Kraken and ConsenSys back staking platform Kiln in $17 million round

ConsenSys and the venture arm of crypto exchange Kraken have backed institutional staking platform Kiln in a €17 million ($17.6 million) round. Blockdaemon and Illuminate Financial led the equity round, which closed in October and featured participation from GSR, LeadBlock Partners, Sparkle Ventures, Alven and Blue Yard Capital. 

Founder Laszlo Szabo declined to disclose the valuation but said it was a significant valuation jump. 

Kiln is part of a group of service providers that has garnered investor interest by enabling institutions to tap into staking, a process of locking up crypto for rewards in return for securing the blockchain. Competitor Figment raised $50 million last year and Staked was the subject of a buyout from Kraken. 

Kiln says it differs from the competition by offering aggregation tooling that allows staking not only on Kiln’s own validators but also those of its competitors. 

“We allow [the user] to spread the stake not only on our validators but also on other validators,” says Szabo. “And, in that sense, the risk will be spread using multiple providers.” 

It also offers a dashboard service used by Binance’s U.S. affiliate which allows companies to monitor staking across different protocols and blockchains — and will, at one point, enable the automation of such processes for exchanges.

“In the future, somebody will stake on the Binance interface — and, in the backend, it talks to our API and everything happens automatically,” said Szabo. 

Staking makes money 

Kiln’s raise is coming at a time of turbulence in the market. Last week, Gemini halted its Earn product after crypto lender Genesis suspended withdrawals, but Szabo believes there’s still space for staking. 

“In staking, you don’t have this risk of counterparties — the counterparty is the protocol,” he said. “Staking in the eyes of everybody now has become the safest yield in crypto.”

Yet amid the downfall of crypto exchange FTX, exchanges such as Gemini, OKX and Crypto.com experienced severe outflows as the sales of non-custodial wallets, such as those offered by Ledger and Trezor, increased. 

Still, Szabo believes Kiln’s diversified its product offering enough to shelter from the storm. The firm also enables wallets, custodians and exchanges to integrate staking services via API and smart contract code. Most recently, it partnered with hardware wallet firm Ledger to offer Ethereum staking, with another partnership with a noncustodial wallet in the pipeline. 

Big-name financial institutions are also starting to show interest in Kiln. Notably, Avon Ventures, a venture fund affiliated with Fidelity Investments — which is looking to offer bitcoin exposure for its retirement plans — participated in the round, said Szabo.

“We’re starting to see more big traditional financial names,” he said, citing the participation of Avon Ventures in the round.

Netting such players from the traditional finance world will also guide its expansion plans with a forthcoming New York office utilized to target such players. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.