Codex Secures $15.8 Million for Stablecoin Layer-2 Network
1min read Codex, a blockchain startup, has secured $15.8 million in seed funding 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 funds will be utilized to construct a stablecoin-only platform from scratch, as stated by Haonan Li, the co-founder and CEO of Codex.
Codex has chosen to avoid "general-purpose blockchains" due to their inefficiencies in addressing real-world applications. Instead, Codex 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 stablecoin solution with a predictable fee structure, unaffected by volatile blockchain activity. Additionally, Codex plans to establish stablecoin off-ramps with existing cryptocurrency exchanges and local brokers, enabling users to convert their onchain assets into fiat currency.
Li's decision to focus on stablecoins was driven by a "hunch" in 2023 that stablecoins would become the next major growth area in the blockchain industry. This perspective was initially seen as unconventional among core crypto enthusiasts. Despite the significant growth of the stablecoin market over the past six years, it still represents less than 2% of offshore US dollar deposits, indicating substantial room for expansion. The resilience of stablecoin demand has been evident, with supplies increasing by $30 billion during the first quarter of the year, despite a plunge in crypto markets. The total stablecoin market capitalization now stands at nearly $230 billion, with the majority of stable assets backed by US dollars.
Codex is not the only company focusing on stablecoin networks. In January, 1Money, a layer-1 network, raised $20 million to advance its stablecoin payment platform. The founder of 1Money, Brian Shroder, predicts that the future of stablecoins will involve multiple currencies, extending beyond the dominant US dollar. This growth is expected to be driven by the demand for localized stablecoin financial solutions and use cases. The strategic shift towards stablecoin-only blockchains by companies like Codex and 1Money reflects a growing trend in the industry, as stablecoins gain traction as a more stable and predictable alternative to other cryptocurrencies. This move could potentially lead to increased adoption and trust in stablecoins, as users seek out more reliable digital assets. 
Ask Aime: What impact will Codex's stablecoin-focused blockchain have on the market and the industry?
