Blockstream has reportedly finalized a $210 million convertible note financing round which has been led by Fulgur Ventures, marking a key shift in its evolution as the global provider of financial infrastructure technology powered by Bitcoin (BTC), the flagship cryptocurrency.
The capital injection will be used in order to accelerate the market adoption and development of Blockstream’s L2 technologies, expand its mining operations in preparation for the next Bitcoin market cycle, as well as grow Blockstream’s Bitcoin Treasury.
Blockstream’s L2 solutions, powering Liquid and Lightning networks, address demand from enterprises for “secure, scalable” Bitcoin-based financial products.
These solutions combine the security and “reliability” of the public Bitcoin blockchain with the flexibility of private or “federated” enterprise deployments.
Capitalizing on institutional interest in both Bitcoin as an “asset class” and the broader potential of asset tokenization,
Liquid specifically aims to become the “de facto infrastructure” for assets within the Bitcoin ecosystem, “enabling tokenization and real-world asset (RWA) integration into traditional financial markets.”
Conceived by Dr. Adam Back and other cryptographers as an approach to building open, more decentralized global financial markets on Bitcoin, the Liquid Network launched “as Bitcoin’s first production sidechain in 2018.”
Operated by a globally-distributed federation of 70+ members and with Blockstream as its tech provider, Liquid’s benefits include fast, confidential settlements and the ability to “issue digital assets, such as stablecoins and security tokens in a simple and secure way without the risks associated with complex smart contracts.”
A total of over $1.8 billion in assets, including stablecoins, tokenized bonds and securities, have been issued on Liquid to date, “with the network boasting over 3,844 BTC locked on-chain.”
One area in which Liquid is gaining traction is the real-world assets (RWA) space.
Use cases include fintech innovator Mifiel’s issuance of $1 billion+ in Liquid-based digital promissory notes, setting a “precedent for the country’s non-banking financial institutions (NBFIs) to access global liquidity.”
Another example is Blockstream partner STOKR’s issuance of the MicroStrategy Note—CMSTR—the Bitcoin ecosystem’s security token “fully backed by shares of a Nasdaq-listed company.”
CMSTR can be traded peer-to-peer against Bitcoin on SideSwap, “a decentralized exchange built on Liquid.”
July 2024 saw the launch of the Blockstream Mining Note. BMN2, an EU-compliant hash rate-backed security token, builds on the success of its predecessor, BMN1, which delivered cash-on-cash returns of “up to 103% over its three-year term—one of the highest payouts in the history of RWA securities.”
The Liquid Network works in alongside Blockstream’s Lightning Network implementation, Core Lightning (CLN), as well as hosted cloud infrastructure service, Greenlight.
This integration consolidates issuance and transactions for assets, stablecoins, and Bitcoin, positioning Blockstream among competitors that “focus solely on either payments or token issuance.”
To guide this next phase of growth, Blockstream appointed Michael Minkevich as Chief Operating Officer.
Michael brings experience in developing technological solutions for traditional industries, including finance.
