Root Protocol, built on Beanstalk hack, raises $9 million

Root Protocol, a marketplace for financial markets, forecasting and trading, raised $9 million in a seed round.

1/ We are excited to announce a $9M Seed Round for Root Protocol with participation from

• @Roadcapitalmgmt
• @NimaCapital
• @Soma_Capital

and Manifest Crypto among other leading crypto-native investors. pic.twitter.com/hOPowhWARu

— Root (@root_protocol) July 26, 2022

Road Capital, Nima Capital, Soma Capital, Manifest Crypto, and other investors participated.

Root is built on top of the Beanstalk stablecoin protocol, which in April having lost about $181 million as a result of a governance-system hack.

“Obviously, this is a very unfortunate situation. I think there are still many lessons regarding on-chain governance, which remains far from what it should be,” said Root founder Part Patel in an interview for The Block.

Beanstalk issues a “stablecoin” Bean backed by collateral. Investors buy the protocol’s debt obligations, on which interest income accrues.

The Root team aims to broaden the coin’s use with new markets such as yield-swaps on returns or betting platforms.

The raised funds will be directed largely toward direct investments in Beanstalk and audits of its own protocol.

Bean plans a relaunch on August 6. Root’s developers expect to present their product in October.

According to Patel, as a “credit-backed stablecoin,” Bean is not intended to be tightly pegged to the dollar. In his view, it is better to drop the term “stablecoin” in this context.

“I think I would call the coin a non-convertible token with low volatility — algorithmic stablecoin has become a trigger word these days, and I don’t blame people,” Patel said.

As noted, in the second quarter venture funding in the industry totaled $6.76 billion, having fallen by 31% from the January–March figure.

Experts attributed this to the Terra collapse, serious Celsius problems and Babel Finance, as well as waves of staff cuts at Coinbase, Gemini and Crypto.com.

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