Stroom Network Realizes $3.5M in Seed Funding, Targets Liquid Staking to Bitcoin Lightning Network
The team behind Stroom Network claims that introducing liquid staking to Bitcoin will address the liquidity issues of Lightning Network.
Stroom Network, Lightning Network’s liquid staking project, has generated $.3.5M in an oversubscribed seed funding round run by Greenfield, a crypto investment company founded in Berlin. Further, the round acquired tactical backing from Mission Street, Ankr’s venture arm.
No Limit Holdings, Lemniscap, Cogitent Ventures, other venture capital companies, and angel investors were part of the funding.
Concurrent Liquid Staking Mechanism on Lightning Network and Ethereum
The liquid staking mechanism entails the process of staking tokens to a platform and, in turn, acquiring a different token that represents the staked position. It has enabled Stroom Network to allow users to trustlessly utilize their Bitcoin capital concurrently on Ethereum and Lightning Network (LN).
Stroom has eight members and intends to utilize the funds acquired to improve the team and introduce the Liquid Staking Token on the Ethereum mainnet. This protocol generates routing fees by efficiently allocating Bitcoin deposits within the Lightning Network. Concurrently, it generates its wrapped BTC (wBTC) equivalent, referred to as InBTC, on a 1:1 basis.
The system allows users to leverage yield opportunities on Ethereum. This compares to how they would if wBTC was utilized. Slava Zhygulin, Stroom’s CTO, revealed to Decrypt that it lacks competitors within the crypto environment and might successfully compete with the traditional payment rails.
Resolving Liquidity Issues Hindering Lightning
The absence of liquidity is a significant problem being encountered by Lighting. The occurrence of a transition relies on adequate liquidity in the payment platforms, meaning that inadequate liquidity may result in unsuccessful or late transactions.
Zhygulin claims that Stroom possesses the key to addressing the matter conclusively. He assured that a properly managed liquidity provision would enhance adoption and lead to improved yields. Further, he claimed that according to their forecasts, a likely rise to a sustainable 6 percent annual percentage yield (APY) shortly was possible.
Zhygulin also claimed that Stroom intended to ease the procedure of earning Lightning routing fees while also playing a role in the scalability of Bitcoin. This can be achieved by restructuring the technical complexities of a Lightning node’s management and implementing mechanics from decentralized finance (DeFi).
Stroom Deploying DAO-Structure and Multiparty Signature Computation
Stroom believes in the mechanics’ ability to motivate Bitcoin users acquainted with Ethereum to offer liquidity to the Lightning Network while concurrently preserving their yield on the Ethereum network. Further, Stroom also uses a multi-party signature computation mechanism to shift to a DAO-resembling model. This will aid in managing funds allotted as payment channels in the form of liquidity.
Stroom believes that this framework will be able to create and alter user incentives, improve the protocol, and develop a treasury. In addition, it will involve decision-making processes linked to the use of collected fees.
