Overview
Puffer Finance is a decentralised finance platform built on Eigen Layer that offers a unique combination of features, including a liquid staking protocol with a focus on stake pools and anti-slashing technology.The platform provides validation services and allows anyone to run a Puffer Node from their home to operate Web3 infrastructure. Puffer Finance has raised significant funding, including a $5.5 million seed round, to fuel the development of its open-source Secure-Signer solution and create a capital-efficient permissionless staking pool. Most recently it has also raised a round with Binance Labs.
Mechanics
Puffer is designed to simplify Ethereum Proof of Stake (PoS) validator operations. It's characterised by its permissionless nature, allowing anyone to participate as a validator. The protocol also features native restaking, a cap to protect Ethereum's interests, and the potential for pufETH to increase in value.
The protocol offers several benefits for Node Operators (NoOps), including the ability to start with less than 2 ETH, innovative anti-slashing hardware, autonomy in choosing miner extractable value (MEV) strategies, immediate liquidity of execution rewards and the option to earn passively without running a validator. Additionally, the rewards system is flexible, accepting any amount of ETH for staking and enhances rewards through Eigenlayer integration. Validator tickets play a crucial role, aligning incentives and creating market opportunities.
A unique aspect of Puffer is the 'flywheel effect' created by the collaboration between stakers and NoOps, aiming for sustainable growth while maintaining a cap to prevent over-dominance in the Ethereum validator set. This model facilitates a balance between growth and Ethereum's credibility.
NoOps have the opportunity to manage a 32 ETH validator by committing just 1 ETH as collateral, retaining all PoS rewards and potentially engaging in restaking for additional gains. Stakers, on the other hand, can contribute any amount of ETH and receive pufETH tokens, which are tied to the protocol's performance and rewards. This structure offers NoOps complete control over their validators' rewards and incentives for long-term performance. Stakers benefit from pufETH's immediate reward accrual and its ability to accumulate both PoS and restaking rewards.
Puffer prioritises security and safety, requiring NoOps to adhere to strict anti-slashing measures and collateral requirements. The protocol also has mechanisms to eject underperforming validators and maintains specific standards for Actively Validated Services and restaking operators.
Overall, Puffer represents a well-structured approach to liquid staking within the Ethereum ecosystem, focusing on accessibility, reward optimization and maintaining a secure and balanced platform for both stakers and node operators.
Raises
Puffer Finance has completed two significant fundraising rounds. The first was a pre-seed round that raised $650,000, led by Jump Crypto and supported by IoTeX and Acanam Capital. The second round, a seed funding, raised $5.5 million and was led by Lemniscap and Lightspeed Faction. Notable contributors to the seed round included Brevan Howard Digital, Bankless Ventures, Animoca Ventures, Kucoin Ventures, as well as individuals such as Sreeram Kannan, the Founder of Eigen Layer and Frederick Allen, the Head of Staking Business at Coinbase. The funds raised are intended to support the development of Puffer's open-source Secure-Signer solution and the creation of a capital-efficient permissionless staking pool, furthering the platform's goal of enhancing Ethereum's decentralisation and scalability. Binance Labs most recently carried out a funding round. Through this, Puffer aims to introduce its native liquid restaking token to BNB Chain users, enabling them to obtain Ethereum PoS and restaking rewards.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.