In the tumultuous landscape of the cryptocurrency industry, 2023 has emerged as a challenging year for many companies within this space.
Venture capital investments in crypto firms have witnessed a substantial decline, plummeting by a staggering 68 per cent in comparison to the previous year, according to data from PitchBook.
While the overall funding climate seems to be facing headwinds, there are exceptions to this trend, with certain startups managing to secure significant financial backing.
One such standout is the French crypto startup Kiln, which successfully concluded a substantial $17 million funding round in December 2023.
Noteworthy contributors to this funding round include 1kx, Crypto.com, IOSG, Wintermute Ventures, KXVC, and LBank, with additional support coming from existing investors who opted to inject further capital into the company. Despite the prevailing challenges in the crypto investment landscape, Kiln's ability to secure substantial funding underscores its resilience and strategic positioning.
For those not closely following the crypto space, Kiln may not be a familiar name, primarily due to its focus on white-label infrastructure-centric products. Kiln has carved a niche by providing technology infrastructure to prominent companies such as Ledger, Crypto.com, and Coinbase. These industry giants rely on Kiln's technology to power their pooled staking services within non-custodial wallets like Coinbase Wallet and Ledger Live.
Staking, a fundamental concept in the crypto realm, involves locking crypto assets in a blockchain to secure its transactions. Participants in staking activities are rewarded with financial incentives over time.
Kiln plays a crucial role in this ecosystem by offering a suite of smart contracts that streamline and automate the staking process. Through these on-chain contracts, users can seamlessly participate in Kiln's staking pools, earning rewards while the company and its partners receive a commission, all meticulously handled by the smart contract.
Kiln's success is further exemplified by the substantial amount of staked Ethereum (ETH) it currently manages, totalling 1,168,288 ETH. This impressive figure translates to nearly $3 billion in ETH assets under Kiln's management, reflecting a fivefold increase in stake under management over the past year. Kiln's adept handling of staking activities has positioned it as a significant player in the market.
Beyond its on-chain products, Kiln also provides Software Development Kits (SDKs) and Application Programming Interfaces (APIs) to facilitate seamless integrations with its staking pools. The company operates a robust network of validators, with the notable distinction of being the largest operator of validator nodes on the Ethereum blockchain, commanding over four per cent of the market share according to Rated data.
Marie Siegrist, Kiln's head of marketing, sheds light on the rationale behind operating their own validator nodes.
Siegrist said: "Operating our own validator nodes is a way to guarantee the highest level of security while optimising for the highest financial performance. It also helps when it comes to improving monitoring.
"Finally, this hands-on approach helps us appear as a legitimate company with strategic partners such as the Ethereum Foundation, which shares our best practices and anti-slashing strategy."
The crypto landscape offers various forms of staking, including centralised exchanges like Coinbase and Binance that provide staking rewards by managing crypto assets on behalf of users. Liquid staking protocols, such as Lido, introduce a different token to represent staked ETH.
Kiln, on the other hand, stands out as a preferred white-label technology provider for those seeking a low-level approach to integrating one-click staking into non-custodial wallets. Some companies even entrust Kiln with the operation of dedicated validators on their behalf.
Kiln's recent funding success and strategic positioning reflect its commitment to expanding its enterprise-grade staking platform.
Co-founder and CEO Laszlo Szabo expresses enthusiasm about the company's trajectory, stating: "Today's news demonstrates our commitment to growing our enterprise-grade staking platform, and we are delighted to be joined by leading digital assets investors who are primed to help us achieve our goals.
"We have an exciting lineup of products and upcoming expansion plans, including the establishment of an office in Singapore."
Since its inception, Kiln has raised a total of $35 million, accentuating the confidence investors have in the company's business model and growth potential. Kiln's revenue model, based on taking a commission on staking rewards, aligns with the growth of its total assets under management.
As the company continues to navigate the dynamic crypto landscape, its focus on security, financial performance and strategic partnerships positions Kiln as a notable player in the evolving world of blockchain technology.
