Stroom Networks Secures $3.5M to Revolutionize Lightning Network with Liquid Staking

• Stroom Network secures $3.5 million in seed funding to enhance Bitcoin’s Lightning Network through liquid staking.
• Liquid staking offers a solution to liquidity challenges, allowing users to diversify their assets on both Lightning Network and Ethereum.

Stroom Network, a pioneer in liquid staking for Bitcoin’s Lightning Network, has successfully secured $3.5 million in an oversubscribed seed funding round. Spearheaded by Berlin’s crypto-focused investment firm Greenfield and supported by Mission Street (Ankr’s venture arm), the funding involved participation from venture capital firms like Lemniscap, No Limit Holdings, Cogitent Ventures, as well as angel investors.

The concept of liquid staking introduces a creative solution to a complex issue – it allows network participants to stake their tokens and receive fungible tokens in return, increasing the liquidity of their initial staked assets. Stroom Network harnesses this innovative mechanism, empowering users to utilize their Bitcoin capital on both the Lightning Network and Ethereum, expanding their utility and yield opportunities. The proceeds from the funding round will facilitate team expansion and the launch of the Liquid Staking Token on Ethereum’s mainnet.

Addressing Liquidity and Scalability Challenges

Bitcoin’s Lightning Network, a Layer 2 scaling solution, has faced an enduring challenge: liquidity constraints. Adequate liquidity is essential for seamless transaction routing, and its scarcity can result in delayed or failed transfers. Stroom Network’s CTO, Slava Zhygulin, holds an optimistic view, believing that their liquid staking solution represents a groundbreaking approach to resolving this longstanding issue.

The team aims to efficiently manage liquidity allocation, with projections indicating the potential to boost the network’s Annual Percentage Yield (APY) to a sustainable 6%. By simplifying the process of earning Lightning routing fees, making it reminiscent of DeFi protocols, Stroom intends to attract Bitcoin users who are also Ethereum enthusiasts, thus alleviating liquidity challenges.

Stroom Network also proposes a governance model through a Decentralized Autonomous Organization (DAO)-like framework, enabled by a multi-signature computation mechanism. This system would oversee liquidity allocation in payment channels, facilitate protocol upgrades, manage the treasury, and make collective decisions regarding fee distribution. With this robust governance approach, Stroom aims to address Lightning Network’s limitations while enhancing its competitiveness against traditional payment infrastructures.