Investment Update: Why We Invested In Scroll
Table of Contents
Our Close Relationship with Scroll
The Solution to Growing Ethereum
Advantages of Scroll Compared to Alternative L2 Solutions
An Expert Team
The Vision: Highly Synergistic with Ethereum
Closing Remarks
Cooperate with Us!
Scroll recently announced the completion of a new $50M funding round, bringing the total amount of funding for Scroll to $83 million, with a latest valuation of $1.8 billion.
OP Crypto was fortunate enough to participate in Scroll’s first round of financing in 2021. As an early investor in the project, we wanted to congratulate the team and share some insights into our collaboration with Scroll.
Our Close Relationship with Scroll
Our founder, David, has known Scroll’s Co-Founder Sandy for almost five years. While Scroll was still in its early stages and had not yet started raising, OP Crypto was in close contact with the team and provided consistent advisory.
At the time, Srikar, OP Crypto’s technical advisor and co-founder of Spectral (backed by OP Crypto), was responsible for technical due diligence. He keenly discovered Scroll’s disruptive potential and provided helpful technical guidance to Scroll, later joining the Scroll team full-time.
At OP Crypto, we leverage our rich experience and extensive network to identify top-notch projects like Scroll in their early stages and support our portfolios throughout their journey, providing a series of practical, value-added advisory services and market incubation support.
The Solution to Scaling Ethereum
A) Ethereum scalability is imminent
Given the high gas fees and congestion in Ethereum transactions, scalability has become the primary development goal for L2 developers. Among the proposed scalability solutions that aim to maintain Ethereum’s standardization, security, and decentralization properties, the ZK Rollup approach has become the most promising option due to its higher security and theoretical performance advantages over the OP Rollup approach. Since Ethereum 2.0 and other scalability solutions have not yet entered the market, Scroll is expected to become the first ZKR solution to land and gain a significant competitive advantage.
B) Scroll’s solution for scaling EVM
Scroll has developed a Rollup solution aiming to address Ethereum’s scalability issues without compromising decentralization or security. It builds a more efficient network structure on top of Ethereum, allowing transactions to be processed and confirmed significantly faster, thereby improving the overall network throughput.
The ZK Rollup developed by Scroll is a scalability solution that uses zero-knowledge validity proofs. It processes off-chain transactions in batches and generates encrypted validity proofs to verify transaction authenticity. These proofs add batch transactions to the L1 blockchain, which can be quickly verified by L1 contracts, while invalid batches are rejected directly.
(Source: How ZK Rollups Work by Simon Brown, Medium)
Scroll’s Advantages Compared to Alternative L2 Solutions
Scroll: An Expert Team
- Ye Zhang started his research in ZKP four years ago, with his first project aiming to accelerate ZKP using FPGA and ASIC. Later, he began to study the mathematics and cryptography behind ZKP and became interested in its application in the blockchain sector. Ye Zhang said that he started developing the Scroll network because he discovered some problems with ZK Rollup last year, and his research direction happened to be suitable for solving these problems.
- Sandy Peng graduated from Cambridge University and previously worked in research at the Hong Kong Securities and Futures Commission. Since 2017, she has been involved in Web3 project investment and has rich experience in the industry. Currently, she is responsible for BD, financing, and ecology at Scroll.
- Haichen Shen studied at the Yao class of Tsinghua University for his undergraduate degree and received his Ph.D. from the University of Washington. His Ph.D. research focuses on the field of underlying systems (including GPU, PL, compiler, and other cross-disciplinary directions). After his graduation, he worked at Amazon to build machine learning systems and other related work.
The Vision: Highly Synergistic with Ethereum
In building its scaling solutions, Scroll is closely aligned with Ethereum. As one of the major contributors to the development of Ethereum-compatible zkEVM, Scroll aims to promote the construction of a “zk-SNARK everything” system, which can be used to prove mainnet blocks. To achieve its ultimate goal, Scroll has established a three-step development plan:
- Implement a reliable zero-knowledge proof to achieve byte-code-level compatible zkEVM.
- Introduce relevant measures to coordinate the development of Layer 1 and zkEVM.
- Achieve community standards and propose EIPs to improve Ethereum to achieve the ultimate goal.
Currently, Scroll is in the first phase of introducing a byte-code-compatible zkEVM with a complete product offering. In the future, Scroll will help Ethereum achieve the ambitious goal of implementing SNARK. Scroll has always adhered to a unique development path: commissioning the community by building out in the open, operating with the same vision and values as the Ethereum foundation, ultimately to advance the entire blockchain sector.
Closing Remarks
When it comes to early-stage, pre-product projects without verified token models or large user bases, VCs are mostly betting on the value of the core team and its founder(s). As a fund focused on backing early-stage startups, this is something we consider frequently.
With Scroll, this was an easy call to make. We were immediately impressed by the team’s vision and their sheer determination to build out an innovative scaling solution when the technology was still in its nascent stages.
To close off, we’ll leave you with some words from Scroll’s Co-Founder:
“OP Crypto was one of our early supporters. We especially appreciate David and the team’s support for Scroll in the development of the ecosystem. We also look forward to continuing to work with OP’s friends to build a more innovative, inclusive, and accessible Web3 entrepreneurial scene.”
— Sandy Peng, Scroll
Cooperate with Us!
If you are a founder in the Web3 field or want to recommend a startup team around you, please feel free to contact us. Don’t forget to follow our Twitter accounts (@OPCryptoVC & @OPCryptoDegen) to get more information and updates from OP Crypto!
ABOUT OP CRYPTO
OP Crypto is a leading high conviction, early-stage venture capital firm in the crypto and blockchain industry, specializing in pre-seed and seed stage investments. The fund successfully raised $50M in September 2021 and has since invested in over 30 projects, including companies such as Scroll Tech, Snackclub, Merit Circle, Omni, and Fyde.
With the support of prominent investors like Bill Ackman and Alan Howard, as well as institutions like Galaxy Digital, Huobi, and DCG, OP Crypto has access to a global network of venture funds, scouts, and ecosystem partners to source the most competitive deals in the market.
With a core team based in the United States and strong ties to the APAC region, the fund serves as a bridge between East and West. Additionally, a dedicated portfolio team provides post-investment support to founders in areas such as marketing, tokenomics, and networking.
Learn more about OP Crypto at: Website
Follow us on Twitter: OPCryptoVC | OPCryptoDegen
