May 14, 2021

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ETH’s Gitcoin Raises $11.3 Million, Spins Out of ConsenSys

2 min read

If you’ve ever traded on Uniswap, read DeFi publication The Defiant, or used the Prysm Eth 2.0 testnet, you might want to thank Gitcoin. For years, the decentralized funding platform has coordinated the distribution of over $18 million in grants. Now, one of the ETH ecosystem’s biggest funders should be around to shepherd in a range of tools for the network’s move to ETH 2.0—and beyond.

Gitcoin raised $11.3 million in an investment round led by Paradigm, the crypto venture capital fund founded by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang. Additional investors included 1kx, Electric Capital, IDEO, The LAO, and MetaCartel Ventures, as well as angel investors Naval Ravikant and Balaji Srinivasan.

The funding is enough for Gitcoin to spin out of ETH studio ConsenSys and become more decentralized. “It was time for us to go and see if this bird can fly and if we can do this on our own and manage our own balance sheet accordingly,” Gitcoin COO Kyle Weiss told Decrypt in a Zoom interview. (ConsenSys helps fund an editorially independent Decrypt.)

Gitcoin, founded by Kevin Owocki in 2017, is a platform that connects developers to open-source projects in the ETH space. It does this through grants, virtual events and hackathons, and an incubator. By organizing grant rounds and raising matching funds, it’s helped get projects like decentralized exchanges Uniswap and 1inch off the ground; the DEXs have since returned the favor to help run Gitcoin-backed hackathons.

But the focus has never been on turning a profit. The goal moving forward is to grow the virtual events business to subsidize the grants and incubator side. “One of the things that’s been important to Kevin is just financial sovereignty for developers working in the Web 3 space,” said Weiss, referring to an internet defined by decentralized networks.

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It’s easier to do that with an extra $11 million in the bank. “We want Gitcoin and Gitcoin Grants to have staying power, so now is the time to make sure there’s enough money in the treasury to last the next four to 10 years, potentially through at least another bear market,” said Weiss.

By doing so, it can avoid going hat in hand to projects and investors if and when the price of ETH eventually cools from its current record high of around $2,400. It also gives the project more independence to grow the ecosystem. “Usually folks love the idea of growing their ecosystem, they don’t love the idea of growing the general ecosystem,” Weiss admitted.

He believes that the funders in this round “model the same ethos and values that we have” and want to see Web 3 as a whole succeed. ConsenSys and Paradigm will have seats on Gitcoin’s board, but, said Weiss, “I think both of those firms are very interested in making sure that we’re community focused first.”

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