Ahead of its mainnet launch early this month, Stride – a liquid staking protocol for the Cosmos blockchain ecosystem – raised $6.7 million in a seed funding round led by North Island VC, Distributed Global and Pantera Capital.

“We’re primarily going to hire engineers to help build out the protocol,” Stride co-founder Vishal Talasani told CoinDesk in an interview. “We also want to hire one to two security people to full-time focus on how to make the chain really secure.”

Proof-of-stake blockchains maintain their integrity through staked or committed assets. Liquid staking allows users to earn yield on those locked assets through an equivalent number of new tokens. Stride offers liquid staking, a network of proof-of-stake blockchains that interact with one another through the Inter-Blockchain Communication (IBC) protocol.

Read more: What Is Cosmos?

Stride lets users stake tokens from any Cosmos chain in exchange for stTokens. The staked assets can earn an auto-compounding staking yield and can earn additional yield through actions like lending and providing liquidity. The stTokens can be sold or used in DeFi (decentralized finance) applications.

The “Tokens” part of "stTokens" is a placeholder for the staked asset. For example, Stride currently offers staking support for Cosmos Hub – one of the first chains launched on Cosmos – and the native ATOM token is exchanged for stATOM. Stride plans to add support for more IBC-compatible assets by the end of the year.

Stride lets users redeem the stTokens for the original asset at any time. The capability helps mitigate risks of locked-in liquid staking, which can leave users stranded if the staked and original assets start to lose their peg, or 1:1 equivalence – an issue that hit the Ethereum-staked sETH tokens in June due to market volatility.

Stride has been audited by blockchain security firms CertiK and Oak Security.

“After launch, we plan to have additional audits given that liquid staking has a kind of unique place where it custodies, or holds onto, funds on behalf of users. It’s a high-profile target for hacks,” said Talasani.

There are plans for the protocol to get additional security features, such as a rate-limiting capability that would temporarily halt activity in the event of suspicious fluctuations.

The Stride funding round comes during a crypto bear market that saw venture capital investments in the space drop 26% year-over-year in the first half of the year, although the number of deals increased, indicating a rise in smaller investments.

UPDATE (August 4, 16:06 UTC): Updated the expected date of Stride's mainnet launch from Friday to early this month.