Root Protocol Based On The Hacked Beanstalk Service Raised $9 Million

The marketplace project for financial markets, forecasting, and trading Root Protocol raised $9 million during the seed round.

It was attended by Road Capital, Nima Capital, Soma Capital, Manifest Crypto, and other investors.

Root is being created on top of the Beanstalk stablecoin protocol, which lost about $181 million in April due to a control system hack.

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

Beanstalk is issuing a “stablecoin” Bean on a leveraged basis. Investors buy the protocol’s debt, which earns interest.

The Root team is looking to expand the use of the coin with new markets like interest rate swaps for yield or betting platforms.

The project will mainly use the raised funds for direct investments in Beanstalk and audit its protocol. 

The Bean issuer plans to restart on August 6th. Root developers expect to present their product in October.

As a “credit-based stablecoin,” Patel says, Bean is not designed to be hard-pegged to the dollar. In his opinion, in this case, it is better to abandon the term “stablecoin.”

“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.

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