Inside a16z Crypto’s $55M ZRO purchase

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“I think the industry a year ago was messy, was very competitive,” LayerZero CEO Bryan Pellegrino told me. But it’s been “cleared up” thanks to the friendlier environment and overall adoption.

Last month, the company saw $6 billion in transfers, he added, and $100 billion worth of assets were built on LayerZero.

Admittedly, Pellegrino added, he still thinks of crypto as an underdog industry, one that’s fairly small. But now that he’s regularly meeting with the BlackRocks and PayPals of the world, it might be time for a mindset shift.

LayerZero dominates with a whopping 75% market share, introducing a new set of challenges for Pellegrino and his team.

“It’s easy when you’re fighting for market share, because it’s very clear what you need to do. But then you get to 75% market share. And … the last 25% doesn’t seem as incrementally important,” he explained.

“How do we go from $6 billion a month to $100 billion a month? How do I make it so that every exchange that runs entire teams of people in the back end to deal with inventory management … you’re basically custodying these things and interacting, and how can I make it so they don’t ever need to think about that again?”

As LayerZero grows, Pellegrino noted, it’s become not just about the technology, and part of the challenge now is to make sure it’s used.

At the end of last week, a16z announced that it bought $55 million worth of ZRO. The VC firm has previously invested in LayerZero.

But what struck me about the announcement was the term length being included in the announcement. a16z Crypto partner Ali Yahya disclosed that the token purchase had a three-year lockup.

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Pellegrino told me the disclosure was part of an effort to be as transparent as possible. But it also helps to show the “extreme conviction” on a16z’s part.

“It’s not something that they’re thinking about in the near term. It’s something they’re thinking about for the very long term. That’s how we think about the world, and that’s how we want people to think about it. We care about what we’re building,” he added.

I asked Pellegrino what the firm planned to do with the money, and he told me it’s all about “alignment.” The firm has a 10-year runway, which showcases how Pellegrino thinks about the industry.

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