Cryptocurrency staking protocol ClayStack has secured $5.2 million in seed funding from several prominent blockchain investor funds, putting it on course to introduce new innovations in staking later this year.
The seed round was co-led by CoinFund and ParaFi Capital, with around a dozen other venture funds also participating, ClayStack announced Tuesday. Most notably, Coinbase Ventures, Solana Foundation, Hashed and Spartan Group were among the investors.
On an individual level, some of the seed investors who participated in the round include Meltem Demirores of CoinShares, Aave founder Stani Kulechov, Solana co-founder Raj Gokal and Sandeep Naiwal, the co-founder of Polygon.
Staking allows investors to earn passive income or interest on their crypto by locking up their holdings for a specific period. In the process, stakers have the opportunity to participate in network governance and other consensus-taking processes.
The ClayStack protocol promotes a method called liquid staking, which allows users to stake cryptocurrencies without the liquidity lockup that’s characteristic of many networks. Santiago R. Santos, a general partner at ParaFi Capital, said “liquid staking is becoming increasingly important in a multi-chain world.”
ClayStack founder and CEO Mohak Agarwal noted that the need for liquid staking is becoming more apparent as the market for decentralized finance, or DeFi, continues to grow:
“The merging of DeFi and staking is a paradigm shift in cryptocurrency and this investment round will enable us to innovate from a position of strength as we head into our alpha launch.”
ClayStack is planning to release the alpha version of its staking protocol in the third quarter of this year.
Venture funds have poured billions of dollars into budding crypto startups this year, signaling heightened investor interest in transformative blockchain technology. One of the most prominent blockchain venture plays has come from Andreessen Horowitz, which recently launched a $2.2 billion fund earmarked for crypto startups.