blockworks.co
Crypto exchange Coinbase’s cloud division is working with Figment to support the founders and operators building what it calls the first enterprise-grade liquid staking protocol.
The news was revealed Tuesday during Blockworks’ Permissionless event in West Palm Beach. Software development firm Alluvial is building the new protocol, which the company ultimately intends to be governed by a decentralized autonomous organization (DAO).
Liquid staking on Ethereum has grown from less than 1% market share in January 2021 to more than 30%, according to Dune Analytics data.
“There has been growing demand amongst institutions and enterprises that want to access liquid staking but haven’t had a solution that meets compliance and security standards,” Coinbase Cloud Senior Manager Mara Schmiedt told Blockworks. “With Alluvial, we are enabling that access and are focused on unlocking the next wave of adoption and financial innovation in the space.”
Coinbase acquired blockchain infrastructure platform Bison Trails in January 2021 to become the foundational team and platform of Coinbase Cloud. The business offers Web3 application programming interfaces (APIs), services, and infrastructure for software builders.
Figment is focused on offering staking and application layer solutions for token holders and developers building on Web3 technology. The firm raised $110 million in a Series C round in December, bringing its post-money valuation to $1.4 billion.
Alluvial is led by Matt Leisinger, former head of liquid staking products at Figment; Nicolas Maurice, the former chief technology officer of staking-as-a-service platform Kiln; and Mike Taormina, former head of institutional business at the Index Cooperative.
Liquidity is key to unlock the next chapter of financial innovation in Web3, the companies said.
The non-custodial protocol will allow users to stake their tokens and receive receipt tokens that prove ownership of the staked tokens. They can then use those receipt tokens to participate in the broader Web3 economy.
It will require all contributors to enable embedded know your customer (KYC) and anti-money laundering (AML) checks.
Coinbase Cloud and Figment plan to perform staking services on the network and run validators with clients across regions and cloud providers. Other security-focused validator operators will be added to the protocol over time.