Puffer Finance, an Ethereum-based project that focuses on liquid staking derivatives (LSD), has formed a partnership with the Ethereum Foundation to collaborate on the development of based rollups. This comes after Puffer Finance secured $18 million in Series A funding to launch its mainnet.
Based rollups are solutions designed to scale layer-1 blockchains by processing transactions offchain and bundling them into a single 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 explained that the industry requires solutions like based-sequencing and based rollups to ensure interoperability and communication between different chains. Puffer Finance has managed to find a way to organize pre-confirmations on Ethereum layers while maintaining decentralization among validators, without the need for an Ethereum Improvement Proposal.
He mentioned that it took them years to develop this solution, but they have finally achieved it. He also emphasized that this is currently the main area of research for the Ethereum Foundation, with thought leaders like Justin Drake leading the way.
Fourouzani also discussed the benefits of based rollups in the decentralized finance space. He mentioned that an interoperable based app chain ecosystem allows users to generate native yields effortlessly, rather than just holding their tokens on the base chain.
According to DefiLlama data, Puffer Finance reached a total value locked (TVL) of $1.7 billion shortly after its early test phase in February. The protocol has raised a total of $23.5 million in venture capital funding so far.
Puffer Finance’s LSD technology enables Ethereum validators to reduce their capital requirement to just 1 Ether (ETH), instead of the usual 32 ETH required for individual stakers. Additionally, users who stake Ether through Puffer receive Puffer liquid restaking tokens (nLRTs), which can be used to earn yields in other decentralized finance protocols simultaneously with their Ethereum staking rewards.
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