Lemniscap leads investment in oracle provider Redstone’s $7 million round

Decentralized finance oracle provider Redstone closed a $7 million seed funding round led by investment firm Lemniscap. 

The new funding comes just over a year after Redstone's founding and during a challenging time for fundraising in DeFi. For the second quarter of this year, venture deals for DeFi were at the their lowest point since the fourth quarter of 2020, according to The Block Research. 

Besides Lemniscap, other investors in Redstone's round include Coinbase Ventures, Blockchain Capital, Lattice, Arweave and Maven 11, according to a press release on Tuesday. 

Oracles are tools that provide real-world data, from financial asset prices to blockchain smart contracts. They provide a way to access off-chain data in an on-chain environment, which can be essential for contracts that rely on real-world data to make decisions. 

How Redstone works

Redstone uses the Arweave blockchain to provide pricing data from sources like FTX and Yahoo Finance to protocols. Arweave, a decentralized storage network, provides Redstone with an affordable storage solution with a permanent audit trial, per the release. 

It also features a dispute mechanism that is backed by collateral from data providers. 

Redstone provides data feeds to over 30 chains including Ethereum, Avalanche, Celo, Arbitrum and Fantom, according to the release. It does this through a proprietary ‘EVM-connector’ to put data on-chain.

Expanding the product suite

However, the firm believes the oracle could become compatible with every chain though new implementations of its core technology like the Solana-connector or ZK-connector, according to the release. 

The idea for the startup was conceived during the Arweave OpenWebFoundry in 2020, it officially launched at the start of 2021. In July of that year, Redstone raised $525,000 in its first round of funding.

The new funds will be used to speed up the rollout of RedStone’s product suite. This product suite includes Warp Contracts, which are smart contracts built on top of Arweave that are suited to data processing and storage, per the release. 

Investing in infrastructure

“Given the conveyor belt of sophisticated DeFi protocols hitting the market, the need for decentralized oracles that can process huge amounts of data has never been more pronounced,” said Roderik van der Graaf, founder of Lemniscap, in the release.  

The Block Research's July funding report highlighted that infrastructure deals decreased by 22% from June to July, but funding levels in the wider crypto space grew 178% from $297 million to nearly $827 million. 

The report notes that in previous cycles, during crypto market turmoil, infrastructure plays have often proven a favored investment choice.

The Block Research

Blockchain infrastructure venture funding by month from The Block Research