Hedgehog, a system that offers solutions for managing volatile cryptocurrency transaction fees, has secured $1.5 million in its pre-seed round.
Participating in the round were venture capital firms Marshland Capital, Tenzor Capital, Prometeus Ventures, 3Commas Capital, and Nothing Research.
The co-founder of Lido Finance Vasiliy Shapovalov, a pseudonymous developer at Yearn Finance named Banteg, and a pseudonymous main contributor to Gearbox named Ivangbi were among the Angel investors.
The goal of Hedgehog is to solve the problem of sharply varying cryptocurrency transaction fees, which may be highly costly for organizations and protocols to manage.
Ethereum transaction fees can go as low as $1 at times, but at times of heavy demand, they increase significantly. The current fees for a basic transaction are $25, and for a more complicated transaction, they are above $100.
The main objective of Hedgehog is to produce an asset with a cost that is comparable to Ethereum’s current transaction fee structures. It will specifically display the moving average price across the latest 50 blockchain blocks. Anyone can long or short such an asset once it is created as a hedge against future transaction fee prices.
Hedgehog shares a similar concept with DAI, a decentralized stablecoin whose value is fixed at par with the US dollar. DAI is generated when cryptocurrency tokens are secured in a vault.
It is overcollateralized, which indicates that there is a significant difference between the amount of DAI created and the value of the cryptocurrency in the vault. Additionally, it features a minting and redemption procedure that generates a chance for arbitrage to maintain the asset’s value at $1.
Hedgehog employs overcollateralized vaults for BaseFee token, uniquely tying its value to average transaction fees through an arbitrage mechanism, rather than pegging it to the dollar.
As long as there is sufficient demand, the protocol can be used to produce various on-chain derivatives, even though it is currently intended to mimic transaction fee pricing.
Also Read: Baanx Secures $20 Million Funding to Advance Crypto Payments
