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Crypto Staking Startup Stader Labs Raises $12.5 Mn In A Private Sale

Crypto Staking Startup Stader Labs Raises $12.5 Mn In A Private Sale

Stader is a non-custodial smart contract-based staking platform that claims to help retail investors and institutions discover and access staking solutions

According to the startup, its modular smart contracts and staking middleware infrastructure for PoS (proof-of-stake) networks can be leveraged by retail users, exchanges, custodians and mainstream fintech players

Some outlets have mistakenly reported the valuation of the startup to be $450 Mn, but that figure is actually the fully-diluted market capitalisation of the token network, not the startup

Cryptocurrency staking management startup Stader Labs has raised $12.5 Mn in a private sale led by Three Arrows Capital.

The round also saw participation from Blockchain.com, Accomplice, DACM, GoldenTree Asset Management, Accel, Amber, 4RC, Figment. Angel investors like Prabhakar Reddy (FalconX) and Matt Cantieri (Anchor Protocol).

Founded in April 2021 by Amitej Gajjala, Dheeraj Borra And Sidhartha Doddipalli, Stader is a non-custodial smart contract-based staking platform that claims to help retail investors and institutions discover and access staking solutions.

According to the startup, its modular smart contracts and staking middleware infrastructure for PoS (proof-of-stake) networks can be leveraged by retail users, exchanges, custodians and mainstream fintech players. 

In essence, it wants to build “staking lego blocks” that can be the infrastructure middle layer that allows anyone to build a staking related product. 

“Since launching in November 2021, there are over 15,000 unique wallets staking over 5.9 million LUNA with a total value locked of around $500 Mn. These numbers underscore both Stader’s early traction and the broader market opportunity in staking infrastructure,” said Kyle Davies of Three Arrows Capital.

A press release claimed that the private sale has increased its valuation to $450 Mn.

When Inc42 enquired about how the value was arrived at, Stader Labs founder Amitej Gajjala confirmed that the value was actually referring to the fully diluted market cap of the token network, not the startup that is building the network itself. 

The market cap of a token network is calculated by multiplying the number of tokens in circulation by the current market price of the token 

As opposed to that, the fully diluted market cap of a token is calculated by multiplying the maximum supply of a token (after they are all minted) with the current market price of the token. This is based on the assumption that the token will continue to hold its value, unaffected by inflation or other market factors

The fully diluted market cap of a coin is an important indicator of what effect the future supply of coins will have on the market. An unusually high fully diluted value compared to the current market cap indicates that a lot more coins will come into circulation and affect the value of the token.

“There are no coins in circulation and therefore we can’t really calculate the current market cap of the network. In 40 days, when tokens are issued and they are in circulation, we would be able to arrive at that number,” said Amitej Gajjala when asked about the current market cap of the network. 

In October, Stader Labs had raised $4 Mn in its seed funding round led by Pantera Capital. That round was led by Coinbase Ventures, True Ventures, Jump Capital, Proof Group, Hypersphere, Huobi Ventures, Solidity Ventures, Ledgerprime, and Double Peak Group.

Update: We have modified the story to include the name of a third cofounder.