Codex Raises $15.8 Million for Stablecoin Layer-2 Network
1min read Blockchain startup Codex has successfully raised $15.8 million to develop a layer-2 network exclusively for stablecoins. This funding round was led by Dragonfly Capital, with additional support from prominent investors such as coinbase, Circle, cumberland Labs, and Wintermute Ventures. The capital will be utilized to construct a stablecoin-only platform from scratch, as stated by the company's co-founder and CEO, Haonan li.
Codex has chosen to avoid "general-purpose blockchains" due to their inefficiencies in addressing real-world applications. Instead, the company is developing a stablecoin-only chain on top of Optimism, an Ethereum layer-2 scaling solution that employs rollup technology to enhance transaction speeds and reduce costs. This approach aims to create a predictable fee structure that remains unaffected by volatile blockchain activity.
In addition to building the stablecoin-only chain, Codex is also focusing on creating stablecoin off-ramps with existing cryptocurrency exchanges and local brokers. This initiative will enable users to convert their onchain assets into fiat currency, providing a seamless transition between digital and traditional financial systems.
The decision to focus on stablecoins was driven by a "hunch" that stablecoins would become the next major growth story in the blockchain industry. This perspective was initially considered contrarian among core crypto enthusiasts. However, the stablecoin market has shown significant growth, increasing 60 times over the past six years, although it still represents less than 2% of offshore US dollar deposits.
Despite adverse market conditions, stablecoin demand has remained resilient. During the first quarter, when crypto markets experienced a significant decline, stablecoin supplies increased by $30 billion. The total stablecoin market capitalization now stands at nearly $230 billion, with the majority of stable assets backed by US dollars. The circulating supply of stablecoins has grown by nearly 3% over the past 30 days, indicating continued interest and adoption.
Codex is not the only company focusing on stablecoin networks. In January, a layer-1 network called 1Money raised $20 million to advance its stablecoin payment platform. The founder of 1Money, Brian Shroder, predicts that the future of stablecoins will be "multicurrency," extending beyond the dominant US dollar. This growth is expected to be driven by the demand for localized stablecoin financial solutions and use cases.
Ask Aime: How will the $15.8 million investment by Codex impact the stablecoin market?
