Puffer Finance Teams Up with Ethereum Foundation to Develop Base Rollups, Tackling Liquidity Fragmentation
Summary:
Puffer Finance, an Ethereum-based liquid staking derivatives project, is partnering with the Ethereum Foundation to co-develop base rollups. This move aims to address the fragmentation of liquidity in the Ethereum ecosystem. Co-founder, Amir Fourouzani, discussed how base rollups will improve interoperability between different 'super chains'. The company's current technology allows Ethereum validators to decrease their capital from 32 ETH to just 1 Ether. After a successful early test phase in February, Puffer Finance surpassed a total value locked of $1.7 billion.
Puffer Finance, an Ethereum-based liquid staking derivatives project, is collaborating with the Ethereum Foundation. The goal of their partnership is to co-develop base rollups, following Puffer Finance securing an impressive $18 million in a Series A financing round to introduce its mainnet. Rollups are upscaling methods that lessen the workload of basic layer blockchains by processing transactions off-chain, then assembling one final transaction to the base layer.
During a discussion with Cointelegraph, Amir Fourouzani, co-founder of Puffer Finance addressed the current market demand. He spoke of the prominent issue in the Ethereum ecosystem known as liquidity fragmentation. He stated that certain projects, such as Optimism, Arbitrum, and ZKSync, create their own 'super chains', which unfortunately leads to isolated liquidity pools.
He further stated that the solution for this issue requires base-sequencing and base rollups, to ensure communicability and interoperability between these chains. He announced that Puffer Finance has discovered a method to coordinate pre-confirmations on Ethereum layers, keeping validators decentralized, without the need for a complete Ethereum Improvement Proposal.
He emphasized that this discovery has been years in the making, and will be the primary area of research for the Ethereum Foundation. The foundation aims to move forward with this revelation with the help of leaders such as Justin Drake, among others.
Fourouzani underlined the potential impact of base rollups in DeFi, foreseeing a future where each company has its own host AppChain. He used the example of Aave and Uniswap, demonstrating how an event in Aave can immediately impact Uniswap's AppChain. In this scenario, neither Aave nor Uniswap would need to go through a governance token or process.
Another vital benefit Fourouzani highlighted is that of native yields in this interoperable base app chain ecosystem. He mentioned that many users would prefer their tokens generate yield effortlessly in their wallets, rather than just storing it on the base chain.
As reported by DefiLlama, Puffer Finance surpassed a total value locked (TVL) of $1.7 billion shortly after its preliminary testing phase in February. So far, the protocol has raised $23.5 million in venture capital funding.
Puffer Finance's existing LSD technology allows Ethereum validators to lessen their capital to only 1 Ether, a significant decrease from the previous 32 ETH required for individual stakeholders. Additionally, users who stake Ether via Puffer receive Puffer liquid restaking tokens (nLRTs), which can be employed to farm yields in other DeFi protocols at the same time as their Ethereum staking rewards.
Published At
6/27/2024 3:40:00 PM
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