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Cosmos-Based Liquid Staking Protocol Stride Raises $6.7M


www.coindesk.com 04 August 2022 13:30, UTC
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Stride, a liquid staking protocol for the Cosmos blockchain ecosystem, raised by $6.7 million in a seed funding round led by North Island VC, Distributed Global and Pantera Capital. The funding news comes ahead of Stride’s mainnet launch on Friday.

“We’re primarily going to hire engineers to help build out the protocol,” Stride co-founder Vishal Talasan told CoinDesk in an interview. “We also want to hire one to two secruity people to full-time focus on how to make the chain really secure.”

How it works

Proof-of-stake blockchains maintain their integrity through staked or committed assets. LIquid staking allows users to earn yield on those locked assets through an equivalent amount of new tokens. Stride offers liquid staking, a network of proof-of-stake blockchains that interact with each other through the Inter-Blockchain Communication (IBC) protocol.

Read more: What is Cosmos?

Stride lets users stake tokens from any Cosmos chain in exchange for stTokens. The staked assets can earn an auto-compounding staking yield and can earn additional yield through actions like lending and providing liquidity. The stTokens can be sold or used in decentralized finance (DeFi) applications.

The “Tokens” part of stTokens is a placeholder for the staked asset. For example, Stride currently offers staking support for Cosmos Hub – one of the first chains launched on Cosmos – and the native ATOM token is exchanged for stATOM. Stride plans to add support for additional IBC-compatible assets by the end of the year.

Mitigating risks

Stride lets users redeem the stTokens for the original asset at any time. The ability helps mitigate risks of locked-in liquid staking, which can leave users stranded if the staked and original assets start to lose their peg, or 1:1 equivalence – an issue that hit the Ethereum staked sETH tokens in June due to market volatility.

Stride has been audited by blockchain security firms Certik and Oak Security.

“After launch, we plan to have additional audits given that liquid staking has a kind of unique place where it custodies or holds onto funds on behalf of users. It’s a high-profile target for hacks,” said Talasan.

The protocol also plans additional security features in the future, such as a rate-limiting feature that would temporarily halt activity in the event of suspicious fluctuations.

The Stride funding round comes during a crypto bear market that saw venture capital investments in the space drop 26% year-over-year in the first half of the year, though the number of deals increased, indicating a rise in smaller investments.

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