Kyiv’s Stroom Network has secured $3.5 million in an oversubscribed Seed funding round.
Stroom is a Bitcoin Liquid Staking Protocol in Lightning Network. It allows Bitcoin (BTC) holders to earn Lightning routing fees while optionally harvesting additional yield in Ethereum’s DeFi ecosystem.
According to Rostyslav Shvets, CEO of Stroom, Lightning Network is the most promising payment rails technology but is yet to meet mass adoption. He attributes this to the lack of liquidity, which affects the robustness of the network and the success rate of payments.
“The recent surge to integrate deposits and withdrawals via Lightning by major exchanges like Binance and Coinbase further validates a huge potential behind it, and we intend to work closely with all of these exchanges”.
Slava Zhygulin, the CTO of Stroom stated:
“Our goal is to provide anyone with an easy way to earn Lightning routing fees and contribute to Bitcoin’s scalability.
We can do so by alleviating the technical complexities associated with managing a Lightning node and by introducing DeFi mechanics,
We think these mechanics can persuade Ethereum-savvy Bitcoin users to deploy liquidity to Lightning while retaining their yield in Ethereum.”
To earn yield, Bitcoin holders have currently three options:
- Lend out their Bitcoin on centralised lending platforms
- Lend out their Bitcoin on decentralised lending platforms
- Generate yield on their native Bitcoin from routing fees in the LN.
However, these opportunities come with specific challenges which is where Stroom comes in.
To ensure transparency and security, Stroom builds DAO-like structures using a multi-party signature computation mechanism to govern users’ funds.
This DAO will establish and modify incentives, upgrade Stroom’s protocol, form and use a treasury, and decide on how to spend collected fees.
The round was led by Berlin-based crypto investment firm Greenfield, with strategic investment from Mission Street, Ankr’s venture arm.
Additional participants included Lemniscap, No Limit Holdings, Cogitent Ventures, and several other venture capital firms and angel investors.
Jendrik Poloczek, Principal at Greenfield, said:
“There are numerous factors that underscore the significance of Bitcoin in the long run, which repeatedly motivates us to invest in the Bitcoin ecosystem.
The Lightning Network is well positioned to become the payment system of tomorrow, not only with Bitcoin, but with many other crypto assets transacting over the network.
Hence, we’re excited to support Stroom, a protocol that sources dormant bitcoin liquidity to be actively used to bolster the Lightning Network and at the same time provide competitive yields for liquidity providers.”
The funds raised will be used to expand the team and release the Liquid Staking Token on the Ethereum mainnet.