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Polychain & Three Arrows lead $230M investment in Avalanche

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John Wu, AVA Labs President joins the Yahoo Finance Live panel to discuss the latest in the crypto and NFT space.

Video transcript

- In today's "Crypto Corner," if you haven't been paying attention, there is a huge rush to capture the market in DeFi. As a lot of these protocols had been building on Ethereum, there has been an intense battle to get a lot of coders, developers, users shifting onto some other blockchains. And one that has been pretty active in trying to attract people to come to their platform is Avalanche.

We've seen that token there rise more than 1,700% year to date. And today, they announced additional funding coming from Polychain and Three Arrows Capital, a $230 million investment into the ecosystem getting built around Avalanche. And for more on that, happy to bring on the president of the group behind Avalanche.

AVA Labs' President John Wu joins me once again. And John, it's been only a couple of months, I think, since we chatted down in Miami at the Bitcoin conference there. But Avalanche's run has been pretty impressive here, and a lot of it has to do with the effort you put into attracting it. It was $180 million, I think you guys announced, with Avalanche rush to attract a lot of people to shift over, you know, in building out what you guys are working on. But talk to me about the growth you've seen in that effort and the new raise announced today.

JOHN WU: Well, Zach, first of all, it's great to see you again. And since the last time we spoke I think was BTC Miami in May or June, obviously a lot has happened. And we're very excited today to announce the $230 million raise for Avalanche. So AVA Labs is the services and software team behind the protocol Avalanche.

So Avalanche raised $230 million. Great supporters-- as you know, the lead guys you mentioned are Polychain, Three Arrows. But there are others that supported Avalanche in the past.

I need to mention them as well-- Dragonfly, Galaxy, A16, Initialized Capital, and many more. But I think it's a testament to all of our partners, VC partners, to the growth in utility on the Avalanche platform. This is why the raise was what it was, being one of the larger ones in recent memory for a protocol.

It is so we can continue helping avalanche with the trajectory that was already on an organic basis growing incredible. Since we spoke, I think, in June, there's something close to like 400 or 500 projects and total of 900 since May that the team has been looking at to try to vet and help out. And on top of that, the technology-- should you know, I wish everyone can go and check out the bridge, how smooth that experience is--

- Yeah.

JOHN WU: --so they move assets over.

- Yeah, I mean, that's one of the things here too, right? And we talked about this a few months ago as kind of these layer one protocols now getting a lot of things built on them. And a lot of it has to do with DeFi.

We've seen some of those projects-- Avi, I think, as well-- kind of transitioning over to Avalanche and working with you guys. And the total value locked, right? This is one of those metrics that people look at in terms of activity, money flowing into these protocols by users and putting it on chain, has skyrocketed over the last few months for you guys too. So I mean, talk to me about that and kind of what you're trying to build out.

JOHN WU: Yep, this is-- you know your stuff. So that is one of the metrics a lot of people use as an indication of real utility in blockchain ecosystems.

- And if you think about layer ones, there's really only three or four that are live. Obviously, we know Ethereum. Then there's Avalanche, the fastest growing, I would argue, if you just look at the numbers and compare the different metrics and the growth rates.

So what is happening is there are not just crypto native users but also traditional users who are very, very excited and see the benefits of peer to peer finance and decentralized finance where they can actually get good yield. This is not just individuals either. Institutions are doing this as well.

- And we were talking about tokenizing all kinds of assets, right, and doing that on the Avalanche protocol. And obviously, if you're a believer in that kind of expanding, you would be a believer in the protocols that are winning and trying to attract people to tokenize whatever it is they want to tokenize. And I think a lot of the attention has been put on NFTs as of late.

And we've seen that space explode. And a lot of that's built on the Ethereum blockchain, and that's produced pretty high gas fees when we're thinking about the transactions on that network-- a lot of congestion. But you might not be a believer of NFTs, really.

You know, you could say that might be a bubble. And eventually, it's not going to be providing the growth anymore. So I mean, you guys have a new partnership with Topps to build NFTs on Avalanche. Talk to me about that and how important it is maybe to drive some NFT action off Ethereum to what you guys are doing.

JOHN WU: Super exciting, and you're right. Another great use case is NFTs. We're seeing in the ecosystem around blockchain literally hundreds of millions of dollars of transactions per day. With Topps, we're super excited because we're going to be creating NFT digital collectibles for various licenses they have.

And most recently, I think you have a picture up. It's Major League Baseball, a sport that is very dear to me personally. I can't wait to see all the NFTS and continue to collect them over time, especially into the actual playoffs.

But what Avalanche created in the NFT world right now is unique. Most of these platforms and protocols, when they have a NFT product, it's usually one or the other. What I mean is it's either abstracting away the entire blockchain experience-- fiat on, centralized custody, fiat off-- or it's the other end of the spectrum.

Very crypto native-- it is crypto on, crypto off, self-custody, harder to use, more DIY. But others like that. This platform that the software company AVA Labs behind Avalanch has created actually allows both at the choice of the user.

If you want to self-custody, great. If you want to have a centralized custodian for you, you can do that too. Different prices for different people, do it yourself versus more service-- up to you.

- Yeah.

JOHN WU: So now as far as I know, there's not too many offerings like that right now.

- Yeah, and I mean, I think that adoption cycle has taken some time. You know, it's mostly been people who understand the crypto market. So it takes a while.

You know, I've never had more people asking me how to get a metamask set up and how to start using this stuff, but it's happening in real time. And John, I mean, you know, I saw on another network, you might have been asked three times about Ray Dalio's comments when it comes to Bitcoin and regulations here. But there are regulatory questions, I suppose, to get into about what DeFi is doing here. But it seems like it's so far down the line because they're focusing in on more centralized institutions right now, what's going on. But when you look at maybe regulations in regards to DeFi as it's getting built out and as more of these things kind of shift from being centralized organizations, I mean, what to you maybe are some of those regulatory risks that might still be there for investors who are looking at not just Avalanche but really all kinds of DeFi projects right now?

JOHN WU: Yeah, so in terms of regulation for DeFi or crypto-- and I don't know what's in the regulator's mind. But if I read the words from Gensler and others, they want to mitigate risk for fraud, for money laundering, and they want more investor protection. I think everyone in the blockchain space agrees that that should happen.

The key, though, is that they have some sort of collaboration and talk with blockchain developers and blockchain users and give some certainty because if you look at other jurisdictions-- Japan, Singapore-- rules are a lot more clear. Switzerland-- rules are kind of clear. EU is about to cement some rules as well.

And we do not want to lose talent, Innovation, and projects overseas because our rules are uncertain. So I think certainty is what everyone is looking for. Philosophically, everyone believes investor protection rights, mitigation of fraud, mitigation of risk of money laundering, those are all good things. So hopefully, we can work towards that and have a good dialogue.

- Yeah, andnot lock out some of that progress that's being made here. It's exciting to watch all this and happy to have you join us again today to kind of discuss a lot of what you're working on, seeing a lot of money flowing into it and a lot of money raised. But interesting to see some of that getting put to use here in new use cases for everybody out there.

But AVA Labs President John Wu, appreciate you coming on. Again, man, hope to chat soon. Be well.

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