Quai, a layer-1 cryptocurrency blockchain network seeking to build a new proof-of-work stablecoin, today announced it has raised $5 million in a new strategic funding round in conjunction with the launch of the company’s devnet infrastructure.
The round attracted investments from Cogitent Ventures, MH Ventures, TPC Ventures, Giga Chad Ventures and DexCheck Ventures. The company previously raised $10 million from Polychain Capital and Alumni Ventures, bringing the total raised to $15 million.
Founded in 2022, Quai uses a two-token system along with Ethereum Virtual Machine compatible smart contract capabilities to combine the best features of Bitcoin and stablecoins into a single cryptocurrency.
A stablecoin is a type of cryptocurrency that maintains the same value over type often by “pegging” itself to another currency such as the U.S. dollar, so that a single token always remains $1. Many stablecoins are backed by large reserves of currency to provide proof of reserves. To provide itself with what the company calls “tangible and measurable value,” Quai claims, its Qi tokens are backed by energy.
Similar to Bitcoin, the Qi token uses proof-of-work, a computationally intensive function that secures the network using a hashing function to create rewards. In this system fluctuations in energy are directly reflected in the cost to generate value. Qi’s energy rises linearly, which rewards in the short term, while the second token Quai has a logarithmic energy and reward schedule, which is superior in the long term.
To balance the two, Qi can be burned, or destroyed, to mint Quai depending on a reward ratio. According to the company, this potentially increases or decreases the value of Qi by reducing its total supply.
“In recent months, Quai has made significant strides by further refining protocol-level scalability enhancements and leveraging proof-of-work as a unique oracle for real-world energy costs,” said co-founder Alan Orwick. “These advancements have strengthened our position as a leader in creating a highly scalable and secure decentralized ecosystem.”
The new funding announcement comes alongside the launch of the company’s devnet, which is compatible with the upcoming mainnet. The objective of a devnet is to provide tooling and infrastructure for developers to build projects for the Quai network. The team is looking to invite developers to build applications and projects on its ecosystem.
The company also recently announced several notable industry collaborations including joining the UXTO Alliance alongside well-known blockchain projects Cardano, Ergo Platform and Topl Networks. The UTXO Alliance seeks to build out protocols on how data is transferred between different blockchain environments so that developers can securely share digital assets, such as coins, tokens, data and smart contracts.