Aaron Ahmadi

<h3 class="wp-block-heading">A quick primer on proof-of-stake&nbsp;</h3>



<a href="https://blockworks.co/news/proof-of-stake-investors-guide">Proof-of-stake (PoS)</a> describes blockchains that rely on an internal token (‘stake’) to achieve network consensus. This is different from traditional proof-of-work blockchains, which rely on mining with computational power and use an external resource, such as energy, to achieve network consensus. 



Proof-of-stake uses a fraction of the energy cost that <a href="https://blockworks.co/news/what-is-proof-of-work">proof-of-work (PoW)</a> uses, enabling thriving DeFi ecosystems to operate with sustainable environmental usage.



By decoupling from an external source, proof-of-stake networks offer token holders “skin-in-the-game” incentives through staking. As the paradigm has grown popular in Web3 ecosystems, more user-friendly implementations have been created to simplify the process.&nbsp;



Most proof-of-stake networks support two methods of staking tokens:&nbsp;



1. Staking&nbsp;



2. Delegating&nbsp;Factors determining which to choose include a token holder’s level of technical expertise, the number of tokens they have available, and the effort they’re willing to invest.



<h3 class="wp-block-heading">What is staking?&nbsp;</h3>



Blockchain networks are decentralized. So, how does a proof-of-stake network remain secure and free from centralized control? Moreover, who decides which blocks get added to the ledger?&nbsp;



The answer to all of these is staking.&nbsp;



Staking rewards participation in proof-of-stake protocols. It aligns network security with individual incentives.



Stakers allocate their tokens to a validator node. Once tokens are staked, they are locked up and essentially untouchable for a period of time. The time required to unlock staked tokens depends on the network they are locked in. The time it takes for staked tokens to be accessible is variable and should be considered when staking.&nbsp;Successful validators have the right to bundle and process transactions into blocks on the blockchain. Their efforts are rewarded with the blockchain’s native crypto tokens.



<h3 class="wp-block-heading">The case for staking</h3>



Staking is an alternative to the traditional proof-of-work consensus model that networks such as Bitcoin use. It has become the default model for many blockchains, including <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, <a href="https://blockworks.co/tag/solana">Solana</a>, and <a href="https://blockworks.co/tag/avalanche">Avalanche</a>. While most benefits of staking apply to both staking and delegation, deciding between the two paths is straightforward, as each was created to appeal to a specific kind of participant. The setup, security, and maintenance of a validator node are not difficult for those with some degree of familiarity with the subject, so the technical barrier to entry isn’t typically high. This makes staking directly an attractive option for retail that’s interested in Web3 and wants to participate actively.



<h4 class="wp-block-heading">Should you choose staking or delegating?</h4>



At a high level, staking generally provides higher returns than delegation, but it requires significant additional effort and is a more active activity. Conversely, delegation generally provides lower yields but requires minimal effort and is a more passive activity.&nbsp;



Staking requires the token holder to set up a validator node and maintain the process. This is popular among individuals with relevant skills who prefer to manage their validators.&nbsp;



Delegation is a convenient, low-risk alternative for individuals or institutions looking for an easy process without logistical limitations such as node management or operation.&nbsp;



When delegating, a token holder ‘delegates’ their tokens to a trusted validator. This allows the token holder to take a share of the rewards without any of the setup and maintenance. The token holder always retains full control and ownership of their tokens, which are allocated to the validator for staking purposes.



Some delegation platforms also guarantee a node is completely owned by the delegator, just operated by the platform, to preserve the autonomy and influence of delegators over their stake.&nbsp;



Delegation is becoming a very popular option across blockchains, as it is more attractive for many users.&nbsp;



<h4 class="wp-block-heading">Energy cost</h4>



Compared to its predecessor, proof-of-stake has significantly lower energy costs. Instead of elaborate mining rigs and expensive GPUs, running a proof-of-stake node simply requires using your internet-connected computer — and staking pools are even less demanding.&nbsp;In addition to resource efficiency, proof-of-stake offers a range of use cases that aren’t compatible with a proof-of-work model, like sharding.



<h4 class="wp-block-heading">Scalability</h4>



Sharding form of database partitioning where large “blocks” are split into smaller, faster blocks. These shards eliminate the need for each node to process the transaction load of the entire network. 



Proof-of-work, by comparison, requires each node to process every ever-growing block. Shards work in parallel to maximize transactions per second—requiring less processing power and storage per node. Sharding allows the network to scale its transaction throughput by a multiple of the number of shards a chain uses.



<h4 class="wp-block-heading">Ease of operation</h4>



Running a blockchain node can be complicated for beginners, but proof-of-stake minimizes this complexity.&nbsp;



You don’t need banks of mining nodes, you only need to run a single validator. Plus, accessible solutions like Blockdaemon’s <a href="https://www.blockdaemon.com/nodes" target="_blank" rel="noreferrer noopener">node management platform</a> simplify things even further. You just need enough cryptocurrency and the right infrastructure partner to start securing rewards. 



<h4 class="wp-block-heading">Rewards</h4>



Staking lets token holders secure rewards on tokens that would otherwise be idle. Because of that, it is a popular investment model. 



While a number of factors can affect your expected reward, it’s common to gain 6% to 12% returns across DeFi protocols. This is advantageous for both finite-supply assets and for outpacing inflation on higher-issuance assets and fiat currencies.



<h4 class="wp-block-heading">Airdrop eligibility</h4>



Airdrops, or ‘stakedrops’, are a fun and lesser-known advantage of staking. New projects often airdrop tokens to validators on their chain. This means that stakers on popular chains are often the first beneficiaries of innovation.



<h4 class="wp-block-heading">Boost network security&nbsp;</h4>



The more holders that stake, the more secure the network becomes. With more validators processing transactions and checking other validators’ work, malicious actors and modified blocks can be dealt with increasingly efficiently.



<h4 class="wp-block-heading">Participate in governance</h4>



Depending on each blockchain’s specific implementation of PoS, validators hold varying degrees of network influence. Typically, there are consistent stake benchmarks that grant validators a specific amount of power. For example, to run one node on the coming ETH 2.0, one must stake 32 ETH per node.



 With staking pools, those nodes can be broken down into smaller portions split between all participants that pool their resources to operate nodes together.



<h3 class="wp-block-heading">How to start staking</h3>



The first step in becoming a validator is to decide which network to stake on. This decision depends on which assets and networks you believe will thrive in the long term and which align with your investment ethos.&nbsp;



Once decided, a prospective validator can set up a node, stake their tokens on their chosen blockchain and enjoy the benefits.&nbsp;



<h4 class="wp-block-heading">Delegating to a trusted validator</h4>



For institutions looking for scale or for users unfamiliar with the technical processes and security standards of staking, delegating stake to an established validator makes the process simple.&nbsp;



For example, Blockdaemon has validator nodes for more than 50 blockchains and supports quick and secure delegated staking on protocols like:&nbsp;



● Solana ($SOL) – High-performance blockchain that lets builders build and use dApps globally – <a href="https://solanabeach.io/validator/FQwewNXahV7MiZcLpY6p1xhUs2acVGQ3U5Xxc7FzV571" target="_blank" rel="noreferrer noopener">start staking</a>



● Cosmos ($ATOM) – Ecosystem of interoperable and sovereign blockchain apps and services – <a href="https://www.mintscan.io/cosmos/validators/cosmosvaloper10nzaaeh2kq28t3nqsh5m8kmyv90vx7ym5mpakx" target="_blank" rel="noreferrer noopener">start staking</a> 



● Livepeer ($LPT) – Platform for decentralized video streaming – <a href="https://explorer.livepeer.org/accounts/0x4712e01e944802613de3a0a6d23274e7e0243015/orchestrating" target="_blank" rel="noreferrer noopener">start staking</a> 



<h4 class="wp-block-heading">Using a liquid staking solution</h4>



Traditional staking locks a validator’s crypto in a smart contract that has a chain-dependent delay in unstake time. To ensure validators can unstake and access their crypto freely, liquid staking solutions have been developed by different protocols and companies.&nbsp;



Liquid staking allows delegated validators to shoulder the unstake wait times and grant users instant access to funds instead of making them wait. This way, users can enjoy both the yield-farming benefits and the flexibility of instant fund access.



<h4 class="wp-block-heading">Examples of Liquid Staking Protocols</h4>



<ol class="wp-block-list">
<li><a href="https://medium.com/osmosis-community-updates/osmosis-superfluid-staking-faq-a7b49797cb72" target="_blank" rel="noreferrer noopener">Osmosis Superfluid Staking</a> &#8211; “Reverse” liquid staking using tokens already circulating in DeFi protocols</li>



<li><a href="https://medium.com/acalanetwork/acala-launches-first-liquid-staking-product-for-polkadot-kusama-in-partnership-with-blockdaemon-5258546c2483" target="_blank" rel="noreferrer noopener">Acala Liquid Staking</a> on Polkadot &#8211; the first liquid staking product in the Polkadot ecosystem</li>



<li><a href="https://lido.fi/" target="_blank" rel="noreferrer noopener">Lido Liquid Staking</a> for Ethereum &amp; Solana &#8211; multi-platform liquidity for staked assets</li>



<li><a href="https://blockdaemon.com/liquid-staking/" target="_blank" rel="noreferrer noopener">Blockdaemon and StakeWise</a>&nbsp;Institutional Liquid Staking Solution &#8211; fully compliant institutional-grade staking on ETH2</li>
</ol>



<h3 class="wp-block-heading">Final Considerations</h3>



All investment models should be carefully weighed against one’s risk tolerance and ethical convictions, but staking has a few method-specific risks:



<h4 class="wp-block-heading">Slashing</h4>



The biggest risk to staking is slashing or losing your principal staking amount due to being pegged as a “bad actor” on the network. When a smart contract detects an attempt to manipulate the blockchain or network, it programmatically punishes perpetrators by forfeiting their staked amount.&nbsp;



Validators not attempting to maliciously change or exploit the network should have nothing to worry about, but with different expectations on each network, it can be tricky to remain compliant. Additionally, validators who fail to perform their functions (due to internet outages, for example) may also be at risk of slashing mechanisms, depending on the blockchain.&nbsp;



Slashing insurance has been introduced by delegated validators, like <a href="https://blockdaemon.com/" target="_blank" rel="noreferrer noopener">Blockdaemon’s 100% slashing insurance</a> guarantee, to resolve the risk of slashing.



<h4 class="wp-block-heading">Lockups</h4>



Lockups are the default staking mechanism for most blockchains. With some lockup periods taking days or weeks to withdraw from, fund accessibility is important to consider. Liquid staking solutions resolve this risk.



<h3 class="wp-block-heading">Further Reading</h3>



This Investor’s Guide was sponsored by Blockdaemon. It’s an easy-to-use, secure and scalable node management platform that secures over $10 billion in staked assets and supports more than 50 chains and protocols. A few include:



<ul class="wp-block-list">
<li><a href="https://solanabeach.io/validator/FQwewNXahV7MiZcLpY6p1xhUs2acVGQ3U5Xxc7FzV571" target="_blank" rel="noreferrer noopener">Solana ($SOL)</a> &#8211; High-performance blockchain that lets builders build and use dApps globally &#8211; <a href="https://solanabeach.io/validator/FQwewNXahV7MiZcLpY6p1xhUs2acVGQ3U5Xxc7FzV571" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://www.mintscan.io/cosmos/validators/cosmosvaloper10nzaaeh2kq28t3nqsh5m8kmyv90vx7ym5mpakx" target="_blank" rel="noreferrer noopener">Cosmos ($ATOM)</a> &#8211; Ecosystem of interoperable and sovereign blockchain apps and services &#8211; <a href="https://www.mintscan.io/cosmos/validators/cosmosvaloper10nzaaeh2kq28t3nqsh5m8kmyv90vx7ym5mpakx" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://explorer.livepeer.org/accounts/0x4712e01e944802613de3a0a6d23274e7e0243015/orchestrating" target="_blank" rel="noreferrer noopener">Livepeer ($LPT)</a> &#8211; Platform for decentralized video streaming &#8211; <a href="https://explorer.livepeer.org/accounts/0x4712e01e944802613de3a0a6d23274e7e0243015/orchestrating" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://network.thegraph.com/profile?id=0x9d2adf4bbbe140020baf520ed084f8a1f38f643c&amp;view=Indexing" target="_blank" rel="noreferrer noopener">The Graph ($GRT)</a> &#8211; Decentralized indexing protocol for organizing blockchain data and making it easily accessible with GraphQL &#8211; <a href="https://network.thegraph.com/profile?id=0x9d2adf4bbbe140020baf520ed084f8a1f38f643c&amp;view=Indexing" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://explorer.celo.org/address/0xCc4B2Bcbbc9639ef1E91F47acfD12Bd131525e79/celo" target="_blank" rel="noreferrer noopener">Celo ($CELO)</a> &#8211; Global payments infrastructure for mobile users &#8211; <a href="https://explorer.celo.org/address/0xCc4B2Bcbbc9639ef1E91F47acfD12Bd131525e79/celo" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://explorer.near.org/accounts/blockdaemon.poolv1.near" target="_blank" rel="noreferrer noopener">Near ($NEAR)</a> &#8211; Scalable, high-speed smart contract-capable blockchain &#8211; <a href="https://explorer.near.org/accounts/blockdaemon.poolv1.near" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://skale-analytics.skalelabs.com/#/validator/14" target="_blank" rel="noreferrer noopener">SKALE ($SKL)</a> &#8211; Decentralized network built on Ethereum designed to run dApps with high speeds and low costs &#8211; <a href="https://skale-analytics.skalelabs.com/#/validator/14" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://dashboard.audius.org/#/services/operator/0x091D2190e93A9C09f99dA05ec3F82ef5D8aa4a07" target="_blank" rel="noreferrer noopener">Audius ($AUDIO)</a> &#8211; Decentralized, community-owned, censorship-resistant music-sharing protocol and app &#8211; <a href="https://dashboard.audius.org/#/services/operator/0x091D2190e93A9C09f99dA05ec3F82ef5D8aa4a07" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://avascan.info/staking/validator/NodeID-6J3LY7ojkK7WCZzmArvxEozaESDMb42hX" target="_blank" rel="noreferrer noopener">Avalanche ($AVAX)</a> &#8211; High-speed and highly decentralized smart contract platform &#8211; <a href="https://avascan.info/staking/validator/NodeID-6J3LY7ojkK7WCZzmArvxEozaESDMb42hX" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://cardanoscan.io/pool/5eb362978a68a4780f4fd701b8f04f5aeb990eb80b1cb025d99e82a1" target="_blank" rel="noreferrer noopener">Cardano ($ADA)</a> &#8211; Low-energy Proof of Stake blockchain platform &#8211; <a href="https://cardanoscan.io/pool/5eb362978a68a4780f4fd701b8f04f5aeb990eb80b1cb025d99e82a1" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://explorer.elrond.com/providers/erd1qqqqqqqqqqqqqqqpqqqqqqqqqqqqqqqqqqqqqqqqqqqqqu8lllls8clacj" target="_blank" rel="noreferrer noopener">Elrond ($EGLD)</a> &#8211; Scalable and fast blockchain platform for dApps, enterprise applications and Web3 economy &#8211; <a href="https://explorer.elrond.com/providers/erd1qqqqqqqqqqqqqqqpqqqqqqqqqqqqqqqqqqqqqqqqqqqqqu8lllls8clacj" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://moonbeam.subscan.io/waiting/0x19A33caD2d311830550B41165d5faBf578347f3A" target="_blank" rel="noreferrer noopener">Moonbeam ($GLMR)</a> &#8211; Polkadot smart contract platform that makes it easy to build&nbsp; interoperable dApps &#8211; <a href="https://moonbeam.subscan.io/waiting/0x19A33caD2d311830550B41165d5faBf578347f3A" target="_blank" rel="noreferrer noopener">start staking</a></li>



<li><a href="https://explorer.provenance.io/validator/pbvaloper193mx3wsed089rnmuf0t9080qlefgyf60cehfz9" target="_blank" rel="noreferrer noopener">Provenance ($HASH)</a> &#8211; Open-source ecosystem for developing and deploying blockchain-based DeFi apps &#8211; <a href="https://explorer.provenance.io/validator/pbvaloper193mx3wsed089rnmuf0t9080qlefgyf60cehfz9" target="_blank" rel="noreferrer noopener">start staking</a></li>
</ul>



<hr class="wp-block-separator has-css-opacity"/>



This Investor&#8217;s Guide was sponsored by <a href="https://blockdaemon.com/" target="_blank" rel="noreferrer noopener">Blockdaemon</a>.



<hr class="wp-block-separator has-css-opacity"/>



<h3 class="wp-block-heading">Get educated. Check out <a href="https://cms.blockworks.co/the-investors-guide-to-bitcoin/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to AVAX</a>, <a href="https://cms.blockworks.co/the-investors-guide-to-music-nfts/">The Investor&#8217;s Guide to Music NFTs</a>, <a href="https://cms.blockworks.co/the-investors-guide-to-defi/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to DeFi 2.0</a> and <a href="https://cms.blockworks.co/the-investors-guide-to-the-metaverse/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to Avalanche</a>.</h3>



The content of this webpage is not investment advice and does not constitute any offer or solicitation to offer or recommendation of any company, product or idea. It is for general educational purposes only and does not take into account your individual needs, investment objectives or specific financial circumstances.

Bitcoin

The Investor’s Guide to Staking

On this episode of &#8220;<a href="https://youtu.be/MeKA74KOqls" target="_blank" rel="noreferrer noopener">On the Margin</a>,&#8221; Blockworks Co-founder Mike Ippolito is joined by Blockdaemon CEO and founder, Konstantin Richter, to discuss the rise and fall of crypto culture. When sentiment shifts in crypto markets, founders build conviction. Konstantin reminds us of previous cycles and shares why he has never been more optimistic on the future of crypto than right now.



Mike and Konstantin debate the pros and cons of centralization vs. decentralization, and they discuss the outlook for a multichain future.



They also cover:



<ul class="wp-block-list"><li>the founding and future of Blockdaemon</li><li>forming new systems of governance</li><li>PoW vs PoS</li><li>and so much more</li></ul>



Watch the full episode below! 👇



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&#8220;On the Margin&#8221; is a two-part show.&nbsp;Once a week, Mike interviews industry experts. At the end of the week, he is joined by a co-host where they break down the top crypto and macro stories. Episodes go live every Wednesday and Saturday morning.



Subscribe to &#8220;On the Margin&#8221; today on <a href="https://podcasts.apple.com/us/podcast/on-the-margin/id1558223079" target="_blank" rel="noreferrer noopener">Apple</a> or <a href="https://open.spotify.com/show/2yFL2nSsQucf1rzdEKbFZY" target="_blank" rel="noreferrer noopener">Spotify</a>, or watch episodes on <a href="https://youtube.com/playlist?list=PLvER9nHSRN3xVs_p-dl7L7K_ZgL6lSudu" target="_blank" rel="noreferrer noopener">YouTube</a>.



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Blockdaemon

Podcast: The Rise and Fall of Crypto Culture | Konstantin Richter

Ben Strack

<div id="highlights-block_622b5d8ed55dc" class="highlights">
 <ul>
 <li>Steve Sadin is set to help build FTX’s new unit focused on gamers to earn, buy, sell, lend, borrow and trade game assets</li>
 <li>Travelocity co-founder seeks to help HOKK Finance transform from a meme token to a DeFi ecosystem</li>
 </ul>
 
</div>



Crypto exchange FTX named Steve Sadin its head of gaming partnerships as the company seeks to build out its <a href="https://cms.blockworks.co/ftx-to-launch-gaming-unit-to-support-mainstream-crypto-adoption/" target="_blank" rel="noreferrer noopener">new gaming division</a>.



In the newly created role, Sadin will collaborate with major gaming brands to help developers launch tokens and own digital assets using FTX’s upcoming crypto-as-a-service platform. FTX Gaming will focus on offering developers the crypto infrastructure needed to enable players to earn, buy, sell, lend, borrow and trade game assets inside and outside the games.



Sadin most recently led WB Game’s Boston studio, where he launched the mobile real-time strategy title, Game of Thrones: Conquest.



London-based crypto custodian firm Copper.co appointed Sabrina Wilson as its new chief operating officer.



Wilson was most recently global co-head of Citi’s futures, over-the-counter clearing and foreign exchange prime brokerage business. She has also served in various roles at Goldman Sachs, JPMorgan and Deutsche Bank.



“We need individuals like Sabrina who have experience across world leading traditional financial institutions to align our operations even closer with the needs of accredited investors, so it can best contribute to the evolution of global financial infrastructure,” Copper.co CEO Dmitry Tokarev said in a statement.



Valour, an issuer of digital asset ETP, hired John Sjöberg as its chief information officer. The Switzerland-based firm, which offers products focused on Solana, Polkadot, Cardano, Uniswap and others, has said <a href="https://cms.blockworks.co/cardano-polkadot-etps-hit-frankfurt-stock-exchange/" target="_blank" rel="noreferrer noopener">it plans to roll out</a> more single-asset, crypto basket and thematic ETPs (exchange-traded products) this year.



Sjöberg joins from Swedish stock exchange Nordic Growth Market where he served as chief technology officer and head of market data.



Blockchain infrastructure company Blockdaemon acquired crypto API company Gem, welcoming its CEO, Micah Winkelspecht, and a team of engineers and product professionals.



“Our united teams and products will be a formidable combination to serve both institutional and retail users of cryptocurrency,” Winkelspecht said.



The acquisition follows Blockdaemon’s recent Series C funding round of $207 million, giving it a post-money valuation of $3.25 billion.



Crypto-focused asset management firm Hashdex hired Nicole Dyskant as its global head of legal and compliance.



Dyskant founded law firm Dyskant Advogados, which represented more than 100 asset managers and investment advisers clients. She also co-founded Compliasset, a regulatory compliance software offering for the Brazilian fund industry.



HOKK Finance appointed Lawrence Hutson as its chief technology officer as it seeks to transform from a meme token to a DeFi ecosystem. The company recently launched an Ethereum aggregator and a range of yield-earning non-fungible tokens (NFTs).



Hutson co-founded and worked as chief technology officer for travel website Travelocity before Expedia acquired it for $280 million in 2015.



Vincent Berk has joined Quantum Xchange as its chief revenue and strategy officer. He was formerly the chief technology officer and chief security architect for Riverbed Technologies.



Quantum Xchange CEO Eddy Zervigon said in a statement that Berk joins the company at the beginning of a multiyear cryptographic transition that will require nearly all organizations to replace their classic encryption with quantum-safe solutions.



Symbiont, a fintech company using blockchain technology, hired Silvia Davi as its chief marketing and communications officer and Tom DeJarnette as its chief people officer.



Davi has held leadership roles at firms such as Nasdaq, Edelman, Instinet and Marsh McLennan. She more recently worked for fintechs Thesys Technologies and 280 CapMarkets and serves on the advisory board of the Museum of American Finance.



DeJarnette is a former consultant for the Voluntary Employee Benefits Association and was also a lead tactical planner and ground force commander during multiple combat deployments to Afghanistan and Iraq.



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Latest in Crypto Hiring: FTX Adds Gaming Partnerships Lead

Sebastian Sinclair

<div id="highlights-block_61f1dfaf362f7" class="highlights">
 <ul>
 <li>Following a recent raise in September, Blockdaemon has raised a further $207 million in a Series C with a post-money valuation of $3.25 billion</li>
 <li>The fresh injection of capital will allow the firm to accelerate strategic acquisitions, continue to develop its product suite and to launch a DeFi fund, Blockdaemon said</li>
 </ul>
 
</div>



Following a successful close of its Series C funding round, blockchain infrastructure firm Blockdaemon <a href="https://www.businesswire.com/news/home/20220126005962/en/Blockdaemon-Raises-207-Million-Series-C-at-3.25B-Post-Money-Valuation" target="_blank" rel="noreferrer noopener">said Wednesday</a> it has secured $207 million in fresh capital with a post-money valuation of $3.25 billion.



The round, led by Sapphire and Tiger Global, adds to the firm&#8217;s recent Series B where it raised $155 million back in September. 



Despite headwinds in the crypto market, funding across major projects — including <a href="https://cms.blockworks.co/figment-closes-funding-round-at-1-4b-valuation/" target="_blank" rel="noreferrer noopener">crypto staking firm Figment&#8217;s</a> raise in December and The Sandbox parent <a href="https://cms.blockworks.co/the-sandbox-parent-animoca-brands-raises-359m-to-build-out-open-metaverse/" target="_blank" rel="noreferrer noopener">Animoca Brands</a>&#8216; raise this year — show an appetite still exists among savvy investors.



The fresh injection of capital will allow the firm to accelerate strategic acquisitions, continue to develop its product suite and to launch a decentralized finance (DeFi) fund, Blockdaemon said. 



To that end, the fund will reinvest earned assets &#8220;into institutional-grade DeFi offerings&#8221; with a focus on creating centralized financial solutions for its more regulatory conscious customers.



SoftBank Vision Fund 2, which participated in Blockdaemon&#8217;s Series B last year, also participated in the round alongside Boldstart Ventures, StepStone Group, Matrix Capital Management and Lerer Hippeau. 



Blockdaemon fashions itself as the&nbsp;&#8220;foundational layer to the blockchain industry&#8221; and provides support for the &#8220;institutional backbone&#8221; in staking and earning via nodes across more than 50 blockchains.



The firm also said it was partnering with open-source protocol StakeWise to build a liquid staking product on the Ethereum network.



“Over the last 12 months Blockdaemon has seen massive growth across all metrics and raised substantial capital to continue bridging institutions onto protocols,&#8221; said CEO and Founder of Blockdaemon Konstantin Richter in a statement.



&#8220;We remain committed to leading the way to overall network resilience and open source tooling development as this field of innovation continues to change the way value traverses the world.”



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Blockchain Infrastructure Firm BlockDaemon Raises $207M to Further Acquisitions, DeFi Fund

Jacquelyn Melinek

<div id="highlights-block_616dad085fbd7" class="highlights">
 <ul>
 <li>Richter said he expects the full merge of ETH 2.0 to happen during the first quarter of 2022</li>
 <li>“The large adoption we see in DeFi today is crypto-native people who are very literate in the crypto sphere&#8230;but he next big thing is the simple activation of DeFi products&#8221;</li>
 </ul>
 
</div>



Staking cryptocurrency is complicated and difficult for most people, but Blockdaemon CEO and Founder Konstantin Richter thinks there’s an evolution on the horizon around liquid staking.&nbsp;



“Within the next year, staking and lending will bring DeFi to the masses. It’ll be a big shift, and it’s going to accelerate adoption,” Richter said.&nbsp;



Richter expects the full merge of <a href="https://cms.blockworks.co/?s=Ethereum+2.0" target="_blank" rel="noreferrer noopener">Ethereum 2.0</a>, which is transitioning from proof-of-work (PoW) to proof-of-stake (PoS), to happen during the first quarter of 2022. He also predicts that the market size of crypto will expand three to four times due to the evolution around liquid staking, lending and DeFi. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I think we’ve seen enough progressive steps toward [Ethereum 2.0]&#8230;if it does come and does work, it’ll be the biggest mass adoption event of DeFi we’ve seen.”</blockquote>



Blockdaemon connects institutions to blockchains through its nodes. The company runs over 20,000 nodes and launches thousands of new nodes a month, Richter said. Blockdaemon recently added validation for SKALE (SKL) mobile staking, which allows users to <a href="https://blockdaemon.com/blog/skales-new-mobile-staking-experience/">stake SKL tokens</a> from within an app on their phone.



The node operator has grown 10 times as a company in the past year, launched 75% of their current nodes just in the last nine months and, by end of year, is expecting annual recurring revenue to be between $70 and $80 million, Richter said. 



In general, staking crypto involves users locking up a portion of their digital assets for an extended period of time, either by running validator software or delegating their tokens to a validator on the blockchain network. As a reward for helping to secure the network and participate in the processing of transactions, stakers can earn additional cryptocurrency — effectively a yield.&nbsp;



For example, users holding 32 ether (ETH) have the option to deposit their assets in the Ethereum 2.0 staking contract by running a staking node. Unlike the currently dominant version of Ethereum, which is secured by a mining process (similar to Bitcoin’s), Ethereum 2.0 will rely on <a href="https://ethereum.org/en/eth2/staking/">ether stakers</a> for its security — the validators who earn newly issued ETH in the process, currently around 6% annualized. But this requires a fair bit of technical know-how (and a considerable bankroll).



At the time of publication, there were over 7.9 million staked ETH (around $30 billion worth) securing the Beacon chain, which will eventually be merged with the current Ethereum Mainnet.



Richter thinks the complex process, which involves custodians, node operators, protocols and more, can be made more accessible. Liquid staking also enables would-be stakers to participate with a smaller amount of ether, and to avoid have it be locked until the merge is complete.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The large adoption we see in DeFi today is crypto-native people who are very literate in the crypto sphere,” Richter said. “But the next big thing is the simple activation of DeFi products,” he said. </blockquote>



Richter expects more seamless integrations of yield-bearing models aimed at customers who don’t want to jump through hoops to get it.&nbsp;



In the past few months, staking has become a hot topic and made headlines as both traditional finance and crypto businesses predict the industry to grow.



In July, senior analysts at JPMorgan Chase wrote in a report last week that the staking industry has a total revenue of $9 billion currently but estimates that staking revenue can grow to <a href="https://www.forbes.com/sites/emilymason/2021/07/01/jpmorgan-says-ethereum-upgrades-could-jumpstart-40-billion-staking-industry/?sh=3c1228991512">$40 billion</a> by 2025, following the Ethereum upgrades.

Blockdaemon CEO: Staking and Lending Will Make DeFi Mainstream

<div id="highlights-block_614a5ef36b22c" class="highlights">
 <ul>
 <li>Over the past year, Blockdaemon has increased its valuation over 70 times and had a 20 times increase in revenue, it said</li>
 <li>One of the largest industrial-scale Bitcoin mining companies, Genesis Digital Assets, plans to expand mining operations in the US and Nordic countries</li>
 </ul>
 
</div>



Blockchain infrastructure company Blockdaemon has raised $155 million in a Series B round led by SoftBank’s Vision Fund 2, the company said in an announcement Tuesday.&nbsp;



The new fundraising brings Blockdaemon’s total valuation to $1.255 billion, adding it to the list of companies that have reached unicorn status, which consists of having a valuation of $1 billion or greater.&nbsp;



Over the past year, Blockdaemon has increased its valuation over 70 times and had a 20 times increase in revenue. Additionally it has averaged more than $10 billion in staked assets across the over 40 protocols it supports, the company said.&nbsp;



Additional participants in this round were Matrix Capital Management, Sapphire Ventures, and Morgan Creek Digital. Pre-existing seed round investors who also increased their investments this round are Boldstart Ventures, Goldman Sachs, Greenspring Associates, CoinFund, Kenetic, Kraken Ventures, Borderless Capital and Lerer Hippeau.



“We are committed to a future of decentralized financial infrastructure and accelerating the ease of integration to bridge traditional banking to the crypto ecosystem. As regulations get further defined, a backer of the caliber of SoftBank and Masa’s experience is crucial,” said Konstantin Richter, CEO and founder of Blockdaemon, in a statement.



The capital will be used to expand the company’s presence in Singapore, Japan, the United Kingdom and Germany. Additionally, it will help the company make acquisitions to build out its tech stack.



“Blockdaemon will also expand into providing liquidity solutions for large scale institutional adoption, starting with ETH 2.0, where Blockdaemon is active and running over 12,000 validators. This makes Blockdaemon the largest operator in the ETH 2.0 space,” according to a company blog <a href="https://blockdaemon.com/blog/announcing-blockdaemons-155-million-series-b-funding/" target="_blank" rel="noreferrer noopener">post</a>. Since each validator requires 32 $ETH staked on Ethereum&#8217;s &#8220;beacon chain&#8221; (which is planned to merge with the current Ethereum mainnet in early 2022), that represents some 384,000 ether locked, worth over $1.1 billion as of today&#8217;s $ETH price. 



Tuesday was a busy day for SoftBank. Separately, the Japanese-based firm <a href="https://cms.blockworks.co/softbank-leads-680m-series-b-for-nft-soccer-platform-sorare/" target="_blank" rel="noreferrer noopener">also announced</a> it led the latest $680 million round for the NFT soccer platform Sorare. Paris-based Sorare will use the new funding to recruit new talent in Europe and the US, sign new partnerships, accelerate on mobile and marketing, and expand into new sports in 2022, beyond the world of soccer. 



In May, SoftBank tripled the size of its Vision Fund 2 to $30 billion, according to a previous statement by Navneet Govil, chief financial officer of SoftBank Investment Advisers. The fund is the company’s second massive venture capital-based portfolio.&nbsp;



<h3 class="wp-block-heading">Genesis Digital Assets New Funding&nbsp;</h3>



One of the largest industrial-scale bitcoin mining companies, Genesis Digital Assets, has announced a strategic raise of $431 million on Tuesday.&nbsp;



The round was led by Paradigm and included investments from NYDIG, Stoneridge, FTX, Ribbit, Electric Capital, Skybridge, and Kingsway Capital, who invested <a href="https://cms.blockworks.co/genesis-digital-assets-lolli-and-prime-trust-raise-new-capital/" target="_blank" rel="noreferrer noopener">$125 million</a> in a previous round earlier this year. Investors in Kingsway Capital include the family offices of Paul Tudor Jones, Paul Marshall, and Winter Capital, the company said.&nbsp;



In addition to the round, Matt Huang, co-founder and managing partner of Paradigm, joined the company’s board of directors.&nbsp;



The company has been around since 2013, just a few years after the crypto industry began. Since then it has built over 20 industrial-scale mining farms and brought over 300,000 miners online. To date, it has mined over $1 billion in bitcoin, Blockworks previously <a href="https://cms.blockworks.co/genesis-digital-assets-lolli-and-prime-trust-raise-new-capital/" target="_blank" rel="noreferrer noopener">reported</a>.&nbsp;



&#8220;As we work towards our goal of bringing 1.4 gigawatts online by 2023, the capital raised from this round will be used to expand our bitcoin mining operations in locations where clean energy is easily accessible,” which includes the US and Nordic countries, Marco Streng, CEO and co-founder of Genesis Digital Assets, said.&nbsp;



As of September, the company’s data center capacity was over 170 megawatts, which equates to a total hashrate of more than 3.3 exahashes or about 2.4% of the global bitcoin mining hashrate, it said.&nbsp;



During the next 12 months, the Bitcoin mining company expects another 8.6 exahashes to go online and by the end of 2023 it anticipates reaching a capacity of over 1.4 gigawatts.



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