Chainalysis to Offer Lightning Network Monitoring Service to VASPs in 2022

Chainalysis to Offer Lightning Network Monitoring Service to VASPs in 2022

On December 10, the blockchain intelligence firm Chainalysis revealed that the company has added support for Bitcoin’s second-layer protocol the Lightning Network (LN). According to Chainalysis, firms like exchanges and virtual asset service providers (VASPs) can leverage the company’s Know-Your-Transaction (KYT) real-time transaction monitoring software in order to access compliant bitcoin deposits and withdrawals from a LN node.

Compliant Lightning Transactions

The blockchain surveillance and intelligence company, Chainalysis, announced on Friday that the company has added Lightning Network (LN) support to its list of blockchain and crypto-asset networks, the company currently monitors. For years, Chainalysis has monitored the Bitcoin (BTC) blockchain, and these days the firm is not only monitoring BTC, but also a myriad of crypto networks and decentralized finance (defi) protocols.

Essentially, the LN is an offchain routed “layer 2” (L2) payment channel network that helps facilitate bitcoin (BTC) transfers faster and cheaper than onchain transactions. The Chainalysis LN support will provide VASPs with “Chainalysis KYT (Know-Your-Transaction) for real-time transaction monitoring will now be able to compliantly allow deposits and withdrawals of Bitcoin from a Lightning node.”

As of December 1, 2021, Chainalysis estimates there is “just under 3,600 BTC worth over $205 million is locked in public Lightning Network channels.” This has increased a great deal since the total value locked in the LN was around 468 BTC on January 1, 2021. Chainalysis also mentions that the LN L2 system is leveraged by countries such as El Salvador and large corporations like Twitter. Pratima Arora, the chief product officer at Chainalysis explains that the firm hopes compliant LN transfers will help the LN mature.

“Chainalysis exists to build trust in cryptocurrency in order to promote more financial freedom with less risk,” Arora said in a statement. “The Lightning Network solves many of the challenges that prevent the Bitcoin protocol from being used for micropayments and other transaction types that bolster financial inclusion. By enabling our customers to compliantly support Lightning transactions, we hope to grow the network’s popularity and help it scale.”

Lightning Network Support for Chainalysis KYT Customers to Launch in February

Chainalysis has expanded its resources a great deal and faces dozens of blockchain intelligence and monitoring competitors. The company raised $100 million at the end of June in its Series E funding round and the previous C and D rounds also saw $100 million capital injections. The company’s post valuation, after the Series E, was $4.2 billion according to the firm’s announcement at the time.

Speaking about the LN support, Chainalysis claims that for the first time, “VASPs can now offer support for Lightning transactions aligned with global regulatory best practices.” The product Chainalysis offers called Chainalysis KYT supports “pre-screening for Lightning withdrawals and behavioral alerts.” The blockchain surveillance and intelligence company further says that the LN support will be available for Chainalysis KYT customers in February.

What do you think about Chainalysis adding Lightning Network support? Let us know what you think about this subject in the comments section below.

Microsoft leads startup Palm NFT Studio’s $27M series B round

M12 adds early-stage Palm NFT Studio to its portfolio with participation from venture firm Griffin Gaming Partners.

Crypto startup Palm NFT Studio announced a Series B raise of $27 million on Thursday led by Microsoft’s venture fund M12. Palm NFT, cofounded by ConsenSys founder and Ethereum cofounder Joseph Lubin, provides strategic and technical services for creators to build NFT marketplaces. 

Other major backers include Griffin Gaming Partners, RRE, Third Kind Venture Capital, Sfermion, the LAO, Warner Bros., and SK Inc.

According to the statement issued on their company blog, the raise will enable the team to scale the Palm NFT Studio’s technology platform and offer it to third parties looking to deploy NFT projects across movies, games, music and art with regulatory compliance and environmental sustainability.

Dan Heyman, cofounder and CEO of Palm NFT Studio, believes that “within three years, most NFTs will be given away for free,” and added:

“We envision programs that mint millions of NFTs with utility; social objects that connect communities, drive engagement and reward true fans. We’re grateful that incredible partners like M12 share that vision.”

Palm NFT Studio co-created the Palm Network, an Ethereum sidechain that allows users to establish NFTs. Any NFTs made on the Palm Network or Ethereum mainnet can be bridged from the Ethereum mainnet to the Palm Network sidechain or vice versa, according to the company.

As new board members, M12 also published a statement to welcome Palm NFT to their portfolio and point out its focus on sustainability:

“The company and third parties have run tests that show the Palm Network requires magnitudes less computation and subsequent energy to execute transactions than proof-of-work chains. The Palm Network also has a carbon tax built into its bridge configuration, enforcing payment when mainnet resources are used.”

Since its launch earlier this year, Palm NFT Studio has collaborated with DC Comics to release an NFT collection of tokenized comic book covers, and worked with Damien Hirst to drop The Currency collection.

Crypto Biz: Smart money ignores BTC price correction as $800M set to flow into blockchain startups, Dec. 9

Crypto- and blockchain-focused capital raises continue to make headlines as venture funds look to support the emergence of Web 3.0.

Bitcoin’s (BTC) return to sub-$50,000 levels has many market participants fretting over the legitimacy of their favorite price models. For venture capitalists and other smart money investors, the latest decline is nothing but noise. Instead, they see the emergence of an entirely new economy that is transforming business, redefining monetary value and pushing the internet to a new frontier. 

This week’s Crypto Biz newsletter highlights four major funding deals from the world of blockchain. Below is a concise version of the Thursday edition of our newsletter.

10T Holdings plans $500M crypto fund

Earlier this week, equity fund 10T Holdings filed a notice with the United States Securities and Exchange Commission to launch a new $500 million crypto-focused investment fund. The 10T DAE Fund 3.0 has been designed to support mid-to-late-stage companies in the digital asset space. 10T has an excellent track record identifying promising crypto plays, with the likes of Kraken, eToro, Huobi and Ledger already a part of its portfolio.

Binance Smart Chain and Animoca Brands launch $200M GameFi fund

Binance Smart Chain and Animoca Brands have each allocated $100 million to a new development fund focused on the fast-growing GameFi ecosystem. GameFi, which refers to the financialization of gaming, is expected to be one of the biggest trends in crypto in 2022 and beyond. The new fund will focus specifically on projects building on the Binance Smart Chain.

Former Facebook engineers at Mysten Labs raise $36M

Mysten Labs, the research and development firm founded by former Facebook engineers, has raised $36 million from some of crypto’s biggest venture funds, including Andreessen Horowitz, Lightspeed, Coinbase Ventures and Samsung NEXT. If you haven’t heard of Mysten Labs, the infrastructure developer is working on building a Web 3.0 interface, which includes a “next-generation NFT platform for the Metaverse.”

Related: Hong Kong-based Chiron Partners launches $50M Terra fund

Fintech startup Lydia raises $100 million in Series C

Speaking of major funding news, crypto-friendly fintech startup Lydia has concluded a $100-million funding round, bringing its total valuation to over $1 billion. You can think of Lydia as an alternative to the popular Cash App and Venmo peer-to-peer payment services. And much like those platforms, Lydia provides another mobile payment gateway to the cryptocurrency market.

Crypto Biz is a weekly newsletter that provides readers with the latest scoop on the business behind crypto and blockchain. The newsletter is delivered to your inbox every Thursday. Stay informed by subscribing below.

Hong Kong-based Chiron Partners launches $50M Terra fund

Terra’s native cryptocurrency, LUNA, has emerged as one of the best-performing digital assets of the past 11 months.

Hong Kong venture capital firm Chiron Partners has launched a new ecosystem fund dedicated to Terra (LUNA), opening the door to new innovations for the layer-one decentralized finance, or DeFi, protocol.

The Chiron Terra Fund I, also referred to as CTI, will deploy $50 million in capital to support innovative projects building on top of the Terra ecosystem. Projects at the intersection of decentralized finance and “metaverse-linked” nonfungible token platforms are eligible for support, the company announced Wednesday.

Built using Cosmos SDK and Tendermint, Terra is a DeFi protocol that uses fiat-pegged stablecoins to power global payment systems. The native LUNA token has been designed to absorb the short-term volatility of Terra-based stablecoins. Following its Columbus-5 upgrade in October, Terra is reportedly set to house over 160 new projects by early 2022.

Terraform Labs, the South Korean development company behind the Terra blockchain, successfully raised $150 million in funding earlier this year. Major crypto venture funds including Pantera Capital, Galaxy Digital and BlockTower Capital contributed to the raise. 

Related: The stablecoin scourge: Regulatory hesitancy may hinder adoption

Terra has emerged as one of the largest DeFi-oriented blockchains on the market, with total value locked surpassing $13 billion, according to industry data. Only Ethereum has a higher TVL.

In terms of TVL, Terra is second only to Ethereum and ahead of Solana, Avalanche, Tron and Polychain. Source: DeFi Llama

In terms of price performance, LUNA has skyrocketed over 9,000% this year. Last month, the cryptocurrency peaked above $77.00. The cryptocurrency has a total market capitalization of $24.2 billion, placing it in the tenth spot among active projects.

French fintech startup Lydia raises $100 million in Series C funding round

The Series C funding round was led by existing investors Tencent and Accel.

French crypto-friendly fintech startup Lydia has raised $100 million in a Series C funding round, per a report in TechCrunch. 

The latest capital raise reportedly helped Lydia attain unicorn status with a valuation of over $1 billion. 

The $100-million fundraise comes nearly a year after its Series B funding round of $86 million in December 2020.

The round was led by investors Tencent and Accel and saw participation from Dragoneer and Echo Street. The fintech startup aims to use the fresh capital to expand its footprint in Europe. The firm hopes to have onboarded 10 million Europeans by 2025.

Lydia did not immediately respond to Cointelegraph’s request for comment.

The app started as a peer-to-peer mobile payments app and later expanded to include cashback and personal loans. The startup recently launched its stock and crypto trading services in association with Australian crypto exchange Bitpanda. The fintech app is similar to Cash App or Venmo in terms of functionality and currently boasts 5.5 million users.

Related: PayPal to offer crypto payments for merchants, limited trading on Venmo.

The popularity of crypto payments in recent years has made fintech and mobile trading apps the biggest winners. Several mobile payment giants and fintech trading apps, such as PayPal, Robinhood and Venmo, have opened the gates for crypto payments for millions of users and merchants alike.

Mainstream mobile payment service providers have already joined the crypto league, and now even local payment processors are looking to bank on crypto’s popularity. Indian mobile payment processor Paytm had recently expressed interest in crypto payments following clarity on regulations from the government.

Dan Tapiero’s 10T will launch $500M fund for late-stage crypto firms

With the addition of the new fund, 10T Holdings’ assets under management would likely exceed $1 billion.

Macro investor Dan Tapiero is launching another multimillion dollar fund intended to invest in mid- to late-stage companies in the digital asset ecosystem.

According to a Notice of Exempt Offering of Securities filing with the U.S. Securities and Exchange Commission on Monday, Tapiero and his 10T Holdings partners Michael Dubilier and Stan Miroshnik have given the regulatory body notice of a $500 million growth equity fund for crypto and blockchain firms. The filing shows the fund has not yet sold any of the original investment.

The 10T DAE Fund 3.0 is the third to come from the growth equity firm, following a $200 million fund launched in February and a $750 million fund in September. The company lists 14 crypto and blockchain firms in its portfolio, including Kraken, eToro, Huobi, Mercado Bitcoin, Gemini, Bitfury and Ledger. With the addition of the $500 million fund, 10T Holdings’ assets under management (AUM) would likely exceed $1 billion — its website lists $770 million AUM at the time of publication.

Tapiero is no stranger to investments, but prior to the crypto boom, some of his business was in gold. The 10T Holdings founder also helped co-found Gold Bullion International in 2009 and has been actively speaking about the potential of the crypto ecosystem, including Bitcoin (BTC), as the adoption of digital assets accelerates.

Related: Why Dan Tapiero expects a massive Bitcoin shortage

According to data from Cointelegraph Markets Pro, the BTC price is $51,140 at the time of publication, having risen more than 20% since dipping to a monthly low to the $42,000s on Dec. 3. However, Cointelegraph reported there are indications that institutional investors are still looking to buy crypto.