Quick take:
- The investment comes after EigenLayer’s $50 million fundraising last March led by Blockchain Capital.
- EigenLayer uses a points system for those who stake on the platform and have no plans to launch a native token.
- Founder Sreeram Kannan believes the platform is not affected by the SEC’s increasing scrutiny of staking platforms.
EigenLayer has received a $100 million investment from Andreessen Horowitz (A16z). The Ethereum restaking protocol enables Web3 developers building on top of Ethereum to leverage the blockchain’s security for their networks.
Speaking on the Big Take podcast, which is broadcast through iHeart Radio, Apple Podcasts, Spotify and the Bloomberg Terminal, EigenLayer co-founder Sreeram Kannan explained why his company’s platform operates slightly differently from traditional staking protocols.
“The idea is that when you stake on Ethereum, you are promising that you’re going to run the Ethereum network nodes correctly,” Kannan said in an interview. “With restaking, you are taking the same Ether and making additional promises that you will also validate other networks correctly.”
This announcement comes on the back of EigenLayer’s $50 million fundraising in March 2023, which was led by Blockchain Capital.
Although most staking protocols have issued their own tokens, EigenLayer maintains it does not plan to launch a native token, and will instead continue to use its paint-based system for those who stake on the platform.
Most staking platforms have come under scrutiny from the SEC chair Gary Gensler who believes the protocols are breaking SEC rules by staking tokens. However, according to Kannan, his company is “essentially offering a marketplace for those looking to restake,” and does not conduct the actual staking process, which is being scrutinised by regulators.
“If Gary Gensler understood what we’re building, he would like us a lot,” he said. According to EigenLayer, “users that stake $ETH can opt-in to EigenLayer smart contracts to restake their $ETH and extend cryptoeconomic security to additional applications on the network,” through a primitive the company describes as the “rehypothetication of $ETH on the consensus layer.”
To A16z, this investment demonstrates the venture capital firm’s commitment to investing in crypto. The firm raised $4.5 billion in 2022 for crypto projects, and despite a relatively bear crypto market, it has continued to invest.
A16z General Partner, Ali Yahya thinks that EigenLayer will play an important part in the advancement of the crypto industry. “It will enable all sorts of new kinds of applications to be built,” he said. “People will stake capital in order to gain rewards from new services that get spun up on top of EigenLayer.”
****
Stay up to date:
Subscribe to our newsletter using this link – we won’t spam!
