- Stroom Network has raised $3.5 million in a funding round led by Berlin-based Greenfield to bring liquid staking to Bitcoin’s Lightning Network.
- The project aims to boost liquidity in the Lightning Network and enable users to simultaneously leverage their Bitcoin on both the Lightning Network and Ethereum.
Liquid Staking: A Pioneering Solution to Lightning Network’s Liquidity Woes
Stroom Network, specializing in liquid staking for Bitcoin’s Lightning Network, has successfully clinched $3.5 million in an oversubscribed seed funding. Spearheaded by Berlin’s crypto-focused investment firm Greenfield and buttressed by Mission Street (Ankr’s venture arm), the funding round witnessed participation from Lemniscap, No Limit Holdings, Cogitent Ventures, and other venture capital firms and angel investors.
Liquid staking is an ingenious solution to a multifaceted challenge: it allows network participants to stake tokens and receive a distinct, fungible token in return, thereby making their initial staked asset more liquid. Stroom Network harnesses this mechanism, thereby providing users the unparalleled ability to deploy their Bitcoin capital on both the Lightning Network and Ethereum, essentially diversifying their utility and yield opportunities. The funds raised will be channeled towards team expansion and launching the Liquid Staking Token on Ethereum’s mainnet.
Liquidity & Scalability: Stroom’s Dual Approach
One of the Achilles heels of Bitcoin’s Lightning Network, a Layer 2 scaling solution, is liquidity, or the lack thereof. Sufficient liquidity is an indispensable criterion for seamless transaction routing, and its inadequacy can lead to delayed or unsuccessful transfers. Stroom Network’s CTO, Slava Zhygulin, has conveyed an optimistic outlook, expressing confidence that their liquid staking solution is a groundbreaking approach to ameliorating this long-standing problem.
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The team aims to efficiently manage liquidity allocation, projecting that their method could augment the network’s Annual Percentage Yield (APY) to a sustainable 6%. By simplifying the process of earning Lightning routing fees and making it more akin to DeFi protocols, Stroom aspires to attract Bitcoin users who are also Ethereum aficionados, to provide the much-needed liquidity.
Stroom Network also proposes governance through a Decentralized Autonomous Organization (DAO)-like framework, achieved via a multi-signature computation mechanism. This system would govern liquidity allocation in payment channels and enable protocol upgrades, treasury management, and collective decision-making concerning fee distribution. With this robust governance model, Stroom aims to make strides in addressing Lightning Network’s limitations while making it more competitive against traditional payment infrastructures.
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