Puffer Finance: Eigenlayer’s Ethereum restaking protocol, Puffer Finance, successfully raised $18 million in a Series A funding round to support the launch of its mainnet. The announcement, dated April 16, revealed that the funding was spearheaded by Brevan Howard Digital and Electric Capital, with substantial contributions from Coinbase Ventures, Kraken Ventures, Lemniscap, Franklin Templeton, Fidelity, Mechanism, Lightspeed Faction, Consensys, Animoca, GSR, and various other angel investors.
Notable Move from Puffer Finance
According to DeFiLlama, a blockchain data analysis platform, Puffer Finance surpassed a total locked value of $1.2 billion shortly after its initial test phase in February. Currently, the protocol has garnered a total of $23.5 million in venture capital funding.
In its announcement, Puffer Finance emphasized the technological advancements accompanying the mainnet launch. It disclosed that following this milestone, Puffer secured a strategic investment from Binance Labs, enhancing its standing in the Liquid Restaking ecosystem.
Puffer Finance’s technology enables Ethereum validators to significantly reduce the capital needed from individual stakers, from 32 Ethereum to just 1 Ethereum. Furthermore, users staking Ethereum through Puffer receive Puffer liquid restaking tokens (nLRTs), which enable them to earn yields in other decentralized finance protocols concurrently with Ethereum staking rewards.
The concept of liquid staking has been in use for some time in other blockchain ecosystems such as Cosmos. However, Ethereum has only recently embraced it following the Merge upgrade. According to Amir Forouzani, a key contributor at Puffer Labs, as stated in a press release:
“While offering the most advanced restaking buying protocol, we aim to significantly reduce participation barriers for protocol validators.”
EigenLayer recently surpassed DeFi lending protocol Aave in total locked value (TVL) and temporarily eliminated the cap on user staking, resulting in an influx of $10.4 billion worth of crypto assets to the protocol.
According to Dune Analytics data, EigenLayer boasts over 107,900 unique deposit holders. Additionally, statistics from DeFiLlama indicate that 74% of the staked tokens consist of Wrapped Ether (wETH) and stETH.
Liquid staking protocols currently represent the largest DeFi protocol category, with approximately $55 billion in locked value spread across around 160 protocols. This category is primarily supported by Lido, the largest protocol with a locked value of $35 billion.
Ethereum Restaking Gains Momentum
Since EigenLayer’s launch last year, the Ethereum restaking vertical has been gaining momentum, resulting in the emergence of several EigenLayer-based platforms in 2023. Presently, Puffer Finance stands as the third-largest liquid restaking protocol by total value locked (TVL), with $1.17 billion, following Ether.Fi ($3.5 billion) and Renzo ($2.95 billion).
Amir Forouzani, co-founder of Puffer, articulated the project’s objective of “dramatically reducing the barriers for home validators to engage, while introducing the most advanced liquid restaking protocol.”
With the Series A funding, Puffer Finance aims to roll out its mainnet, which it anticipates will increase validator involvement and bolster Ethereum’s decentralization. Previously, the project received a $120,000 grant from the Ethereum Foundation for its open-source Secure-Signer tool, designed to assist validators in mitigating slashing or penalty risks.
Avichal Garg, co-founder of Electric Capital, lauded Puffer’s technology for “enabling broader participation and fortifying the network’s integrity.” Peter Johnson, co-head of venture at Brevan Howard Digital, affirmed the firm’s commitment to supporting “projects critical to the expansion and resilience of the blockchain ecosystem.”
FAQs
Q.1 What is Puffer Finance?
Puffer Finance is a protocol that enables users to stake Ethereum with a reduced minimum requirement. Participants are issued liquid staking tokens representing their stake, which can be utilized in various DeFi applications while simultaneously earning staking rewards.
Q.2 Why is Puffer Finance raising funds?
Puffer Finance secured funds to launch its mainnet, aiming to streamline Ethereum staking processes and foster greater participation from validators. This initiative is expected to enhance the security and decentralization of the Ethereum network.
Q.3 What are Puffer’s advantages?
Puffer Finance enables users to stake Ethereum with just 1 ETH, significantly lower than the standard 32 ETH requirement. Furthermore, users have the opportunity to utilize their staked ETH in various other DeFi applications through liquid staking tokens.
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