Mysten Labs, creator of the Sui blockchain, closes $300 million raise led by FTX Ventures

Mysten Labs has closed a $300 million fundraise at a valuation that tops $2 billion, according to an announcement on Thursday.

Mysten is the creator of Sui, a yet-to-launch proof-of-stake Layer 1 blockchain that is built to mount a challenge to the likes of Ethereum and Solana.

The startup’s co-founder and CEO Evan Cheng, who was head of research and development at Meta’s crypto wallet Novi Financial until September last year, told The Block in an interview that Mysten aims “to bring about consumer adoption — mass adoption.”

“We focus a lot on designing an architecture that is completely different that allows us to horizontally scale the capacity of the blockchain,” he said.

Mysten’s $300 million Series B round was led by FTX Ventures, the venture arm of Sam Bankman-Fried’s crypto exchange. Other investors in the round include Andreessen Horowitz’s a16z Crypto unit — which invested $36 million in Mysten in December last year — as well as Jump Crypto, Apollo, Binance Labs, Franklin Templeton, Coinbase Ventures, Circle Ventures, Lightspeed Venture Partners, Sino Global, Dentsu Ventures, Greenoaks Capital, O’Leary Ventures, and others. The Information first reported that the fundraise was in the works in July.

All five of Mysten’s founders worked on Meta’s crypto initiatives. Chief Technology Officer Sam Blackshear was a principal engineer at Novi, and is credited with creating Move, the coding language used by both Sui and Meta’s ill-fated blockchain Diem (formerly known as Libra). Mysten’s chief product officer is former Novi product lead Adeniyi Abiodun; chief cryptographer Kostas Kryptos held the same role at Meta; and chief scientist George Danezis also worked on Novi and Diem.

Today’s announcement comes just a few months after Aptos — another blockchain devised by former Meta executives that uses Move — topped up its coffers with a $150 million round, bringing its total capital raised this year to $350 million.

The pair are seen as the next wave of Layer 1 blockchains and challengers to predecessors such as Ethereum, Solana and Avalanche. Their challenge will be to lure crypto projects and developers over to their platforms, and away from incumbents.

All aboard

Cheng hopes that a fresh take on processing crypto transactions will be the key to Sui’s success.

“All the blockchains today basically process transactions as groups,” he said, a method defined as head-of-line blocking. “We’re the only one that takes a completely different approach.”

Cheng likened the way blockchains process transactions to boarding a train. In the current model, he said, “you wait for everyone to get on before you get moved.” On Sui, there are a greater number of cars available to transport groups bound for the same destination. The technical term for this is “inter-validator sharding.” In blockchain systems, the validators are the parties that verify transactions. In proof-of-stake models, they lock up tokens on the network in exchange for the chance to validate new transactions and earn rewards.

Mysten hopes that this and other innovations will give Sui the ability scale throughput and storage in line with demand from developers and apps, while keeping transactions costs low, per the release.

But the startup is not only competing with established Layer 1 blockchains. It also has a growing number of scaling outfits — technologies that sit on top of blockchains to make them more efficient — to contend with. Earlier this week, Fuel Labs raised $80 million to develop its “modular execution layer,” which it hopes will deliver slicker execution for crypto transactions. Meanwhile, there is currently close to $5 billion interacting with Ethereum using Layer 2 tools, such as optimistic and ZK rollups, according to The Block Research data. But Cheng is unfazed.

“If you look at the Layer 2s, they usually are just fixing one aspect of the problems,” he said. “We don’t believe solving one particular problem is sufficient to move the field forward. So we want to look at everything with a fresh set of eyes.”

Cheng applies the same mindset to how Sui will differ from Diem, which was ultimately sold on the cheap to Silvergate Capital, the holding company for Silvergate Bank, for $182 million after it was repeatedly stymied by regulators.

“Diem was purposely built for payments,” said Cheng. “We want to take that a step further… How can we make asset transfer or programming of assets as easy as manipulating data or transferring data, basically? So that requires us to take a big step forward beyond the Diem vision.”

A multi-chain future?

Investors in the Series B raise will receive equity in Mysten as well as token warrants — meaning they will be able to claim a portion of Sui’s native tokens, which will begin trading when the blockchain launches publicly. Mysten unveiled Sui’s public software development kit and began showing off the software to developers in March.

The startup plans to use the $300 million to continue building its technology, as well as to entice users to its platform and for hiring, in particular in the Asia-Pacific region, according to the announcement.

Given the shared backgrounds of their executives and the use of Move, not to mention their similar fundraising trajectories, Mysten and Aptos are often positioned as rivals. Yet the two share strikingly similar backers. FTX Ventures, which led Mysten’s $300 million round, also co-led Aptos’ $150 million raise in July alongside Jump Crypto, which itself invested in Mysten’s Series B round. Other investors that have backed both startups include a16z, Circle Ventures, Apollo and Franklin Templeton.   

Backing apparent rivals is not, however, uncommon in the blockchain space. FTX Ventures lead Amy Wu told The Block in a previous interview that this is because “many investors believe in a multi-chain future, potentially where some blockchains have distinct category expertise and advantages based on their architecture.”

As to the sheer volume of capital pouring into Aptos and Mysten to support two largely-untested blockchains, Tushar Jain, managing partner of Multicoin Capital, which has backed Aptos and Solana but not Mysten, said: “This is an enormous, enormous market and investors realize it, and they want to bet on this market — the smart contract platform market. This is not exceptional or unprecedented.”

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