Wasabi Bitcoin wallet makers valued at $7.5 million after its first equity round

According to a report from CoinDesk, zkSNACKs, the makers of the privacy-focused Wasabi bitcoin wallet, raised $337,500 from Cypherpunk Holdings, valuing the wallet startup at $7.5 million. Wasabi acts as a non-custodial wallet and a gateway to CoinJoin transactions, an on-chain mixing technique that can obscure coin ownership traceability. Cypherpunk Holdings CEO Dominic Frisby cited Wasabi's substantial early revenues and the existence of a viable business model as reasons why the investment firm sprung at the opportunity. The new funding will help the privacy wallet to transition from a volunteer project that paid contributors via donations to a traditional VC-backed startup.

In our analysis of Wasabi's user activity and revenue, Bitcoin holders seeking financial anonymity adopted the privacy wallet rapidly following a UX upgrade released in early Dec. 2018. The number of CoinJoin transactions it facilitated rose steadily to a peak in Mar. 2019 before plateauing throughout the Summer months.

For revenue, Wasabi keeps a percentage of the total bitcoin entered into each CoinJoin transaction (equal to 0.003% * the anonymity set) as a fee. Therefore, its revenue is a function of CoinJoins administered, the size of each CoinJoin, and the price of Bitcoin. This dynamic helps explain the steep rise in month-over-month earnings from March to June, as the BTC price jumped from ~$4,100 to almost $14,000 over a three month period starting in Apr. 2019. Despite Bitcoin's price sliding back to around $10,000, Wasabi registered its highest monthly earnings two months later, suggesting the average anonymity set for each CoinJoin reached an all-time high in August. In total, Wasabi generated over 71 BTC in revenue (~$580,000 if exchanged for USD at the time of sale) in under ten months.

Note: The Bitcoin wallet used to observe Wasabi’s earnings has been inactive since Sep. 2019.

Why it matters:
Was this a good move from Cypherpunk Holdings? Judging by the numbers, it is hard to argue again the decision to invest. zkSNACKs is a small team (two listed employees on LinkedIn) that managed to generate exceptional growth in terms of user activity and revenue since its first production-ready release. On the flip side, the market potential should lead to a mass influx of competitors offering lower CoinJoin fees to woo Bitcoin users away from Wasabi.

Cypherpunk Holdings also invested in Wasabi's chief competitor, Samourai Wallet, back in June, valuing Samourai at $6.6 million. The investment firm is making a clear bet that Bitcoin privacy and fungibility will continue to see an increase in demand, especially after the recent rise of blockchain tracking companies like Chainalysis and Elliptic.


Veröffentlicht von Paul Christoph

Mein Name ist Paul Christoph Feichtinger, geboren am 15.5.1991 in Oberndorf bei Salzburg und mittlerweile stolzer Autor von 11 Büchern (7 in Deutsch und 4 in Englisch), 4 Apps (bald kommt Nummer 5) und dieser Webseite. Bei Paul Solutions bekommen alle Bücher und Apps ihre Form. Sieh dich ruhig ein bisschen auf meiner Webseite um, vielleicht gibt es auch für dich noch das ein oder andere zu entdecken. ;-)

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