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Binance Labs Invests in Puffer, a Decentralized Liquid Restaking Protocol

Binance Labs, the venture capital and incubation arm of Binance, has announced its investment in Puffer, a decentralized and permissionless native liquid restaking protocol (nLRP) that combines Ethereum liquid staking with native restaking on EigenLayer, a novel Layer 2 (L2) solution.

The investment amount was not disclosed, but Binance Labs said that it will support Puffer’s development of its open-source technologies, its nLRP, and its novel actively validated services (AVSs) built as part of Puffer’s verticalized infrastructure. Puffer will also bring its native liquid restaking token (nLRT), pufETH, to BNB Chain users, enabling them to earn Ethereum proof-of-stake (PoS) and restaking rewards.

Puffer is a native liquid restaking protocol, which is a combination of ETH liquid staking and native restaking on EigenLayer. Liquid staking is a process that allows ETH holders to stake their tokens in a smart contract and receive a tokenized representation of their stake, which can be used for other purposes such as lending, borrowing, or trading. Native restaking is a process that allows liquid stakers to further stake their tokenized stake in another smart contract and receive additional rewards.

Puffer aims to democratize Ethereum staking by reducing the operational risks and costs associated with validating, making it viable for at-home validators. Ethereum validators currently face high costs and risks, often leading to institutional control and centralization. Puffer’s protocol leverages its anti-slashing technology, Secure-Signer, which allows validators to reduce the risk of slashing while enhancing capital efficiency. Puffer also collaborates with eminent researchers, such as Ethereum Foundation core researcher Justin Drake, to publish security research and mechanisms for pools that inspired changes to the Ethereum roadmap.

As part of its strategy, Puffer plans to run its upcoming L2 as an EigenLayer AVS. EigenLayer is a novel L2 solution that enables the creation of custom L2 networks that can operate as AVSs. AVSs are services that are actively validated by a set of validators who stake their tokens in a smart contract and receive rewards for their validation work. AVSs can provide various benefits, such as scalability, privacy, interoperability, and composability, for different use cases and applications. Puffer’s L2 will operate as an EigenLayer AVS, which will generate network effects, particularly as more AVSs come into play and benefit from the economic security provided by Puffer. This integration will also increase the rewards for Puffer’s permissionless validators, which will not only incentivize participation but also contribute to reinforcing the decentralization of Ethereum.

Yi He, Co-Founder of Binance and Head of Binance Labs, commented: “At Binance Labs, we always look to support innovative DeFi projects during their early stages, and we look forward to working closely with DeFi founders towards their long-term growth.”

Amir Forouzani, Founder of Puffer, said: “As Puffer continues to develop, our unique approach, supported by collaborations with eminent researchers, elevates validator profitability, contributing to Ethereum’s decentralization and securing its infrastructure with EigenLayer. We are incredibly excited about laying a robust foundation for the future of decentralized trust, ensuring a resilient and thriving ecosystem for years to come.”

Puffer has previously raised $6.3 million in three funding rounds backed by Lemniscap, Faction, Animoca Brands, and others.

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