Web3 startup Redeem announced Wednesday that it has raised $2.5 million in pre-seed funding to change the landscape of nonfungible tokens by making it easier for users to send, receive and redeem them using only their phone numbers.

Blockchain solution-focused investment firm Kenetic Capital led the round with participation from Monochrome Capital, VC3 DAO, The Fund, Flyover Capital, CMT Digital, KCRise Fund and Kestrel 0x1. The company said the funds would go to building out the company’s core technology and toward the product launch in the second quarter of 2023.

Nonfungible tokens, or NFTs, are a type of crypto asset built on blockchain technology that allows for provable ownership of digital items such as virtual tickets, loyalty points or in-game items.

Using Redeem’s technology, users can associate their crypto wallets with their phone numbers in order to redeem these types of NFTs so they can send and receive them just by scanning a Quick Response code. The platform requires very little technical know-how and takes care of the blockchain fees.

Users can also send and receive NFTs across text messaging, Apple’s iMessage and WhatsApp without needing to remember complicated information such as wallet addresses. All of this is stored in the QR codes for sending and receiving.

“I love creating new user experiences that surprise and delight while hiding the complexity of the technology,” Toby Rush, co-founder and chief executive of Redeem. “Using the phone number as the link into the digital world is an obvious unlock right in front of us.”

Right now, crypto adoption can be slow because users must navigate myriad apps to get the full benefit of the crypto ecosystem. That means they must first set up a crypto wallet in order to store and secure their NFTs. Then they have to learn and remember their own wallet address to receive and the wallet address where they want to send, and those are often extremely long alphanumeric codes.

Connecting them to phone numbers, Rush says, helps reduce the potential for fraud between participants because it makes it less likely that the entity on the other end is a bot. And by adding in QR codes and using phones and text messages, users no longer need to worry about having to type in long strings of digits to send and receive their NFTs. That in turn makes things easier for businesses that want to get into using NFTs to represent virtual tickets, loyalty points or in-game cosmetics such as shirts, jewelry and avatars.

“Adoption is the Holy Grail of Web3,” said Kenetic Capital founder Jehan Chu. “Redeem’s core features allow users to access the universe of Web3 in seconds with no prior crypto blockchain knowledge. This is a game-changer for traditional enterprise companies who want to reduce cost and drive new user engagement via Web3 without complicated or risky crypto processes.”

Nonfungible token markets soared in 2021 with $25 billion in volume, mostly on the back of the sale of digital art, but slumped during what was dubbed “crypto winter” in 2022. Volumes have begun to recover in the beginning of 2023, according to a report from DappRadar reaching $946 million in January, up 38% over December.

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