Blockchain
Cata Labs, a blockchain infrastructure startup, has raised $4.2 million in seed funding at a mid-eight-digit valuation, the company announced Wednesday.
The fundraising round, which closed in March, was led by crypto venture capital firm Spartan Group and included participation from Robot Ventures, Maven 11, Alchemy Ventures, HashKey Capital, Circle Ventures, and Superscrypt, among others.
Cata Labs is building Catalyst, a cross-chain bridge that aims to make it easier for blockchains to communicate with each other. Currently, popular layer 1 blockchains like Ethereum and Solana cannot easily transact with other blockchains, sparking a spurt in bridging projects like Jump Capital-backed Wormhole and Andreessen Horowitz-backed LayerZero.
Read more: Crypto Protocol LayerZero Raises $120M at $3B Valuation
“It has become ridiculously easy to create new blockchains,” said Cata co-founder Jim Chang. “There are ways you can click a button and create a new blockchain. There’s no point in having all those blockchains if they can’t talk to each other.”
Chang, who was formerly a product manager at decentralized finance protocol Aave, is teaming up with Cata co-founder Alexander Lindgren to launch Catalyst.
Catalyst differs from existing bridges in that it can already be integrated into blockchains that sign up to its ecosystem, eliminating the tedious and manual integration process typical of bridges like Wormhole.
Read more: Celestia Labs raises $55 million to build modular blockchain network
Catalyst’s thesis is that in the future there will be thousands of modular blockchains that need to communicate with each other. Modular blockchains are easier to implement than traditional blockchains and break down the core functions of a blockchain into several specialized blockchains.
“With the proliferation of rollups and app-specific chains, liquidity fragmentation is becoming a major pain point and we have yet to see a unified layer of liquidity that allows users to seamlessly and efficiently trade native assets cross-chain,” said Kelvin Koh, managing director of Spartan Group. “We believe Catalyst is in an excellent position to solve this pain point.”
However, a major challenge for the modular thesis is attracting user activity to its blockchains. “At the end of the day, all these bridges are in a race where the winner gets it all to build network effects,” Chang said.
