Paradigm backs $7.5M seed round for Sorella to address Ethereum’s MEV issue

Crypto startup, Sorella Labs, announced that it had raised $7.5 million in a funding round led by Paradigm. The firm confirmed that it was developing tools to mitigate Ethereum’s Maximum Extractable Value (MEV) problem. According to Sorella, prominent investors include Paradigm, Nascent, Uniswap Ventures, Robot Ventures, and Bankless Ventures.

Sorella Labs disclosed that it had developed the Brontes tool to identify MEV activities and process Ethereum blocks. The startup also developed the Angstrom tool to integrate into Uniswap V4. Sorella said that Angstrom would use Sorella’s off-chain network to run auctions that determined the order of transactions to prevent arbitrage.

Paradigm backs seed funding for startup Sorella Labs

According to Sorella Labs, Paradigm led the funding round with Bankless Ventures, Nascent, Uniswap Ventures, and Robot Ventures. The CEO of Sorella, Ludwig Thouvenin, disclosed that the firm had closed the seed funding in September 2023. However, he affirmed that the firm made the announcement almost a year later, on August 20, 2024, as it emerged from ‘stealth’ with its live Brontes MEV tool. 

Thouvenin claimed that over $855 million had been lost to malicious MEV actors. He explained that the lower-bound estimate was reached from Sorella’s internal analysis of the September 2022 Ethereum’s Merge upgrade.   

“We knew that MEV was extremely pervasive on Ethereum, but it was crazy to see to what extent…It is quite rare to find a block with no MEV on it.”

–Ludwig Thouvenin

Thouvenin confirmed that Sorella worked closely with Flashbots to address the MEV problem. He pointed out that Flashbots focused on the protocol level, while Sorella Labs targeted the application layer to address the MEV issue.    

Thouvenin says Flashbots complement the future of Sorella

Thouvenin revealed that Flashbots was a Paradigm-backed crypto firm that had raised $60 million in a Series B round in 2023, reaching approximately $1 billion in valuation. He asserted that the difference between Sorella and Flashbots was how they approached and provided solutions to the MEV problem.

Sorella’s CEO mentioned that the most blatant MEV extraction lay in decentralized exchanges where liquidity providers lost money due to complex arbitrage and sandwich attacks. He claimed that this hampered the efficiency and growth of the Ethereum ecosystem while also undermining trust in decentralized systems.

Consequently, Thouvenin confirmed that at least 15 people worked for the Manhattan-based Sorella Labs. He mentioned plans to expand the team by bringing in systems engineers, MEV researchers, and Rust developers.

According to Thouvenin, Sorella’s approach could significantly reduce MEV’s impact on the Ethereum ecosystem. He asserted that the MEV tools would prevent common MEV strategies like sandwich attacks and front-running. Thouvenin insisted that this would create a more efficient and fair environment for DeFi users in the ever-evolving MEV landscape.