Puffer Finance, an Ethereum-based project that focuses on liquid staking derivatives (LSD) and utilizes the EigenLayer restaking protocol, has announced a partnership with the Ethereum Foundation. The collaboration aims to jointly develop based rollups, following Puffer Finance’s successful $18 million Series A funding round to launch its mainnet.
Based rollups are scaling solutions that alleviate the strain on layer-1 blockchains by processing transactions offchain and consolidating them into one finalized transaction on the base layer. In an interview with Cointelegraph, Amir Fourouzani, co-founder of Puffer Finance, highlighted the growing demand for such solutions in the market.
Fourouzani emphasized the need for based-sequencing and based rollups to ensure interoperability and communication between different chains. He stated that Puffer Finance has developed a way to organize pre-confirmations on Ethereum layers while maintaining decentralization among validators, without requiring an Ethereum Improvement Proposal.
“This has been the central area of research for the Ethereum Foundation, and thought leaders like Justin Drake are working towards pushing this forward,” Fourouzani added. He also showcased the potential of based rollups in the decentralized finance sector.
One of the advantages of an interoperable based app chain ecosystem, according to Fourouzani, is the ability to generate native yields. Users can earn passive income by having their tokens generate yield effortlessly in their wallets, rather than simply holding them on the base chain.
DefiLlama data shows that shortly after its initial testing phase in February, Puffer Finance achieved a total value locked (TVL) of $1.7 billion. The protocol has raised a total of $23.5 million in venture capital funding thus far.
Puffer Finance’s LSD technology allows Ethereum validators to reduce their capital requirement to just 1 Ether (ETH), instead of the 32 ETH needed for individual stakers. Additionally, users who stake Ether via Puffer receive Puffer liquid restaking tokens (nLRTs), which can be utilized to earn yields in other decentralized finance protocols alongside their Ethereum staking rewards.
In related news, EigenLayer has enhanced the security of its EigenDA protocol to combat Sybil attacks.