Blockchain startup Codex has successfully raised $15.8 million to develop a dedicated layer-2 network specifically designed for stablecoins. This recent funding underlines the increasing interest and investment aimed at stablecoins at a time when the industry is experiencing regulatory alignment and accelerated growth around fiat-backed digital assets.
The seed funding round was led by Dragonfly Capital, with notable contributions from Coinbase, Circle, Cumberland Labs, Wintermute Ventures, among others, as reported by Fortune. This influx of capital will support Codex in building its stablecoin-exclusive platform from the ground up, according to co-founder and CEO Haonan Li.
Disavowing the inefficiencies of general-purpose blockchains, Li emphasized that Codex’s focus will be entirely on a stablecoin-specific chain, built on top of Optimism. This Ethereum layer-2 scaling solution utilizes rollup technology to enhance transaction speeds and reduce costs. While specifics regarding the Codex chain remain limited, Li stated that their stablecoin solution aims to establish a predictable fee structure unaffected by volatile blockchain activity.
In addition, Codex is set on creating stablecoin off-ramps via collaborations with established cryptocurrency exchanges and local brokers. This innovation will facilitate users in cashing out their on-chain assets for fiat currency.
The Stablecoin “Hunch”
Reflecting on the emerging trend in the blockchain space, Li revealed that he had a “hunch” in 2023 that stablecoins would be the next significant growth story in the sector, a notion that some might have deemed contrarian at the time. Fellow co-founder Victor Yaw noted that the stablecoin market has expanded sixty-fold over the past six years, yet it accounts for less than 2% of offshore US dollar deposits, indicating immense potential for growth.
With stablecoin demand remaining resilient, evidenced by an increase in stablecoin supplies by $30 billion amidst challenging market conditions, the total market capitalization of stablecoins has surged to nearly $230 billion, predominantly backed by the US dollar.
Interestingly, Codex is not alone in this pursuit. Just this year, a layer-1 network named 1Money raised $20 million to enhance its stablecoin payment platform. Brian Shroder, the founder of 1Money and former chief of Binance.US, anticipates a future where stablecoins are “multicurrency,” expanding their reach beyond the ubiquitous US dollar to cater to localized stablecoin solutions and use cases.
As the stablecoin market continues to evolve, Codex and similar ventures stand at the forefront of driving innovation and setting new standards in how digital assets can integrate with real-world financial systems, reinforcing the notion that we have only just begun to explore the potential of stablecoins.
