Stroom Network Has Raised $3.5 Million in Order to Launch Bitcoin Liquid Staking on Lightning Network

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Last Updated on August 31, 2023 by Bitfinsider

Stroom Network, a “liquid staking” system for Bitcoin’s Lightning Network, has earned $3.5 million in a preliminary fundraising round that was oversubscribed.

According to a release, the financing was led by Berlin-based crypto investment firm Greenfield, with participation from Lemniscap, No Limit Holdings, Cogitent Ventures, and Mission Street, Ankr’s venture arm.

The funds will be utilised to expand the team and launch Bitcoin “liquid staking” on Lightning, as well as the release of a comparable Ethereum-based wrapped token, lnBTC.

The Lightning Network is a second-layer solution of bi-directional payment channels built on top of the Bitcoin blockchain that allows for quick and low-cost transactions. Liquid staking systems often allow users to receive staking rewards on an underlying proof-of-stake blockchain asset, typically ether, while also unlocking its value and liquidity in the form of a liquid staking derivative token across numerous DeFi apps. Stroom works in a similar manner.

Users can use Stroom’s protocol to leverage their bitcoin wealth on both the Lightning Network and Ethereum. Users that deposit bitcoin on Lightning can receive routing fees on network payments. Similarly to WBTC, Stroom simultaneously releases a wrapped bitcoin token, lnBTC, on Ethereum, pegged at a 1:1 ratio with bitcoin, allowing users to explore new yield prospects within the Ethereum ecosystem.

Stroom CEO Rostyslav Shvets, who formerly worked at blockchain service provider Bitfury and liquid staking platform Lido, believes the Lightning Network has untapped potential, especially considering Binance’s recent integration.

“Lightning Network is the most promising payment rails technology out there,” Shvets added, “but it has yet to reach mass adoption.” “One of the main reasons is a lack of liquidity, which affects the network’s robustness and the success rate of payments.”

“Our goal is to provide anyone with an easy way to earn Lightning routing fees and contribute to Bitcoin’s scalability,” explained Stroom CTO Slava Zhygulin.

Zhygulin has been working on Lightning since 2016, co-authoring a white paper with Stroom’s core developer Mykola Sahno, Lightning Labs co-founder and CTO Olaoluwa Osuntokun, and others on a routing algorithm dubbed Flare.

“We are able to do so by removing the technical complexities of managing a Lightning node and introducing DeFi mechanics.” “We believe that these mechanics will persuade Ethereum-savvy Bitcoin users to deploy liquidity to Lightning while keeping their yield in Ethereum,” Zhygulin stated.

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