Alkimiya Raises $7.2M Funding Round to Grow Cash Flow Hedging Protocol for Miners, Stakers

Alkimiya, a decentralized capital markets protocol, has raised $7.2 million in funding as it seeks to attract miners and stakers wanting to hedge their cash flow as they attempt to navigate the current bear market.

The funding round was led by Castle Island Ventures and 1kx and included contributions from other digital asset heavyweights including Circle Ventures, Coinbase Ventures and Dragonfly Capital Partners.

Alkimiya provides a protocol for miners and staking validators to lock in upfront revenue to fund future production. This is designed to manage the risks of fluctuating cash flow, exacerbated further when liquidity is scant across decentralized finance (DeFi) ecosystems. Its aim is to provide a source of cash flow that is independent of the overall liquidity across DeFi ecosystems.

The protocol derives its revenue from allowing depositors to gain a portion of rewards generated from mining and staking activities from block space producers – referring to entities that utilize massive computing resources to participate in mining or staking to earn rewards.

These cash flows represent the native economic activities accrued on the block space. However, the miners and validators are burdened with increasing expenses. Without effective tools to manage the risks, they are fully exposed to market risks such as the inherent volatility of cryptocurrencies.

“A fundamental issue with DeFi today is the lack of support from natural cash flow. It’s currently a system of highly self-referential and interdependent machines that are addicted to cheap sources of liquidity and when the environment changes, the entire DeFi space dries up very quickly," Alkimiya co-founder Leo Zhang said.

"Alkimiya aims to bridge this gap with block producers' hedging needs. This strategic funding round will help to further our expansion and deepen our relationships with key partners," Zhang added.

Among Alkimiya's products is Silica, which represents a swap between the upfront payment that the buyer agrees to purchase the contract with and the mining rewards produced by the amount of hash power specified during the contract period.

Alkimiya is aiming to fully launch on the Ethereum mainnet during this quarter, following a beta launch on Avalanche in the second quarter of 2022.

Read more: Anxious Ethereum Stakers Question When They’ll Be Able to Access Funds