Crypto funding: A $60M week for liquid stakers and Web3 security providers

This week, 11 crypto startups collectively raised nearly $60 million, with the majority focusing on liquid staking or smart contract security.

The top capital getter this week was liquid staking derivatives solution Helio Protocol, which secured $10 million from Binance Labs. 

The protocol has a combined $300 million in total value locked, according to Binance Labs, primarily engaging in over-collateralized lending of its decentralized stablecoin HAY. 

It also offers “multi-chain [staking-as-a-service] and [liquid staking derivatives] services,” both of which are run through Synclub, a BNB validator that Helio merged with in July.

The merger will lead to the incorporation of additional liquid staking tokens as collateral on Helio. Synclub already allows native staking with polkadot (DOT), cosmos (ATOM), tron (TRX) and Binance Coin (BNB).

Binance co-founder Yi He said that Binance Labs is committed to supporting DeFi projects like this to advance the space.

“We have seen tremendous potential in the LSDfi sector, which plays a crucial role in driving the overall growth of the DeFi ecosystem,” she said in a statement. 

Puffer Finance is another startup involved in the liquid staking realm, raising $5.5 million in a seed round co-led by Lightspeed Faction and Lemniscap. Another major investor was the crypto arm of Brevan Howard, a large asset manager.

The Ethereum Shapella upgrade, which updated the network to a proof-of-stake model, was a major factor in Puffer’s impetus to raise money for its product lineup, according to a Medium post. 

Puffer is particularly worried about centralized liquid staking providers outpacing decentralized ones. 

To address that fear, it wants to “​​increase the economic viability of home stakers” by protecting them from slashable offenses with its Secure-Signer tool. 

Additionally, home stakers can join the Ethereum network through a Puffer’s pool with as little as 2 ether (ETH), according to its website. Solo stakers normally need to deposit 32 ETH to participate in the network. 

The founders of Puffer, Amir Forouzani and Jason Vranek, released a joint statement on the funding news, saying they are trying to lower the barriers to entry for staking. 

“Anyone can run a Puffer Node from their home to operate Web3 infrastructure and play a pivotal role in shaping a Web3 that is resilient and censorship-resistant,” the duo said.

A focus on smart contract security

Alchemy’s developer report for the second quarter of 2023 found that builders are most interested in building solutions that tackle smart contract security. 

The week after that report dropped, three startups looking to protect smart contracts raised multimillion-dollar rounds. 

One was Cube3.ai, which locked down $8.2 million in seed funding to boost its three blockchain security products. They are called Detect, Protect and Manage, all of which have free trials. 

These products, each having a slightly different purpose, combine together to monitor and, if necessary, block malicious transactions on the blockchain, according to a company blog. 

Spearbit was another security-minded startup to raise money. The firm raised $7 million to build Cantina, an open marketplace for Web3 security auditors. 

Framework Ventures led the round, and the money will also go toward hiring more software engineers at Spearbit, TechCrunch reported Thursday.

The first two items on the agenda, now that the firm has increased its cash reserves, are to assist solo auditors in starting smart contract audits and to establish a “guild” platform for specialized audit shops.

SphereX is the third and final company that fundraised with security top of mind.

It raised $8.2 million in seed funding at a $24 million valuation, with investors including Aleph, Pillar VC, Fabric Ventures, Mensch Capital Partners and other angel investors.

The company’s flagship product is SphereX Protect, a security solution for smart contracts that prevents hackers from exploiting vulnerabilities in the code.

Other notable fundraises

• Bitcoin wallet Xverse brought in $5 million from Jump Crypto among others to develop its Bitcoin scaling solutions.
• Binance Labs invested $5 million into Curve Finance’s native token CRV to support deployment to the BNB chain. 
• Fxhash, a Tezos-based platform for collecting NFT generative art, also raised $5 million in a seed round.

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