Bitcoin
Bitcoin Could Get Ethereum-Style Revival as Startup Lombard Raises $16 Million
“Restaking” is all the rage in Ethereum blockchain circles. It allows users to earn interest by leveraging their staked assets to help secure other blockchain applications. Even developers in other ecosystems, such as Solana, are trying to replicate Ethereum’s resurgence in popularity.
So it was only a matter of time before the recovery reached the most valuable blockchain: Bitcoin.
In partnership with Bitcoin staking protocol Babylon, startup Lombard has raised $16 million to develop Bitcoin-based restaking. In addition to capitalizing on the restaking hype, Lombard is the latest startup to integrate Bitcoin into the broader world of decentralized finance (DeFi) — an industry that has so far been largely devoid of Bitcoin.
“Lombard aims to elevate BTC from a store of value to a productive asset that flows into the Web3 economy and drives sustainable growth,” the company said in a statement shared with CoinDesk.
Polychain Capital led Lombard’s funding round, joined by BabylonChain, Inc., dao5, Franklin Templeton, Foresight Ventures, Mirana Ventures, Mantle EcoFund, and Nomad Capital.
Restaking was introduced to Ethereum with EigenLayer, one of the biggest DeFi success stories in recent memory. EigenLayer has skyrocketed to US$18 billion in deposits in less than a year, promising users extra interest on assets they had already “staked” to help secure Ethereum.
EigenLayer’s “reclaimed” assets are pooled to secure a network of other cryptographic protocols that use proof of stake security. In essence, EigenLayer and other resumption protocols allow fledgling blockchain applications to bootstrap their security and provide investors with a new way to leverage their crypto assets.
Lombard’s dive into the recovery will be built on Babylon, which lets people use bitcoin to hedge other proof-of-stake networks. Paradigm previously led a $70 million funding round for the Bitcoin staking company.
Lombard is expanding Babylon’s cross-chain security technology with the advent of “liquid bitcoin” tokens, or LBTC — a type of tradable receipt on Babylon deposits that Lombard says will allow users to retain liquidity on the BTC they’ve staked to secure other networks.
“By bringing together leading DeFi ecosystems and protocols to integrate LBTC, over $1.3 trillion in Bitcoin can be used to lend, borrow and trade, providing new capital opportunities for bitcoin holders and new capital and users for the ecosystems and their protocols,” Lombard said in a statement shared with CoinDesk.
Ethereum’s ETH token started as the staked asset of the day on EigenLayer. ETH (and its derivatives) were considered less prone than most other digital assets to suddenly drop in price, which could undermine the security of proof-of-stake networks.
Many of the same attributes that make Ethereum an obvious comeback candidate also extend to Bitcoin, the oldest blockchain. Bitcoin boasts the largest market cap on any blockchain — 1 BTC is worth $63,000 at press time — and tends to be less volatile than other crypto assets.
“Our commitment to Lombard represents a deeper belief in the leverage that Bitcoin can have in catalyzing growth across the blockchain space,” said Olaf Carlson-Wee, founder of Polychain Capital, in a statement.