Why We Invested in Magik: New Middleware Infrastructure to Become the Deel for Crypto

Despite the turbulence in the crypto markets, the use of cryptocurrencies remains resilient, especially in emerging markets where traditional banking systems are not always accessible. According to an emerging market study, between 2021 and 2022, 35-55% of the adult population in emerging markets traded cryptocurrency at least once per month. A more recent Chainalysis report suggests that crypto usage growth has flattened in the past year, but transaction volumes remain strong. Consumers are also using cryptocurrencies as a hedge against local currency inflation and as an alternate source of income, such as web3 gaming.

There are already thousands of cryptocurrencies and various DAOs and companies holding stablecoins. Any user attempting to onramp into a new app or platform must fastidiously research and understand exchange possibilities, prices, and fees to convert the funding source to whatever crypto is required by the project. Each variable fluctuates in real-time and thus even a simple convert currency A to B requires constant recalculations.

The inconvenience and steep learning curve present a blocker preventing the average consumer from accessing new projects on a level playing field. Not to mention that each step introduces the possibility of a bug or an execution error, and in the case of bridge errors, funds can be lost forever. There is a need and an opportunity for a unified and efficient means for non-technical users to access the crypto universe in a convenient and safer way.

At Flourish, we are intrigued by the various possibilities of crypto middleware that can unify a fragmented market and make it safer and easier for consumers and businesses to participate in. Startups attempting to provide universal onboarding face a multitude of challenges, ranging from uncertain and rapidly evolving regulatory viewpoints, bridging multi-country jurisdiction-specific laws and on/off ramp preferences, and end-to-end integration with all the industry players from wallets to on/off ramps to exchanges.

Enter Magik, a Bengaluru- and San Francisco-based startup that is creating a middleware infrastructure that helps web3 companies make payments globally. The company removes the need for web3 apps to integrate with multiple providers across different geographies while providing a choice of payment methods and better rates in 60+ countries.

Making its debut at the YCombinator Winter 2023 conference, its foundational product provides startups in the space with payment pipes that connect to more than 10 L1 chains, and the appropriate bridges and offramp providers. The software automatically calculates the fastest, cheapest, and most price-stable route to any person opportunity within its network, even if it lies on a different chain from the user’s initial input.

With Magik, companies can connect their gnosis Safe or Deel accounts to cash out the desired crypto with one click. Apart from wire transfers, cash-out options include hyperlocal payment methods such as Pix, GrabPay, UPI and SEPA – a crucial feature in a region where SWIFT transfers take 10%.

In doing so, Magik aims to become the Deel for DAOs and web3 companies, the middleware pipes that enable anyone in crypto to send money to workers and employees, the same way Deel integrates across numerous countries and presents a one-stop solution for companies seeking to pay global talent.

The Magik team of Mohit Jandwani, Himanshu Bamoria, Akshat Gupta and Shiv Shakuja are all crypto-native with extensive crypto experience. They have also scaled web2 startups, which gives them a unique perspective and skill set in building a successful crypto business.

Intrigued by the crypto adoption in early 2022, we had been looking for entrepreneurs building safer rails for the mass market to engage with this universe. The Magik team stood out in this space from our first interaction. By virtue of having run educational social media channels on the space, they were very keenly aware of what the everyday customers were facing. Their vision to build safer rails echoed with us.

With a strong start and a first-mover advantage, Magik is well positioned in the early market and will contribute significantly in the creation of core technology for a more unified, efficient crypto trading system. With the team’s expertise and vision, Magik has the potential to revolutionize the way web3 companies make payouts and create a more accessible and efficient and fairer financial system for all.