Root Protocol raises $9 million to build on top of hacked stablecoin issuer Beanstalk
In a blog post of July 26, an on-chain marketplace for financial, prediction and commerce markets, Root Protocol announced a $9 million seed round led by leading crypto-native investors Road Capital, Soma Capital, Nima Capital, and Manifest Crypto.
The valuation was not disclosed yet. Root’s market will be built on top of Beanstalk, a stablecoin protocol that was hacked in April this year through a governance exploit, And Approx $182 Million worth of crypto assets was stolen in the attack. the Decentralized Autonomous Organization (DAO) that regulates the protocol is at present attempting to raise $77 million from private investors to revive the venture.
"It's obviously a very unfortunate situation," said Parth Patel, a founding member of Root, in an interview with The Block. "I think there's still a lot of learnings when it comes to on-chain governance, it's still a long way away from where it should be."
Beanstalk utilizes loans to back the worth of its native stablecoin Bean. Investors can purchase Beanstalk debt assets known as "pods" that function like time-vested bonds, paying out a yearly interest rate.
The root will develop on this offering by intending to expand markets for example interest rate swaps on Beanstalk yields and a sports betting platform. The funds from the round will fundamentally be used to directly invest into Beanstalk, as well as to assist with auditing the protocol. Root is expecting to launch in October.
As a "credit-based stablecoin," Bean isn't intended to keep a hard peg and should oscillate above and beneath the $1 mark, as indicated by Patel.
Given the distinction, Patel mentioned he would rather not like to use the term stablecoin by any means. "I think I would call it a non-convertible low volatility token — algorithmic stablecoin is a trigger word these days and I don't blame people," he added.
CBW - External Analyst