Tech
Staking technology provider Kiln raises $17 million in rare cryptocurrency funding round
Last year was not the best year for crypto companies. Second PitchBook data, venture capital investments in cryptocurrency companies declined 68% in 2023 compared to 2022. To be fair, cryptocurrency companies still raised $9.5 billion. But that’s small compared to 2022, the year cryptocurrency companies raised $30 billion.
Yet, some startups are doing better than others. French crypto startup Oven just closed a $17 million funding round in December 2023; 1kx is leading the round with Crypto.com, IOSG, Wintermute Ventures, KXVC and LBank also participating. Some existing investors also put more money into the company.
Even if you’re familiar with the big names in the crypto space, you may not be aware of Kiln, as the company has focused on white label infrastructure-focused products. Companies like Ledger, Crypto.com, and Coinbase rely on Kiln’s technology for their pooled staking services in their non-custodial wallets (Coinbase Wallet, Ledger Live, etc.).
As a reminder, staking is locking crypto assets into a blockchain to protect the blockchain and its transactions. There are financial incentives when you put resources on the line while earning rewards over time.
Several proof-of-stake blockchains allow users to stake crypto assets, such as Polygon, Solana, and Avalanche. But the largest proof-of-stake blockchain of all is Ethereum, which has switched to this mechanism in September 2022.
In this ecosystem, Kiln provides a suite of smart contracts that facilitates staking. Essentially, Kiln manages staking programmatically through these on-chain contracts. With one simple transaction, users participate in Kiln’s staking pools and start earning rewards. Kiln and its partners also receive a commission, which is also automatically handled by the smart contract.
And it worked very well as a company currently manages 1,168,288 ETH staked. At today’s exchange rate, it represents nearly $3 billion in ETH assets under management. Over the past year, Kiln has increased its “stake in management” 5-fold.
The largest operator of Ethereum validation nodes
In addition to these on-chain products, Kiln has SDKs and APIs to facilitate integration with its staking pools. It also manages a large network of validators. On the Ethereum blockchain, Kiln is currently the largest validation node operator with just over 4% market share according to Nominal data.
“Managing our validation nodes is a way to ensure the highest level of security while optimizing maximum financial performance. It also helps when it comes to improving tracking. Ultimately, this hands-on approach helps us appear like a legitimate company with strategic partners like the Ethereum Foundation, who share our best practices and anti-slash strategy,” Marie Siegrist, Kiln’s head of marketing, told me.
There are different ways to offer staking or “pseudo-staking”. For example, many centralized exchanges like Coinbase and Binance offer staking rewards. Behind the scenes, these centralized exchanges manage crypto assets for you. There are also liquid staking protocols like Lido, which provides a different token to represent a staked ETH.
But if you want to integrate one-click staking into a non-custodial wallet, Kiln seems to be a good white label technology provider. This is a low-level approach to staking, and some companies even ask Kiln to manage dedicated validators for them.
“Today’s news demonstrates our commitment to growing our enterprise-grade staking platform, and we are pleased to be joined by leading digital asset investors who are ready to help us achieve our goals. . . We have an exciting product lineup and upcoming expansion plans, including the establishment of an office in Singapore,” Kiln co-founder and CEO Laszlo Szabo said in a statement.
Kiln has raised a total of $35 million since its inception. The company takes a commission on staking rewards, which means that the company’s revenues will grow alongside its total assets under management.