According to the latest strategic roadmap released by Puffer Finance, the platform has expanded from a native liquidity re-pledge protocol to an Ethereum decentralized infrastructure provider. Its product architecture has also been adjusted. In addition to Puffer LRT, it has also added Based Rollup Puffer UniFi and pre-confirmation solution UniFi AVS. In response to these adjustments, Puffer said, "Puffer's strategic roadmap represents the team's commitment to building the infrastructure needed to support Ethereum's growth and resilience. From UniFi AVS to PUFI TGE, they are all carefully designed to align with Ethereum's core principles. "
The Birth of Puffer
On November 29, 2023, Puffer co-founder Jason Vranek presented at the "Restaking Summit: Istanbul Devconnect" hosted by EigenLayer Puffer's Demo. Puffer is a native liquidity re-staking protocol that aims to alleviate the centralization and high barriers to entry in the current staking market by designing a permissionless, slash-reducing liquidity re-staking solution. The original goal of the Puffer founding team was to use verifiable technology to reduce the slash risk that may exist in the liquidity staking protocol. However, inspired by the solution proposed by Justin Drake, a researcher at the Ethereum Foundation in his 2022 paper "Liquid solo validating" to reduce the slash risk of individual validators through hardware technology, the Puffer team developed the Secure Signer secure signature technology at the end of 2022. This technology uses Intel SGX to store the validator's private key in the enclave to prevent the validator from slashing due to key leakage or operational errors. The development of Secure Signer also received funding from the Ethereum Foundation in the fourth quarter of 2022.
Of course, Puffer has also attracted the attention of many investment institutions and angel investors. So far, Puffer Finance has completed 4 rounds of financing, and the cumulative financing amount has reached 24.15 million US dollars. In June 2022, Puffer Finance completed a $650,000 Pre-Seed round of investment led by Jump Crypto. Then in August 2023, Puffer Finance completed a $5.5 million seed round of financing led by Lemniscap and Lightspeed Faction, with Brevan Howard Digital, Bankless Ventures and others participating. This round of financing was used to further develop Secure-Signer. In April of this year, Puffer Finance once again completed an $18 million Series A financing, led by Brevan Howard Digital and Electric Capital, and participated by Coinbase Ventures, Kraken Ventures, Consensys, Animoca and GSR. This round of financing is mainly used to promote the mainnet launch.
Liquidity Re-staking Tokens (LRT) are an asset class developed around the EigenLayer ecosystem, which aims to further improve the capital utilization efficiency of Ethereum staked assets through the re-staking mechanism.Its operating principle is to re-stake ETH or Liquidity Staking Tokens (LST) that have been staked on the Ethereum PoS network to other networks through EigenLayer to obtain additional benefits beyond the Ethereum mainnet staking rewards.
Since Ethereum switched to the PoS mechanism, more and more staking products have emerged, driving the development of the staking market. However, some platforms such as Lido have occupied a large share of the staking market, which has raised concerns about the risk of network centralization. Looking back to September 2023, in the field of liquidity pledge, Lido's share of the liquidity pledge market once reached 33%. However, with the rise of liquidity re-pledge protocols, Lido's market share began to gradually decline and has now dropped to around 28%. Ethereum contributor Anthony Sasson said that the vampire attack launched by Puffer had a major impact on Lido, involving more than $1 billion in capital flows.
As a permissionless decentralized native liquidity re-pledge protocol, Puffer combines the dual strategies of liquidity staking and liquidity re-pledge, using Secure Signer secure signature technology and Validator Tickets (VT) and other designs help independent validators effectively participate in the Ethereum staking and re-staking process, thereby increasing returns while maintaining the decentralization of the Ethereum network.
In addition, in order to prevent Puffer from forming an over-centralized situation in the network, the protocol strictly limits the number of its verification nodes and does not allow it to occupy more than 22% of the total number of Ethereum network nodes to ensure that it does not pose a threat to the trusted neutrality of Ethereum.
Reduce the staking entry threshold from 32 Ethereum to a minimum of 1
Ethereum requires 32 ETH to become a node, which is undoubtedly a high threshold for independent users. Puffer lowers the entry threshold for participating in staking through a mechanism called Validator Tickets (VT), allowing node operators to run verification nodes with only a deposit of 2 ETH (if using SGX, only 1 ETH is required). VT is an ERC20 token that represents the node operator's right to run an Ethereum validator for one day, and the price of VT is set according to the expected daily income of running the validator. In other words, the node operator needs to lock a certain amount of VT to participate in staking, and gradually release it to the liquidity provider during the staking period, and the validator can obtain all the rewards generated by PoS. To give a simple example, similar to joining a restaurant, users can choose to pay monthly income or pay a one-time payment in advance for the expected income within the next year to obtain the right to operate, and Puffer's VT mechanism is the latter model. At the same time, node operators can get 100% of the PoS rewards, thereby avoiding the "lazy node" phenomenon caused by insufficient income in the traditional staking model (that is, choosing to passively participate or exit the consensus when the income is not ideal). In addition, as a kind of equity note, VT can not only supplement the pledged funds, but also has liquidity and can be traded on the secondary market.
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