Lightspeed Newsletter: Switchboard hauls in $7.5M despite sleepy venture week

03.06.2024

Howdy!

It’s summertime in Brooklyn, which means stooping season is in full swing. I might go wander around Park Slope later to see if I can find one of those chairs shaped like a hand sitting out on the sidewalk.

But as for today’s Solana stuff:

Switchboard hauls in $7.5M despite sleepy venture week

June is here, and the markets appear to be taking a summertime nap.

Solana’s often-bumpy price chart has sat mostly between $160 and $170 for 10-plus days now, and the venture market has similarly zenned out.

Of the venture deals announced in recent days, perhaps the most notable came from oracle platform Switchboard, which closed a $7.5 million Series A. Tribe Capital and RockawayX led the round. The Solana Foundation invested, as did notable Solana-adjacent angel investors Mert Mumtaz and Joe McCann.

Oracles help feed data to smart contracts. Most straightforwardly, this can look like providing price feeds for DeFi protocols — which otherwise could not access price information outside of their blockchain environment.

Switchboard helps with oracle services for a number of liquid staking tokens (LSTs) including those offered by Jito, Sanctum, and Marinade, a spokesperson told Blockworks. It’s also pitched itself as a fast and efficient oracle for a blockchain that has sometimes struggled with congestion. Switchboard’s improved oracle — named Switchboard On-Demand — went live on Solana’s devnet in late March.

Switchboard isn’t without competitors in becoming Solana’s choice oracle though. Pyth is another popular solution. Solana DeFi protocol MarginFi has said it primarily uses Pyth’s data alongside data from Switchboard.

There are a couple other recent Solana-focused raises to be aware of: Parasail, formerly named Repl, raised $4 million in seed funding for a DePIN infrastructure service (or in longer form, decentralized physical infrastructure infrastructure). This comes less than a month after Repl was given an honorable mention in the Solana Renaissance hackathon.

Payment infrastructure company and Solana Labs client Coinflow also closed a $2.25 million seed round.

After a desolate 2023 Q3 and Q4, crypto venture funding has shown seeds of a comeback in 2024. But most of the big rounds, it should be said, haven’t been based in the Solana world.

By my count, there have been at least twelve crypto-related venture rounds to cross the $50 million mark in 2024. Only one pertained directly to Solana: the Solana Virtual Machine (SVM) Ethereum layer-2 Eclipse.

That’s not to say Solana protocols haven’t been raising money by other means. Liquidity worth hundreds of millions of dollars has been minted through a string of highly sought-after token airdrops. I’d imagine VCs haven’t been sitting those out entirely.

— Jack Kubinec

Zero In

650%

That’s the premium shareholders of Grayscale’s Solana Trust (GSOL) are paying to gain exposure to SOL.

GSOL’s massive gap opened up last July, two weeks after BlackRock filed its application for a spot bitcoin ETF.

It exploded again in late October-early-November following Cointelegraph’s fake news tweet about BlackRock gaining approval, and once more in March as bitcoin hit its all-time high.

Now, anyone who acquired GSOL when it launched last April are now up 20x, while those actually holding solana, the cryptocurrency, are up “only” 6.3x.

As for why there’s such a premium, it’s a mixture of low supply mixed with high demand, seemingly in anticipation of a buy-the-rumor-sell-the-news event should more spot crypto ETFs materialize.

All proof that degeneracy isn’t native to crypto. It’s perfectly expressed in brokerage accounts playing the stock market.

— David Canellis

The Pulse

Many of the investors who watched the spot bitcoin ETF success story will be hoping Solana gets its own iShares product someday. However, the ETF hype train can count out at least one member: meow, the pseudonymous founder of Jupiter.

In a brief blog post, meow advocated for power to be decentralized because of people’s disappointing tendency to become “utter pieces of shits [sic] if given enough power.”

In a postscript, meow added: “That’s the reason why crypto celebrating ETFs is deeply unsettling to me – if the whole world owns ETH/SOL via blackrock – are we more decentralized or far, far less?”

It’s nice, on one hand, to see a founder argue for principles rather than sacrificing all at the altar of “number go up.”

On the other hand, Jupiter’s “everything exchange” plan could certainly stand to lose from a world where BlackRock becomes the go-to provider for tokenized assets.

Maybe principles and profit go hand in hand sometimes?

— Jack Kubinec