Galaxy Digital Holdings Ltd.

07/25/2024 | Press release | Distributed by Public on 07/25/2024 19:11

Announcing $113M Initial Close for Galaxy Ventures Fund I

Origins. For the last six years, the Venture team at Galaxy has been investing in Seed and Series A-stage companies in the blockchain and crypto industry on behalf of Galaxy's balance sheet. Galaxy has been in-and-around-the-hoop on the most potent trends in the industry from their formative moments, made possible by our firm's 450-person footprint and world-class operating businesses. We've had the great pleasure of investing in and supporting crypto and web3 companies pushing frontiers. Fireblocks transformed flexible private-key management for digital asset enterprises (we know because our Trading & Ops teams were the guinea pig). Bison Trails and Figment made staking available to new participants as production blockchains moved from Proof-of-Work to Proof-of-Stake. Tagomi and Talos contributed new now-ubiquitous market infrastructure. Celestia, Axelar and Avalanche brought new approaches to the gritty areas of blockchain scaling and interoperability; EigenLayer opened our minds to the economic value latent inside of Proof-of-Stake. We're also excited about our investments in Citrea, RiscZero, Gensyn, Chaos Labs, and many more.

Present and Future. Today we announce the $113M initial close of Galaxy Ventures Fund I. Fund I is Galaxy's first external venture fund for the core crypto venture strategy at Galaxy and it helps us create an even stronger program for portfolio companies. (Check out our Gaming and Media-focused friends at Galaxy Interactive.) We plan to add a bit more capital in another close later this year, but we felt the time is ripe to share our investment strategy and why this moment in particular excites us.

The core infrastructure that underpins financial markets globally was developed in the mid-20th Century. Since then, innovation in financial markets has been cloistered to electronification of markets and development of new financial products. Fintech has provided improvements on the margin in terms of user experience but has not addressed the foundational inadequacies of the outdated systems underneath.

Public blockchains are global coordination and innovation platforms that enable new financial primitives. We are seeing the emergence of a revolution in the payments stack, underpinned by stablecoins and new crypto payment rails. Leveraging public blockchains as new financial rails, value can be moved around the world cheaper and faster than ever before. Next will come tokenization of assets, and those assets will plug into the onchain financial programs we call DeFi.

The financial services market makes up 25% of global GDP and is a $26T market annually. The size and the outdated nature of the financial system leave it ripe for disruption, even if over a two-decade time horizon. We are extremely early in the blockchain transformation and investing across the blockchain ecosystem - the protocols that developers interact with, the financial applications that users interface with, and the software businesses that stitch these innovations together with the world today - can yield some of the most meaningful economic outcomes globally.

The strategy, of course, is not to bet on financial services disrupting itself from the inside-out with consortiums and pilots. It's more subversive: Project Mariana showed that the largest institutions (Central Banks, financial incumbents) will likely use Curve code when they eventually come onchain. Investment in the frontier is our priority as open-source development continues to push boundaries. Three investment areas:

  • Financialized Applications: Real, secular product-market fit is showing up in the financial applications of blockchains. We're seeing tangible success cases in payments/stablecoins. Read our piece on the Future of Payments. We also expect to invest in tokenization, lending, exchange, settlement, and emerging applications of onchain finance over the next three years.

  • Software Infrastructure: Software businesses that support the growth of the space can be candidates to compound at high rates of return as the industry expands. Fireblocks is a foundational infrastructure for the management of digital assets, and we've enjoyed partnering with them across Ventures, Trading, and Operations. Galaxy is often both a customer and investment partner to these businesses.

  • Protocols: Since Ethereum's launch in 2015, the game has been to reduce cost and increase throughput on generally programmable environments. We think we're halfway up the S-curve on protocol design and we expect to invest in protocols pioneering broadcast consensus, sequencing and MEV, advanced cryptography like zero knowledge and fully homomorphic encryption, and differentiated L1/L2 execution environments across all ecosystems. Read our piece on the Business of Blockspace Part 1 and Part 2.

As part of this close, we've contributed our 2024 investments into Galaxy Ventures Fund I and we'll look to build our portfolio alongside these announced investments:

  • Ethena: A dollar-pegged expression of the basis trade, opening a new design space for what can sit behind an onchain dollar.

  • M^Zero: A decentralized finance protocol which unifies stablecoin liquidity under the $M asset and can function as the lowest level in the stablecoin stack.

  • Monad: A new high-performance Layer-1 blockchain environment which brings the best ideas from contemporary designs like Solana and Sui to the network effect of the EVM.

  • Plume: An Ethereum layer-2 blockchain dedicated to tokenized assets, providing the necessary functionality for them to thrive.

  • Renzo: A protocol supporting derivatives on assets locked in EigenLayer and Ethereum Proof-of-Stake.

Building upon our tenured venture success dating back to 2018, this new fund marks an inflection point for us. We will continue to put capital to work behind a rigorous investment thesis while further expanding Galaxy's capabilities to support portfolio companies.

To get in touch with us, reach out to [email protected].

Disclaimers

The investment examples noted in the first paragraph have been included for informational purposes only. These portfolio companies are not held by the Fund. These examples are not representative of every investment made by Galaxy. It is not intended that the Fund will participate in such investments, and no assurance can be given that similar opportunities will arise or that the performance of these investments will be typical or representative of any or all future investments associated with any Fund or other product managed by Galaxy. Accordingly, it should not be assumed that investments made in the future will be profitable, will equal the performance of the investments referenced within this presentation, or avoid losses.

Legal Disclosure:
This document, and the information contained herein, has been provided to you by Galaxy Digital Holdings LP and its affiliates ("Galaxy Digital") solely for informational purposes. This document may not be reproduced or redistributed in whole or in part, in any format, without the express written approval of Galaxy Digital. Neither the information, nor any opinion contained in this document, constitutes an offer to buy or sell, or a solicitation of an offer to buy or sell, any advisory services, securities, futures, options or other financial instruments or to participate in any advisory services or trading strategy. Nothing contained in this document constitutes investment, legal or tax advice or is an endorsementof any of the digital assets or companies mentioned herein. You should make your own investigations and evaluations of the information herein. Any decisions based on information contained in this document are the sole responsibility of the reader. Certain statements in this document reflect Galaxy Digital's views, estimates, opinions or predictions (which may be based on proprietary models and assumptions, including, in particular, Galaxy Digital's views on the current and future market for certain digital assets), and there is no guarantee that these views, estimates, opinions or predictions are currently accurate or that they will be ultimately realized. To the extent these assumptions or models are not correct or circumstances change, the actual performance may vary substantially from, and be less than, the estimates included herein. None of Galaxy Digital nor any of its affiliates, shareholders, partners, members, directors, officers, management, employees or representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the information or any other information (whether communicated in written or oral form) transmitted or made available to you. Each of the aforementioned parties expressly disclaims any and all liability relating to or resulting from the use of this information. Certain information contained herein (including financial information) has been obtained from published and non-published sources. Such information has not been independently verified by Galaxy Digital and, Galaxy Digital, does not assume responsibility for the accuracy of such information. Affiliates of Galaxy Digital may have owned or may own investments in some of the digital assets and protocols discussed in this document. Except where otherwise indicated, the information in this document is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. This document provides links to other Websites that we think might be of interest to you. Please note that when you click on one of these links, you may be moving to a provider's website that is not associated with Galaxy Digital. These linked sites and their providers are not controlled by us, and we are not responsible for the contents or the proper operation of any linked site. The inclusion of any link does not imply our endorsement or our adoption of the statements therein. We encourage you to read the terms of use and privacy statements of these linked sites as their policies may differ from ours. The foregoing does not constitute a "research report" as defined by FINRA Rule 2241 or a "debt research report" as defined by FINRA Rule 2242 and was not prepared by Galaxy Digital Partners LLC. For all inquiries, please email [email protected]. ©Copyright Galaxy Digital Holdings LP 2024. All rights reserved.