ClayStack secures $5.2 million seed round for liquid staking protocol; funding co-led by CoinFund and ParaFi Capital

A few months ago, Ethereum released Phase 0 of Ethereum 2.0 as it began its transition to a proof-of-stake consensus mechanism. People (also known as validators) stake their ETH on the Beacon Chain to secure the blockchain. These validators also earn staking rewards in proportion to the number of tokens they staked.

In effect, this allows validators and users to generate a passive income stream through staking their Ethereum, or running their own validator infrastructure to participate in the network consensus. However, self staking and exchange staking are now with their own drawbacks. A new protocol was later developed to address the limitations surrounding both self staking and exchange staking.

Dubbed as liquid staking, the protocol serves as an innovative alternative to locking up a user’s stake and so users can stake their tokens while keeping their assets liquid. Liquid staking also bypasses some of the risks associated with illiquidity, complexity, and centralization.

One of the leading liquid staking companies is ClayStack, the next-gen crypto staking platform allowing its users to stake their tokens and participate in the DeFi ecosystem at the same time. ClayStac enables users to unlock the power of staked digital assets in the form of liquid staking derivative tokens. ClayStack also provides a novel approach by enabling users to stake digital assets while avoiding liquidity lockup periods.

To further accelerate the growth of its platform, ClayStack announced today that it has raised $5.2 million in a seed funding round co-led by leading blockchain-focused investment firm, CoinFund, and ParaFi Capital. The round was joined by Coinbase Ventures, Spartan Group, HyperSphere, Defiance Capital, Hashed, Solana Foundation, The LAO, Genblock Capital, Ledger Prime, Animoca Brands, Republic Labs, and others. ClayStack said the fresh funding will be used to redefine the current staking ecosystem by building a robust platform that is secure and open for all.

Founded in 2020, the Singapore-based ClayStack is on a mission to redefine the staking landscape by helping users unlock the underlying value of their crypto assets. ClayStack is doing this by building a decentralized cross-chain liquid staking protocol. A user can effortlessly stake their crypto assets and maintain the liquidity to participate in the rich DeFi ecosystem.

With ClayStack, users can deposit digital assets in ClayStack’s smart contracts in exchange for an equivalent liquid derivative token minted on any of the supported blockchains. The assets are then delegated to professional proof-of-stake blockchain validators, and rewards are sent daily to derivative token holders. Liquid derivatives can be further utilized to earn additional yields by building composable money legos within the DeFi ecosystem.

“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,” said ClayStack Founder and CEO, Mohak Agarwal. “We appreciate being able to partner with CoinFund and Parafi Capital because they understand the technical side of our business and have taken a hands-on approach to bring our vision to life.”

“We believe ClayStack has developed an efficient solution that addresses the shortcomings of present-day liquid staking protocols,” said CoinFund Founder and CEO, Jake Brukhman. “We look forward to continuing our partnership with the ClayStack team to grow the company at scale and make a significant impact on the world of decentralized finance.”

“Liquid staking is becoming increasingly important in a multi-chain world. We were impressed by Mohak’s background and his hands-on expertise in staking,” said Santiago R. Santos, General Partner, ParaFi Capital. “We’re excited to partner with the Claystack team as they build the inter-chain superhighway.”