Router Protocol which is building a suite of cross-chain liquidity infra primitives that aims to seamlessly provide bridging infrastructure between current and emerging Layer 1 and Layer 2 blockchain solutions, has completed its second funding round, raising $4.1 million from a cohort of venture capital firms including CoinBase Ventures and prominent web2.0/web3.0 executives & founders. The funds will be used to further develop Router Protocol and scale up marketing and research activities.

The USD 4.1 million round saw participation from leading investors including Coinbase Ventures, Woodstock Fund, QCP Capital, Alameda Research, De-Fi Capital, Polygon, Wintermute, Shima Capital, TeraSurge Capital, Maple Block, and Bison Fund in addition to leading Web 2.0/Web 3.0 funds, executives and entrepreneurs. Some of the leading angels in the round include Polygon’s Sandeep Nailwal, Doordash’s Gokul Rajaram, Aave’s Ajit Tripathi.

In addition, the project had also received grants earlier from Terraform Labs (Terra) and the Algorand Foundation.

Launched late last year, Router completed its seed round at the beginning of 2021, raising a modest $480,000. The latest private sale was oversubscribed, showing increased interest from investors looking for high-value projects in the interoperability space.

Proceeds from the sale will be used to further support the Router ecosystem. This includes improving Router’s cross-chain infrastructure and building the Router V2 in which Router Protocol will have its own blockchain for managing inter-blockchain messages.

Darius Sit, Managing Partner at QCP Capital, noted:

“Getting blockchains to communicate effectively with each other is the holy grail for DeFi going forward, and we are happy to work with the team behind Router & Dfyn and support their unique approach to solving this problem”

The exponential growth the DeFi and Layer-1 market has been experiencing in the past year has led to significant liquidity fragmentation across blockchains. With networks such as Polygon, Avalanche, Polkadot, and Fantom competing with Ethereum, the funds locked in each of those protocols takes away from the overall liquidity of another. This drastically reduces the usability of smaller blockchain networks that might be able to compete with Ethreum on account of their superior technology.

Router Protocol aims to solve this by deploying a cross-chain bridge that connects the liquidity that would have otherwise been fragmented across various blockchains. The protocol aims to deploy ParaRouter contracts on different blockchains that will be able to communicate with each other through the Central Router. Funds moving through the protocol are exchanged into stablecoins on the source chain and then swapped into the desired asset on the target chain.

For investors with funds spread across various different blockchains, direct access to a project that provides a seamless bridge between networks is a significant value proposition. For Router Protocol, support from some of the industry’s biggest VCs will certainly boost interest from the wider community.

Router Protocol will introduce a multi-chain token launch platform and start offering its SDK for other projects to develop upon in the coming months.

All of these are developments that have the potential to put Router on the map, not just on its native Polygon, but across the entire DeFi system as well.