BLOCKCHAIN
BLOCKCHAIN
BLOCKCHAIN
Ethereum restaking protocol EigenLayer raises $100 million led by a16z
Crypto startup Eigen Labs raised $100 million in a funding announced today led by Andreessen Horowitz’s a16z crypto venture capital arm for its EigenLayer crypto restaking protocol.
The startup previously raised $50 million in March in a funding round led by Blockchain Capital, bringing to total raised by the company to $150 million.
Founded by Sreeram Kannan, Eigen Labs provides a service known as EigenLayer, which facilitates a process known as “restaking.” Staking itself is part of a process known as proof-of-stake that is used by the Ethereum blockchain where token holders can lock up their tokens, or prove that they have a stake in the security of the blockchain, by becoming validators.
Restaking allows developers to borrow Ethereum’s proof-of-work and restake Ethereum tokens that are currently staked on the Ethereum network through EigenLayer’s protocol so that other blockchains can benefit from Ethereum’s engine. That means projects building their own blockchain protocols do not need to build their own proof-of-stake mechanisms and can borrow Ethereum’s engine through EigenLayer.
“The idea is that when you stake on Ethereum, you are promising that you’re going to run the Ethereum network nodes correctly,” Kannan said in an interview with Bloomberg. “With restaking, you are taking the same Ether and making additional promises that you will also validate other networks correctly.”
Ethereum is the second largest blockchain by total market cap at $357 billion, second only to the bitcoin blockchain. Its blockchain switched from proof-of-work, which requires massive computational logic to validate and secure its network, to proof-of-stake with an event known as the Merge in September 2022. Doing so greatly reduced the amount of energy required to run the blockchain and made staking as the way that transactions are secured and validated on the network.
Staking attracted regulatory attention when the United States Securities and Exchange Commission began investigating companies offering staking rewards. When a user locks up a token to validate the network, they receive rewards, essentially interest for holding the asset. The SEC began investigating major U.S. cryptocurrency exchange Coinbase Inc. for its staking reward listings in 2022 and crypto exchange Kraken agreed to settle a lawsuit with the SEC that shut down its staking program and pay a fine of $30 million.
Image: Pixabay
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