What is Puffer Finance?

Binance Labs, the incubation and venture capital arm of cryptocurrency exchange Binance, recently made a strategic investment in Puffer Finance. 

But what is Puffer Finance? Let’s find out.

What is Puffer Finance?

Puffer Finance stands out as an Ethereum liquid restaking protocol built on EigenLayer, offering a unique combination of features that redefine the staking landscape.

At its core, Puffer Finance is a Native Liquid Restaking protocol, bridging Ethereum's liquid staking with native restaking capabilities on EigenLayer. This approach reportedly allows validators to participate in the network with minimal barriers, requiring only a low bond of 1 or 2 ETH. 

With Puffer, validators earn proof of stake rewards and unlock additional restaking rewards via EigenLayer.

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Unique Features

Puffer Finance introduces a variety of restaking modules, each equipped with unique EigenLayer applications (AVSs) tailored to specific strategies. Validators, the backbone of the ecosystem, earn traditional proof of stake rewards akin to standard liquid staking protocols. 

However, Puffer Finance distinguishes itself by tapping into EigenLayer, generating additional restaking rewards. 

The protocol introduces Native Liquid Restaking Tokens (nLRTs), a hybrid asset that accrues both proof of stake (PoS) and restaking rewards, amplifying the value proposition for participants.

Puffer Finance envisions a future where validators transcend the confines of traditional PoS validating. The protocol reportedly empowers validators to efficiently reuse their hardware and capital, elevating their viability and profitability. 

The project’s long-term objective is to attract an increasing number of validators to fortify the Ethereum network's security and uphold its decentralization ethos.

Diverse Strategies: Restaking Modules Unveiled

Puffer Finance introduces a spectrum of restaking modules, each accompanied by a unique set of EigenLayer applications or AVSs (Application Verification Scripts). 

Validators choose a strategy, submitting evidence on-chain while fulfilling bonds and smoothing commitments. The protocol's smart contracts then queue them as pending validators for the selected strategy.

The role of Guardians, integral to Puffer's governance, comes into play during the validation process. Guardians verify withdrawal credentials and deposit message validity before provisioning ETH to deploy validators to the beacon chain.

Secure-Signer: Fortifying Validators Against Slashing Risks

Puffer Finance developed Secure-Signer as a public good understanding of the need for security in the evolving landscape. This open-source tool acts as a shield, protecting validators across the ecosystem from slashing risks.

Anti-slashers, a key component in Puffer's protocol, play a role in safeguarding validators against potential slashing incidents within AVSs as the restaking ecosystem matures.

The Vision of Puffer Finance

Puffer Finance was founded by Amir Forouzani and Jason Vranek. According to Jason Vranek, who is also the CTO of Puffer, Ethereum's liquid staking model is coupled with native restaking on EigenLayer to maximize rewards and resource efficiency. 

In addition to securing Eigenlayer applications, the integration of native restaking expands revenue streams and enhances viability, according to Vranek.

"At a high level, Puffer is Ethereum liquid staking where you earn proof of stake rewards with validators. However, we're also conducting native restaking on EigenLayer to generate additional rewards," said Jason Vranek at an event last year. 

Before securing Binance Labs' investment, Puffer Finance had already received investment from prominent investors such as Brevan Howard Digital, Jump Crypto, and Lightspeed Faction. The project successfully raised $5.5 million in a seed round last August and initially secured $650,000 in a pre-seed round.

Further, the Ethereum Foundation awarded Puffer $120,000 for Secure-Signer, an open-source tool that reduces the risk of Ethereum validators being slashed or penalized.