Puffer Finance secures $18M in funding as liquid staking market heats up

Puffer Finance, an Ethereum-based liquid staking project built on the EigenLayer restaking protocol, has raised $18 million in a Series A funding round led by Brevan Howard Digital and Electric Capital. The funds will be used to launch the project’s mainnet, marking a significant milestone in the development of Puffer Finance’s liquid staking solution.

The funding round saw participation from prominent investors such as Coinbase Ventures, Kraken Ventures, Lemniscap, Franklin Templeton, Fidelity, Mechanism, Lightspeed Faction, Consensys, Animoca, and GSR, among others. In addition to the Series A round, Puffer Finance also secured a strategic investment from Binance Labs, further enhancing its position within the liquid restaking ecosystem.

“Following this round, Puffer secured a strategic investment from Binance Labs, enhancing its position within the Liquid Restaking ecosystem,” Puffer Finance stated in its announcement.

The protocol also hinted at forthcoming “technological advancements” after its mainnet launch, although the specifics of these updates were not discussed.

Puffer Finance’s technology enables Ethereum validators to reduce their capital requirement from the standard 32 ETH to just 1 ETH, significantly lowering the barrier to entry for individual stakers. Moreover, users who stake Ether through Puffer Finance receive Puffer liquid restaking tokens (nLRTs), which can be used to farm yields in other decentralized finance (DeFi) protocols simultaneously with their Ethereum staking rewards.

Liquid staking, a process that allows users to stake their assets while maintaining liquidity through tradable ERC-20 tokens, has gained popularity among Ethereum holders following the network’s transition to proof-of-stake (PoS) consensus. Puffer Finance aims to make liquid staking more accessible and efficient for Ethereum users.

Data from DeFiLlama indicates that Puffer Finance’s total value locked (TVL) surpassed $1.2 billion shortly after its early test phase in February, demonstrating strong demand for its liquid staking solution. To date, the protocol has raised a total of $23.5 million in venture capital funding.

Amir Forouzani, a core contributor at Puffer Labs, emphasized the project’s goal, stating, “We aim to significantly reduce the barriers for home validators to participate, while delivering the most advanced liquid restaking protocol.”

The Ethereum liquid staking market has experienced tremendous growth, with a TVL exceeding $51 billion, largely driven by Lido Finance, the largest liquid staking protocol on Ethereum. As of March 2024, Lido Finance has a TVL of over $11 billion, with more than 9.78 million ETH staked on the platform.

Liquid staking offers several benefits to Ethereum users, including diversification of earnings, risk mitigation, improved capital efficiency, enhanced network security and decentralization, and the ability to use staked assets in DeFi applications. By enabling more participants to stake their ETH, projects like Puffer Finance contribute to the overall health and resilience of the Ethereum network.