Team Behind Hacked Beanstalk Stablecoin Raises $9M for Market Protocol

The Root Labs raise precedes Beanstalk’s “Replanting” relaunch strategy

article-image

Source: Shutterstock and Beanstalk

share

key takeaways

  • A “significant portion” of the seed funding went to support a Beanstalk recapitalization token to pay back investors affected by the hack
  • Root has been in talks with Polygon about using its zkEVM to validate transactions

Beanstalk, the Ethereum-native stablecoin hacked for $180 million in April, has yet to resume operations as it struggles to recapitalize. But investors seem to have let bygones be bygones — Beanstalk-built market protocol Root received $9 million in seed funding to develop a zero-fee decentralized marketplace.

Announced Tuesday, the funding round was led by Road Capital, Nima Capital, Soma Capital and Manifest Crypto.

Beanstalk suffered one of the year’s largest crypto hacks when a so-called flash loan temporarily gave a malicious user enough funds to control the protocol’s governance. The protocol has since plugged the governance loophole with multi-signature security, where five of nine validators chosen by Beanstalk developers must validate governance decisions.

Prior to this funding round, Beanstalk frequently highlighted that its growth to $100 million in market cap happened without venture capital funding. 

Parth Patel, founding member of Root Labs, emphasized the funding round was for Root, not for Beanstalk, though the development teams are intertwined.

“The opportunities to invest in Beanstalk are equitable for all,” Patel told Blockworks, adding the funding round was meant “to help provide liquidity on the markets we make on top of Beanstalk.”

Root’s fundraise comes weeks before Beanstalk’s “Replanting,” when the protocol will reopen after being paused since April. In the interim, Beanstalk has been running a “Barn Raise” recapitalization campaign, selling Fertilizer tokens that accrue interest based on Bean token mints. 

The Barn Raise will continue until all compromised investors are repaid, though only 15% of the $77 million hole has been filled so far, according to Patel.

Root said it spent a “significant portion” of its seed funding on Fertilizer, and it hopes to use the Bean yield to fund its treasury.

Root will initially only host a Fertilizer secondary market and Beanstalk interest rate swap market, though the developers hope to create markets for asset futures, non-fungible tokens (NFTs), and sports and political election betting.

Root hopes to attract users by allowing market participants to transact without fees. Patel said Root has been in talks with Polygon about using its forthcoming zkEVM to validate transactions. In a best-case scenario, a partnership with the scaling “holy grail” could significantly lower Root’s costs.

Root will make transactions free for users by either subsidizing the market itself or asking the Beanstalk DAO to foot the bill, Patel said.

The Root Protocol aims to go live by the end of the year. Beanstalk re-launches on Aug. 6.

Publius, the developer group behind the stablecoin, was circumspect about the ecosystem’s prospects in a June blog post.

“The thing about a system like Beanstalk is that it works until it doesn’t. You can never actually know if it works, only that it has worked so far,” Publius wrote.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Nillion_DeSci_Report_Template.png

Research

Nillion’s Monad Integration is poised to catalyze the next phase of DeSci’s evolution by eliminating key privacy bottlenecks. This synergy allows researchers, institutions, and DAOs to exchange sensitive data and insights securely while managing governance and payments onchain.

article-image

A community-driven, radically fair currency model is challenging Worldcoin’s biometric vision

article-image

Sponsored

DePIN powers a global network for AI computes, storage, streaming, and IPFS pinning service, enabling AI to be developed and deployed in a decentralized environment with greater transparency, control, and ownership

article-image

Bitcoin has broken its previous price record of $109,026 set on Jan. 19, 2025

article-image

The SEC filed the suit on Tuesday night, alleging that some Unicoin executives made “false and misleading statements” and violated securities laws

article-image

VanEck’s Pranav Kanade told Blockworks that it doesn’t plan to launch a similar fund for other ecosystems at this time