NFTs Mushroom Into Billion-Dollar Market With Help From Alchemy

The $1 billion market for non-fungible tokens has seemingly come out of nowhere to capture the imagination of artists and blockchain enthusiasts all over the world. While the projects range from eight-bit pixelated portraits to elaborate ink and paint creations, what they all have in common is the behind-the-scenes startup Alchemy.

The San Francisco-based firm was founded in 2017 by Nikil Viswanathan and Joe Lau and only opened to general, rather than private, customers in August. Since then, transactions using Alchemy technology have grown 54-fold to power $25 billion worth of Ethereum projects such as decentralized finance startups and NFT platforms, Viswanathan said in an interview. Alchemy’s first customer was Matt Hall, the co-creator of CryptoPunks. Hall and his partner John Watkinson have since watched as more than $130 million of the low-fi pixelated people have changed hands of various NFT platforms, with the priciest selling recently for about $7.6 million.

It was hard to see how popular CryptoPunks and the rest of the NFT market would become three years ago, Viswanathan said. Unlike Bitcoin, an NFT is meant to be unique and might be created in small batches. Hall and Watkinson viewed their project as something cool to do on the side, but had a hard time managing their connection to the Ethereum blockchain on their own. That’s when Alchemy entered the picture to handle the technical side of the operation.

“I was like, ‘oh, cool, a side project,’” Viswanathan said with a laugh.

That side project has grown into Alchemy being the technology behind every major NFT platform such as Makersplace, OpenSea, Nifty Gateway, SuperRare and Cryptokitties. What about the digital artist Beeple’s record-breaking NFT auctioned by Christie’s for $69 million? That was Alchemy too, which powers the Makersplace NFT platform that partnered with Christie’s in the sale. What Alchemy does is allow its customers to connect to the Ethereum blockchain so transactions can be read and written to the world’s most used blockchain, Viswanathan said.

“If we were to turn off, all these products wouldn’t work,” he said.

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Viswanathan, 33, and Lau, 31, met at Stanford University where they both served as teaching assistants for a database class. Alchemy counts as investors Duncan Niederauer, Charles Schwab, John Hennessy, Jay-Z, Jerry Yang, Ruchi Sanghvi and Will Smith. While NFT market values can be hard to come by, Viswanathan estimated it to be worth $1 billion using both public and private data.