Stroom Network, a liquid staking project for Bitcoin’s Lightning Network, has raised $3.5 million in an oversubscribed seed funding round.
The funding round was led by the Berlin-based crypto investment from Greenfield and had the support of Mission Street, which is a venture arm of Ankr. At the same time, the funding round was also joined by Lemniscap, No Limit Holdings, Cogitent Ventures, as well as numerous other venture capital firms and angel investors. The aim of the funding is to launch liquid staking services on the lightning network, and it also includes releasing a corresponding Ethereum-based wrapped token, InBTC.
Through the seamless application of the liquid staking mechanism, the Stroom Network would offer users the ability to use their Bitcoin capital simultaneously on both the lightning network and Ethereum. The lightning network is a layer 2 solution of multi-directional payment channels built on the Bitcoin blockchain and is designed to enable swift and low-cost transactions. Liquid staking protocols often make it possible for users to earn staking rewards on an underlying proof-of-stake blockchain asset.
Stroom Commits to Solving the Liquidity Problems
The protocol effectively and efficiently assigns BTC deposits within the lightning network to generate routing fees, generating InBTC simultaneously on a 1:1 basis. This setup would enable users to pursue yield opportunities on Ethereum as well, which would reflect similarity with the use of wBTC. The CTO of Stroom, Slava Zhygulin, stated that the lightning network is undoubtedly the most promising payment technology despite its limitations. The network still does not have any competitors in the crypto ecosystem and could effectively compete with the traditional payment systems.
One of the major challenges the lightning network has been facing since its launch is the lack of liquidity. There has to be sufficient liquidity present in the payment channels for a certain transaction to occur. In the opposite case, limited liquidity can result in either delayed or failed transactions.
The Stroom Network considers it its goal to drastically simplify the process of earning lightning token fees and contributing to the overall scalability of Bitcoin. This feat would be achieved by streamlining all technical complexities associated with the management of the technical node and introducing several mechanics from the DeFi ecosystem. These mechanics would encourage users to provide liquidity to the lightning network while still looking after their yield on Ethereum.