Investing in Monad

Lisa Cuesta and I are proud to announce our investment in Monad’s seed round to scale the EVM to a billion transactions per day. We’re making this investment out of Credibly Neutral, our new early-stage venture fund specializing in protocols, infrastructure, and crypto SaaS.

The Ethereum Virtual Machine (EVM) is near and dear to developers, but its impact is not nearly as well understood as Ethereum itself.

Initially, the EVM was synonymous with Ethereum. Ethereum was the first general purpose smart contract platform with its own custom VM and coding language (Solidity) that enabled developers to create arbitrary programs on Ethereum. This innovation and head start enabled Ethereum to take the lead with dapp developers — it was the only game in town so devs rallied around it to eat glass and build all the tools, infrastructure, auditing frameworks, etc. they needed to successfully build their applications.

Over time, new blockchains attempting to challenge Ethereum dominance did so with new VMs, coding languages, and other technologies. What many found is that this is a bigger undertaking than they thought, as it was difficult to convince enough developers to eat glass while working on a highly risky new platform. Developers defaulted to starting on Ethereum (and the EVM), where the majority of users and businesses lay.

To compete, blockchains began to adopt the EVM as a way to bootstrap users, developers, liquidity, integrations, etc. while building out their own home-grown ecosystems. BNB Chain, Polygon, Avalanche, Evmos, Moonbeam, Fantom, and many others did so, many of which have been highly successful to date. While some chains have made limited modifications to the EVM, most focused on changing parameters such as block size, thereby maintaining very close resemblance to Ethereum.

Now there is a third wave of innovation centered around augmenting the EVM. Although there are many different approaches, they can be summed up as improving the inner workings of the EVM to get different sets of features without breaking the compatibility of existing tooling, integrations, etc. Stylus by Offchain Labs is a great example — it makes it possible for developers to deploy programs written in languages like Rust and C on Arbitrum while maintaining full compatibility with the EVM.

Monad is a new Layer 1 blockchain bringing asynchronous, parallel execution to EVM transactions. It attempts to fundamentally optimize decentralized computation by building a new platform with highly optimized consensus and execution mechanisms, ultimately leading to 1 billion transactions per day of throughput and extremely low transaction fees. It does this while maintaining EVM-equivalence, which is a stronger version of EVM-compatibility, and means that the same smart contract bytecode can be used (i.e., devs don’t need to worry about weird edge cases when deploying on Monad vs Ethereum).

The Monad team has made a number of innovations in order to deliver a fundamentally optimized system:

• Asynchronous execution allows execution to run separately and alongside consensus, where consensus is responsible for distributed nodes coming to agreement about transaction ordering, and execution runs in a slightly lagged, asynchronous fashion, significantly raising the execution budget.
• Pipelined execution is the practice of scheduling work intelligently so that transactions that don’t compete for resources can run in parallel. For example, minting an NFT, depositing into Aave, and swapping on a Uniswap pool are orthogonal transactions that could be run in parallel.
• High-throughput Tendermint consensus improves mempool propagation and proposal efficiency

Parallelizing the EVM is a highly ambitious effort, and there’s just a handful of teams in the world that have a shot at getting it right. Monad is amongst them.

If Monad is an EVM-maxi, why isn’t it an L2 on Ethereum? Why a separate blockchain?

It is at this time impossible for something like Monad to have launched as an L2 on Ethereum because of two primary reasons:

• First, existing rollups all rely on a single centralized sequencer and while research is ongoing to decentralize this responsibility, there is no clear path forward and no way to parallelize execution among these sequencers
• Second, Monad aims to launch with 10k TPS, which requires ~5x more on-chain storage than Ethereum will have available post-EIP-4844 across all rollups.

Ultimately, Monad gains much from Ethereum, including an existing community of users and developers, tools, infrastructure, and so on. But advancing the EVM means also advancing Ethereum. A rising tide lifts all boats as teams learn from each other and push the entire industry forward.

Monad is bringing an exciting and much needed advancement to the EVM that I believe will reignite developers to build new use cases thanks to ultra high performance and imperceptible transaction fees. Lisa and I are excited to support Keone, Eunice, James and the Monad team in their work. Please follow Monad on Twitter and subscribe to their mailing list to follow along their journey!