A bridge to Web3 — and why we invested in Ramp Network

I’m a passionate believer in Web3. My first investment in blockchain was in 2013 — the same year Alan Greenspan referred to Bitcoin as “a bubble, not a currency.” And indeed, for much of the past decade, crypto has remained at the fringes of the investment universe.

Nonetheless, the crypto ecosystem has come a long way since then: the total value of all crypto currencies is now approximately $1 trillion. However, on a global scale, adoption remains nascent at just below 4%. As a result, Web3 applications — with their promise of building a fairer internet — still have a way to go before they can attract the average internet user. To do so they will need to significantly lower barriers to entry — and most crucially, simplify the user experience.

At Mubadala Capital, our investment thesis is built on backing the companies that break down these barriers to entry so we can enable the onboarding of the next billion Web3 users by 2030.

Our investment in Ramp Network is an illustration of that thesis.

From Hype to Adoption

Despite the media hype around NFTs (or Non-Fungible Tokens) and the potential of crypto, only a small slice of the global population is sharing in that value today. It is estimated that only 300 million people worldwide own some kind of crypto currency today. Complex regulations, difficult onboarding processes and cautionary news stories have impacted consumer confidence.

As a result, we are still a long way from widespread crypto usage. However, a gateway to mass crypto adoption has emerged: on-ramping platforms — a straightforward way to exchange fiat money (such as US Dollars or Euros) to cryptocurrency.

Currently, buying and using crypto currencies happens on separate platforms, which means that users must sign up to an exchange (such as Coinbase or Binance) to purchase crypto and then have a separate wallet to use these assets. In practice, new users tend to try different wallets and exchanges as they learn how to best manage crypto assets, wasting time and money with multiple transactions across many applications.

Inconvenient, for sure. But the wider issue is that without the seamless flow of economic value between cryptocurrencies and fiat money and water-tight security of the infrastructure enabling it, we will never be able to fully realise the benefits of blockchain and Web3.

The PayPal of Crypto

That is where Ramp comes in. In the same way that PayPal and Stripe offer a unified purchasing experience across any e-Commerce site, Ramp’s full-stack payment solution allows users to buy crypto currencies inside any application or website, making digital assets more accessible to a much wider range of consumers.

One area where Ramp has already proven its merits is the crypto gaming industry.

Last year, gamers spent over $60bn on in-game items such as avatars or weapons. With the advent of NFTs, gamers are now able to genuinely own these digital items because the proof of ownership is an immutable entry on a public blockchain. This means that, for the first time, gamers can participate in the economics of the games they play.

The Play to Earn (P2E) market peaked in the last quarter of 2021 when Axie Infinity had almost 3 million daily players. And while P2E remains nascent and follows the cycles of the broader crypto market, we believe that Axie has paved the way for other game developers to become gateways to mass crypto adoption.

To date, Ramp has onboarded 100s of partners from top wallets such as Trust Wallet, Exodus and Argent as well as some of the world’s most successful crypto games, such as Sorare and Axie Infinity. Leveraging their platform, Ramp has helped hundreds of companies of all sizes and across all sectors (and their users) connect with the global crypto infrastructure.

A compliance-first solution

The first time I met Szymon and Przemek, the co-founders of Ramp, I knew they were building something different. Front and centre of their pitch was their mission: to create a world where Web3 is a reality and accessible for everyone.

Trust plays a leading role in the drive for mass adoption of crypto, and Ramp knows it. That is why Ramp has focused on complying with the most stringent legal and financial standards. In doing so, it has emerged as a global leader in regulatory compliance.

For example, Ramp’s strong focus on KYC (Know Your Customer) and AML (Anti Money Laundering) allows them to carry out checks in all 170 countries in which they operate — no mean feat, as compliance rules are ever-changing and differ regionally.

Ramp was the one of the first crypto companies to receive a PSD2 open banking registration and has a crypto assets business registration from the Financial Conduct Authority (FCA) in the UK. In addition, it recently received regulatory approval from The Financial Crimes Enforcement Network (FinCEN), enabling it to operate in 38 U.S. states and paving the way for further expansion.

This rigorous focus on regulation and compliance is paying off. During 2022 payment volumes increased by almost 240% compared to the same period last year.

Ramp joins Mubadala’s Web3 portfolio

We are excited to be leading Ramp’s $70 million Series B fundraising round, alongside Korelya Capital and with participation from existing investors. Ramp joins other visionary companies in Mubadala’s Web3 portfolio such as CoinMetrics, Risk Harbor and Crusoe Energy.

Ramp will be using this new investment to fuel its U.S. expansion, onboard new partners and deploy its off-ramping product which allows users to convert their coins or tokens back into fiat money.

Today, crypto technology is at a similar level of penetration as the internet in the late 1990s. As the market matures and the technology advances, global uptake will increase, and we will need the infrastructure and tools to onboard customers on a large scale.

We are excited about the potential of Ramp and its important role in building a decentralised web, transforming how people purchase their first cryptocurrency. We are delighted to be part of their journey.