high levels of decentralisation and security.

Competing directly with Layer-1 blockchains such as Ethereum, Shardeum deploys dynamic state sharding technology to linearly scale and increase transactions per second with every node added to the network. This allows the overall network to maintain low gas fees, all while scaling up its operations.

The startup claims to be built on the principles of OCC (open, collaborative and community-driven) and has targeted a beta launch by the end of 2022. Shetty told the publication that Shardeum currently has an operational alpha net and is targeting a mainnet launch by 2023.

“The Blockchain Trilemma has been a difficult problem to solve, and scalability is the most significant factor that is preventing wider crypto adoption especially in emerging markets like India. The Web3.0 ecosystem has been on a massive growth spree. For Web3 to onboard 1 Bn users in the next few years, we need a scalable L1 blockchain which ensures 1 cent fees forever while maintaining decentralisation. Shardeum aims to make that happen,” added Shetty. 

In the test run, the startup claims to have onboarded more than 1 Lakh users from countries such as India, UK, Japan, and a few countries in Africa and South-East Asia, among others. 

Speaking on the occasion, Struck Capital’s managing partner and founder Adam Struck said, “Shardeum’s protocol is the first of its kind, and strategically and efficiently solves the pain points of today’s most reputable blockchains.… We are delighted to join Shardeum in its mission to provide scalable, economical, and streamlined decentralisation for the world.”

Shardeum plans to actively host hackathons in India and the US over the next year to incentivise developers to build and grow the Shardeum ecosystem. Shetty told Inc42 that the startup is eyeing the next 800 Mn users who are yet to take a plunge into the world of Web3.0. 

Apart from that, Shardeum has also deployed its native utility token called SHARD ($SHM) on the network. Going forward, the token will largely be available for use on the platform for running transactions on the network, incentivising validators, running DApps, among others.

Leaving The Past Behind

While Shetty has focused his energies on the new project, his public image continues to be marred by the major public fiasco involving WazirX. The crypto exchange, which he helped found, was embroiled in a controversy in August this year after the enforcement directorate (ED) landed on the doorsteps of the startup’s director Sameer Mhatre in a money laundering case. 

The subsequent crackdown saw agency sleuths freezing an amount of INR 64 Cr related to WazirX, with both Shetty and Binance CEO Changpeng Zhao hitting out at each other publicly over a purported acquisition deal gone sour.

The ensuing fallout of the ED crackdown and the ongoing crypto winter has seen crypto trading volumes plummet at the crypto exchange. Such was the effect that WazirX fired more than 60 employees across multiple verticals earlier this month. 

Interestingly, it has also been widely reported that Shardeum has been poaching much of WazirX’s staff to fill positions at the new venture. The startup has onboarded hirees from WazirX in domains including those from marketing, tech and even public relations.

Shardeum’s mega fundraise comes at a time when the entire ecosystem continues to be in doldrums. While the crypto landscape has taken a massive hit, the Web3.0 space continues to evolve and incubate a host of cutting-edge and new age startups. 

A slew of regulations, including the move to implement a 30% tax on profits from crypto transactions and 1% TDS, have effectively pulled the plug on the prosperity of crypto startups. The ongoing crypto winter has further plummeted volumes, even as many startups have shut shops while others balance their finances on a thread. 

Even though the industry faces an uphill task, the rise of Indian Web3.0 startups has indeed surprised many. But, will Shardeum survive the test of government regulation, only time will tell.