Nonagon Capital Officially Launches Validator Business
Nonagon Capital, a venture fund that invests in cryptocurrency and blockchain startups, announces the launch of support services for major domestic companies to begin validator operations, in addition to operating its own blockchain validators.
Background
For approximately three years, Nonagon Capital has been conducting investment activities. During this time, the firm recognized that synergy effects could be expected between its investment business and blockchain node operations. In particular, when investing in developers of L1 (Layer 1) blockchains, one can begin validator operations simultaneously with token issuance, enabling stable, medium-to-long-term revenue.
Common new businesses utilizing cryptocurrency and blockchain include developing services that run on blockchains or developing blockchains themselves. However, realizing these involves many high hurdles. While issuing NFTs is chosen as an easy starting measure, it has sustainability challenges. Therefore, Nonagon Capital has communicated to domestic companies that participation is also possible through hackathon hosting or sponsorship, and cryptocurrency purchase/management (DAT strategy).
Since 2024, the firm has been operating "Nonagon Connect," a community service for domestic listed companies. Through this business, Nonagon Capital has opportunities to dialogue with companies launching businesses utilizing cryptocurrency and blockchain, or distributing NFTs. A common concern the firm hears is "we don't know what the optimal solution is anymore."
While the aforementioned event sponsorships and DAT strategies are effective as methods for entering the blockchain space, Nonagon Capital saw potential in validator operations, which can provide greater benefits with more limited risk than these methods. The firm therefore established an in-house system capable of completing validator operations, centered on members who obtained PhDs from the University of Tokyo, and began validator operations.
Additionally, Nonagon Capital concluded that validator operations are the optimal solution for domestic companies considering business entry into the blockchain space, and decided to support major domestic companies until they begin validator operations.
Benefits Obtained Through Validator Operations
For stable blockchain operation, validators—people or corporations that manage dedicated nodes (a general term for servers, etc.)—are indispensable. In existing services and systems, developers are responsible for server management. However, blockchains require many validators to avoid depending on specific companies alone for stable operation and integrity.
Validator operations can be performed by both individuals and corporations, and a major feature is that they can generally be started without requiring permission from blockchain developers.
There are multiple benefits to operating validators, but three particularly important ones are:
- Potential to build deep relationships with blockchain developers and communities
- Continuous cash flow can be expected
- Operations are possible while implementing measures to suppress token price volatility risk
From a new business launch perspective, being able to build relationships with blockchain developers is a major benefit of validator operations.
By operating validators, companies can become a partner with blockchain developers in spreading that blockchain worldwide. Through partnerships with them, benefits include regular online meetings, participation in various events hosted by blockchain developers, and direct consultation on business development and community management, providing significant advantages for information gathering and business development.
Furthermore, beyond the inevitable question when launching new businesses of "when will it become profitable," validator operations are easier to commercialize in a shorter period than other blockchain-related businesses, which is why Nonagon Capital considers validator operations an accessible business for domestic operators. Additionally, methods exist to operate validators without purchasing the tokens typically needed for blockchain node operations with company funds.
About Validator Operation Support
Nonagon Capital provides necessary support for domestic listed companies to begin validator operations on domestic and international blockchains. Starting validator operations requires preparations such as the following. Nonagon Capital handles these on behalf of domestic operators and provides comprehensive support until validator operations begin:
- Strategy planning centered on validator operations
- Selection of blockchains for validator operations
- Condition negotiations with developers
- Establishment of legal and accounting business flows, and internal coordination support
- Technical support necessary for validator operations
About Nonagon Capital
Nonagon Capital (Representative Executive Officer: Kazuhito Okamoto) is a venture fund based primarily in the San Francisco Bay Area that invests in blockchain projects. With a network of cutting-edge players worldwide, Nonagon Capital adds value by functioning as a bridge connecting North American and Asian markets, particularly the Japanese market, primarily investing in seed-stage projects related to infrastructure, DeFi, DAO, and entertainment worldwide. With the mission to "create projects that globally popularize Web3," Nonagon Capital will continue our investment and business activities.
Norbert Gehrke
