Root raises $9 million to build on top of hacked stablecoin issuer Beanstalk
Root Protocol, an on-chain marketplace for financial, prediction and commerce markets, today announced a $9 million equity round led by Road Capital.
According to a release, Nima Capital, Soma Capital and Manifest Crypto also participated in the round. The valuation was not disclosed.
Root will be built on top of Beanstalk, a stablecoin protocol that was hacked in April this year through a governance exploit. Around $182 million in various crypto assets were lost in the attack. The Decentralized Autonomous Organization (DAO) that oversees the protocol is currently trying to raise $77 million from private investors to revive the project.
"It's obviously a very unfortunate situation," said Parth Patel, a founding member of Root, in an interview with The Block. "I think there's still a lot of learnings when it comes to on-chain governance, it's still a long way away from where it should be."
Beanstalk works by using loans to back the value of its native stablecoin Bean. Investors can buy Beanstalk debt assets known as "pods" that function like time-vested bonds, paying out an annual interest rate.
Root will expand on this offering by aiming to develop markets such as interest rate swaps on Beanstalk yields and a sports betting platform. The funds from the round will primarily be used to directly invest in Beanstalk, as well as to help audit the protocol. Root is hoping to launch in October.
As a "credit-based stablecoin," Bean is not meant to maintain a hard peg and is supposed to oscillate above and below the $1 mark, according to Patel.
Given the distinction, Patel said he would prefer not to use the term stablecoin at all.
"I think I would call it a non-convertible low volatility token — algorithmic stablecoin is a trigger word these days and I don't blame people," he added.
Back to the list