Ion Protocol raises $4.8 million to unlock native yield on rollups and appchains

Quick Take

  • Ion Protocol has raised a further $4.8 million to support the development of its native yield platform Nucleus.
  • Nucleus enables rollups and appchains to generate native yield for users bridging assets to their networks.

Ion Protocol, a liquidity protocol for staked and restaked assets, has raised an additional $4.8 million from Gumi Capital Cryptos, Robot Ventures, BanklessVC, NGC Ventures, Finality Capital and SevenX Ventures, among others, bringing its total funding to $7 million.

The fresh capital will be used to support and develop a native yield primitive called Nucleus, designed to help address monetization problems for rollups and appchains, potentially helping to foster new decentralized application use cases in their ecosystems.

“Through Nucleus, any network can provide its users with native yield for ETH, BTC and USD backed assets,” the team explained in a statement shared with The Block, providing a financial incentive for making deposits on the networks. “Users are able to natively generate returns on a wide variety of assets by simply bridging into the network’s environment."

“Participating in the staking and restaking ecosystem to generate yield has become and will only become a more powerful economic incentive for every stakeholder in crypto,'' Nucleus co-founder Chunda McCain added. “Any network unable to provide their users the option to maximize the value of their bridged assets and bring new sources of revenue to their ecosystem is leaving money on the table. Our plug-and-play platform allows rollups to innovate on their pre-existing business models and ecosystem design while making depositing truly compelling for users.''

How does Nucleus work?

While the explosion of Ethereum rollup solutions offers cheaper and faster transactions, they often require users to forgo staking yields on the mainnet, where returns are around 3-4%. Bridged assets typically don't earn interest, creating a significant opportunity cost. Nucleus aims to address this, claiming to provide a default yield for users across more than 20 different rollups and appchains over the coming months.

Nucleus sources the yield from securing infrastructure products like bridges and oracle networks, passing the revenue to networks, apps and users, focusing on the infrastructure-sourced yield to minimize risk, the team said.

It claims to do this by lending capital to Ion Protocol’s lending platform, and by reallocating unused borrower liquidity to “power sophisticated counterparties that help enable bridges and chain abstraction protocols to move liquidity from chain to chain seamlessly.”


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About Author

James Hunt is a reporter at The Block and writer of The Daily newsletter, keeping you up to speed on the latest crypto news every weekday. Prior to joining The Block in 2022, James spent four years as a freelance writer in the industry, contributing to both publications and crypto project content. James’ coverage spans everything from Bitcoin and Ethereum to Layer 2 scaling solutions, avant-garde DeFi protocols, evolving DAO governance structures, trending NFTs and memecoins, regulatory landscapes, crypto company deals and the latest market updates. You can get in touch with James on Telegram or 𝕏 via @humanjets or email him at [email protected].

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