Stroom Network has effectively raised $3.5 million in an oversubscribed seed funding round. Their goal is to introduce Bitcoin ‘liquid staking’ utilizing the Lightning Network. The funding phase, surpassing initial expectations, was led by the crypto investment firm Greenfield, based in Berlin.
Noteworthy contributors also include Lemniscap, No Limit Holdings, Cogitent Ventures, and Mission Street – Ankr’s investment division.
The capital injection will be strategically employed to facilitate team expansion and to initiate the implementation of Bitcoin’s “liquid staking” on the Lightning Network. This endeavor encompasses the launch of a corresponding wrapped token on the Ethereum network, known as lnBTC.
The Lightning Network constitutes a secondary infrastructure of bidirectional payment channels established atop the Bitcoin blockchain. Its primary function is to enable swift and cost-effective transactions.
Comparable to conventional liquid staking frameworks, Stroom Network empowers users to accrue staking rewards from a fundamental proof-of-stake blockchain asset, often Ether. Additionally, it offers liquidity and functionality across various DeFi applications in the form of a liquid staking derivative token, aligning with the essence of Stroom’s approach.
Stroom Network: Bridging Bitcoin and Ethereum Through Innovative Protocol
Stroom’s protocol combines Bitcoin and Ethereum, allowing users to utilize their Bitcoin holdings in both ecosystems. This is achieved by depositing Bitcoin into the Lightning Network, earning fees from network transactions.
Additionally, Stroom introduces lnBTC, a wrapped Bitcoin token on the Ethereum network, mirroring Bitcoin’s value at a 1:1 ratio. This approach lets users explore diverse yield opportunities in the Ethereum space, similar to Wrapped Bitcoin (WBTC).
Rostyslav Shvets, CEO of Stroom Network, highlights the untapped potential in the Lightning Network. This is especially notable after its integration by Binance.
Shvets points out that liquidity limitations have hindered the network’s expansion, impacting its strength and payment success rates. Stroom aims to make earning Lightning routing fees easier, thereby enhancing Bitcoin’s scalability.
Stroom Network’s CTO, Slava Zhygulin, underscores their mission of enabling anyone to earn Lightning routing fees seamlessly while bolstering the scalability of Bitcoin. Zhygulin’s involvement in the Lightning Network dates back to 2016 when he co-authored the Flare routing algorithm’s whitepaper.
Stroom integrates DeFi principles and simplifies Lightning node management complexities. This encourages Ethereum-savvy Bitcoin users to contribute liquidity to the Lightning Network, while also preserving their yield in Ethereum.
In the realm of Bitcoin yield generation, options for holders have been somewhat limited and accompanied by respective challenges. These include entrusting centralized entities, accepting less attractive decentralized lending yields, or grappling with the intricacies of configuring Lightning nodes for routing fees.
Stroom Network’s Decentralized Framework and MPC-Powered DAOs Revolutionize Lightning Network
Stroom Network endeavors to merge these solutions into a decentralized, transparent, and secure framework.
Their approach involves the establishment of DAO-like structures powered by multi-party computation (MPC), which oversee users’ funds, incentive modifications, protocol enhancements, and the allocation of protocol-generated fees. This intricate system removes the need for users to maintain their own Lightning node infrastructure.
MPC, a cryptographic technology, enhances traditional multi-signature techniques by effectively distributing wallet keys among multiple parties.
Greenfield Principal Jendrik Poloczek underscores the Lightning Network’s potential as a payment system, not solely for Bitcoin but for various cryptocurrencies traversing the network. Stroom’s protocol utilizes dormant Bitcoin liquidity to enhance the Lightning Network’s vitality while concurrently offering appealing yields for liquidity providers.
Recent data reveals that the Lightning Network briefly achieved a record capacity of 5,640 BTC ($175 million) before experiencing a slight decline. The present capacity rests at 4,830 BTC ($133 million).
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