Ether.fi raises $5.3 million in funding to grow its decentralized liquid staking platform

Is crypto winter behind us? The recent uptick in funding activities in crypto and web3 startups appears to be suggesting so. Earlier today, we wrote about Impossible Cloud after the German Web3 startup raised $7.6M in seed funding to revolutionize decentralized cloud storage. Now, another blockchain startup just raised millions in funding.

Today, ether.fi, a non-custodial and decentralized liquid staking protocol, announced it has raised $5.3 million in a funding round led by North Island Ventures and Chapter One, with participation from Node Capital, Arrington Capital, Maelstrom, Version One Ventures, and Purpose Investments, among other investors. etherFi will use the funding proceeds to expand its team and pursue more partnerships.

ether.fi addresses existing ETH staking issues around centralization and composability. Instead of stakers in other delegated staking protocols being matched with a node operator who generates and holds the staking credentials, as a decentralized non-custodial staking solution, ether.fi allows stakers to retain control of their keys while delegating validator operations to a node operator.

ether.fi brings a new platform approach to the staking market. Minting an NFT representation of every validator generated through its protocol, to allow for the storage of validator metadata, ether.fi intends to unlock new use cases and long-term value creation for developers building on staking infrastructure.

In a statement, ether.fi said that Ethereum stakers depositing a minimum of 32 ETH will hold the NFT, which represents the economic interest in the validator. Once the NFT liquidity pool and the protocol treasury management contracts are implemented and launched, ether.fi will enable fractionalization via the launch of its eETH Liquid Staking Derivative token, for liquidity pool individual stakers with more than 0.1 ETH. Additionally, stakers and node operators will benefit from ether.fi’s decentralized protocol by providing them with economic exposure to revenue derived from services built on the staking infrastructure.

In a blog post, Node Capital said: “ether.fi is committed to upholding the decentralized principles of the cryptocurrency world. To ensure that the entire crypto community stays true to these principles, it’s imperative that we all continue to educate and emphasize the values and logic behind Web3 principles,”

ether.fi said its liquidity staking protocol is launching on March 4 at ETHDenver, following the successful Ethereum Shapella upgrade on the Sepolia testnet today.

Commenting on the launch, Mike Silagadze, Founder & CEO said:

“ether.fi was established as a direct remedy to common issues facing Liquid Staking Derivatives (LSDs) surrounding custody and risk. Thanks to our investors, we are excited to be launching the ether.fi platform as the LSD market enters a pivotal phase. The staking market serves as a gateway to a $10 billion ecosystem of blockchain products and services. Offering a new way to earn yield on crypto assets, the LSD market has increased significantly in recent months. The upcoming Ethereum Shanghai Upgrade is expected to further accelerate the market by enabling ETH staking withdrawals that can be used across DeFi, without giving up the staking yield.”