Espresso raises $28 million in series B round led by a16z crypto

Blockchain project Espresso Systems closed a $28 million Series B funding round led by a16z crypto.

After raising $30 million in a Series A round in 2022 and $2 million in seed funding in 2020, the latest round brings Espresso’s total fund to more than $60 million. The company has not disclosed its latest valuation.

The round was opened for negotiation in early Q4 2023 and closed with a16z in early 2024, Espresso said. The project is currently being finalized with additional strategic investors.

Espresso is building a marketplace for shared sequencing, allowing rollups to auction the rights to build their blocks. According to Espresso, this setup facilitates interoperability between rollups and provides opportunities for various stakeholders, including Layer 1 block proposals (such as on Ethereum), to participate.

“Anyone can participate in this marketplace, including L1 proposals and rollups themselves. Rollups who don’t want to worry about sequencing can fully rely on Espresso, with the confidence that they will be fully compensated for the value they create, while maintaining their sovereignty,” CEO Ben Fisch told The Block.

What is a Shared Sequencing Marketplace?

A shared sequencer is a batch or protocol that produces blocks for multiple rollups simultaneously. A marketplace in this setup allows rollups to sell shared sequencing rights per time slot to third-party bidders.

Espresso creates a marketplace that allows rollups to designate a standard sequencer and set a minimum price for transferring sequencing rights from the standard sequencer to a third-party entity. If rollups prefer not to manage the sequencing, the marketplace can manage it on their behalf, Fisch explains.

“Espresso’s evolution from a single decentralized shared sequencer to a shared sequencing marketplace is critical to increasing sovereignty and capturing value,” said Ben Fisch.

Ultimately, Espresso wants rollup users to experience being on one Ethereum chain with improved composability. All this while turning their project into a decentralized marketplace for shared sequencing that maintains the sovereignty and value capture of individual rollups, according to the project.

Espresso integrates a finality tool called HotShot, which ensures fast block completion. In other words, HotShot acts as the consensus protocol for Espresso’s shared sequencer ecosystem. The project also has a data availability layer for sovereign rollups called Tiramisu.

“Espresso brings faster shared transaction confirmations to all of its integrated rollups, which, among other benefits, dramatically reduces risk for cross-chain liquidity providers, enabling faster bridging between rollups,” Fisch added.

In April, Espresso will release its fifth testnet: Cappuccino. Compared to the current testnet, Cappuccino will be further decentralized and feature several improvements, paving the way for the launch of the Espresso marketplace. The team is targeting a mainnet launch later in 2024.