Tech-focused venture giant Andreessen Horowitz (a16z) has invested $100 million in the Ethereum-based EigenLayer, suggesting that VC funding in crypto may be on course for a revival.

As reported by Bloomberg on Thursday, a16z was the sole backer of the funding round, which marks the largest investment ever received in EigenLayer by a wide margin.

Restaking With EigenLayer, Explained

The next largest investment in the platform was a $50 million raise in March during a funding round led by Blockchain Capital, a firm that has also supported platforms like Coinbase, Kraken, Aave, and OpenSea.

EigenLayer is a decentralized Ethereum “restaking” protocol, allowing users to repurpose their already staked ETH to also secure Ethereum sidechains. These sidechains may have different scalability and development properties from Ethereum’s base layer.

“It will enable all sorts of new kinds of applications to be built,” said a16z partner Ali Yahya during an interview with Bloomberg. “People will stake capital in order to gain rewards from new services that get spun up on top of EigenLayer.”

Ethereum introduced staking in September 2022, and has since become the most dominant proof of stake blockchain in history. According to Etherscan, over 39.6 million ETH are now staked on Ethereum, amounting to $118 billion worth of economic security at current prices.

Ethereum’s Inherent Security

“The idea is that when you stake on Ethereum, you are promising that you’re going to run the Ethereum network nodes correctly,” said EigenLayer founder Sreeram Kannan, a former associate professor at the University of Washington.

In return for locking up their ETH, stakers receive periodic ETH-based payouts from the network. Data from ultrasound.money suggests that current rewards provide a roughly 3% APR in ETH terms.

“With restaking, you are taking the same Ether and making additional promises that you will also validate other networks correctly,” continued Kannan.

He added that EigenLayer provides a point system for those who restake using its platform, but that they still have no plans to launch a native token.

A16z raised a whopping $4.5 billion crypto fund in 2022. General Partner Chris Dixon has confirmed that the company is still seeking crypto investments ahead of the 2024 presidential election.