2023 hasn’t been the best year for cryptocurrency companies. According to PitchBook data, venture capital investment in cryptocurrency companies dropped by 68% in 2023 compared with 2022. To be fair, cryptocurrency companies still raised $9.5 billion. But that number is a small number compared to 2022, when cryptocurrency companies raised $30 billion.
However, some startups perform better than others. French crypto startup Kiln just completed $17 million in financing in December 2023. 1kx led the investment, with Crypto.com, IOSG, Wintermute Ventures, KXVC and LBank also participating. Some existing investors have also poured more money into the company.
Even if you are familiar with big names in the cryptocurrency space, you may not know Kiln because the company specializes in white-label infrastructure products. Companies such as Ledger, Crypto.com and Coinbase rely on Kiln’s technology to provide collective staking services in their non-custodial wallets (Coinbase Wallet, Ledger Live, etc.).
As a reminder, staking is locking crypto assets into the blockchain to ensure the security of the blockchain and its transactions. When you stake an asset, you gain financial incentives by earning rewards over time.
Some proof-of-stake blockchains allow users to stake cryptoassets, such as Polygon, Solana, and Avalanche. But the largest proof-of-stake blockchain to date is Ethereum, which switched to this mechanism in September 2022.
Within this ecosystem, Kiln provides a set of smart contracts that facilitate staking. Essentially, Kiln manages staking programmatically through these on-chain contracts. Through a simple transaction, users can participate in Kiln’s staking pool and start earning rewards. Kiln and its partners also receive a commission, which is also handled automatically by the smart contract.
The company currently manages 1,168,288 staked ETH and is operating very well. At today’s exchange rates, it represents nearly $3 billion in ETH assets under management. Last year, Kiln’s “management shares” increased fivefold.
The largest Ethereum verification node operator
In addition to these on-chain products, Kiln also provides SDKs and APIs to facilitate integration with its staking pool. It also operates a large network of validators. On the Ethereum blockchain, Kiln is currently the largest verification node operator, with a market share of just over 4% according to Rated data.
“Operating our own validator nodes is one way to ensure the highest level of security while optimizing the highest financial performance. It also helps improve monitoring. Finally, this hands-on approach helps us become a legitimate company that owns Ethereum strategic partners like foundations who share our best practices and anti-cut strategies,” Marie Siegrist, Kiln’s head of marketing, told me.
There are many ways to provide staking or “pseudo-staking”. For example, many centralized exchanges such as Coinbase and Binance offer staking rewards. These centralized exchanges manage crypto assets for you behind the scenes. There are also liquid staking protocols like Lido, which offer different tokens to represent staked ETH.
But if you want to integrate one-click staking into a non-custodial wallet, Kiln seems to be a good white label technology provider. This is a low-level staking method, and some companies even ask Kiln to run dedicated validators for them.
“Today’s news demonstrates our commitment to growing an enterprise-grade staking platform, and we are excited to be joined by leading digital asset investors who are ready to help us achieve our goals… We have an exciting product lineup and Upcoming expansion plans include opening an office in Singapore,” Kiln co-founder and CEO Laszlo Szabo said in a statement.
Kiln has raised a total of $35 million in funding since its founding. The company receives commissions from staking rewards, meaning its revenue will grow in tandem with its total assets under management.
