March 27, 2024
Stroom Network Bridges Bitcoin and Ethereum with Liquid Staking
Bitcoin News

Stroom Network Bridges Bitcoin and Ethereum with Liquid Staking

With the help of Mission Street, Ankr’s venture arm, and an oversubscribed early fundraising round, Berlin-based cryptocurrency investment firm Greenfield raised $3.5 million for Stroom Network, a liquid staking solution for Bitcoin’s Lightning Network.

Along with a number of other venture capital firms and angel investors, Lemniscap, No Limit Holdings, and Cogitent Ventures participated in the investment round.

Stroom Network gives users the option to securely use their Bitcoin (BTC) funds simultaneously on the Lightning Network (LN) and Ethereum by implementing the principles of liquid staking—the method of staking tokens to a network and getting a different token expressing that staked position in return.

Stroom, which has eight members as of right now, intends to use the money raised to grow the team even more and introduce the Liquid Staking Token to the Ethereum mainnet.

The protocol generates its own 1:1 version of wrapped BTC (wBTC), known as lnBTC, as well as the routing fees that are assigned to BTC deposits inside the Lightning Network.

Users can take advantage of yield chances on Ethereum with this configuration, just like they would with wBTC.

“Despite having its limitations, Lightning Network is still the most promising payment technology out there. It doesn’t have any competitors within the crypto space and could effectively compete with traditional payment rails,” stated Slava Zhygulin, the CTO of Stroom.

A shortage of liquidity is one of Lightning’s biggest problems. In order for a transaction to take place, there must be enough liquidity in the payment channels, and insufficient liquidity might cause delays or failed transactions.

Zhygulin claims that Stroom “holds the key to resolving this issue once and for all.”

“We are confident that a well-managed liquidity allocation will drive adoption and result in higher yields. Our projections suggest a potential increase to a sustainable 6% APY in the near future,” stated Zhygulin.

Stroom’s objective, according to Zhygulin, is to make earning Lightning routing fees easier while simultaneously enhancing the scalability of Bitcoin.

This is accomplished by simplifying the intricate technical details involved in running a Lightning node and integrating concepts from the world of decentralized finance (DeFi).

He claims that these mechanisms might persuade Ethereum-savvy Bitcoin consumers to offer liquidity to the Lightning Network while maintaining their Ethereum platform income.

Additionally, Stroom is adopting a DAO-like structure with a multi-party signature computation process to control the liquidity money allotted to payment channels.

According to Stroom, this structure will be able to create and adjust user incentives, improve the protocol, create and operate a treasury, and take part in decision-making processes connected to using fees earned.

Image: Freepik

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