The lending platform DeFi Liquity Protocol has secured USD 6 million Series A financing to expand lending services throughout the chain, confirming the continued growth in cryptocurrency lending.
The financing round was led by Pantera Capital, a venture capital firm with cryptocurrency with additional contributions from Nima Capital, Alameda Research, Greenfield.one and IOSG, the company said on Monday. Business angels including Meltem Demirors, David Hoffman and Calvin Liu also contributed to the increase.
Robert Lauco, CEO of Liquity Protocol, said the new round of funding “will enable us to continue to fulfill Liquity’s mission to improve access to loans throughout the value chain, eliminate interest rates and reduce governance in DeFi.”
Based in Zug, Switzerland, Liquity offers interest-free loans on secured loans backed by Ethereum (ETH). Loans are repaid in LUSD, which is a stable currency linked to the dollar and requires a minimum guarantee ratio of 110%.
The company says the protocol will be launched on the Ethereum network on April 5.
While some of the hype has subsided, DeFi is still one of the hottest corners in the cryptocurrency market. According to industry data, there were over $ 78 billion in DeFi protocols as of Monday. As Cointelegraph recently reported, the original Binance Smart Chain DApps are driving the sector’s growth.
Defi’s lending and lending services are expected to grow as the cryptocurrency market expands to new heights, prompting investors to defer capital gains taxes or use capital to cover unexpected expenses. Michael Sailor, CEO of Microstrategy Inc., asked to have cryptocurrencies, ie Bitcon, for 100 years or more and borrow against them to finance daily expenses.
The biggest problem with the DeFi lending market, according to Lauco, is that “variable interest rates and fees make DeFi lending extremely unpredictable,” which means “people pay a high premium for fixed-rate products.” In addition, borrowers are willing to pay much higher interest rates in order to be able to borrow at a lower interest rate on a secured loan.
“Liquidity seeks to solve this problem by replacing variable interest rates with one-off fees while improving capital efficiency by at least 110% collateral,” he said.