The Ethereum blockchain is designed to let protocols flourish as fully decentralized and permissionless systems, yet we do not see projects building with this focus in mind daily. It is becoming more clear that DeFi is needed globally, a strengthening market that will power the next evolution of our peer-to-peer financial system. However, with all systems, we must invest in the infrastructure that powers the underlying technology.
In September 2022, Ethereum’s consensus mechanism switched to proof-stake which will be a contributing factor to the scaling of the Ethereum Virtual Machine. ETH is now more secure, less energy intensive, and overall a better playground for new decentralized software.
The transition to proof-of-stake began with the Beacon Chain on December 1, 2020, and we are just weeks away from the Shanghai upgrade when 16 million ETH becomes liquid.
A decentralized system cannot scale to the likes of Visa or fintech infrastructure without a robust base layer. Liquid staking derivatives represent a completely new market in crypto that has been growing at a rapid pace since Ethereum’s consensus migration. Liquid staking protocols have become the fastest-growing DeFi sector over recent months and network effects are becoming clear.
By decentralizing proof of stake models, investors can convert their staked assets into fluid capital that lowers the opportunity cost of staking to secure the network. Ethereum needs its community to stake ETH to secure the distributed ledger from a global standpoint, however, users should never give up their power or custody of assets in return for the work provided to this decentralized blockchain.
These are only some of the problems that ether.fi is on a mission to solve, by being the first ever fully decentralized staking protocol that will create a business through its services layer (developer infrastructure built on top of its modules). Currently, $10.7B (42.7%) of staked ETH is participating in liquid derivatives which is less than 6% of the total ETH supply.
We, Chapter One, are thrilled to announce that we have co-led the seed round of ether.fi alongside our partners at North Island Ventures, with support from a multitude of strong funds such as Node Capital, Version One, Arrington Capital, Purpose Unlimited, and many influential angel investors.
At Its core, ether.fi will give the power back to the stakers and empower individuals to retain control of their keys while delegating their powers to node operators. The use of NFTs is very impelling to us as each validator will own and store their keys through a digital representation. This is just the start.
Once the protocol is operational and past its initial growth stage, there will be a services layer aimed at supercharging trustless node operations and becoming a foundational development layer for Web3 projects who need access to data and node infrastructure.
One step further, ether.fi will issue its liquid staking derivative token (”eETH”) which will allow all ETH stakers to utilize their staked positions across DeFi and build a monetary system around this composable and transferrable tokenized yield representation.
The ether.fi team is very impressive to us and we believe that the founding team is positioned very well to take on this growing ecosystem and build a community for all Ethereum participants to engage in.
Mike Silagadze was the founder and CEO of TopHat for over 10 years where he raised over $230M across 8 rounds, exiting in 2021 to a private equity firm. Mike and his previous VP of Sales at TopHat, Rok Kopp began a crypto-focused hedge fund called Gadze Finance which ultimately led them to the decision of creating a retail and institutional-focused liquid staking protocol.
This is a big week for ether.fi at ETH Denver, the world's largest Ethereum conference.
The protocol will launch on March 4th, 2023 (this Saturday), and expect to see a phased launch over the next several months.
We are at the forefront of DeFi and we expect to see a lot of innovation happening within liquid staking over the coming years. We believe that ether.fi will play a vital role in scaling Ethereum with its trustless while efficient strategy, and we could not be more excited to support the ether.fi community alongside its mission.
Time to build --
Jack Lipstone, Investment Partner at Chapter One
If you would like to attend their launch event in Denver, you can register here.
If you would like to join their Discord, you can join here.